One of Wall Street’s most vocal bulls is scaling back his bullish calls on stocks and trimming risk in his bank’s model portfolio. Here’s why.

JPMorgan Chase & Co.’s chief markets strategist Marko Kolanovic is trimming risk in the bank’s model portfolio this month in the wake of questionable central bank policy and rising geopolitical tensions.

Kolanovic, who has been Wall Street’s most vocal bull this year, cut the size of both the company’s equity overweight allocations, or the expectation of the stock to outperform its industry in the market, and bond underweight allocations, or the outlook of the bond to underperform

“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,” wrote JPMorgan strategists led by Kolanovic in a Monday note.

The cut follows Kolanovic’s comments earlier this month when the analyst said the company’s year-end S&P 500 index SPX,
+0.67%
target of 4,800 may not be realized until 2023 or when risks ease. His price target implies nearly 30% upside from Tuesday’s level when the large-cap index traded at 3,725 points in the afternoon.

“Given the recent escalation in hawkish rhetoric, the likelihood of central banks committing a policy mistake with negative global consequences has increased, and this started showing in various cracks in FX and rates markets,” Kolanovic wrote earlier in a note dated Oct.3. “Even if a mistake is avoided, a delay will likely be introduced for the global market and economic recovery.”

See: Popular US recession gauge is at risk of hitting most-negative level since Reagan era, BMO says

Despite the cautiousness, Kolanovic still stays with a pro-risk stance in the hope that bearish investor positioning and sentiment could limit further declines in stocks and the expectations of Asian economic growth will support the global recovery.

“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,” he said in the note on Monday.

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JPMorgan’s Kolanovic is not the only bull on Wall Street who started to be cautious with his bullish stance as stock market volatility continues. MarketWatch reported on Monday that Oppenheimer’s top markets guru has just cut his year-end price target for the S&P 500 for the second time in three months. John Stoltzfus, chief investment strategist at Oppenheimer said he now sees the S&P 500 finishing the year at 4,000-level, implying a roughly 6.9% upside from Tuesday’s level. He added it would take a “miracle” for stocks to claw their way back to 4,800-level given the uncertain outlook for global markets and the economy.

US stocks are continuing a two-day rally on Tuesday as investors weighed on strong earnings reports from major Wall Street banks. The S&P 500 was up 1.4%, while the Dow Jones Industrial Average DJIA,
+0.77%
climbed 1.3% and the Nasdaq Composite COMP,
+0.27%
advanced 1.2%.

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