All into Account

Equity Strategy: May Chartbook

Speaker: Mislav Matejka CFA, Head of Global Equity Strategy
Beneath the surface, the leadership is turning Defensive, and away from Value & Cyclicals… we think this rotation continues into/around last hike
In the past weeks, a range of Defensive sectors, such as Staples, Utilities and Healthcare, have rebounded. They joined the already robust performance of the Tech sector ytd. We are more positive on Tech this year than last, but think the sector is becoming stretched in absolute terms now, especially as good results are out in the open. On the other side, many Cyclical and Value plays are losing momentum, among others Mining, Autos, Retail, Construction and Semis, joining the weaker Banks run ytd. We think this rotation will continue as we approach the last Fed hike in the cycle, on the back of our view that US bond yields will be flat/down, and as the Q4&Q1 acceleration in PMIs, and in particular in European PMIs, starts to wane. The narrow and increasingly risk-off internal leadership adds to the main disconnect that the market will need to grapple with: hopes of a soft landing, without much pain to profits, labour or credit, but at the same time the consensus expectation that inflation will come down quickly and that central banks will be cutting in 2H. We believe that the consensus view that the worst of pressures is behind us will be proved wrong, as the impact of monetary tightening worked historically with a lag. Labour markets are lagging indicators, and could weaken abruptly – continued Q1 strength doesn’t mean anything for 2H. We held a view over the past two years that corporate earnings would be resilient, and argued that Q1 results would still be robust, but this is likely to start changing into 2H, as pricing power wanes.
This podcast was recorded on 30th April 2023.
This communication is provided for information purposes only. Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-4400022-0.pdf  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.
 

All into Account: ‘IMF highlights from the Markets and Volatility panel’, with Thomas Salopek, Head of Cross Asset Strategy

Sharing a few of the highlights from the recent IMF meetings of the ‘Markets and Volatility’ panel, which included JP Morgan’s business heads of Trading and Research.
 
Speakers:
Thomas Salopek, Head of Global Cross Asset Strategy
Steve Dulake, Global Head of Spread Research
 
This podcast was recorded on 01 May 2023.
This communication is provided for information purposes only. Institutional clients can view the related report https://www.jpmm.com/research/content/GPS-4391169-0  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

All into Account: ‘Credit Watch: Navigating the bull market in bearishness’, with Steve Dulake, Global Head of Spread Research

Speakers:Thomas Salopek, Head of Global Cross Asset Strategy
Steve Dulake, Global Head of Spread Research
This podcast was recorded on Apr 24, 2023.
 
Our overall market thesis a few weeks ago was that while spreads were in something of a ‘no-man’s land’ valuation-wise, the path of least resistance was likely tighter, based on the continued absence of ‘scary’ headlines, resulting in further declines in volatility.  What has changed is market pricing and, as much as the ‘pain trade’ could be tighter still, risk-reward feels much more symmetric today.
 
This communication is provided for information purposes only. Institutional clients can view the related reports at https://www.jpmm.com/research/content/GPS-4391169-0 and https://www.jpmm.com/research/content/GPS-4391285-0,  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.  

Does impact investing hold the future for ESG investing? Impact investing on the rise to meet demand for measurability

Speakers Joyce Chang, Chair of Global Research
Stella Y. Xu, Strategic Research
Jean-Xavier Hecker, EMEA ESG & Sustainability Research
This podcast was recorded on Apr 20, 2023.
In this latest episode of our All into Account podcast and video, Joyce Chang, Chair of Global Research, is joined by J.P. Morgan’s Stella Y. Xu, Strategic Research and Jean-Xavier Hecker, EMEA ESG & Sustainability Research discuss the rise of impact investing, how it differs from other ESG investing strategies, size of the market, historical returns and regulations.
While macro drivers such as the generational shifts in wealth from Baby Boomers to Millennials and Gen Xers will continue to drive adoption, this sector is arguably the most challenging ESG investing strategy to implement when considering the duration mismatch between shorter-term financial returns alongside longer-term progress on social and environmental impact.
This communication is provided for information purposes only. Institutional clients can view the related reports at https://www.jpmm.com/research/content/GPS-4377094-0,  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.  

