“The decline in earnings could become more significant if the unemployment rate starts moving up materially and a protracted or deep recession takes place,” Kolanovic said. But such a scenario doesn’ “But even in this adverse scenario, we believe that the Fed would be cutting rates by more than is currently priced in for 2023, thus backstopping equity markets and inducing higher P/E multiples,” he added. Kolanovic ultimately believes those rate cuts could accelerate considerably if economic strength begins to deteriorate.
;t mean investors should ditch stocks because the Fed could return to its years-long practice of easing financial conditions, according to the note.
The Fed Could Cut Rates Aggressively if a Recession Materializes, Says JPMorgan
