Investors should be wary of the ongoing stocks rally because it doesn't reflect looming economic risks, and is reminiscent of the months that led up to the 2008 financial crisis, according to JPMorgan Asset Management's chief investment officer. that the current market conditions remind him of the March-to-June period in 2008.
"We're seeing things that you only see in recession or where you wind up in recession," Michele said, referring to the Federal Reserve's aggressive interest-rate increases, the credit squeeze caused by banking-sector stress, risks tied to commercial real estate, and the inverted bond-yield curve, which is widely regarded as a recession indicator.
He also pointed to the series of regional bank collapses of the past few months, with JPMorgan taking over First Republic Bank after it failed – as it did with investment bank Bear Stearns in March 2008. "The markets viewed it as, there was a crisis, there was a policy response and the crisis is solved," he told CNBC, referring to market events of 2008."Then you had a steady three-month rally in equity markets."
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