Buy bonds & gold, be underweight equities: JPMorgan strategist

JPMorgan Chief Market Strategist Marko Kolanovic is telling investors to bet on safe haven investments such as gold and bonds. In a note, Kolanovic reiterated the he reccommends being underweight equities.

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Video Transcript

SEANA SMITH: JP Morgan’s Chief Global Markets Strategist Marco Kolanovic is all in on Safe Haven Investments as tensions in the Middle East heat up. Now, in a note to clients, Kolanovic reiterated that he is underweight equities and recommended buying bonds and gold, saying, quote, “While it remains uncertain whether bonds have bottomed, we add back 1% to our government bond allocation given geopolitical risk, cheap valuations, and less pronounced positioning.”

So not necessarily anything new that we’re hearing from Marco Kolanovic. But again, just a warning here to the Street just in terms of what exactly the next couple of months could look like when we talk about the pressure that we could potentially see on equities. We’ve seen many strategists here rein in some of their year end price targets for the S&P, what that looks like going into 2024 and how this all plays out. Obviously, a huge issue for investors. And we’re seeing that reflected from some of these analyst calls on the Street.

BRAD SMITH: I mean, Kolanovic is also called for a 20% move lower in the markets as well here. So this, as you were mentioning, really kind of jives with and is in line with what he has already come out with at the beginning and the onset of October and the fourth quarter here. So this directly in line with that.

It’s more interesting here as well, even in this reiteration of that underweight in equities where and in which sectors specifically, especially at a time where we already know and it’s been well documented, we’ve looked at this time and time again how much the move that we’ve seen over the course of this year is really on the back of a few main players.

And that is the Magnificent Seven and this broader AI hype that is taking place as well. And so if you did see any type of rug pull or taking of chips off the table, it’s likely because there is not as much of this That’s actually trickling through in terms of the realized demand into some of the financial performance for some of the companies that have talked most about artificial intelligence and those that are more pretenders than contenders in it.

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