Marko Kolanovic’s latest dance as the most bearish of Wall Street bears cost him his job: he had been warning since September of last year—even before the S&P 500’s astronomical climb of 25.5%—of a sharp fall in the index by the end of 2024. What’s more, warned of an imminent recession in the United StatesThe message from the former head of global strategy for JP Morgan was a harbinger of the ‘Black Monday’ that hit stock markets in every corner of the world this week, when the same index lost almost 400 points during the panic unleashed last Friday.
Over the course of his 19 years at the helm of the American investment bank, Kolanovic came to embody a kind of Nostradamus on the stock market: Bloomberg crowned him ‘Gandalf’, and the American television channel, CNBC, as “the man who moves the markets.” The physics professor was among the most pessimistic of the bears, even at the beginning of the rally post-pandemic indices that resulted in a rise in the blue-chips by almost 40% from 2023.
The chief strategist’s message fell on deaf ears. He was a pessimist in a market in full euphoria. Just 48 hours after the collapse of global financial marketsand after the S&P 500 took a 8.5% hit from its peak, the Nasdaq fell 13% from its highs and the Nikkei fell 25%, the ghost of Kolanovic hangs over the market like an albatross.
Best inverse indicator was Marko Kolanovic getting fired from JPMorgan Chase as the last bear on Wall Street. Literally marked the top on the market. He will end up looking like a genius.
— Gareth Soloway (@GarethSoloway) August 6, 2024
Morgan Stanley strategist Mike Wilson has also been warning of the risk of a correction in the S&P 500 for months. “I think a 10% correction is highly likely at some point between now and the election,” Wilson warned a month ago. Bloomberg, although he abandoned his bearish bet in May. The last remaining bear in an unstoppable bull market was Kolanovic.
JP Morgan ultimately fired Kolanovic on July 3, according to an internal memo obtained by Bloomberg and confirmed by The Wall Street JournalAnd so the S&P 500 continued its rally The stock market showed no signs of tiring, reaching an all-time high of 5,667 points on July 16. But there is no denying the natural order of the market: what goes up must eventually fall. On the first Monday in August, traders were greeted with flashing red numbers on their screens. Kolanovic’s prophecy (or at least part of it) came true, and his exit marked the market’s high.
The Kolanovic case has brought to mind the retirement of the legendary Merrill Lynch bassist, Charles Clough, who left his financial career behind just days after the bubble burst. dot com in the summer of 1999. Clough had been betting against the S&P 500 for four years, which was taking advantage of a rally by 220% due to the rise of the Internet.
It should be noted that the departure of the strategist – at the head of JP Morgan for almost two decades – not only had to do with this latest aggressive bearish bet, but that the same pessimist remained bullish in 2022, a time when the index sank 19%, and the other voices on Wall Street were advising bearishness.
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