According to JPMorgan’s “guru of quantitative analysis” Marko Kolanovich, the recent sell-off in the US stock market does not mark the beginning of a bear market cycle, since the country’s economy can still avoid a recession, writes Business Insider.

According to Marko Kolanovich, the stock market sell-off should be short-lived, as the economy will surely avoid a recession, as consumer strength, political incentives in China and the ongoing recovery after COVID-19 should contribute to the development of the economy.

Our positive view is due to the fact that the movement in the market during the year more than compensates for the risk of recession

The expert believes that the market has already sufficiently embedded the risk of recession in prices, and that the US economy will eventually avoid it, despite fears of high inflation and rising interest rates.”

But it seems that investors did not share the expert’s optimism: on Monday, the S&P 500 fell by more than 4% and closed in the territory of the bear market, and the Dow Jones index fell by almost 1,000 points. Widespread risk aversion was caused by the US Consumer Price Inflation (CPI) report last Friday and a sharp sell-off in the cryptocurrency sector over the weekend.

Kolanovich does not believe that the long-term “bull” stock market is over, pointing out several more reasons why it makes sense for investors to remain optimistic about stocks. “We see a lot of support from low investor positioning, depressed market sentiment and an influx of corporate buybacks,” Kolanovich said.

Kononovich expects unchanged US stock market returns in 2022 and S&P500 growth of almost 30% in the second half of the year. To take advantage of the rally, the expert advises not to buy indiscriminately risky assets and instead fill the portfolio with stocks of commodities, innovative technologies and biotechnologies.

While some market segments are trading near historical highs today, such as defensive stocks, others are near historical lows, such as innovation, Chinese stocks, small-cap stocks, energy, biotechnology, and highly valued defensive stocks will not withstand a prolonged downturn.

The volume of corporate buybacks is expected to reach a record $1 trillion this year, according to JPMorgan estimates, which indicates the financial stability of most corporate balance sheets.

But it seems that investors did not share the expert’s optimism: on Monday, the S&P 500 fell by more than 4% and closed in the territory of the bear market, and the Dow Jones index fell by almost 1,000 points. Widespread risk aversion was caused by the US Consumer Price Inflation (CPI) report last Friday and a sharp sell-off in the cryptocurrency sector over the weekend.