Equity Strategy: When to close the preference for Europe over the US? Q1 results still to be better, but don’t extrapolate

Speaker: Mislav Matejka, Head of Global Equity Strategy
Regionally, we are OW International equities vs the US, and within this specifically Europe vs the US, a position we held through 2022 and so far ytd. The question is when should one close this trade? Internal leadership might become increasingly difficult for Europe to keep beating the US, especially if our call of Value underweight this year, and the recently introduced preference for lower beta part of the market - where we in particular cut Autos, and added to Staples - keeps gaining traction. So far ytd, Value is behind in both Europe and in the US, and the Defensive stocks are staging a recovery - Eurozone has historically been more of a Cyclical Value tilted play. The big benefits for Europe that we were highlighting in Q4, of falling gas price and the China reopen, are now in the open. Eurozone has enjoyed a strong rebound in PMIs since November on the back of these, of 7 points, but the upmove could be petering out soon. We note that Eurozone valuations vs the US continue to screen cheap, but it appears that the consensus call these days is to be OW Europe vs the US, and the region has strongly outperformed in the past few quarters. Eurozone is up vs the US by 31% in USD terms since the September low. We are remaining OW Europe vs the US, for now, but think that the time to take profits on the trade is approaching. Looking at Q1 reporting season, the consensus expectations have come down aggressively over the past months, from +7% yoy for S&P500, to current -7%. In contrast, activity in most places was better in Q1 vs the previous quarter. The combination of low hurdle rate and the improving fundamentals bodes well for the corporate results, where we expect beats. Having said that, the beats might not lead to upgrades for the rest of the year. 2023 projections keep moving lower. Also, the question is whether the stocks will rally much further on the back of beats, post an already strong rally. We advise to use any strength on the back of positive Q1 results as a good level to reduce from. Finally, consensus expectations are for a renewed margin acceleration in 2024, which could prove too optimistic, as pricing normalizes.
 
This podcast was recorded on 24 April 2023.
This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4392460-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Top Ten Takeaways from J.P. Morgan’s Investor Seminar during the 2023 IMF/World Bank Spring Meetings: Market pricing and investor expectations diverge

In this latest episode of our All into Account podcast and video, Joyce Chang, Chair of Global Research, is joined by J.P. Morgan’s Bruce Kasman, Chief Economist, Jan Loeys, Strategic Research, Jahangir Aziz, Head of Emerging Market Economics Research, Luis Oganes, Head of Global Macro Research, and Saad Siddiqui, Emerging Markets Fixed Income Strategy dive deeper into our top ten takeaways from the J.P. Morgan Investor Seminar hosted during the 2023 IMF/World Bank Spring Meetings. The mood was downbeat but not overly bearish in our view, and there were few signs of complacency with “fragmentation,” “setting up guard rails” and “re-globalization, not de-coupling” among the key buzzwords and catch phrases.
Speakers
Joyce Chang, Chair of Global Research
Jan Loeys, Strategic Research
Bruce Kasman, Chief Economist
Luis Oganes, Head of Global Macro Research
Jahangir Aziz, Head of Emerging Market Economics Research
Saad Siddiqui, Emerging Markets Strategy
Related Research:
Top 10 Takeaways from J.P. Morgan’s Investor Seminar during the 2023 IMF/World Bank Spring Meetings: Higher for longer despite rising financial stability risks (https://www.jpmm.com/research/content/GPS-4390217-0), Joyce Chang et al., 19 April 2023
Investor Survey Results from 2023 IMF/World Bank Spring Meetings: Recession fears still top of mind with downside seen to current valuations, particularly global equities (https://www.jpmm.com/research/content/GPS-4387732-0), Joyce Chang et al., 17 April 2023
Feeling edgy: Smaller countries make for big stories in DC: Takeaways from IMF/WB meetings (https://www.jpmm.com/research/content/GPS-4390074-0), Nicolaie Alexandru, Ben Ramsey, Katherine Marney, 20 April 2023
Emerging Market Takeaways from IMF/World Bank Spring Meeting (https://www.jpmm.com/research/content/GPS-4386452-0), Luis Oganes et al., 18 April 2023
This podcast was recorded on April 20, 2023.
This communication is provided for information purposes only. Institutional clients 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 StrategyEduardo Lecubarri, Head of SMidCap Strategy
This podcast was recorded on April 14, 2023.
This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4375824-0, www.jpmm.com/research/content/GPS-4375240-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.
 

