Kolanovic says US stocks can bounce back

NEW YORK: Marko Kolanovic is resolute that things can get better for US stocks as the year progresses, even with the S&P 500 tumbling and bullish catalysts seeming rare these days.

“We can climb out of this hole,” Kolanovic, Jpmorgan Chase & Co’s co-head of global research, said in an interview last week in his New York office, referring to stock prices.

“There will be no recession this year, some summer increase in consumer activity on the back of reopening, China increasing monetary and fiscal measures.”

Bolstering his opinion is a conviction that US inflation has probably peaked, or is about to do so, paving the way for a pullback in price pressures that will eventually allow the Federal Reserve (Fed) to moderate the pace of monetary tightening.

Fed chairman Jerome Powell, in his most hawkish remarks to date, said Tuesday the US central bank will keep raising interest rates until there is “clear and convincing” evidence that inflation is in retreat.

Americans got little respite from inflation in April, as prices for a range of necessities and discretionary-spending categories continued to climb at some of the fastest-ever rates.

While annual measures of consumer prices cooled slightly from March – signalling a peak that economists expected – the details of a report last week painted a still troubling picture as monthly figures advanced more than forecast.

“Most of the bad things have happened already this year,” Kolanovic said.

That includes “the Fed making a very drastic turn and heading very aggressively toward tightening. And then war in Europe, which we would say is impacting commodities inflation for the consumer, especially in Europe”.