One of Wall Street's largest firms has a clear message for investors: Keep calm and carry on with your long-term investment strategy.
"What you've seen investors doing is starting to chase other asset classes in a search for yield so they've been piling into things that they perceive as safe havens," explained JPMorgan's Stephen Parker on CNBC's "Futures Now" this week.
The bank's head of thematic equity solutions highlighted the recent popularity of minimum volatility exchange traded funds (ETFs). These instruments offer nervous investors the opportunity to invest in so-called safe haven stocks, such as utilities and consumer staples.
However, while these sectors currently offer attractive yields in a zero interest rate world, valuations are trading well above the market. For instance, consumer staples trade at 22 times forward earnings and utilities, which historically trade at a 20 percent discount to the market, are trading at a premium.
"When you think about safety, it is a reflection not just of the fundamentals, but also of the price you're paying," noted Parker. "We're telling clients to be cautious about chasing yields at this point."
Parker went on to say that he sees signs of froth in high quality bonds and gold. Moreover, while he envisions equities and Treasuries continuing to move in tandem in the near-term, Parker eventually sees the two diverging— in spite of low rates and accommodative central banks.
"You need to look for a little bit of a divergence going forward," said Parker.
"If this market is going to see more meaningful upside from here you need to start to see better growth, better earnings and higher inflation," he said. "That probably means rates move higher, and that's a positive environment for stocks."
Parker highlighted that, despite the gains for defensive sectors like telecom and utilities on a year-to-date basis, many investors are beginning to rotate towards more cyclical parts of the market like technology, banks and materials.
"That is a vote of confidence for the fact that growth is going to continue to be modest, but positive," concluded Parker.