Top J.P. Morgan advisor increases cash position, cites stimulus gridlock risks as major reason

J.P. Morgan Securities’ Colleen O’Callaghan is taking steps to protect portfolios from an economic setback.

O’Callaghan warns the domino effect from coronavirus aid gridlock on Capitol Hill is the biggest risk facing Wall Street right now.

As a result, she’s increasing cash exposure for her ultra-high worth clients.

“What we’ve been working to do is to reduce some of that equity exposure — sit in cash perhaps for a little bit,” the firm’s managing director and financial advisor told CNBC’s “Trading Nation” on Thursday.  

O’Callaghan, who manages more than $3 billion in assets, is one of Barron’s top 20 women financial advisors and is on one of the nation’s top 50 private wealth management teams.

As a long-term investor, O’Callaghan’s goal is to tune out the day-to-day headlines and volatility in the market. But she acknowledges the elephant in the room right now is the stimulus, or lack thereof.

“It’s prudent to rebalance clients’ assets a bit, trim back some of those equities, increase the cash position and just let’s wait this out,” said O’Callaghan. “We really need to see that stimulus package. If we don’t see that stimulus, I do think there’s going to be more volatility.”

She sees the delay having the most impact on consumers, which account for about two-thirds of the country’s GDP.

“We need checks to people so they can continue to feel as if they’re receiving some kind of income to help them through a tough time,” said O’Callaghan. 

With the holiday shopping season approaching, O’Callaghan considers the risks magnified.

“If you look at retail sales, more than 30% comes in the fourth quarter,” she added. “We need that consumer to be out, to be spending [and] to do their holiday shopping.”

Once there’s more clarity on the economic recovery’s path and who wins the White House, she plans to employ the cash.

“Certainly, we want to take advantage like we did in March,” O’Callaghan said.


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