JPM warns of equity pullback.

Investment Adviser, February, 2007

JPMorgan has put forward a checklist outlining the 10 conditions to watch out for in the UK equity market amid growing concern about an imminent correction.

David Shairp, global strategist for JPMorgan Asset Management, believes the possibility of a pullback in equity markets is looking likely due to the current "frothy state" of the markets. He urges advisers to keep an eye on sharp changes in interest rates.

He said: "Interest rate expectations tend to rise sharply and hikes are expected. Previous corrections have been preceded by markets discounting aggressive."

Mr Shairp also touched on the excessive increase in investor risk appetite. He said: "The Credit Suisse risk appetite index reached a 20-year high ahead of the correction last May...

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