JPMorgan’s top global strategist, David Kelly, is warning that the recent stock market bounce-back is a bit much. He thinks the rally is stronger than it should be, considering the US economy’s outlook.
A Cautious Outlook
Kelly points out that even with recent trade deal developments, tariffs are still higher than before. This, combined with slower economic growth, makes him believe the market’s relief is overdone. He’s particularly concerned about the high price of US stocks compared to the rest of the world. He thinks this premium is unjustified.
He’s not optimistic about the near future either. He doesn’t see enough reason to be bullish on US stocks due to factors like the Fed’s actions and the current state of the economy.
International Stocks Look Better
Kelly suggests that investors might find better returns in international markets. He notes that European and other global stocks are doing well, and the dollar is weakening. He expects these trends to continue because of higher tariffs, deficits, and lower immigration, all of which negatively impact the US economy in the short to medium term. While he thinks the US will do okay, he questions whether US stocks deserve their current high valuation compared to global markets.