This JPMorgan superbull that sparked the summer rally sees a soft landing ahead. Here’s his advice on stocks and oil.

On ours call of the day, which comes from one of Wall Street’s staunchest bulls, JPMorgan’s Mark Kalanovich, who is betting on a soft landing for the global economy. The chief market strategist was spot-on in calling for a rally in stocks this summer, and was heard last month telling investors to hold on as the gains are not yet over.

First, investors need to trust the data more and focus less on central banks, he says.

“We argue that economic data and investor positioning are more important drivers of risk asset performance than central bank rhetoric. And the data increasingly supports a soft landing (rather than a global recession) given the easing of inflation and wage pressures, the recovery in growth rates and the stabilization of consumer confidence,” Kalanovich told clients in a new note.

He believes that a global recession can be avoided because of expectations that China and Europe will support their poor economies. Low positioning and investor sentiment should also “continue to support risk assets, despite more recent central bank rhetoric.”

Among these assets, JPM maintains an “aggressive overweight” in commodities and commodity-sensitive assets because of the supercycle thesis and to hedge against inflation and geopolitical risks.

Kalanovich suggests cutting energy as Europe’s current crisis is not resolved, and markets have yet to appreciate the weaker prospects for the Iran nuclear deal or the G-7’s progress in curbing Russian oil prices.

He also remains bullish on equities, particularly cyclicals, small caps and EM/China, compared to expensive defensives.

Unlike energy, “defensives have outperformed multiple expansions and are trading at a near-record premium to the market,” said the strategist, who added that central bank tightening and labor resilience could keep rates higher for longer, limiting multiples for the long term. growth and technology.

Intermediate maturities also affect the bank’s equation for riskier assets. “Given the lag needed for rate hikes to work their way through the system, and with only a month before a very important U.S. election, we believe it would be a mistake for the Fed to increase the risk of a hawkish policy error and jeopardize market stability,” Kalanovich said. .

Markets

Stock futures
ES00,
+0.68%

YM00,
+0.63%

NQ00,
+0.69%

higher and Treasury yields
TMUBMUSD10Y,
3.308%

TMUBMUSD02Y,
3.519%

below the dollar
dxy,
-0.55%

the rollback continues. Oil prices
CL.1,
+1.37%

also rising, while gold prices
GC00,
-0.02%

head in the other direction.

Hud

Ahead of the all-important CPI data, the latest index of small business sentiment showed an increase in confidence. The federal budget is later.

Oracle
ORCL,
+1.54%

disappointed with earnings and earnings forecast, thanks to a stronger dollar. Shares rose slightly.

Pelaton
PTON,
+7.18%

shares fell after the announcement by co-founders John Foley and Hisao Kushi they leave.

HBO had a big night at the Emmys that passed Netflix
nflx,
+1.27%

with big awards for “Continuity” and “Euphoria”. meanwhile, interest was high in Netflix’s The Crown, after the death of Queen Elizabeth II.

Twitter
TWTR,
-1.85%

there are shareholders the $44 billion takeover is reportedly pending approvalr that of Tesla
TSLA,
+2.83%

Elon Musk tried to back out of the meeting early Tuesday. The fate of the deal, however, may be over court. And the whistleblower on Twitter will to testify to Congress.

A Russian unit assigned to front-line defense against a NATO attack has apparently badly damaged in the last attack on Ukraine.

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In five of the seven historical inflation spikes, “the S&P 500 bottomed at or before the eventual peak of inflation,” says Jim Paulson, chief investment strategist at The Leuthold Group.

Among the exceptions, in one case the stock market moved sideways for several months after that peak, although it did not see much movement lower. And in 1970, stocks moved south even after high inflation, although the downturn was short-lived and the S&P 500 fully recovered within months, the strategist notes.

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