Equity Strategy: Can Technology keep driving the markets higher?

Speaker: Mislav Matejka, Head of Global Equity Strategy
We argued last October that one should be buying back the Tech sector, following a year of sharp underperformance, and given our view that US long yields had likely peaked at tat point. The question is, will Tech keep driving the market higher? So far ytd, S&P500 is up 7%, but ex-Tech this stands at just 2%. FAANG is up as much as 26% ytd. We continue to believe that Tech will be trading better this year than it did last, but at the same time, think that the recent Tech run is becoming stretched, in absolute terms. It is looking overbought, close to all-time highs, with RSIs that are nearing elevated territory. Valuations of the sector are up meaningfully from last October, with FAANG P/E back at 1 standard deviation expensive. Globally, Tech P/E relative is closing in on 20-year highs. Our call is that bond yields will be down further from here, but the Tech bounce appears to have over-discounted that now. In addition, the clear and rising risk is that the Fed does not deliver on market expectations for cuts in 2H of the year. Real rates could stay higher, with Tech inversely correlated to them. With respect to the earnings outlook, consensus expectations are for the Technology sector to expand its profit margins by as much as 140bp next year, the largest increase of all sectors, and which would put it at new all-time highs. We see risks to this, especially if the economy weakens into a downturn Within Tech, we argued that unprofitable parts will not perform, with our more positive stance on quality, good cash flow parts. We continue with this view. Non-profitable Tech and Fintech are underperforming by 10-20% since October, even as they are becoming more attractively valued. In conclusion, we do not advocate to be short Tech, and still think the sector will be trading better than last year, relative to the market, but think that its absolute run is becoming stretched. In general, we believe that positioning in pure Defensive plays – where we have recently advised to add to them – such as Telecoms, Utilities, Staples and Healthcare, could be the best place to be over the next months.
 
This podcast was recorded on 11 April 2023.
This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/ for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.
 

All into Account: ‘US High Yield: The next shoe to drop?” with Nelson Jantzen, Head of US High Yield and Leveraged Loan Strategy

As the regional bank stress subsides, we consider whether US High Yield or Leveraged Loans will be the next weak link to snap. Nelson joins us to share his market views.
 
Speakers Thomas Salopek, Head of Global Cross Asset Strategy Nelson Jantzen, Head of US High Yield and Leveraged Loan StrategyThis podcast was recorded on Apr 04, 2023. This communication is provided for information purposes only. Institutional clients can view the related reports at https://www.jpmm.com/research/content/GPS-4375240-0, https://www.jpmm.com/research/content/GPS-4377007-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.  

All into Account: ‘Saudi 101: our primer on the Saudi Arabian stock market’ with David Aserkoff, Head of CEEMEA Equity Strategy

Speakers Thomas Salopek, Head of Global Cross Asset Strategy David Aserkoff, Head of CEEMEA Equity Strategy
This podcast was recorded on Mar. 27, 2023. This communication is provided for information purposes only. Institutional clients can view the related reports at https://www.jpmm.com/research/content/GPS-4267128-0, https://www.jpmm.com/research/content/GPS-4328949-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.