JPMorgan: “Investors Should Start Building Hedges” As “Bad Omen” In Markets Resurfaces

Thursday, April 4, 2019
By Paul Martin

by Tyler Durden
Thu, 04/04/2019

Yesterday after the close, JPMorgan top quant Marko Kolanovic appeared on CNBC to reiterate his chronically bullish case, saying the S&P 500 could hit his year-end price target of 3,000 by the end of May (he had several caveats, noting that a U.S.-China trade deal had to be concluded coupled with Brexit that is “not too disruptive” or is even pushed back.)”

“If earnings season is not a complete disaster, I think markets will go higher and we could actually see our price target being achieved earlier, maybe even sometime in May or June,” Kolanovic said.

And yet, keeping up with its now traditional “good quant, bad quant” strategy (profiled most recently here), just hours later, JPMorgan’s “other” quant, Nikolaos Panigirtzoglou published a report in which he said that while he maintains a risk-on and pro-cyclical stance (the alternative is risking being dubbed “fake news” by Kolanovic), we warned that “investors should start building up hedges against the risk of a repeat of the past two weeks’ yield curve inversion episode.”

Picking up on what he said two weeks ago, the Greek strategist then notes that “yield curve inversion has been generally a bad omen for growth and recession risk, though with variable lags to risky asset prices historically.”

While not news to those who read our latest recap of Panigirtzoglou recent report, at the macro level the “other” JPM quant warns that “despite the improvement in the Chinese and Asian PMIs in this week’s releases the global growth picture is not out of the woods yet” adding that “these cyclical risks are still manifesting in our global manufacturing PMI, which has failed to rise in the latest release despite better Asian PMIs”.

The JPM strategist also cautions that forward-looking indicators are “still pointing to declines rather than rises.” Similarly, JPM’s Forecast Revision Index for Global GDP growth also keeps declining and is now at levels last seen a year and a half ago.

The Rest…HERE

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