JP Morgan warns US equity rally at risk – higher for longer Fed, stagflation, election

JP Morgan equity analysts note investor sentiment is predominantly bullish, resulting in a
consensus view on the “goldilocks outcome”.

But outline concerns brewing:

  • inflation could rise due to loose financial conditions, strength in the jobs market, high government spending
  • potential 1970s-style stagflation due to geopolitical headwinds to global trade
  • that could be exacerbated by the Nov US election

Which could mean higher rates for longer from the Federal Reserve.

More on the 1970s, the note goes on to say that there were three distinct surges in inflation, each linked to
geopolitical events:

  • equity markets remained
    largely unchanged in nominal value, while bonds saw

JPM also cite:

  • “Investor
    positioning has increased significantly and presents an increasing
    headwind for the market.”


This article was written by Eamonn Sheridan at Source