All into Account

Speaker: Mislav Matejka, CFA, Head of Global Equity Strategy After a prolonged spell of weakness, at first driven by the inflation and bond yields spike last year, and then this year by macro recovery trade, certain Defensives are starting to trade a bit better of late. We think that Defensives could catch a more sustained bid if: 1. Bond yields could be in the process of peaking out, we reiterate the call from last month that one should go long duration. If the turn lower in bond yields is confirmed, on the Fed being done, a continued move down in inflation, but also on softer activity indicators, as seen in disappointing PMIs, then a range of Defensives should benefit. There is a clear link between bond yields and Utilities. Long bonds have lost half of their value over the past 3 years, as did Utilities relative, and that could be turning. Now, even if bond yields ramp up further, the trade might be on. Any break in yields above 5% will, in our view, be taken negatively by the market. In that scenario, Defensives might not behave as they did in August-September, when they underperformed against the backdrop of rising yields, but could be seen more as a traditional low beta part of the falling overall market. 2. Global output PMIs have been weakening for 5 months now, both manufacturing as well as services, and the risk is of a move into outright contraction. Money supply trends suggest that there could be more downside. 3. Earnings of Cyclical sectors are elevated vs Defensives, and are showing signs of a turn. In the latest reporting season, Cyclicals - Discretionary & Industrials had the most profit warnings, and Utilities the least. 4. Valuations of Defensives are not demanding anymore, having de-rated from outright expensive territory to fair value currently. Within Defensives, we have a preference for Utilities (OW), Telecoms (OW) and Staples (OW), and have recently upgraded Healthcare and Real Estate post the big spell of weakness. This podcast was recorded on 12 November 2023. This communication is provided for information purposes only. Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-4560156-0  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Mislav, Kian, and Esmail join to discuss our view of European banks, after our recent shift to UW given that the outperformance of the sector may stall assuming bond yields are peaking. We also discuss the bottoms up perspective and how best to implement the views within vol markets.   Speakers: Thomas Salopek, Head of Global Cross Asset Strategy Mislav Matejka, Head of Global & European Equity Strategy Kian Abouhossein, European Banks Analyst Esmail Afsah, European Derivatives Strategist     This podcast was recorded on Nov. 9, 2023. This communication is provided for information purposes only. Institutional clients can view the related reports at https://www.jpmm.com/research/content/GPS-4546791-0, https://www.jpmm.com/research/content/GPS-4488904-0, and https://www.jpmm.com/research/content/GPS-4555229-0, for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

We reiterate our call from October that bond yields are likely in the process of peaking during Q4, and that one should go long duration. As this view gets confirmation, it is in the short term interpreted by investors as a knee-jerk positive for equities, especially after some derisking that took place in the past months. Having said that, we believe that equities will soon revert back to an unattractive risk-reward into year end. This is especially if 2024 earnings projections start to reset lower. We think that pricing power is waning, profit margins are at risk and the slowdown in topline growth is set to continue. Money supply in the US and Europe keeps contracting. Labour markets are lagging indicators, and could weaken abruptly – continued ytd strength doesn’t mean anything for the next 6-12 months. Within this, we have recently advised to tactically close the shorts on China, given fresh stimulus and an already weak ytd performance – this was behind our call to close the shorts on Miners. If bond yields are rolling over, as we suspect, Defensives will get a tailwind, such as Utilities and Staples. We also reiterate our upgrade of Real Estate, done in September, after 2 years of an UW stance. Finally, we have last week cut European Banks to UW. They had a very strong run again ytd, and will likely have a headwind if yields start moving lower.   This podcast was recorded on 05 November 2023. This communication is provided for information purposes only. Institutional clients can view the related report at http://www.jpmm.com/research/content/GPS-4553659-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

We expect GLP-1s will be an important theme now and in the years to come, so we’ve gathered up both the Stock and Credit analysts for a number of sectors including Pharmaceuticals, Med Tech, Food, Beverages, Healthcare, Insurance, Retail etc. to get an overview of the broad impact.   Speakers: Thomas Salopek, Head of Global Cross Asset Strategy Chris Schott, Pharmaceuticals Analyst Robbie Marcus, Medical Supplies & Devices Analyst Andrea Teixeira, Beverage, Household & Personal Care Products Analyst Ken Goldman, Food Producers & Retailers Analyst Brett Gibson, US Credit Analyst: Healthcare and Insurance Carla Casella, US Credit Analyst: Food, Beverages, Tobacco, Consumer products, Retail   This podcast was recorded on Nov 01, 2023. This communication is provided for information purposes only. Institutional clients can view the related reports at  https://www.jpmm.com/research/content/GPS-4537812-0, https://www.jpmm.com/research/content/GPS-4532586-0, for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Speaker: Mislav Matejka, CFA, Head of Global Equity Strategy We are advising to open a short in European Banks, and we move the sector from Neutral to UW. Banks have been one of the best performers in the past 6 months, second only to Energy, are ahead nicely ytd, up 8% vs SXXP at 1%, to be cumulatively ahead by 60% since Sept 2020. If bond yields are in the process of peaking this quarter, as we suspect, then Banks could start to struggle. After all, the Banks rally was underpinned by the sharp move up in bond yields over the past 3 years, with German 10 year moving from -0.5% to 3%, and US 10 year from 1% to 5%. Any potential fall in yields, or the ECB cuts next year, will reduce Banks’ profitability. Further, Banks’ deposit base is likely to fall, and with rising deposit betas their net interest income is likely peaking now. From the regulatory side, the sector might not enjoy as favourable a backdrop as it did recently, with buybacks and capital return to shareholders as good as they get. Finally, Banks remain much more levered than any other sector, and are a beta play on the overall activity. Banks could suffer if economies enter contraction, and if some of the very benign credit backdrop changes next year, with spreads widening and delinquencies rising. We are using the funds to upgrade Healthcare, from Neutral to OW. The sector has lagged this year, but could benefit from high USD exposure, low beta and the long duration angle. If Banks start to lag, then the periphery could fall behind core markets. Periphery nicely outperformed the core for a while, Italy is top European performer ytd, up 15%, but Banks relative and peripheral markets relative performances remain very strongly correlated. We remain bearish on the market direction, and our sector positioning stays the barbell of commodities – led by Energy, and the bond proxies – such as Utilities and Staples, which are catching up post the earlier poor performance. This is likely to continue if the long duration trade takes hold, and if the earnings momentum for the overall market deteriorates. This podcast was recorded on 29 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-4546791-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.  

