JPMorgan’s Marko Kolanovic predicts a 20% sell-off in the S&P 500.
According to Kolanovic, high interest rates are causing stocks to reach a breaking point. As a protective strategy, he recommends choosing cash with a 5.5% return in money market and short-term Treasuries.
“If we stay at this level of interest rates, I’m not sure how we’re going to avoid a recession,” said Kolanovic, the firm’s chief market strategist and global research co-head, in an interview with CNBC’s “Fast Money” on Thursday.
The S&P 500 closed at 4,258.19 on Thursday and is on a five-week losing streak. In the past month, the index has dropped more than 5%.
Kolanovic believes the current weakness is not a definite indication of a major downward move. He suggests that a near-term bounce is still possible, with economic reports playing a crucial role in the coming months.
“We’re not necessarily calling for an immediate sharp pullback,” he said. “Could equities have another 5-7% upside? Of course… But there’s also a potential downside of 20%.”
Kolanovic warns that the “Magnificent Seven” stocks, including Apple,
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