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JPMorgan’s top strategist spoke positively about stocks for the first time in a while.
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Dubravko Lakosbujas, chief equity strategist at JPMorgan, said investors shouldn’t get too defensive.
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“While it is premature to consider this a turning point, it does suggest that a recession is unlikely in the near term.”
JP Morgan Strategist The stock market is bearish From October 2022 onwards.
But according to Tuesday’s memo, things appear to be changing. JP Morgan Dubravko Lakos-Bujas, chief global equity strategist, said:
Lakos Bujas did not update his company on the end of the year, but S&P500 Although his price target is $4,200, which would represent a significant 27% downside from current levels, he advised investors not to become too bearish on the market.
“We are trying to neutralize the long-term defensive and short-term cyclical views,” Lakos Bujas said.
The Federal Reserve lowers interest rates, China launches new economic stimulus package is causing a change in the emotions of Lakos and Bujas.
“Policy support from the world’s largest economy comes at a time of surprisingly resilient U.S. growth, including a tight labor market, continued government deficit spending, and record levels of equity, credit, and housing,” Lakos-Bujas said. “I’m coming,” he said.
The bank also noted that the health of U.S. consumers is strong. Their wealth has increased by a combined $50 trillion since COVID-19.
According to Federal Reserve data, U.S. consumers have about $185 trillion in assets, mostly made up of stocks, bonds, homes and cash, but only $21 trillion in debt. it is A healthy balance sheet.
Lakos Bujas is also supported by strong growth in corporate profits, which are expected to accelerate from 3% in the past two years to 12% over the next two years.
“U.S. companies are increasingly focused on recycling pre-tax profits into investment spending, rather than returning after-tax profits to shareholders through stock buybacks, which also helps stimulate the economy. ,” Lakos-Bujas explained.
Part of that is being driven by the AI technology boom, with big-cap tech companies expected to accelerate R&D and capital spending to more than $500 billion annually.
“In our view, these dynamics, coupled with U.S. exceptionalism, are helping to offset uneven macro weakness,” Lakos-Bujas said.
He added: “While it is premature to think of this as a turning point, a recession is likely in the near term, especially as surprisingly strong job growth and falling unemployment have broken the trend of economic slowdown. “This suggests that it is low,” he added. job market. ”
But Lakos Bujas isn’t completely bullish on stocks. The strategist warned that November’s presidential election could cause market volatility depending on the outcome, and lower interest rates could be a headwind for corporate profits, particularly in the financial sector.
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