Credit Suisse is bracing for more pain ahead in the stock market. The firm has reduced its equity allocation to underweight, calling the outlook for equities "outright unattractive" in the coming months. Federal Reserve Chair Jerome Powell 's speech on Friday essentially confirmed Fed rate hikes will continue and remain high until inflation is close to its target, said Michael Strobaek, Credit Suisse's global chief investment officer. "Market participants are now confronted with an environment of slowing growth, rising probability of recession, elevated inflation and — after the Jackson Hole Symposium — central banks that are determined to hike interest rates, and stay the course," he wrote in a note Monday. That signals a return to asset price volatility such as the market experienced in the first half of the year, Strobaek said, when the S & P 500 lost more than 20% and had its worse first half in more than 50 years . "The next few months are thus likely going to be painful as markets adjust to this new reality," he wrote. But Credit Suisse isn't advocating leaving equities entirely. Instead, Strobaek urged investors to diversify portfolios broadly, "including alternative investments and private markets," in an attempt to hold positions that match long-term investment financial objectives. "It is very easy to throw in the towel when markets are turbulent. But throwing the towel would most likely also mean missing the recovery that will undoubtedly follow a correction," said Strobaek. — CNBC's Michael Bloom contributed reporting.