JPMorgan Remains Bearish Despite New Painful Losses This Year
JPMorgan (NYSE:JPM) remains bearish despite new painful losses this year as 70% of short sellers continue to take a massive hit.
The bank’s strategists say investors are overly optimistic about inflation’s path and the chances that the Federal Reserve and other central banks will softly land the economy.
JPMorgan strategists are willing to bet that ongoing tight monetary policy will dampen some of this year’s bubbly behavior, says WSJ.
The S&P 500 just hit its highest level since March 2022 but JPMorgan isn’t letting go of its bear case quite yet.
“Equity valuations (multiples) are not pricing a soft landing, but rather a continued expansion (no landing) and simultaneous monetary easing (reduction of interest rates and/or QE),” writes JPMorgan strategist Marko Kolanovic.
“With no interest rate cuts in sight, ongoing QT and our base case for macroeconomic slowdown, multiples appear too high.”
Short sellers have now lost more than $175 billion this year according to the latest data conducted by financial analytics firm S3 Partners.
According to data from S3 Partners, only 30% of every shorted stock was a profitable trade for investors this year.
“US/Canada equity short sellers started out 2023 with large mark-to-market losses in January, followed by four months of profits, and now a second month of large losses,” S3 Partners said in a research note.
Many economy experts anticipated a recession to hit the United States during the first quarter of 2023 which led to believe the bear market would linger.
But 2023 has proven the bears wrong.
“Investors have piled into tech stocks through 2023 thanks to the release of OpenAI’s ChatGPT in November, and optimism that the Federal Reserve will ease up on its monetary policy.
Both sentiments have helped the S&P 500 and Nasdaq 100 surge about 17% and 39% this year respectively.
Short interest in stocks including Nvidia, Meta, and Tesla have proved to be the least profitable shorts for traders, S3 Partners reveals.
The three companies have ballooned in value so far this year, with Nvidia emerging as an investor favorite,” says Business Insider.
Other JPMorgan News This Week
JPMorgan Chase (NYSE:JPM) is abruptly closing business accounts as well as executives’ personal banking accounts in its latest scandal.
This is not the banks first scandal closing or freezing accounts without warning or explanation, but more on that later.
JPMorgan Chase canceled vaccine skeptic Dr. Joseph Mercola’s business account and the personal accounts of Mercola Market’s CEO, his wife and the company’s CFO, according to documents obtained by the Daily Caller News Foundation.
“Mercola Market is a Florida-based health business, and Chase abruptly closed its accounts for unspecified reasons, according to the documents. Chase sent the letters on July 13, notifying the company it had until September 10 to shut down account operations and informing CEO Steven A. Rye and his wife, as well as CFO Amy Legaspi, that they have until August 11 to close their personal accounts and open new ones at another bank,” says Daily Caller.
“After careful consideration, we decided to close your accounts because of unexpected activity on this or another Chase account,” the letters stated.
“I was told for legal reasons they cannot tell me why they are closing the accounts,” a Chase representative told Rye in a voicemail.
The representative told Rye to send him the letters he received to begin the process of restoring the accounts but repeatedly stressed there was no guarantee that the effort would be fruitful. “We are going to try because you’re a good client of our institution,” he said.
In May, republican attorneys general from 19 states said the bank is “persistently” discriminating against its own clients and closing bank accounts without warning.
The law enforcement officials, led by Kentucky Attorney General Daniel Cameron, sent a letter to JPMorgan CEO Jamie Dimon stating that the banking giant’s practices go against the company’s own policies on equality, per Business Insider.
A JPMorgan representative told The Journal: “We have never and would never exit a client relationship due to their political or religious affiliation.”
Also Read: Bank of America is Freezing Accounts in New Scandal
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