Stocks are ‘outright negative’ for JPMorgan’s Marko Kolanovic

Hollis Johnson/Insider

JP Morgan’s Marko Kolanovic is ahead of an early 2023 rally.

Instead, the Institutional Investor Hall of Famer is poised for a correction of more than 10% in the first half of this year, telling investors he is “totally negative” in the market. I’m talking

“Fundamentals are deteriorating. And markets are going up. So this has to come crashing down at some point,” the firm’s chief market strategist and co-head of global research said Tuesday on CNBC. told Fast Money. Kolanovic cut his equity exposure to underweight in the company last week. In a recent statement, he warned that the market is not pricing in a recession right now. His base case is a hard landing.

Marko Kolanovic

“Short-term interest rates have fluctuated a lot over the past six months and are likely to rise a little more and stay there,” he said. “Consumers owe a lot of debt. Interest rates rose. Consumers are resilient, and that has been our theme over the past year…but they have become less resilient over time. “

Institutional Investor magazine’s 12th ranking of equity strategists, Kolanovic said the bear market was caused by problems in recent key economic data, including ISM services, retail sales, and the Philadelphia Fed’s survey. pointed out a certain tendency.

“I think things are getting worse and worse,” Kolanovic said.

Still, like the S&P 500, the tech-heavy Nasdaq is up more than 8% so far this year.

increased by nearly 5%. On Tuesday he closed at 4,016.95.

He cites positive developments such as China’s resumption of the Covid-19 lockdown and weaker dollar for market enthusiasm. Kolanovich believes they helped craft the narrative that the worst has passed and a recession “magically” happened last year.

“I don’t think a 5% interest rate can sustain this economy,” Kolanovic said, noting that private equity and venture capitalists cannot exist in such an environment. , the Fed will have to recoil.”

And that could come in the form of rate cuts this year.

“Eventually they (the Fed) will stop it again. So the big question is where is the [S&P] at 3,600? 3,400? 3,200? We don’t have very strong beliefs. But I think the direction is downward,” he said. “Usually contagion or something unexpected happens.”