JP Morgan Advises Selling Bonds and Stocks, Buying Oil

JP Morgan strategists are advising clients to sell bonds and stocks and instead invest in commodities, particularly oil. They believe that recent gains in equities and bonds were driven by technical factors and that the risk-reward profile for equities remains unattractive. They expect demand destruction and weakening pricing power for corporates in the coming quarters, making consensus expectations for next year's earnings growth overly optimistic. The strategists also see the recent decline in oil prices as an opportunity, citing geopolitical hedging and lighter positioning. They recommend a defensive allocation in their model portfolio, reducing exposure to government bonds and increasing allocation to commodities, specifically energy.