Buy the Omicron Dip? Here’s What These JPMorgan Pros Are Saying.

As the omicron variant continues to spread and make its way into the United States, details are emerging on what it may mean for the countries most infected. Travel restrictions are being tightened once again. Meanwhile, politicians are trying to strike a balance by combating the virus without imposing the stricter measures of places like Europe.

An illustration of the novel coronavirus second wave.
Source: Shutterstock

So, scientific and medical research teams are racing to examine the slowly emerging data. But while they do, many of us have been left with questions about this new pandemic development. With news of the variant causing turbulence across financial markets, investors are now pondering one question in particular: should they buy the omicron dip?

Some experts are saying yes.

Why You Should Buy the Omicron Dip

While reports of the variant initially sent markets into what seemed like a free fall, they have since rebounded. Both the Dow Jones Industrial Average and the Nasdaq Composite rose today within the first hour of trading. At the time of this writing, the Dow is up 1.56% and the Nasdaq is up 0.57%.

This relative resurgence in investor confidence is likely due — at least in part — to a recent report from JPMorgan (NYSE:JPM) on the omicron dip. Specifically, the report covers whether investors should view it as a buying opportunity. We’ll discuss it in more detail, but the answer is yes — “Buy the omicron dip” should be a battle cry among investors.

According to Bloomberg, the report — authored by strategists Marko Kolanovic and Bram Kaplan — presents a picture not of a bleak financial landscape plagued by the new variant, but of a landscape where it proves to be a critical asset. They note early reports have indicated that, although omicron is likely more contagious, it also seems less deadly. This could easily translate into a positive trend for risk markets, as it seems likely to signal the ultimate end of the pandemic. The report highlights:

“Omicron could be a catalyst for steepening (not flattening) the yield curve, rotation from growth to value, selloff in Covid and lockdown beneficiaries and rally in reopening themes.”

The report also notes that its authors are viewing the recent selloff triggered by the variant as an opportunity to buy the dip in “cyclicals, commodities and reopening themes.” It notes that investors should regard the omicron dip as a chance to “position for higher bond yields and steepening” as well.

Another Expert Take and What Comes Next

Kolanovic and Kaplan aren’t the only industry insiders who feel that the omicron dip should be regarded as a buying opportunity, however.

Recently, InvestorPlace’s Luke Lango discussed what this trend may mean, addressing the fears that riddled investors as the stock market plunged last Friday amid the panic. One of Lango’s central points? This dip could present an opportunity for investors to focus on secular growth stocks with the potential to “reshape the world over the next few years, regardless of how omicron impacts the economy in the near-term.”

The point Luke Lango makes is well taken. Many stocks are down right now as the markets struggle to recover, but they will recover as they always do. And if Kolanovic and Kaplan are correct, it may happen sooner rather than later. Right now, investors have the opportunity to buy the omicron dip and find a silver lining in what otherwise seems like a frightening storm cloud.

Details regarding the severity of the variant are still emerging and we likely won’t know too much for a few more weeks, at least. Until we do, though, the opportunity to buy this dip is still there. According to experts, it shouldn’t be ignored.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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