JPMorgan’ s Kolanovic Warns:
JP Morgan: US stock mkt concentration highest 60 years. Watch AI frenzy for selloff sign.
A note Monday from JPMorgan Chief Global Markets Strategist Marko Kolanovic’s analyst team.
In summary:
US stock market is seeing its dependence on a handful of megacap names increase at the fastest pace in 60 years, surpassing what was seen during the dot-com bubble, which peaked in March 2000
additionally, crowding in growth stocks included in the S&P 500 has reached the 97th percentile on a historical basis, the highest since the dot-com bubble
a selloff catalyst might include an event such as:
a deep recession
a sudden resurgence of inflationary pressures
“The peak in this concentration episode should coincide with a diminishing interest in [the generative AI/large-language model] theme from investors or as more rationalization is applied post the initial AI frenzy”