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Markets Could Reclaim Highs by Early Next Year Says JPMorgan Analyst 

2 mins
Updated by Kyle Baird

In Brief

  • JPMorgan equity strategist says markets will recover by early 2021.
  • Substantial declines have been the result of coronavirus fears.
  • Stimulus package and containment will help recovery over time.
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Dubravko Lakos-Bujas, the chief U.S. equity strategist at JPMorgan, believes that markets can recapture and even surpass all-time highs by next year. The necessary component for this massive reversal is all predicated on the containment of the coronavirus.
The prediction came in a note to clients from Lakos-Bujas, even as stocks collapsed further on Friday. The Dow Jones Industrial Average (Dow) had its worst week since October of 2008, closing 40% down from all-time highs.

Markets Coming Back for Vengeance

Lakos-Bujas argues that the current climate in stocks is massively oversold, leaving the potential for a significant upside. The far-reaching fear in the marketplace has soured investors to the potential for gains in the current environment. However, if the U.S. government is able to pass a significant stimulus package, these losses could quickly be offset. This is, of course, contingent on the government being able to ‘flatten the curve’ of the outbreak to lessen the impact on the health care system. Lakos-Bujas said:
“Acknowledging that equity markets globally are now down 30-50% from their recent highs…we see an asymmetrical return profile for equities with upside significantly higher than downside over the next year.”
Market Losses

Would Bitcoin Follow?

The argument regarding equities markets could also apply to Bitcoin. The overall financial climate that gave rise to $10,000 prices has changed drastically. However, the market may well have oversold. The fear in the market and the overall problems with unemployment and global economic shutdown have led to the current declines. Nevertheless, Bitcoin investors who bought the drop below $4,000 were rewarded with a significant price increase above $6,000. Lakos-Bujas suggests that with the substantial economic stimulus from the U.S. government, along with containment of the coronavirus, markets will rebound. Should these measures go into effect, the overall response from investors would likely be a strong buy, leading to increased prices in these markets.


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