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Bloomberg

JPMorgan chief strategist says markets may be at a long-term tipping point

(Bloomberg) – According to Marko Kolanovic, chief global markets strategist at JPMorgan Chase & Co., global markets may have reached a tipping point where value stocks will outperform growth stocks for a significant period of time over the pandemic, falling volatility, as well as the Fiscal and monetary policy support will last for some time as the various factors creep through the system, Kolanovic said in an interview. These could trigger a long-term shift in investment towards cyclical and reflationary ones, he said. “We may be at a more significant tipping point than just historically what blips were going back to the growth investing style,” said New York-based Kolanovic said on April 9th. “We believe this rebound can be longer, deeper, and have more impact on investor styles and flows than people appreciate.” The debate between value and growth has been one of the most controversial issues in the global strategic community, especially since the Reflation trading, which led to a rebound in value stocks, has stalled lately. Earlier in the market there was unusual cohesion of views on ports like gold and defensive stay-at-home trading, followed by bets on cyclicals and a steeper yield curve. That more predictable era now seems to be over. Most bullish Alongside appreciation, JPMorgan is one of the most bullish banks on Wall Street. The company has a year-end target for the S&P 500 of 4,400, compared to the median forecast of 4,100 in a Bloomberg poll and Monday’s close of trading of 4,127.99. “Fundamentals are improving and you have incentives and supportive monetary policy, and now the VIX is sinking little by little it will help the rivers,” said Kolanovic. There are many pessimists. Bank of America Corp. and Citigroup Inc. both predict the S&P 500 will drop to 3,800 by the end of December. BofA strategists, led by Savita Subramanian, warned of “anemic returns” in a note this month, while a Citi team led by Tobias Levkovich cited negatives like high valuations and the potential of the Federal Reserve to push back incentives more later this year : Marko Kolanovic Says Stop Reblancing Is No Longer Responsible For Stock Losses While rising government bond yields have helped improve the playing field in favor of value investments, it’s unlikely to become a negative factor for stocks until the 10-year Deadline reached 2.50%, said Kolanovic. The reference yield rose to 1.77% at the end of March, the highest level since January 2020, but has since fallen back to around 1.70%. Looking ahead, Kolanovic said that leadership in global equity markets could shift from the US to relative latecomers later in the year. “As the US pushes coronavirus recovery, it is likely stronger right now, but it could be more Europe, Japan and emerging markets in the second half of the year,” he said. Some Other Observations Kolanovic said his asset allocation group is likely to add alternative assets such as private equity and credit, hedge funds, systematic strategies, and real estate to their mix, which is updated about once a month, with inflows for stocks from currently Rising about $ 1 billion per day to about $ 2 billion per day The oil market is fragile with crude oil around $ 60. Lots of commodity trading advisors are moving in and out, and there are lots of options strikes around $ 60. However, JPMorgan anticipates oil will rise significantly in the short term as demand returns decline. Quarterly realignment of the flows becomes less and less relevant and the monthly numbers more relevant. For more articles like this, please visit us at bloomberg.com. Subscribe to us now to stay ahead of your trusted source of business news. © 2021 Bloomberg LP

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