Monday Jan 08, 2024

Equity Strategy: January Chartbook

Speaker: Mislav Matejka, CFA, Head of Global Equity Strategy

As of end October ‘23, the average stock in S&P500 was down on the year, with SPW at -5%. A lot has changed, courtesy of the November-December rally, and equity markets are now showing overbought conditions, with sentiment moving into complacent territory. This can be seen in high RSIs, elevated Bull-Bear, VIX near lows, tight credit spreads, as well as in the current S&P500 P/E at 20x. Importantly, while a year ago risky assets were fully pricing in a recession, and economists unanimously agreed with that, now the picture is quite different, recession probabilities are currently near the lows of the range, and most macro forecasts are hopeful. This might be too optimistic. Our key call was to go long duration, we advised last October to position for the rollover in bond yields, and while we see this call having legs in 2024, there is likely to be some payback given the sharpness of the move over the past 3 months. Yields could be consolidating near term, and have next leg lower only when activity dataflow shows more clear deterioration. Crucially, while market interpreted falling bond yields since Oct as solely a positive development, we do not think that this will sustain through the year. Lower yields could end up signaling weaker EPS delivery ahead, on softening pricing, sequential activity slowdown and profit margin compression. Bottom line, the risky assets have started to fully embrace the macro combination of central banks easing on lower inflation, but at the same time resilient growth and continued record profitability – this might end up contradictory. All this suggests a much less attractive risk-reward than what would at face value lower bond yields/central banks easing and up to now resilient growth suggest. Healthcare, Telcos, Energy and Utilities have started the year on a positive note, and we think this may continue.

This podcast was recorded on 08 January 2024.

This communication is provided for information purposes only. Institutional clients can view the related report at for more information; please visit for important disclosures.

© 2024 JPMorgan Chase & Co. All rights reserved. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. It is strictly prohibited to use or share without prior written consent from J.P. Morgan any research material received from J.P. Morgan or an authorized third-party (“J.P. Morgan Data”) in any third-party artificial intelligence (“AI”) systems or models when such J.P. Morgan Data is accessible by a third-party. It is permissible to use J.P. Morgan Data for internal business purposes only in an AI system or model that protects the confidentiality of J.P. Morgan Data so as to prevent any and all access to or use of such J.P. Morgan Data by any third-party.

Copyright 2022 All rights reserved.

Version: 20230822