Markets marko kolanovic

Yes, Marko Kolanovic Is Holding A Client Call This Week. No, It’s Nothing To Panic About.

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8 comments on “Yes, Marko Kolanovic Is Holding A Client Call This Week. No, It’s Nothing To Panic About.

  1. Goldfinga'

    I think, If the market breaks by Tuesday, they’ll be bearish….if it rallies, they’ll be bullish…..if it holds steady, they’ll be undecided……just like the rest of us.

  2. Let’s face it…the bank’s wealth management arm makes money as long as their clients “stay invested”, especially in equities. They have a huge vested interest in “calming” their clients who understandably are getting nervous about their equity exposure to an extremely overvalued market – S&P 500 in particular- by most historical measures (CAPE, Buffett ratio, etc). Of course, it is going to be a “stay calm” message!

    • JPM’s wealth management revenues are based on assets under management, not on what those assets are invested in. A shift from equities to fixed income is largely revenue-neutral. A shift from equities to “cash equivalents” could be slightly revenue-dilutive if JPM charges lower fees on assets held in cash equivalents, but could be revenue-additive if those cash equivalents are JPM proprietary instruments or deposit accounts.

      As a related example, if you look at the big brokers (SCHW etc), a huge part of their revenue is from sweeping clients’ cash balances. They earn around 1% on that (or did last time I looked at their financials).

      Finally, he is almost certainly doing a call for JPM’s institutional clients, not for JPM’s wealth management clients.

      Granted, the sellside as a whole tends to lean bullish for various structural and behavioral reasons. Its not evident to me if this particular analyst does that.

    • Charles Ponzi

      There’s an old market cliche which applies now more than ever:

      “Don’t tell me up don’t tell me down, tell me the volume.”

  3. The last time I checked they were charging much more for the equity portion vs bonds or cash. In any case a client could have completely liquidated their equity portion on Aug 14 2018 and independently invested it in T bills purchased directly from the US treasury. Fast forward to Aug 14, 2019. The client would have earned over 2% in T bills (while JPM would have lost 1% in fees) during a period when the S&P500 ended up exactly flat while experiencing stomach churning swings along the way. Btw, I believe more pain is yet to come….

  4. Interesting. So JPM WM makes a higher fee as % of AUM in a 70% equity / 30% fixed portfolio than in a 50% / 50%? That seems like a potential conflict of interest?

  5. The VIX/10 yr treasury yield hasn’t seen fear like this since around August 10, 2011. Thus, having a chat with clients about fear is obviously a nice idea, it might be wise to re-think risk!

    Ever since Standard & Poor’s stripped the U.S. of its AAA credit rating on Friday, fears have been building that rating agencies may also downgrade AAA-rated nations in Europe, since they are also struggling with massive debt problems.

    On Wednesday, shares of French bank Societe Generale tumbled 15% on the Paris stock exchange amid speculation that France, Europe’s second-largest economy after Germany, may be first to face a rating cut.

    https://money.cnn.com/2011/08/10/markets/markets_newyork/index.htm

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