Investors should pay attention to values, put money into value stocks, sell cryptocurrency, and stay away from bitcoin, according to the chief global strategist at JPMorgan Asset Management. He claimed that the Federal Reserve was exaggerating the health of the U.S. economy because it was ashamed of the fact that inflation had increased while under its control.
Strategy Suggestions from JPMorgan
If you’re an investor who is worried about a hawkish Federal Reserve, you may want to listen to David Kelly, the chief global strategist at JPMorgan Asset Management.
Federal Reserve Chairman Jerome Powell was mentioned after his address last Friday in Jackson Hole, Wyoming.
The economy has already taken two steps into recession and is currently balancing precariously on a banana peel.
To bring demand into better balance with supply and to keep inflation expectations rooted, we are taking swift and decisive action. Last Thursday, Powell added, “We will remain at it until we are convinced that the work has been done.”
Kelly cautioned that further volatility was on the horizon, and advised that, rather than following the market in the short term, investors should prioritize conservative plays and valuations like purchasing value stocks, long-term bonds, and income-generating alternatives.
Investors should sell cryptocurrency and stay away from bitcoin and large-cap technology firms, the expert urged.
Overweight value companies, both domestic and foreign, and those trading at a discount to their profits potential.
Kelly said the economy would “feel more normal” by the end of 2019 despite the significant chance of recession. But, he said, “how much damage the Fed intends to inflict on this economy?”
JPMorgan Asset Management’s top global strategist added his thoughts:
Because of its shame over the fact that inflation rose under its watch, the Federal Reserve is exaggerating the health of the U.S. economy.
Kelly added on Monday that unless the Federal Reserve backs off its efforts to curb inflation, the U.S. economy will continue “wobbling on the edge of recession.” He believes that the Federal Reserve Board will raise the target federal funds rate from its current range of 2.25%-2.5% to between 3.75% and 4% by year’s end. He explained how the Federal Reserve could cease raising interest rates in the event of a recession.
Earlier this month, JPMorgan Chase CEO Jamie Dimon expressed concern that “something worse” than a recession could be on the horizon. The boss warned investors to prepare for a financial “storm” in June.
Goldman Sachs recommended this week that clients invest in commodities first and then fret about the economy. “Equities could suffer as inflation stays elevated and the Fed is more likely to surprise on the hawkish side,” the Goldman economists warned.
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