JPMorgan Chase Kolanovic: A rate cut is needed to justify stock valuations

Global central banks will need to ease monetary policy this year, and companies will need to achieve good earnings growth to ensure higher stock price-to-earnings ratios in recent months. JPMorgan Chase Chief Market Strategist Marko Kolanovic has been diagnosed. Overall, if the central bank behaves more dovish than currently expected and growth does not disappoint, the current equity P/E ratio may be justified, it said. If earnings disappoint and central banks become more restrained, equity P/E ratios may need to fall. Equity performance this year has been largely driven by multiple spreads. With traders expecting the Fed and ECB to start cutting interest rates in June, rising risks to inflation or growth could shake the market’s dovish sentiment.