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JPMorgan warns: “Market about to reach high of the year; then, it will fall.”

JPMorgan warns: "Market about to reach high of the year; then, it will fall."

European markets down this Wednesday -Ibex 35, CAC 40, DAX…- after the falls on Wall Street and Asia. Investors are turning their attention today to the publication of the Minutes of the last monetary policy meeting of the US Federal Reserve (Fed).

Meanwhile, experts advance what can happen in the very short term in the markets.

According to JPMorgan (NYSE) strategists:.JPM), investors who have become overly optimistic about the economic outlook are bracing for disappointment, and the stock market rally could peak before the end of the first quarter.

“It is too early to completely rule out economic recession after the Federal Reserve’s aggressive rate hike campaign, especially since the impact of monetary policy on the economy may be delayed by one or two years,” JPMorgan analysts said in a note, collected by Bloomberg. “The central bank is likely to pivot only in response to a much more negative macroeconomic backdrop than markets currently expect.”

“Historically, stocks don’t typically bottom out before the Fed moves forward with the cut, and we never saw a low before the Fed has stopped rising,” these experts note. “The damage is already done and it is likely that the consequences are still ahead,” they warn.

Global stocks have risen this year as hopes of a Fed turnaround, China’s reopening and Europe’s energy crisis provided support. But signs that inflation remains a persistent problem in the US are starting to show once again, weighing on markets. Comments from hardline Fed officials have also sparked fears that U.S. rates could hit a higher-than-expected high.

“The first quarter is likely to mark the highest point for stocks this year, say JPMorgan analysts, who are cautious about the stock’s outlook. The bank’s analytics team expects the rally to fade amid warning signs. of key monetary indicators such as the strongly inverted yield curve and the money supply moving downward in Europe and the US.

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