Kolanovic, voted the No. 1 equity-linked strategist in last year’s Institutional Investor survey, has stuck to his calls for risky assets this year despite the sharp rout in the first half. He expects a rebound in stocks on attractive valuations and as the peak in investor bearishness has likely passed.
Goldman’s Cecilia Mariotti wrote in a note on Monday that it was still too soon for markets to dismiss the risk of a recession on bets of a pivot in the Fed’s hawkish stance on policy. And even after this year’s selloff in equities, recession risks aren’t fully priced in European equities, according to Goldman.
Short positioning data indicates that Kolanovic could be right in forecasting a sustained recovery, at least in the short term. Citigroup Inc. strategists including Chris Montagu said short positions across most markets are facing steep losses after last week’s rally, increasing the risk of a short squeeze and equity upside from forced unwinds of large legacy shorts.
Bank of America strategist Michael Hartnett also said last week it was too soon to position for a bull market trade and that the “true lows” for the S&P 500 were below 3,600 points -- about 13 per cent below its latest close.
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