The outlook for stocks looks dour as the chances of Federal Reserve rate cuts decrease and risks abound, according to JPMorgan's Marko Kolanovic. "Equity markets disconnected even further from bonds on Friday, as equities rallied post-NFP even as rates reset higher and cuts got pushed further out. We see diminished prospects for easing this year, and now expect the first Fed cut only in November," wrote Kolanovic, one of the most followed strategists on Wall Street.
Kolanovic also said stocks aren't pricing in a "plethora of risks," including elections, geopolitical tensions and narrow market breadth. "Despite these abundant risks, equities continue to trade around record highs, and investor sentiment and positioning are elevated," he said. .SPX YTD mountain S & P 500, YTD Against this backdrop, the strategist reiterated his "defensive tilt," staying overweight commodities and cash and being underweight stocks.