The chief global strategist at JPMorgan Asset Management advised investors to concentrate on valuations, invest only in value stocks and avoid bitcoin. He said that the Federal Reserve overestimates the strength of the U.S. economic system because it is guilty of inflation rising under their watch.
JPMorgan Strategist’s Recommendations
JPMorgan Asset Management’s chief international strategist, David Kelly has some suggestions for investors concerned about a hawkish Federal Reserve.
Following the speech by Federal Reserve Chairman Jerome Powell Friday at Jackson Hole, Wyoming, he was quoted as saying:
The economy has got one foot into a recession and the other on the banana peel now.
” We are taking rapid and forceful steps to reduce demand to bring it into line with supply and keep inflation expectations stable. We will keep at it until we are confident the job is done,” Powell said last week.
Kelly warned of increased volatility and suggested that investors focus more on defensive plays and valuations than on short-term direction. Kelly recommended that investors look at long-duration bonds and value stocks as well as income-generating options.
The strategist recommended that investors sell crypto and avoid large-cap tech stocks like bitcoin.
Make sure you overweight U.S. and international value, as well as stocks with relatively low price-to-earnings ratio.
Citing a high chance of recession, Kelly stated that the economy would “feel more normal” by next year. Kelly cautioned, however, that the real question is “how many damage the Fed wants this economy to.”
The chief global strategist at JPMorgan Asset Management also stated:
The Federal Reserve is overestimating the strength of the U.S. economy as it feels guilty about the fact that inflation went up under their watch.
Kelly said Monday that the U.S. will “wobbling at the edge of recession” unless the Federal Reserve stops fighting inflation. He anticipates that the Fed will raise the federal funds rate to 3. 75%-4% by the end of the year, from 2. 25%-2.5% currently. He said, “The Fed could then cease hiking and hope that the economy just avoids recession.”
JPMorgan CEO Jamie Dimon warned earlier this month that “something worse” than a recession could be coming. In June, the executive said an incoming economic hurricane, advising investors to brace themselves.
This week, Goldman Sachs urged investors to buy commodities and worry about the recession later. Goldman analysts warned that stocks could be affected if inflation remains high and that the Fed is more likely than not to surprise on the hawkish side .”
What do you think about the recommendations by JPMorgan Asset Management’s chief global strategist? Comment below.
Kevin Helms
A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests include Bitcoin security, open source systems, network effects, and the intersection of cryptography and economics.
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