JP Morgan: Deadlocked debt ceiling threatens Wall Street

JP Morgan: Deadlocked debt ceiling threatens Wall Street

He Deadlock in US government debt limit debate has become the center of discussion for many experts including strategist of JPMorgan Chasemarko kolanovic, he himself pointed it out poses a threat to Wall Street’s prospects According to Alexandra Semenova at Yahoo Finance,

The strategist repeated a call US and European stocks will remain underweight as date X approaches, with a possible political demonstrations in a resolution that exacerbates the already existing risk of recessionEspecially if the debt event of 2011 is any guide.

“While we believe there was a serious selloff of riskier assets as early as August 2011 due to the US debt ceiling issue at that time,” Kolanovic said in a note to clients on Monday.

US stocks faltered on Monday As investors weigh the prospects of debt ceiling discussions Federal Reserve monetary policy.

kolanovic was one of Wall Street’s Biggest Bulls Through Most of 2022 Market CrashBut it has since reversed the worsening economic outlook this year, cutting the bank’s stock allocation in mid-December, January and March.

before monday Mike Wilson of Morgan Stanley issued a similar warning about the debt ceiling deadline.Noting that the customers of the bank said that it is This issue is unlikely to be resolved without some near-term volatility., During this, Jean Boivin Y Wei Li Dell BlackRock Investment Institute they said they hope Potential debt showdown triggers renewed volatility,

Investors will get the latest clues about the prospects for a resolution today when President Joe Biden and Speaker of the House Kevin McCarthy met after high-level talks Last weekend on this topic. Biden said on Saturday that discussions were moving forward but that “They haven’t come yet.”

More generally, Kolanovic and his team state that Stocks seem to have diverged from the bond market And this Economic data is getting weakerApart from the risks of credit limit.

“Overall, we continue to see long-term key economic signals pointing to worse times ahead, while the market takes a more optimistic view,” Kolanovic said. “A rally made by a handful of stocks can easily be reversed.”

JPMorgan ChaseIt closed Monday in the green at $135.34, although the candle remained in the bearish range of Friday, and the 70-period moving average remained above the said candle.