All into Account

All into Account: Cost of living pressures reaching an inflection point?

In this podcast we discuss the recently published “Cost of Living Surveys” by our US and EMEA retail analysts. The surveys provide a pulse check on consumer sentiment and spending plans ahead, with responses from 5k consumers across Germany, France, Spain the United Kingdom and the United States. The survey results raise a question on whether consumers are at an inflection point and paint a picture of rising income disparities, deteriorating consumer sentiment alongside lower cash balances, with Black and Hispanic families in the US experiencing a more rapid reversal of cash buffers and savings accumulated during the pandemic.
In addition, the JPMorgan Chase Institute has also taken a closer look at how US households are managing their balances and the level of cash buffers they maintain, analyzing a sample of de-identified data covering 19 million individuals that spans the period from 2008 through early 2023.
Speakers
Joyce Chang, Chair of Global Research
Chris Wheat, President of the JPMorgan Chase Institute
Matthew Boss, Head of Retailing: Department Stores & Specialty Softlines Research
Georgina Johanan, Head of the European General Retail Research
This podcast was recorded on 10 October 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: ‘Update on the Chinese economy & Chinese equities’ with Grace Ng, Senior China Economist, and Wendy Liu, Chief Asia and China Equity Strategist

Speakers:
Thomas Salopek, Head of Global Cross Asset Strategy
Grace Ng, Senior China Economist
Wendy Liu, Chief Asia and China Equity Strategist
This podcast was recorded on October 11, 2023.
This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4530776-0, www.jpmm.com/research/content/GPS-4528894-0, www.jpmm.com/research/content/GPS-4528708-0, www.jpmm.com/research/content/GPS-4523374-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Where Are We in the Great Repricing?

In this latest podcast we revisit the predictions we made at the beginning of the year on the outlook for markets and review how the “The Great Repricing” we discussed earlier this year is playing out. We also take the opportunity to make adjustments to our long-only Strategic Asset Allocation views. The great repricing that we had expected for fixed income has dramatically unfolded this past year and a half, with real yields almost at our longer-term target of 2.5% on 10yr US TIPs. We explore what this means for future return expectations on both bonds and equities.
Speakers
Joyce Chang, Chair of Global Research
Jan Loeys, Long-Term Strategy, Strategic Research
Bruce Kasman, Chief Global Economist
Alex Wise, Strategic Research
Amy Ho, Strategic Research
 
This podcast was recorded on October 9, 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.

Equity Strategy - Time is coming to position for the long duration trade

Speaker: Mislav Matejka, CFA, Head of Global Equity Strategy
 
In terms of a move in bond yields, we believe that we are currently in a transition phase, rising bond yields at these levels are problematic for investor sentiment and for the economy, and are therefore ultimately not sustainable. Bonds RSI is becoming oversold and at some point soon this should morph into pricing in of a policy mistake, where bond yields are likely to start to move lower. Brent rally does mechanically imply that PPIs, as well as CPIs, could inflect higher again. That said, unlike the 2021-2022 episode, where bond yields and oil were moving up together for some time in order to reflect the economies reopening, and where the consumer at the time was accepting of rising prices, given pent-up demand and a strong post-COVID liquidity position, the recent oil rally was mostly for supply reasons. This could lead to demand destruction, and be deflationary, rather than inflationary. Looking at the past eight Fed tightening cycles, post the final hike, bond yields were down each time, by 100bp on average, irrespective of whether recession or soft landing followed. If bond yields roll over, will it help equity valuations? Not if yields are peaking at a time when earnings, and the broader economy, start to disappoint. In terms of sector leadership, we note that post the last Fed hike, the sector tilts would turn broadly Defensive, on a 6- to 12-month horizon, both in the US and in Europe, with Insurance, Staples and Utilities ahead. Another implication, apart from the likely Defensives rebound, would be to go UW Banks. Banks are well capitalized, show strong earnings trends, and have been the best performer in Europe over the last 6 months, given the higher for longer narrative, but could start to lag if/when bond yields peak out, especially if their NII income rolls, along with the potential credit backdrop worsening.
 
This podcast was recorded on 08 October 2023.
This communication is provided for information purposes only. Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-4529073-0  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.
 

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.