saw its highest bullish reading since 2021, right before the stock market entered a painful bear market.
"We see unattractive risk-reward for equities and increasing investor complacency ahead of our expectation that the business cycle will further decelerate in 2H with an onset of a recession likely in 4Q23/1Q24," Lakos-Bujas said. JPMorgan's view that a potential recession is imminent is driven by a weakening consumer, the expectation that accumulated excess savings from the COVID-19 pandemic will be fully depleted by October, and that fiscal tailwinds are fadingAnd there's always the potential for a surprise black swan-type event that could disrupt markets and send stock prices lower, akin to the regional banking crisis earlier this year or the onset of the COVID-19 pandemic in 2020.
"The risk of another unknown unknown resurfacing appears high," Lakos-Bujas said, pointing to the potential lagged effects of the Fed's aggressive interest rate hikes and balance sheet reduction over the past year."There is risk that liquidity and credit conditions tighten in coming months."
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