JP Morgan just can’t agree

Change of cycle to cyclical stocks to defensiveA Wall Street trader

“What should the Fed be concerned about at the moment?”, our DC correspondent asked Bruce Kasman two months ago. JP Morgan chief economist did not doubt for a second: “The markets are complacent and this has probably helped asset prices. And this is a worry for the Fed, putting it in a position where perhaps it is beginning to consider that there is a potential problem of financial stability which is increasing. This is what is affecting the decision-making.”


Like Kasman, the majority of market makers are following the theory that there are financial bubbles everywhere.


We were surprised to read Luis Artero’s words, investment director at JP Morgan Private Banking in Spain:


“Those who see a bubble argue that the central banks are limiting bond yields artificially. This at the same time generates unsustainable valuations for financial assets sensitive to risk-free interest rates,” he explained in a press release.


“JP Morgan Private Banking’s analysis shows that this tale about market manipulation is not real, and that currently the yields on government bonds in the developped markets are close to their fair value. (…) Current valuations of bonds are not particularly off course, which contradicts the idea that the bonds are experiencing a bubble,” he added.


Market sources told The Corner that Luis Artero’s words could be a reaction to reports such as BoAM’s, pointing to the eventual problems of monetary tightening in the eurozone.

About the Author

Ana Fuentes
Columnist for El País and a contributor to SER (Sociedad Española de Radiodifusión), was the first editor-in-chief of The Corner. Currently based in Madrid, she has been a correspondent in New York, Beijing and Paris for several international media outlets such as Prisa Radio, Radio Netherlands or CNN en español. Ana holds a degree in Journalism from the Complutense University in Madrid and the Sorbonne University in Paris, and a Master's in Journalism from Spanish newspaper El País.