Scattered with the requisite “suggest’s” and “unlikely’s,” just in case, Mislav Matejka of JP Morgan says equities are likely to continue bouncing along a downwards trend for the foreseeable future.
“Clearly, equities are unlikely to keep falling in a straight line, with periodic rebounds likely. However, we believe that one should be using any bounces as selling opportunities…The medium-term risk-reward for equities has worsened significantly, in our view, and the risk of a downside economic scenario is far from adequately priced in.”
“All these variables – duration of equity market weakness, size of the fall, multiples at lows and the move in sales/earnings from highs – suggest that the market is far from pricing in adequate probability of an economic slowdown. We believe it is premature to start thinking about a low from a medium-term perspective.”