The biggest bear on Wall Street is on his way out.
Chief market strategist Marko Kolanovic is leaving JPMorgan Chase & Co. after 19 years at the bank, a person familiar with the investment bank said Wednesday, sharing details from two internal memos with MarketWatch.
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Kolanovic’s departure was first reported by Bloomberg News.
According to one of the memos, which was sent to JPMorgan JPM staff by Claudia Jury and Scott Hamilton, global co-heads of sales and research at the bank, Kolanovic is leaving to explore other opportunities. Hussein Malik, previously co-head of global research alongside Kolanovic, will take over as the bank’s sole head of global research.
A second memo from Malik said that Dubravko Lakos-Bujas will become the bank’s new chief market strategist, leading the market strategy group, which includes cross-asset, equity and macroeconomic research. Meanwhile, Steve Dulake and Nick Rosato will jointly lead fundamental research, the newly branded team that brings credit and equity research under a single leadership structure.
Kolanovic’s departure from the bank follows two years of disappointing market forecasts. He remained optimistic as stock prices plunged in 2022, but turned pessimistic again as the market began to recover in the fourth quarter.
Since the start of 2024, Kolanovic has maintained a year-end target for the S&P 500 of 4,200, while many of his Wall Street colleagues — including Morgan Stanley’s Michael Wilson, who previously stuck to his own pessimistic forecast — have raised their targets to keep pace with a relentless rise in the index.
Kolanovic’s target was the lowest among major Wall Street banks by a significant margin. According to analysts at Bespoke Investment Group, the next-lowest target is 5,200, or 1,000 points higher than JPMorgan’s.
The JPMorgan strategist only reiterated his target last week when his team published its second-half outlook. It is unclear whether the bank plans to revise its target after Kolanovic’s departure.
His replacement, Lakos-Bujas, has favored the large-cap growth names that have contributed an outsized share of the S&P 500’s gains over the past year. Though Lakos-Bujas also recently warned the bank’s clients that the index’s increasing reliance on mega-cap and momentum names could leave it vulnerable to a pullback.
The S&P 500 SPX and Nasdaq Composite COMP were aiming for back-to-back record closes on Wednesday, according to FactSet data. A return to Kolanovic’s target would necessitate a selloff of nearly 25% between now and December.
Kolanovic’s pessimistic view of the markets was rooted in the notion that the U.S. economy appeared headed for a recession as the highest interest rates in more than two decades finally seemed to take their toll. He also saw earnings expectations for U.S. stocks, particularly artificial intelligence darlings like Nvidia Corp. NVDA, as unrealistically high.
Instead of advising clients to buy high-scoring technology stocks, Kolanovic favored more defensive names and also advised investors to increase their exposure to commodities such as gold.
It is unclear whether Kolanovic’s bearish view had anything to do with his departure from the bank. A representative for JPMorgan Chase declined to comment when asked by MarketWatch.
It’s worth noting that Morgan Stanley’s MS Wilson left the bank’s global investment committee earlier this year to focus on serving the bank’s institutional clients. Wilson raised his target, predicting that the S&P 500 would hit 5,400 by June of next year, a few months away.
Kolanovic is one of a shrinking group of bearish voices that professional investors need to consider, though a few remain. Peter Berezin, chief global strategist at Canada-based investment research firm BCA Research, recently warned that the S&P 500 could fall to 3,750 early next year as the U.S. enters a recession.
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And Barry Bannister, chief equity strategist at Stifel in St. Louis, has said a bubble in the names of artificial intelligence companies could push the index to 6,000 by the end of this year before eventually deflating and sending shares back to around 4,800, about where the S&P 500 was in early 2024.
Kolanovic did not respond to a request for comment from MarketWatch.
