- About 29% of investors see COVID-19 variants as the biggest risk for the markets, according to a JPMorgan survey.
- Investors also cited a possible correction in expensive equity sectors and stronger inflation as dangers to the bull market.
- Six out of ten respondents thought that cryptocurrencies were in a bubble, and almost all said that they believe that fraud is at least somewhat widespread in space.
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Investors are divided on which downside risks are most likely to disrupt the stock market’s bullshit.
JPMorgan surveyed clients who attended their Macroquantitative Conference at the end of January on several aspects of the current investment landscape. The hearing came when stocks were near record highs then, lifting hopes of a new stimulus bill and falling COVID-19 cases.
Concerns about overvaluation and the emergence of new COVID-19 variants have since hit the market, and these risks remain an important factor for investors. About 29% of investors surveyed considered coronavirus mutations to be the biggest risk to markets, while 28% cited a correction in expensive equity sectors, according to JPMorgan. About one-fifth of respondents cited rising returns and stronger inflation as a major risk.
Only 13% of investors expressed concern that the central bank was declining. The Federal Reserve has announced that it will not slow down the pace of its asset purchases until the US economy makes “significant further progress” towards reaching inflation above 2% and maximum employment. At present, the Fed continues to buy at least $ 80 billion in Treasuries and $ 40 billion in secured mortgages each month.
A recession scenario was the least feared market risk and received only 9% of investors’ votes.
Almost 60% of investors thought that cryptocurrencies were in a bubble. Bitcoin had just fallen from peaks of almost $ 40,000 at the time of the conference and is now trading close to $ 52,000.
Only 11% of investors said they trade in cryptocurrencies, and of those who said they do not, 22% plan to start. A majority of respondents said they believe cryptocurrencies are “here to stay.” More than three quarters of respondents expect tighter regulation of the cryptocurrency market, and almost all investors believe that fraud is either something or very common in space.
Electric cars and green tech stocks were seen as a bubble by 29% of investors surveyed, according to JPMorgan. Only 3% of investors saw bond proxies trading in bubble territory despite the fact that returns were close to record lows.
Almost half of the survey respondents see that ESG funds receive the largest inflows, while risk parity strategies are expected to see the largest outflows. About 84% of investors expect earnings growth to continue when the economy reopens and sick sectors recover.