A top-level executive at banking titan JPMorgan Chase is warning that investors may be turning a blind eye to worsening economic data as they pour into stocks.
In a new interview on CNBC Television, JPMorgan Asset Management’s chief global strategist, David Kelly, says that stocks may be getting overheated.
“Where we are is an economy which is growing more slowly. It’s heating up in terms of inflation, and the outlook, of course, is just getting cloudier and cloudier as we lack these government data.
From a market perspective, I am a little bit concerned here, because the market is just blindly moving higher when really a lot of the fundamentals are deteriorating beneath it. I think investors need to be cautious here and recognize that there is clearly a disconnect between market euphoria and really some growing problems in the economy.”
Kelly also says that stocks may be trading at higher values than make sense, creating a greater risk for a sudden market correction.
“If people are really scared about a recession or a huge credit event or some other huge event, then you get a gap down in the market, and that could be very painful. But for investors, you never know the hour nor the day when such a thing could happen. I think it’s just best to play it on the safe side and recognize that there is something a little irrational about how high the market is going and how well it is doing given this uncertainty.”
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