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The former chief market strategist at JPMorgan, Marko Kolanovic, is offering his outlook on the US stock market in his first interview since leaving the trillion-dollar bank.
In a CNBC interview, Kolanovic says a correction could be incoming for the US stock market amid a loss of momentum by stocks such as the electric carmaker Tesla and the analytics software firm Palantir Technologies.
The analyst also warns that the equities are trading close to record high levels, but America is still staring at the same issues that triggered a stock market correction earlier this year.
“That [loss of momentum] could be a catalyst for a bit of a correction because close to all-time highs, but we still have all the problems. We have a trade war, we had a sort of signs of economic slowdown, valuations are back to highs. So that’s sort of what I’m kind of expecting – a little bit of a pullback here.”
Kolanovic believes that a potential pullback could ultimately reward patient investors, provided the likelihood of a US economic contraction does not significantly increase.
“There are some cheap aspects of US markets as well, and maybe wait for that garden variety sell-off that can be maybe 5%, 10%.
And if we still don’t have the recession probability shooting up, then it’s a buy opportunity. But I would keep an open mind that maybe at that point there is increased probability of recession and maybe even that 5% is not a buy at that [point].”
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