Most Recent Stories


JP Morgan continues to view the current market downturn as a buying opportunity.  Although they are paring back some near-term risk they also recommend that investors with a medium term outlook remain long.  This is very similar to my own thinking as of now.   Nonetheless, JP Morgan is not convinced that the sell-off is over in the short-term:

“We remain of the view that the recent sell-off is as a correction in a medium-term bull market in riskier assets, but a correction that is probably not over. We thus retain bullish medium-term forecasts for all risky assets, and bearish ones for government bonds.

Their medium term view remains quite constructive as they see continuing upside based on the economic recovery, strong earnings, and supportive government actions:

“Our still-positive medium-term view on risky markets is based on a solid global recovery and fading risks around it. Think of this as the mean and standard deviation of the growth distribution. Our growth view is itself based on strong corporate earnings and supportive government policies stimulating corporate spending on people, inventory, and capital.”

In terms of China tightening and the Greek debt problems, they say investors are overreacting.  That doesn’t mean fears regarding both won’t continue to hold down markets though:

“We believe markets are overreacting to the impact of Chinese policy tightening and the Greek fiscal situation, at least with respect to global growth. China is aiming to stabilize a red-hot economy and is using all the tools at its disposal. China has a good track record, though not perfect, in stabilizing its economy, and we thus are confident of success. This is not a reason to sell risk. Greece is the subject of a liquidity crisis, but is fundamentally solvent. There is pressure on other countries to tighten spending, but they are not large enough to drive the Euro area economy down.

The pressure from these two risks is unlikely to fade in coming weeks and will thus likely further depress risky markets, even as we do not rate them that highly as macro risks.”

In short, be looking to get long into weakness….

Source: JP Morgan

Comments are closed.