All into Account

All into Account: ‘State of the pullback in Credit and Equities’ with Steve Dulake, Head of Spread Product Research, and Bram Kaplan, Head of Americas Derivative Strategy

Speakers:
Thomas Salopek, Head of Global Cross Asset Strategy
Steve Dulake, Head of Spread Product Research
Bram Kaplan, Head of Americas Derivative Strategy
This podcast was recorded on October 5, 2023.
This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4522939-0, www.jpmm.com/research/content/GPS-4512598-0, www.jpmm.com/research/content/GPS-4517149-0, for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

All into Account: Debt, default, devaluation: Implications for China’s financial markets

In this podcast we discuss the substantial outflows and volatility impacting China’s financial markets since 2022.  China’s regulatory policies and debt burden have raised concerns and authorities have announced numerous measures to “activate capital markets” and support policy targets since August. We continue to view risks of global financial market spillovers as muted.
 
Speakers
Joyce Chang, Chair of Global Research
Haibin Zhu, Chief China Economist
Karl Chan, Head of China Property Developers Research
Katherine Lei, Head of Greater China Bank Research
Soo Chong Lim, Head of Asia Credit Research
 
This podcast was recorded on Oct. 3, 2023.This communication is provided for information purposes only. Institutional clients can view the related reports at  https://www.jpmm.com/research/content/GPS-4506472-0, for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.
 

Equity Strategy: October Chartbook

Speaker: Mislav Matejka CFA, Head of Global Equity Strategy
Despite some recent weakness, where SPX RSI turned technically oversold, we believe that the equity risk-reward remains challenging. Divergences between softer activity momentum and the elevated equity prices, as well as market internals, that opened up in the summer, are starting to close, but there is more to go. The PMI rebound that many were hoping for, the call that the weakness in manufacturing will end and join the more resilient services, remains elusive. In addition, real rates upmove is pressuring multiples, and this is even taking out Tech. Finally, Brent and USD rally should be seen as concerning for stocks. Most of Brent upmove is supply driven, and could lead to weaker final demand. Corporates might struggle to pass on rising input costs this time, in contrast to ’21-’22. Historically, strengthening USD was almost always met with risk-off in equities. We do not think that bond yields will be able to keep moving up for too much longer, and will likely ultimately fall, and that is precisely because of the “higher for longer” narrative by the Fed. Q4 could end up a very good time to lock in the long duration trade for the next 12 months. SX5E had gone nowhere for half a year now, and has lagged the US since May, coincident with our downgrade to UW – stay short. Even as we remain bearish on China over the medium term, a lot has happened, MSCI China is down 20% since January, and one should not be tactically pressing the shorts into year end, in our view. We reiterate recent call to close the shorts on Miners, and we stay OW Energy.
 
This podcast was recorded on 01 October 2023.
This communication is provided for information purposes only. Institutional clients can view the related report at http://www.jpmm.com/research/content/GPS-4524004-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

All into Account: ‘Impact of “High for Long” on our Cross Asset views’ with Fabio Bassi, Prabhav Bhadani, and Patrick Locke

The theme of High for Long (H4L) is supportive for our current Cross Asset views, where it’s long European duration, UW European stock, or OW USD vs lower yielding currencies with growth risk. More often than not, this theme has reinforced the conviction in our regional views as we assess to what degree H4L is durable in countries with more growth risk.
 
Speakers:
Thomas Salopek, Global Cross Asset Strategy
Fabio Bassi, Head of International Rates Strategy
Prabhav Bhadani, Global Equity Strategist
Patrick Locke, FX Strategist
 
This podcast was recorded on 09 Sept 2023.
This communication is provided for information purposes only. Institutional clients can view the related report https://www.jpmm.com/research/content/GPS-4519192-0, https://www.jpmm.com/research/content/GPS-4519132-0, https://www.jpmm.com/research/content/GPS-4515282-0, https://www.jpmm.com/research/content/GPS-4519047-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Equity Strategy: Who could get hurt from the rollover in corporate pricing power?

