FAST FIVE: Kolanovic Explains "Why He Is Not Bearish When One Individual Can Crash The Market"
Gone is the euphoria from early April, when the JPM quant predicted the S&P would hit 3,000 as soon as May (which instead turned out to be the worst May for stocks in decades) and instead it has been replaced with “we maintain our cautiously positive stance on equities, which is relying on progress in the trade war with China” especially since once again institutional investors refused to follow Marko's advice and put it all in the market where “sentiment is fragile, and over the past few weeks most discretionary investors reduced their equity exposure.” That sure is one way of putting what is now been a record 6 month outflow from equities.
Well, in a word – Trump, who apparently was so unpredictable, at least in retrospect, Kolanovic never even bothered predicting a scenario in which Trump would be, well, unpredictable, to wit: If one takes that the average annual return of US equities was ~7% (current capitalization of ~$30T), the estimated cost of the trade war so far is about ~$3T.
The market damage is ~100 times the tariffs collected, so it is clearly not making the country richer.
At least we will agree with Kolanovic on this: the president sure is more influential than “outlets will present somewhat credible but distorted coverage of sell-side financial research, mixed with geopolitical news, while tolerating hate speech in their website commentary section”, although we certainly were flattered.
This would translate into a quick ~5% rally in broad markets, and a 10-20% rally in value and high beta.” But why is the JPM quant still so adamant that Trump will concede.