“If there is no recession – and this is from our point of view – the prices of risky assets are very cheap”: JP Morgan

A daily news report on research and analysis from Scott Barlow, Market Strategist at The Globe and Mail

John Laforge, a real estate asset analyst at Wells Fargo, is concerned about the looming global food crisis,

Although the additional energy costs have been painful, rising global food prices may be the most disturbing trend. So far in 2022, prices of corn, soybeans, and wheat are up 31%, 28%, and 36%, respectively. These gains unfortunately come on top of similar price hikes in 2021…the UN Food and Agriculture Global Food Price Index is up 60% since the start of 2021. Unfortunately, that’s as good as the food news gets. The confluence of factors may make it difficult for food prices to fall in 2022 and 2023. We believe the odds are rising that some of the world’s poorest countries may soon face a food crisis.”

Mr. Laforge sees the strong US dollar as a really under-appreciated reason for rising food prices in the developing world. He lists Egypt, where 70 percent of the population requests food subsidies, as a potential flashpoint for social unrest.

Wells Fargo: As painful as the additional energy costs have been, rising global food prices may be the most disturbing trend. “” – (extract from research) Twitter


JP Morgan’s global research team released their mid-year forecasts for the economy and markets with some disagreement ideas,

“If there is no recession – and this is from our point of view – the prices of risky assets are very cheap. For example, stocks of small companies in the US are currently trading near the lowest valuations ever. Several sectors of the stock market are down 60-80 percent. %. Putting investors and their morale at the lowest levels in several decades. So we do not believe that the world and economies are in good shape, but only that the average investor expects economic disaster, and if this does not materialize, risky asset classes can recover most of their losses from the first half… Key Sector Calls: We continue to prefer the energy sector due to continuous improvement in fundamentals, stronger growth potential, better quality, attractive valuation, increased shareholder return…Healthcare provides stable earnings and return on capital at a still favorable valuation.We expect the market to reward the sector for Its defensive/secular growth with reasonable assessment…objective recommendations…long periodicity on defenses on risk/reward increasingly attractive given the still-sound business cycle,flexible fundamentals,rich versus periodic defense assessments”

Recommendations to buy risky assets have been rare on Wall Street lately.

From JPM: “If there is no recession – and this is in our view – the prices of risky assets are very cheap” – (extract from research) Twitter


Scott Kronert, Citi US Equities Analyst, released the North American Focus List of Top Picks,

“We have updated our top ideas of conviction with three new ideas added to the focus list in North America. Added to the focus list: AutoZone, Thermo Fisher Scientific, and classified drugs for sale. Removed from focus list: Avery Dennison Corp., Dover Corporation, Ryman Hospitality Properties, and Buy-rated United Airlines….we selected 14 names for the focus list.Our criteria during the selection process include: (1) shares that are actionable by excluding those with low liquidity; (2) preference for shares that did not score poorly in the form Citi’s quantitative multifactor; and (iii) bold stock calls that were significantly different from the street in projected total returns, earnings forecasts, or analytics. Our analysts believe these are our highly-convinced ideas that the market may be ignoring.”

I saw North American Focus List and was hoping for a Canadian name, but it didn’t.

Top picks for long ideas are Linde PLC and Autozone Inc. and Wlamart Inc. and PG&E Corp. and M&T Back Corp. and Apellis Pharmaceuticals and Thermo Fisher Scientific Inc. and Kimco Realty Corp. and Jabil Inc. and Lam Research Corp. Liberty SiriusXM Group, T-Mobil US, and Fortinet Inc. The short idea is Ionis Pharmaceuticals Inc.

“Citi’s North American Focus List of Top Picks” – (table) Twitter


the news: “Five very clear signs we were in a financial bubble” – Globe Investor

Transformation: “The Untouchables” with Bill Simmons and Chris Ryan – (Podcast) Spotify (open version)

Today’s tweet:

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