JP Morgan’s Kolanovic doesn't like stocks for H2 2023: "risk-reward remains unattractive"

<p>JP Morgan’s Kolanovic says the second half of this year presents a 'challenging backdrop' for equities:</p><ul><li>“We expect a more challenging backdrop for stocks in H2 and believe risk-reward remains unattractive"</li></ul><p>Citing:</p><ul><li>given the decelerating economy </li><li>and a likely recession starting in 4Q23/1Q24</li><li>softening consumer trends</li><li>the significant re-rating of stocks so far this year</li></ul><p>That last point he is referring to the move higher so far in 2023. </p><p>Kolanovic expects moderating growth in the second half, with stubbornly high inflation forcing central banks to retain their restrictive stance and potentially tighten further.
</p><p>On subdued market action presently:</p><ul><li>“Market volatility is unusually low given the high interest rates and risk of recession, which in our view is largely technical in nature, driven by short-dated option selling that creates a virtuous cycle between long gamma hedging and systematic strategy re-leveraging,”</li></ul>

This article was written by Eamonn Sheridan at www.forexlive.com.