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Kolanovic Unveils His 2018 Outlook: The "Frogs Are Almost Boiled" So Start Hedging

• http://www.zerohedge.com, by Tyler Durden

Decreased AUM of strategies that buy value assets
Tail risk of private assets
Increased AUM of strategies that sell on "autopilot"
Liquidity-provision trends
Miscalculation of portfolio risk
Valuation excesses
... the quant wizard is back in a more conventional form, this time summarizing JPM's 2018 outlook for equities, volatility and tail risk.

Starting at the top, it may seem otherwise paradoxical - although in the new normal nothing surprises any more - that JPM which holds a near apocalyptic long-term forecast for the world in a derivative context, is also the bank with the highest 2018 S&P target among its bank peers. 

Our price target for S&P 500 at the end of 2018 is 3,000 and our earnings forecast (including tax reform) is $153. Half of the earnings upside (~$10) is due to tax reform, and the other half due to top line growth (~$7), margin expansion (~$1.50) and buybacks (~$2.50). To reach the price target, bond yields should not rise too much as that would destabilize the equity multiple.

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