Matthew Fox
Business Insider
September 26, 2022
- Conditions are forming that suggest a stock market bottom could be near, JPMorgan’s Marko Kolanovic said.
- Kolanovic said the ongoing sell-off in stocks has been driven by an extremely hawkish Fed.
- Peaking inflation, extremely depressed investor positioning, and attractive valuations give Kolanovic confidence in his view.
The more than 20% year-to-date decline in the S&P 500 could be nearing its end as “pre-conditions” for a stock market bottom are starting to form, JPMorgan’s Marko Kolanovic said in a Monday note.
Kolanovic explained that much of the ongoing sell-off in stocks can be attributed to a very aggressive Federal Reserve, which issued another outsized 75 basis point interest rate hike at its FOMC meeting last week in its ongoing bid to tame inflation.
But according to Kolanovic, who has steadfastly remained bullish throughout this year’s market decline, inflation is likely to start showing more concrete signs of peaking. That’s because oil prices continue to move lower, US composite PMI is in contraction territory at 49, and a number of corporations are issuing profit warnings.
“Therefore, the phase of strong payrolls will likely move behind us,” Kolanovic said, adding that inflation will stay elevated, but more importantly, it will have peaked.