Speaker - Mislav Matejka, CFA, Head of Global Equity Strategy
As inflation rates are moving lower, taking out last year’s spike, the question is what the impact of this will be on corporate profitability. After all, instead of being hurt from higher input costs, it appears that most companies benefitted over the past two years, due to better mix and stronger pricing. European topline growth was a very high 14% in 2021, and as much as 24% in 2022, compared to historical median of 6%. 2022 EBIT margins for Europe are 330bp above 2019 levels. Defensives such as Healthcare, Staples and Utilities are the only sectors that are lower. There is a risk of reversal, especially if final demand stalls, potentially if PMI softness continues, and as supply chains have normalized. There is a very strong correlation between PPIs and global earnings delivery. Now, the latest oil rally could mechanically lead to stronger PPIs again. Historically though, when Brent moved up due to supply constraints, topline and margins of other sectors would not benefit, there would be demand destruction. Pent-up demand is behind us, as well as the ample post-COVID consumer liquidity, companies might not be in a position to pass on rising input costs as easily any more. In the report, we assess sectoral impacts, together with our analysts. We find a number of sectors to be at risk of a reversal in pricing power, such as Food and General Retail, Autos, Semis, Hotels, Airlines, Luxury/Sporting Goods and Construction Materials. On the other side, Insurance, Staples, Healthcare and Utilities could be less affected. Big picture, we see the Growth-Policy tradeoff as challenging into year-end. This is especially as the market is pricing in a no-landing scenario, with VIX at lows, credit spreads tight, and, until recently, a big rally in Cyclicals, but on the other side, the market expects 80bp of easing in 2H of next year, just ahead of US elections. This is an unlikely combination. We believe that Defensives will be having a bid into year end. We reiterate last week’s closing of two years’ worth of shorts in Real Estate, and advise tactically less negative call on China and on commodities – Mining (N) and Energy (OW), as they did poorly in 1H – CSI to bounce vs SPX and SX5E.
 
This podcast was recorded on 25 September 2023.
This communication is provided for information purposes only. Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-4519132-0  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.
 

All into Account: ‘FOMC Takeaways’ with Mike Feroli, Chief US Economist

Speakers:
Thomas Salopek, Global Cross Asset Strategy
Michael Feroli, Chief US Economist
 
The big news at the FOMC was the upward revision of the ’24 and ’25 dots, although Powell’s message seemed less hawkish.  Our views haven’t changed, i.e. we’ve seen peak funds and policy will be on hold until  around 3rd quarter of next year. We discuss how Fed will proceed in the event of a government shutdown, as well the signaling power of the yield curve.
 
 
This podcast was recorded on Sep. 20, 2023.This communication is provided for information purposes only. Institutional clients can view the related reports at  https://www.jpmm.com/research/content/GPS-4513430-0, for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Equity Strategy: How much more can Eurozone lag? Reiterate that commodity equities look better; Add to Real Estate

Speaker - Mislav Matejka, CFA, Head of Global Equity Strategy
After the strong 30%+ rally vs the US that started last September, Eurozone equities have lagged notably since May, by 14%. SX5E has not managed to make gains in absolute terms since February. On the positive side, given the poor relative run, Eurozone equities are looking quite cheap at present, and one could argue that the relative growth disappointments are likely closing in on their worst point, vs the US. Having said that, the absolute Growth-Policy tradeoff is still challenging for Eurozone, in our view. Activity has stalled, as we were fearing, and M1 lead indicator points to continued softness. On the other side, while ECB has indicated a pause, it might not be done, as inflation could stay sticky – core CPI still has a 5% handle. Eurozone EPS revisions held up well so far this year, but look set to turn sharply negative, which will take away some of the perceived valuation support. Finally, Euro equities are trading better than the macro outturns would suggest. We reiterate our downgrade to UW, made in May, staying cautious on the region, expecting it to have another leg of underperformance in the global context. This could come if services momentum slows more broadly, and if bond yields move down. Eurozone historically acted as a high beta on the way down vs other equity indices, especially the US. Within Europe, we have tactically a more positive call on commodity equities, Energy (OW), which tended to do well against the backdrop of the rollover in PMIs, as well as Mining, on which we were bearish earlier in the year, but would not be short any more given the big 30% underperformance since January. We are relatively more cautious on consumer and corporate plays, that have done well in 1H, such as Autos, Semis, Capital Goods and Luxury. We also stay cautious on Chemicals. We have been UW Real Estate for the last two years, but advise closing the short now. We are not excited about Eurozone Banks (N), and globally prefer Japanese Banks – we continue the pair trade of long Japanese vs Eurozone Banks – started in April, on the expectation of further move up in Japanese bond yields vs Eurozone bond yields.
 
