JPMorgan Asset Management’s global chief strategist advised investors not to invest in bitcoin, but instead focus on value and investing in high-quality stocks. “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,” he said.
JPMorgan Strategist’s Recommendations
JPMorgan Asset Management’s chief global strategist, David Kelly, has some advice about what investors who are worried about a hawkish Federal Reserve should invest in.
After Friday’s speech at Jackson Hole by Jerome Powell, Chairman of the Federal Reserve, Powell was quoted saying:
Now, the economy is both in a recession and on the banana peel.
“We are taking forceful and rapid steps to moderate demand so that it comes into better alignment with supply, and to keep inflation expectations anchored. We will keep at it until we are confident the job is done,” Powell said last week.
Kelly cautioned that there will be more volatility in the future and advised investors to focus on valuations and defensive plays rather than short term direction. Kelly suggested investing in long-duration bond, value stocks and income-generating investments.
According to the strategist, it was recommended that investors avoid bitcoin and large-cap tech stocks while selling crypto.
You should be sure to overweight stocks of high price-to earnings ratios and U.S. value.
Citing a high risk of recession, Kelly said the economy will “feel more normal” by the end of next year. However, he cautioned that the real question is “how much damage the Fed wants to inflict to this economy?”
JPMorgan Asset Management’s chief global strategist also stated:
Because it’s guilty that the U.S. inflation rate went up while they were in charge, the Federal Reserve has overestimated the strength of America’s economy.
Kelly also said Monday that the U.S. economy will be “wobbling on the edge of recession” until the Federal Reserve relents on its fight to tame inflation. Kelly expects that the Fed will raise the federal funds rates to between 3.75% and 4% before the year ends, up from the current range of 2.25% to 2.5%. “The Fed could then stop hiking and hope that the economy will just avoid recession,” he described.
JPMorgan CEO Jamie Dimon warned earlier this month that “something worse” than a recession could be coming. The executive warned investors in June that an economic storm was on the horizon, and advised them to be prepared.
Goldman Sachs encouraged investors to purchase commodities this week and not worry about the recession. The Goldman analysts stressed that “equities could suffer as inflation stays elevated and the Fed is more likely to surprise on the hawkish side.”
What do you think about the recommendations by JPMorgan Asset Management’s chief global strategist? Comment below.
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