JPMorgan strategists reiterated an Underweight rating on Equities and their view that equity valuations are too high.
They share the view that the markets are pricing in an even more optimistic scenario than a soft landing – akin to a continued expansion (no landing) and simultaneous monetary easing.
“With DM central banks unlikely to ease nearterm, ongoing QT and our base case for macroeconomic slowdown, multiples look too high,” the strategists said in a client note.
Moreover, they don’t agree that the Fed will be able to navigate a soft landing as JPM economists continue to assign a 65% chance of a recession either this year on in 2024.
Along these lines, they highlight Commodities as a place to be as they are “under-valued, under-owned, and backed by compelling fundamentals and technicals.”
“As such, we maintain an overall defensive stance in our model portfolio, and continue to be UW equities and credit vs. OW in cash and commodities,” the strategists concluded.