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JPMorgan Warns of Crowded Trades Amid Markets’ ‘Clear Consensus’

  • History shows consensus rarely plays out entirely: strategists
  • Crowded trades include short dollar, long copper, long Bitcoin
Stocks Surge To All-Time High On Vaccine Progress
Photographer: Michael Nagle/Bloomberg

There’s strong consensus in markets right now and investors need to position to hedge against crowded trades, according to JPMorgan Chase & Co.

The last time such a strong agreement on strategy existed was in late 2017 and early 2018, and that time period serves as a reminder that such a consensus view rarely plays out in its entirety, strategists led by Nikolaos Panigirtzoglou wrote in a note Friday. Global stocks reached records in January 2018 amid massive inflows, but extended positioning in risk assets became a concern and the next month the “Volmageddon” volatility spike crushed trades that many investors had viewed as a sure thing.