Credit, equity markets in ‘expensive valuation territory,’ says JPMorgan

JPMorgan’s Global Head of Macro Quantitative and Derivatives Strategy Marko Kolanovic says stock valuations “look even more stretched.” Core inflation will likely prove firmer in the first half of 2024 than the market expects, and a few bad inflation prints would likely “upset” both bond and equity markets, the analyst tells investors in a research note. The analyst sees risk to markets from again pricing in a higher probability of “hard landing.” This outcome is “very underpriced” in large cap equities and credit, which price close to zero probability of recession, says JPMorgan. It believes the rally since the end of October “has pushed both credit and equity markets into expensive valuation territory”