Recession worries haven’t been the main driver of market sell-off: JPMorgan

An analysis by JPMorgan indicates that recent sales in the US stock market was not driven by fears of the economy in recession.

Understanding the impact of the tariff plans for president Donald Trump on the economy, trade relations and the labor market, as stubborn inflation continues to attract the budgets of Americans.

“Often growing fears of growth in the United States due to the uncertainty in our customer talks as a major reason for correcting the stock market in the last of the United States,” wrote a team of JP Morgan analysts led by Nikolaos Bangerzoglu last week. “In fact, based on our estimates, the implicit possibility of the American recession that is included in the classes of assets continued to crawl during the past week, as risk markets were lost and with US Treasury’s revenues decreased.”

However, the JPMorgan analyst review indicated that the correction may be an essential cause through the hedge boxes that use the algorithm strategies to control the positions, rather than concerns about the recession.

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A report issued by JPMorgan analysts indicates that the market sale process was not mainly driven by stagnation concerns. (Photo by Ryan Rahman/Pacific Press/Lightrockket via Getty Images/Getty Images)

They wrote: “It seems that the correction of the stock market in the last United States is driven by amendments to the position of the amount of stock funds and less driven by the main or estimated managers who re -evaluate the risk of American recession.”

The report indicated that the credit markets send a lesser signal than the stagnation from the stocks and the standard of bonds.

As of March 11, the S& P 500 index suggested implicitly 33 % of the recession, while the cabinet for 5 years involves a chance of 46 %, basic minerals 45 % and Russssell 2000 A chance of 52 %. On the contrary, high -quality credit markets in the United States involve a 12 % chance of stagnation and high credit in the United States only 9 %.

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The JP Morgan report indicated that credit markets send signals less than stagnation compared to other parts of the market. (Michael M. Santiago / Getty Images / Getty Images)

Analysts wrote: “If a person puts more weight on the credit markets and rejects the risks of American recession, then what then explains the correction in American stocks, especially on the Nasdak Stock Exchange? As we highlighted in our modern publications, retail investors have continued their behavior “DIP” in the past three weeks. “

Analysts said: “In our minds, the most likely perpetrators are stock hedging boxes, especially two categories: the quantitative hedge funds and the hedge of the TMT stock.” They went on to have more traditional hedge funds that focused on long or short stock sites played a lower role in decline in view of the trial version of shares, a financial scale, which rises in February.

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“If the above evaluation is correct and the quantitative hedge funds in stocks play a more role than their discretionary counterparts, then correcting the last American stock market will appear to be more driven by two main managers or estimated who re -evaluate the risk of American recession,” the analysts explained.

They added, “If the investment funds circulating in stocks in the United States continue to see mostly flows as they were so far, there is a good opportunity for most of the current American stock market to be behind us,” they added.