# ‘We are only in the middle of the bull market’ and a buying opportunity could come soon, JPMorgan says

In our call of the day, JPMorgan
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strategists said any near-term equity correction would be a buying opportunity, as “we are only in the middle of the current bull market.”

The investment bank’s global markets strategy team said there was a clear consensus when it came to year-ahead trading themes, but urged investors to seek out less-crowded trades. They said the ‘long equities’ theme was crowded tactically and prone to a correction in January.

Elevated positioning by momentum traders and rebalancing flows by balanced mutual funds and pension funds posed some downside risk into year-end, they added in a note to clients. However, over the medium term, the long equity trade appears less crowded and closer to average than overbought levels.

“Thus any equity correction in the near term would represent a buying opportunity as in our opinion we are only in the middle of the current bull market.”

With the consensus view rarely playing out in its entirety, JPMorgan urged traders to scale exposures to avoid an “overly concentrated portfolio.” One way of doing this was by limiting exposure to the most crowded trades, which currently include short the U.S. dollar vs. cyclical developed market currencies and bullish positions on copper and bitcoin, as well as overweight non-U.S. equities vs U.S. stocks.

But the strategists said, “luckily” there were several less-crowded consensus trading themes, including overweight emerging market equities against developed market equities, and long gold and oil. Favoring value stocks over growth ones at an individual stock level was also a less-crowded consensus trade.

The chart

This chart from BDSwiss shows that the week to Dec.1 was the fourth- straight week of a reduction in ETF (exchange-traded fund) holdings of gold
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Its head of investment research, Marshall Gittler, noted that this was “not by any way the longest or deepest selloff of gold ETFs,” with 26 consecutive weeks of falling holdings in 2013. In contrast, ETF holdings of silver increased after two weeks of decline.

The markets

U.S. stocks slipped lower early on Monday, with the S&P 500
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and the Nasdaq
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both falling, along with the Dow. European stocks
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also moved lower as U.K. and European Union negotiators failed to reach a post-Brexit trade deal over the weekend. Sterling
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tumbled 0.8%, as the prospect of a no-deal scenario became more likely.

The buzz

The U.S. is preparing new sanctions on at least a dozen Chinese officials in response to Beijing’s crackdown on dissent in Hong Kong, Reuters reported.

President Donald Trump said on Sunday his personal attorney Rudy Giuliani has tested positive for COVID-19. Giuliani has been traveling the country in an effort to fight Trump’s election loss.

Networking-hardware company Cisco Systems
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-0.33%
said it is buying software company IMImobile
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+47.33%
for £543 million ($720 million), or 595 pence in cash per share, a 48% premium to Friday’s close. IMImobile stock soared 47% early on Monday.

Shares of Eastman Kodak Co.
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+60.03%
 soared 68% in active premarket trading on Monday, after federal regulators found no wrongdoing in the process which created a loan to the imaging company that has been halted, according to a report in The Wall Street Journal.

Chip manufacturer Intel’s
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stock fell 1.8% in premarket trading, after a Bloomberg report that technology giant Apple
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was planning a series of new semiconductors aimed at outperforming Intel’s fastest chips.

XPeng
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-0.75%
stock fell 4% in early trading, extending last week’s selloff, after the China-based electric vehicle maker disclosed a public offering of 40 million shares.

Airbnb plans to boost the proposed price range of its initial public offering to between $56 and $60 a share, from $44 to $50, The Wall Street Journal reported on Sunday. The new range would value the vacation-rental online marketplace at up to $42 billion on a fully diluted basis.

Plane maker Boeing
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+4.04%
was upgraded to buy from neutral at UBS, which doubled its price target to $300 from $150. UBS said Boeing can get to 50 or more per month of production on the 737, “in a supply constrained world post-2021/22 as leisure, domestic and low cost carrier-centric demand recovers the fastest…”

Chinese exports jumped 21.1% in November, accelerating from 11.4% in October.

Random reads

Monolith discovered on Isle of Wight, similar to those found in the U.S. and Romania.

A shortage of short shorts leaves fans of electric-car maker Tesla
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frustrated.

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