According to JP Morgan’s Mary Callahan Erdoes, opportunities abound in this turbulent market.
The stock market has been trading in a bear market this year as investors talk about inflation, a rate hike by the US Federal Reserve and the possibility of a potential recession. On Wednesday, the S&P 500 rallied after hitting lows for the year in the previous session.
“The world is watching every Black Swan event,” Ardos, CEO of JP Morgan Asset & Wealth Management, said at CNBC’s Delivering Alpha investor summit in New York City on Wednesday. “It is one of the most important things, and one of the hardest, to keep an eye on these white swans and to keep investing in these markets.” .”
A black swan is an unexpected event that leads to a panicked sell-off, and a white swan is a predictable crisis that can be handled.
JP Morgan’s Mary Callahan Erdoes on CNBC’s streaming alpha on Sept. 28, 2022.
Scott Mullin | CNBC
Continuing to invest means finding the right opportunities.
“Alpha is everywhere,” Erdoes said. “It’s in stocks, bonds, currencies, real estate, private markets, public markets. We’re in a volatile state, so it’s everywhere.”
Alpha is essentially a return above market performance.
Erdoes, in particular, believes there are so many opportunities in China, while acknowledging that the country’s complex market may not be for everyone.
“Don’t fight investments in China,” she said. “It’s a country that’s about to emerge from Covid. It’s a country that’s about to put 22 percent of youth employment back into work. It’s an economy that’s about to continue investing in EVs, cicadas, and more.”
China is also moving toward its “Made in China 2025” goal of becoming a world leader in technology, she added.
She also likes British banks, which she says may be “the most interesting thing you can invest in.” The country’s markets and economy are in turmoil. On Wednesday, the Bank of England bought British bonds to calm market turmoil.
“Last week we were told not to invest anything in the UK, and that’s exactly when people like us and people in the room think, ‘Let’s go look over there,'” she said. rice field.
John Vaske, head of Temasek’s Americas division, said most of his investment activity is in private markets. Now that he’s anticipating a few bearish quarters, he’s pulling some money out of popular names and will be back at lower prices in the future. That includes companies such as Bill.com, he said.
Longer term, investors should prepare for a likely recession in 2023 or 2024, said Roger Ferguson, former TIAA CEO and former vice chairman of the Federal Reserve Board. says.
“A recession is very likely,” he said.
But investing is a long-term activity. Investors should therefore look for four or five major trends that will create investment opportunities over the next decade or so, and markets that need disruption, he said.
Key trends include an aging population and longer lifespans, the latter of which Ferguson hopes will make a comeback. That means looking to the healthcare sector, he said.
Another trend is the likely increase in defense spending and a form of globalization. Ferguson said investors also need to get used to inflationary pressures.
“The Federal Reserve is going to work very hard to get it. [inflation] under. I don’t think even their own projections are getting there as quickly as they would like,” he said.
For those who may shy away from stocks because of inflationary pressures or the possibility of a recession, Ardos said history provides answers as to why you should keep investing. It’s usually within her 10-day cycle that she sees the best returns, she says. So missing her 10 best days in any market environment would cut revenue in half, she added.
“To all of you in this room, it’s irresponsible for you to be reluctant about what you’re doing now, when you think about people managing so much money,” she said.