(This story is for CNBC Pro subscribers only.) A top JPMorgan strategist said Thursday that rising political tensions both within the United States and between the U.S. and China pose risks to the recent rally in stocks. Marko Kolanovic, who turned bullish on the market before its rally from the March lows , said he is "dialing down" his optimism about the markets even as he remains confident that the health situation is improving. The strategist did not formally change the bank's prediction that the markets would surpass its highs from February later this year, but he pointed to different approaches taken by Republican and Democratic governors and risks to global trade from turmoil with China as major risks. "Reopening only half of the economy will not be sufficient to support our current forecast for all-time highs in 2021. On the other side, a complete breakdown of supply chains and international trade, primarily between the two largest economies (US and China), would justify equities trading drastically lower," Kolanovic wrote. The firm currently projects the S & P 500 to finish the year at a level of 3,400, about 12% above where the index closed Thursday. That is the second-highest target among major Wall Street firms, according to the CNBC Market Strategist Survey . While governors of both parties have moved to reopen non-essential businesses, Republican governors of large states including Texas and Georgia have done so more aggressively than their Democratic counterparts in California, Michigan and New York. Even if political leaders eventually come to a more unified agreement about how to handle the reopening of the economy in the U.S., there could be struggles in the near-term, Kolanovic said. "Ultimately we think that the abovementioned politicizations of COVID-19 will backfire and will be abandoned, but some self-inflicted damage could perhaps happen first," he said. Kolanovic, who argued in March that smart thermometer data showed the virus pandemic was close to peaking, said that data about cases and positive test rates from reopened states was not showing "deterioration" of the health care situation, on average.
A view of the fearless girl wearing a mask in front of the New York