JPMorgan’s Marko Kolanovic predicts that oil is heading higher — but so are stocks.
Kolanovic, who serves as the firm’s chief global market strategist and co-head of global research, believes the US economy is strong enough to handle oil prices as high as $150 a barrel.
“There could be some potential further spikes in oil, especially … given Europe and the war situation. So, we wouldn’t be surprised,” he told CNBC.fast money“On Tuesday. “But it could be a short-term spike and, eventually, normalcy.”
WTI crude is trading at the highest level of almost three months. rose 0.77% to $119.41 per barrel on Tuesday, Brent crude closed at $120.57. The bullish move came as Shanghai reopened from a two-month Covid-19 lockdown, opening the door to higher demand and more upside.
“We think the consumer can handle oil at $130, $135 as we had back in 2010 to 2014. Inflation adjusted, that was basically the level. So, we think the consumer can handle that,” Kolanovic Said, who has earned top honors from institutional investors for accurate forecasts for several years in a row.
His base case is America and the global economy will survive the recession.
But at a financial conference last week, JPMorgan Chase President and CEO Jamie Dimon told investors He is preparing for an economic “storm” Which could be “Minor Forest or Superstorm Sandy”.
Kolanovic makes it important to be prepared for all possibilities.
“We anticipate some slowing down,” he said. “No one is saying there’s no problem.”
officers of his firm S&P 500 The year-end target is 4,900. But in a recent note, Kolanovic projected the index to end the year around 4,800, still on par with the all-time high it hit on January 4. Right now, the S&P is down 16% from its record high.
‘We don’t think investors will be in cash’
“We don’t think investors are going to be in cash for the next 12 months, you know, looking forward to this downturn,” Kolanovic said. “If we continue to see [the] On the consumer side especially on the services side – which we expect – then we expect investors to slowly return to the equity markets.”
Kolanovic’s top call is still energyA group on which it has been bullish since 2019.
“Indeed, valuations went down despite the uptick in share prices,” Kolanovic said. “Incomes add up fast, so the multipliers are actually lower in energy now than they were a year ago.”
he is also bullish little hats and hi-beta technology Shares that have been crushed this year.