JPMorgan Quants Say Stock Market Is Worried About Wrong Risks
- Strategists say inflation, rate hike fears may be misplaced
- Slowing earnings, economic growth signal volatility ahead
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While investors have been fixating on inflation and rate hike fears, the true signs of trouble lie in earnings growth outlooks, according to JPMorgan Chase & Co. quantitative strategists.
“Global profit forecasts have been slowing for a number of months” and global earnings data are now “in net downgrade territory,” quant and derivatives strategists led by Khuram Chaudhry wrote in a note to clients. “Our reading of the earnings cycle, and its drivers, suggests that the slowdown is indicating that inflation may have peaked and bond yields may have exhausted themselves.”