This podcast was recorded on 18 September 2023.
This communication is provided for information purposes only. Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-4514331-0  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

All into Account: ‘Best opportunities in SMidCap stocks’, with Eduardo Lecubarri, Head of SMidCap Strategy

Speakers:
Thomas Salopek, Head of Global Cross Asset Strategy
Eduardo Lecubarri, Head of SMidCap Strategy
 
We maintain a cautious stance with a deteriorating macro backdrop and margin pressure which challenge the rich consensus sell-side earnings estimates. Despite our bearish view, we can find SMidCap opportunities at the stock level, focusing on names which are under-valued, where pricing power and margins are more supportive.
 
This podcast was recorded on Sep. 13, 2023.This communication is provided for information purposes only. Institutional clients can view the related reports at  https://www.jpmm.com/research/content/GPS-4497659-0, https://www.jpmm.com/research/content/GPS-4508173-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Equity Strategy - Should one turn more positive on China? How attractive is broader EM?

Speaker - Mislav Matejka, CFA, Head of Global Equity Strategy
China is the worst performing equity market ytd, out of larger EMs and DMs, down 6%, and 20% below January highs. At the same time, fresh stimulus newsflow is coming through and the Chinese-related indices could be due a bounce. Should one position for this? The new support measures might stabilize Chinese growth momentum, close to the 5% target, but could end up insufficient in helping drive any sustained upside. We note CNY is making fresh multi-year lows. Structural concerns remain significant, with the lack of confidence by the private sector, and the adjustment in real estate continuing. Demographics is a constraint; fiscal and monetary space to act is limited; and the risk of Japanese-style stagnation remains real, with a housing double dip the base case. We have been cautious on China over the past months, advising to fade stimulus-driven bounces. Our worry is that any rally might end up short-lived, and not lead to sustained medium-term gains, unless the real estate overhang reduces. With respect to the broader EM, EMs are this year underperforming DM by 11%, and even if one is to look at DM ex US, or EM ex China, EMs are struggling this year. While the Fed is likely to stop tightening, it could stay higher for longer. The EM FX index is making fresh lows. If USD keeps getting stronger, as we suspect, this was never a good backdrop for EM. In our global equity regional allocation, we stay cautious on EM vs DM. The EM basket has underperformed European indices ytd, and we stay away from it. Within it, while we are cautious on Miners, we note that they have already performed quite poorly, and, together with Energy which we are OW, can offer better relative value. In contrast, Luxury, Capital Goods, Autos and Semis did well in 1H, but are starting to stall, and there could be further weakness ahead. Defensives to work.
 
This podcast was recorded on 10 September 2023.
This communication is provided for information purposes only. Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-4509399-0  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

All Into Account: ’China multi-asset update’ with Tingting Ge, Tiffany Wang, and Soo Chong Lim

Broadening policy easing in China will do just enough to ensure growth comes in at the ~5% growth target, although in the absence of bazooka-like stimulus, restoring private sector confidence will be critical. Tingting, Tiffany and Soo Chong join us to give an update on China economics, rates, FX, and credit.
 
Speakers:
Thomas Salopek, Global Cross Asset Strategy
Tingting Ge, China Economist
Tiffany Wang, Rates and FX Strategist
Soo Chong Lim, Asia Credit Strategist
 
This podcast was recorded on 08 Sept 2023.
This communication is provided for information purposes only. Institutional clients can view the related report https://www.jpmm.com/research/content/GPS-4498587-0 , https://www.jpmm.com/research/content/GPS-4506962-0 , and https://www.jpmm.com/research/content/GPS-4504178-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.