JPMorgan Asset Management's chief global strategist advised investors to focus on valuations, invest in value stocks, sell cryptocurrencies, and stay away from bitcoin. "The Federal Reserve is overestimating the strength of the U.S.
economy as it feels guilty about the fact that inflation went up under their watch.," he said.
Recommendations from JPMorgan strategists
"The economy has got one foot into a recession and the other on the banana peel now.
We are taking forceful and rapid steps to moderate demand so that it comes into better alignment with supply, and to keep inflation expectations anchored. We will keep at it until we are confident the job is done," JPMorgan's chief strategist noted.
Both traditional and crypto markets have suffered major declines since the beginning of the year due to fears of tighter monetary policy to curb inflation, which has reached its highest levels in forty years. After the Chairman of the Board of Governors of the US Federal Reserve System, Jerome Powell emphasized in his latest speech that interest rates may need to remain elevated to reduce inflation, Bitcoin briefly fell below $20,000.
Recommending that investors sell crypto while steering clear of large-cap tech stocks and bitcoin, the strategist advised: "Make sure you overweight U.S. and international value, as well as stocks with relatively low price-to-earnings ratios."
According to Kelly, investors should now steer clear of large-cap tech stocks, Bitcoin, and cryptocurrencies in general and invest in stocks, long-term bonds, and other income-generating alternatives. He expects that there will be greater instability and a high risk of recession.
Kelly said Monday that the U.S. economy is “wobbling on the edge of recession” until the Federal Reserve relents in its fight to contain inflation. He expects the Fed to increase the federal funds rate to a range of 3.75%-4% by the end of the year, from the current 2.25%-2.5%.
JPMorgan CEO Jamie Dimon warned earlier this month that an economic hurricane was coming and advised investors to prepare.