On 5 October 2023, Marko Kolanovic, the Chief Global Market Strategist and co-head of Global Research at J.P. Morgan, appeared on CNBC\u2019s \u201cFast Money\u201d to discuss a range of topics, including his views on the stock market, the Federal Reserve\u2019s stance on interest rates, and the performance of mega-cap stocks compared to mid-sized stocks.<\/p>\n
Holding a Ph.D. in theoretical high-energy physics from New York University, Kolanovic brings a quantitative lens to market analysis. His team has earned top rankings in Institutional Investor surveys globally, and he personally ranks #1 in Americas Equity Derivatives. Prior to J.P. Morgan, he held key roles at Bear Stearns and Merrill Lynch. Known for his accurate short-term market forecasts, he has been labeled \u2018The Man who moves Markets\u2019 by CNBC and \u2018Gandalf\u2019 by Bloomberg. In 2020, he joined the Institutional Investor Hall of Fame.<\/p>\n
Kolanovic opened by stating that he has a somewhat negative outlook on the stock market. While he did not explicitly say a recession is inevitable, he did mention that he thinks a recession will \u201ceventually happen.\u201d He also pointed out that the upside versus downside in stocks is not particularly favorable at the moment.<\/p>\n
Kolanovic noted that the job market is strong but highlighted signs of stress in the consumer sector, such as rising delinquencies in credit cards and auto loans. He suggested that these could be early indicators of economic challenges, although he did not specifically say that consumer sentiment is eroding.<\/p>\n
Kolanovic discussed the current level of interest rates, particularly the 4.7% yield on the ten-year Treasury. He stated that these rates don\u2019t align with historical market multiples and mentioned that they could rise a bit more. However, he did not express explicit concern about the current rate levels.<\/p>\n
Kolanovic talked about the divergence between the NASDAQ and other markets. He noted that while the NASDAQ and mega-cap stocks have performed well, other markets have been flat or down. He offered two courses of action: either invest in lagging stocks if one believes a recession won\u2019t happen or avoid mega-cap stocks if a recession is expected.<\/p>\n
Kolanovic emphasized that market positioning matters and has been a significant factor this year. He noted that volatility has been decreasing, which has been a tailwind for the market. However, he did not specifically say that rising volatility is a sign of more challenging times ahead.<\/p>\n
Kolanovic briefly touched on the topic of volatility as an asset class. He mentioned that it\u2019s challenging to own just volatility because it\u2019s generally negative. He suggested that investors could use it to generate yield by selling short-term options.<\/p>\n