JPMorgan's Kolanovic Identifies Important Mean Reversion Trade, Sides With Dalio on QE

JPMorgan’s Global Head of Derivatives and Quantitative Strategies examines the recent stock market sell-off, noting potential causation for the jump in stock prices that began yesterday afternoon, all while offering a mean reversion value investment that will likely play out over the next several years. This trade has potential to become the most important relative value trade of the decade as it is tracking key measures of world economic value. In report sent to investors Thursday, Marko Kolanovic looks at the stock market turmoil and doesn’t pour over the lack of earnings growth potential. What he sees is a relative divergence of very different asset classes – and he predicts a major mean reversion that will bring the assets closer...