“Mortgages are cheap to Corporates” has become one of the most popular adages in the HG credit market this year, achieving near Taylor Swift status within certain circles of investors (aka the Taylor rule). In this podcast, we roll out a novel framework to look at Corporates versus MBS relative value. If we compare the OAS of MBS (which takes call risk into account) versus Corporate spreads adjusted for downgrade risk, then are Corporates cheap to MBS?   Speakers: Stephen Dulake, Global Head of Credit, Securitized Products and Public Finance Research Nathaniel Rosenbaum, Head of U.S. High Grade Strategy Nick Maciunas, Head of U.S. Agency MBS Research   This podcast was recorded on 27 Oct 2023 This communication is provided for information purposes only. Institutional clients visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Speakers: Thomas Salopek, Head of Global Cross Asset Strategy Eric Beinstein, Head of US Credit Strategy This podcast was recorded on 26 October 2023. This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4538830-0, www.jpmm.com/research/content/GPS-4540030-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

‘Practitioners’ views on QIS investments’ with Dobromir Tzotchev, Head of Cross Asset Systematic Research, Deepak Maharaj, QIS Product Development, and Paul Fraynt, Portfolio Manager, Franklin Templeton.   Speakers: Thomas Salopek, Head of Global Cross Asset Strategy Dobromir Tzotchev, Head of Cross Asset Systematic Research Deepak Maharaj, QIS Product Development Paul Fraynt, Portfolio Manager, Franklin Templeton   This podcast was recorded on October 24, 2023. This communication is provided for information purposes only. Institutional clients can view the related reports at https://www.jpmm.com/research/content/GPS-3295004-0  https://www.jpmm.com/research/content/GPS-4527762-0 and https://www.jpmm.com/research/content/GPS-4540030-0  For more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Speaker: Mislav Matejka, CFA, Head of Global Equity Strategy   In addition to the move up in energy prices and elevated bond yields, renewed USD strength is another factor that the equity market needs to digest. Last October, USD peak coincided with the equity trough, and the more mixed equity performance in the past few months is coinciding with USD bottoming. Almost always in the past, when USD is strengthening, global equities have been under pressure. Our FX team is bullish on the USD over the next 3-6 months, vs all major crosses. If that comes to pass, equities in general could stay under pressure. Regionally, a stronger USD has typically meant the outperformance of Japan, Switzerland and the UK, in local currency, given their large export exposures. When assessing the performances in common currency, US equities are the top performers in times of USD strength, even with a headwind to the exporters, and Japan stays the outperformer, in the regional context. EM is an underperformer, and it is Eurozone that moves to the bottom of the pecking order. EM are lagging DM this year by 10%+, and from our equity strategy perspective, we remain cautious on EM. Broadly, in terms of sector tilts, we continue advising a barbell of commodities – OW Energy – together with a low beta exposure, such as Staples and Utilities, and that could track even if bond yields keep going higher in the near term. European Healthcare could be interesting, as well, as it tended to work well with a strong USD. Thematically, we maintain our longstanding preference for FTSE100 over FTSE250 that we initiated in November ’21. In terms of equity market levels, our index target of 4150 for SX5E has not changed over the last 12 months, since it was initiated. Stocks are at present below it, but we expect continued undershooting of the targets in the near term. This podcast was recorded on 22 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-4540044-0  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Nuclear is making a global comeback, and we see accelerating developments across the APAC region as nuclear plays role in de-carbonization. Since early 2022, at least 14 countries have approved new nuclear units or announced supportive policies. This echoes IEA’s earlier forecast that nuclear power capacity will need to double in size in the next two decades for the world to meet net-zero. We expect this trend to be particularly pronounced in Asia. Speakers: Thomas Salopek, Head of Global Cross Asset Strategy Alan Hon, Head of Asia Power, Utilities and Renewables Research Tomohiko Sano, Co-Head of Japan Equity Research and Head of Japan ESG & Sustainability and Machinery Research SM Kim, Korean Autos Analyst Sanjay Mookim, Head of India Research and India Equity Strategist Hannah Lee, Head of Asia ESG Equity Research This podcast was recorded on 20 October 2023. This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4527125-0, www.jpmm.com/research/content/GPS-4531807-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.