Over the past 4 months, some traders have expressed concern and confusion why JPMorgan's quant superstar, Marko Kolanovic, had been on a seemingly bullish tilt, urging clients to blindly buy stocks come hell or high water (which incidentally took place in December, when the S&P tumbled to the edge of a bear market even as Marko kept repeating his S&P 3000 target), and doubled down on his S&P 3000 target as recently as two weeks ago, when he said that underperforming investors will have no choice but to be "forced in" to chase returns, creating a "re-levering cycle" which may continue for another three months, or "could last between now and e.g. May", according to the JPM quant.

We now may have an answer to the "why."

One of JPMorgan Asset Management’s largest mutual funds has been quietly selling stocks on the thesis that the Fed's dovish reversal signals burgeoning risks to global economic growth. Recall that as we showed several weeks ago, the surest catalyst for a a recession is when the Fed start cutting rates: an economic contraction usually follows 3 months later.

As Bloomberg reports, Eric Bernbaum, co-portfolio manager of the firm’s $50 billion Global Income Fund, has cut European and emerging-market stock exposure to about 27 percent in February from 31 percent in October. He also favor junk bonds, though has also loaded up on low-risk, highly liquid money-market investments, i.e. cash.

The Fed’s "more dovish pivot should be recognized that it was taken because they had a less favorable view of both markets and economic growth," Bernbaum told Bloomberg. "The risk reward trade-off -- both from a return perspective and certainly from a yield perspective -- is more attractive in corporate credit today than it is in equities."

While the $1.7 trillion money manager is still positive on risk assets, he sees junk bonds - which have soared in recent weeks - as a safer way to play the dovish Fed-induced rally. Low default rates and sound fundamentals make riskier corporate debt attractive, and the fund is likely to continue adding money into the asset class, Bernbaum said. As a result, U.S. junk comprised 27% of his fund, while about 9% was invested in European junk.

Among the fund's other exposures are:

Short Duration Buffer: "Agency mortgages and short-duration fixed-income instruments comprise 12 to 13 percent of the portfolio today -- a mix of money-market type assets as well as very high quality corporate credit and asset backed-securities. This makes us very comfortable with our meaningful weight in high-yield credit, where we know at times liquidity can be restricted."

"Agency mortgages and short-duration fixed-income instruments comprise 12 to 13 percent of the portfolio today -- a mix of money-market type assets as well as very high quality corporate credit and asset backed-securities. This makes us very comfortable with our meaningful weight in high-yield credit, where we know at times liquidity can be restricted." Range-Bound Treasuries: "Our expectations on yields have come down moderately -- we see fair value for 10-year Treasury yields by the end of the year in a range of 2.5 to 3 percent. If we start to see yields creep up toward 3 percent it might become an entry point to add a bit more high quality duration assets to the portfolio."

"Our expectations on yields have come down moderately -- we see fair value for 10-year Treasury yields by the end of the year in a range of 2.5 to 3 percent. If we start to see yields creep up toward 3 percent it might become an entry point to add a bit more high quality duration assets to the portfolio." Rich Dollar: "The greenback will remain relatively range-bound this year, although from a longer-term valuation perspective, the dollar looks a bit rich. We expect there to be a bit more nuance in how the dollar moves relative to emerging-market currencies."

"The greenback will remain relatively range-bound this year, although from a longer-term valuation perspective, the dollar looks a bit rich. We expect there to be a bit more nuance in how the dollar moves relative to emerging-market currencies." China Risk: "We do recognize that there are some upside risks to China should there be resolutions to discussions between the U.S. and China on trade. In the near term though, some of the structural and important issues -- things like cyber security or intellectual property rights -- are going to be hard to resolve."

In light of this surprising move by one of JPM's largest funds we wonder if Kolanovic will blame his own company's de-risking on the same "viciously negative news and social media cycle" that prompted traders to liquidate, and ignore his recommendations to load up on stocks not only in December, but also in January and February, when as we showed previously, institutional investors have continued to dump risk asset exposure even as a combination of buybacks, short squeezes and CTAs have overwhelmed the institutional selling to push the S&P back to the 2,800 "quad top."