Kolanovic, who still predicts the S&P 500 will swing back up 30% by the end of the year, cut the size of his equity “overweight” allocation, or the expectation of stocks to outperform, in JPMorgan’s bank model portfolio, citing central bank policies and escalating geopolitical tensions.

“Recent developments on these fronts—namely, the increasingly hawkish rhetoric from central banks, and escalation of the war in Ukraine—are likely to delay the economic and market recovery,” Kolanovic wrote in a note to clients late Monday.

The move to trim stock exposure follows earlier comments from Kolanovic, when he hinted that he may have to push back his 2022 S&P 500 index price target of 4800—a 30% rise from its close at 3678 on Monday—until 2023 or until risks ease. In an Oct. 3 note to clients, Kolanovic said the destruction of the Nord Stream pipelines and increasingly hawkish central banks could cause delays in the U.S. equity market’s recovery.

But while Kolanovic gets warier of the economy’s recovery, he is still bullish that things will look up by year-end.  

“However, we stay with a pro-risk stance overall as extremely weak investor positioning and sentiment should limit further downside, and an expected growth recovery in Asia should support the cycle,” Kolanovic said in the note on Monday.

Ex-bulls

JPMorgan is the most bullish of all banks listed on the CNBC Market Strategist Survey—a roundup of year-end targets for the S&P 500 from top Wall Street strategists—with chief strategists Dubravko Lakos-Bujas and Marko Kolanovic arguing the consensus earnings estimates for the S&P 500 were “overly pessimistic” in April.

When the S&P faltered more over the summer, Kolanovic maintained his bullish stance, arguing the U.S. stock market was poised for a gradual recovery in 2022 and that the S&P 500 index would likely end the year unchanged since investors had “already absorbed and priced in” aggressive policy changes from the Federal Reserve.

Kolanovic has gone against strategists at other banks like Goldman Sachs and Bank of America Merrill Lynch, who have all predicted the S&P 500 would stagnate at around 3600 by year-end.

His predictions even go against his own CEO, Jamie Dimon, who said in August that “something worse” than a recession could be coming. Dimon has previously argued that it’s unlikely the U.S. economy will experience a soft landing, and at an industry conference last Thursday, Dimon said, “In a tough recession, you could expect the market to go down another 20% to 30%.”

Other bullish strategists, like Oppenheimer chief investment strategist John Stoltzfus, who previously argued that the S&P 500 would rebound 40% to 5330 by the end of 2022, cut their year-end target to 4000 this month as time for a market turnaround dwindles.

Kolanovic’s reasoning

Kolanovic bases his positive outlook on the assumption “that central banks will not make a grave policy error, that the war in Europe will de-escalate over the course of the fall/winter season, and that growth in Asia will accelerate significantly in H2,” he said in his Monday note.  

“We expect the global expansion to continue to display resilience through the middle of next year given an unwind of adverse supply shocks, a material slowing in inflation, and a healthy private sector,” Kolanovic argues.

With his recent note, JPMorgan remains underweight on credit and equities, while overweight on commodities and the dollar. Kolanovic also believes the U.K. markets, despite the “messy fiscal news flow” will recover, and that the Bank of England will be successful in stabilizing markets. “U.K. equities continue trading at a record discount versus other regions, and the U.K. offers the highest dividend yield globally,” Kolanovic writes.

Kolanovic’s prediction so far has not fared well: His previous calls to buy the dip when stocks were at a June closing low of 3666.7 have seen few price rises since then.