Why JPMorgan’s Marko Kolanovic Sticks to His Prediction of a 20% Market Selloff

• JPMorgan’s Marko Kolanovic sees no reason to turn bullish on the stock market despite record highs.
• In a note on Monday, Kolanovic reiterated his view that the S&P 500 could fall 20% to 4,200 points.
• “We do not currently view equities as attractive investments and we see no reason to change our position,” Kolanovic said.

Just one day later Morgan Stanley CIO Mike Wilson dropped his bearish call on the stock market, JPMorgan’s Marko Kolanovic is digging in his heels.

Kolanovic is the latest mega-banking bear on Wall Street and reiterated his position in a Monday note that the S&P500 will fall about 20% to 4,200, levels not seen since October.

“With very high equity valuations, we do not currently view equities as attractive investments and see no reason to change our position,” Kolanovic said.

US stocks hit record highs last week, with the S&P 500 trading just above 5,300 for a year-to-date gain of more than 11%.

Kolanovic acknowledged that his bearish view on equities has hurt the performance of his multi-asset portfolio over the past year, but that interest rates are likely to remain in restrictive territory for longer, coupled with lower-income consumers showing signs of weakness and high levels of geopolitical uncertainty, Kolanovic believes this is not the time to become bullish.

And AI won’t save the stock market either.

“We don’t think narrow themes like AI chips can offset all those traditional market challenges that have historically worked against the cycle,” Kolanovic said.

In the case of Morgan Stanley CIO Mike Wilson, it was the continued strength of corporate earnings and the likelihood that earnings growth will accelerate in 2025 due to operating leverage that caused his view to change from bearish to bullish.

But Kolanovic doesn’t necessarily see it that way. He said in his Monday note that to meet investor expectations, S&P 500 earnings in 2024 would need to accelerate earnings per share by 16% in the third and fourth quarters from the first quarter.

“That is unlikely, especially if the recent period of softer activity data flow continues,” Kolanovic said.

It has been a tough time for Kolanovic and his predictions in recent years.

The closely followed Wall Street strategist was bullish on stocks for much of 2022’s bear decline. before turning bearish around the bottom in mid-October 2022. From then on, Kolanovic has remained consistently bearish on stocks through 2023 and 2024, when the S&P 500 staged a more than 40% rally.

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