All into Account

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.

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.

In this podcast we discuss the recurrent food security crises, which bring new challenges as supply side shocks, geopolitical risks, climate change and biodiversity loss magnify vulnerabilities across the global food system. Moderate or severe food security now affect 30% of the global population, or 2.4bn people and food insecurity is the “new normal” with climate change and biodiversity loss pointing to recurrent crises. Three shocks tilt food prices to the upside—the breakdown of the Black Sea Grain Initiative (BSGI), new rice export restrictions and El Niño. Countries are bracing for ongoing food insecurity through increased stockpiling, seeking alternative supply routes and maintaining restrictions on food and fertilizer exports, and a number of countries are also accumulating stocks of food in reserve as buffers. Africa and EMEA are most exposed to wheat and rice shortfalls, while LatAm food supply is most exposed to weather-related shocks on food prices from El Niño. Speakers Joyce Chang, Chair of Global Research Nicolaie Alexandru, Head of EMEA EM Economics Research Toshi Jain, India Economist Vinicius Moreira, Brazil Economist Natasha Kaneva, Head of the Global Commodities Strategy Virginia Martin Heriz, Head of ESG Research Methodology and Integration Amy Ho, Strategic Research This podcast was recorded on September 6, 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.

Speaker - Mislav Matejka, CFA, Head of Global Equity Strategy Divergences keep opening up between the resilient equity markets and softening dataflow. Manufacturing PMI recovery, that was the consensus call for months now, remains elusive, and there are signs of services weakening, as well. There is no regional convergence coming through, with Europe disappointing further, and China staying mixed. SX5E had gone nowhere for half a year now, and has lagged the US since May, coincident with our downgrade to UW, but the relative performance of SX5E vs bonds has opened up a big gap with IFO, worth 20%+. How will it close? Also, even as Cyclicals finally stalled somewhat in August, the gap with PMIs remains significant. In a sense, bad is so far still seen as good, but this could change if labour market and consumer dataflow starts disappointing. Bond yields look set to move lower in that scenario, which will keep supporting our OW Growth vs Value call that we had on this year, at least in relative terms, but the bond proxy sectors should be logically getting a bid, too. Cyclicals stalled in August, keep fading them, in particular Industrials and Autos. This podcast was recorded on 03 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-4502246-0  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 Month to date, in SXXP, Healthcare, Energy, Insurance, Staples and Utils are top sectors, a big change from earlier in the year, while the worst are Mining, Autos, Industrials, Travel & Leisure, Semis and Homebuilders. This reversal in leadership coincided with bond yields breaking out higher in August, from 4.0% to 4.30% for US 10 year. Can Defensives work if yields are going up, and should yields be going up in the first place? We think that bond yields’ move is to a good extent driven by inflation forwards moving up, US debt downgrade, and demand-supply worsening, and not just due to forecasters abandoning their recession calls. If the above remain the dominant drivers, then it is unlikely that high-beta stocks will benefit from this; i.e., bond yields might be rising for the “wrong reasons”. MSCI China made new ytd lows last week, down 20%+ from Jan high. This usually mattered for the broader Cyclicals complex, and not just for Miners. Lastly, Eurozone PMIs are meaningfully down since May, coinciding with our downgrade to UW. As we feared, the positive convergence, which was the consensus call over the past 3-4 months by forecasters, is not coming through, PMIs appear to be converging to the downside. Our lead indicators continue to point to no meaningful recovery in the near term. Despite recent Cyclicals stalling, the gap between PMIs and market internals, which we highlighted in our July Chartbook, is still significant. We do not see bond yields moving higher from here, at least not for the right reasons, China is likely staying under pressure, and PMIs are weakening. Put together, we think that Cyclicals can show another leg lower.   This podcast was recorded on 28 August 2023. This communication is provided for information purposes only. Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-4498704-0   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 Compared to the start of the year, clearly investor expectations, market positioning and the equity valuations have moved up. Recession projections have been erased, there is no more fear, only complacency. While positioning was rather cautious at the turn of the year, many indicators point to significant investor involvement currently. SPX P/E has moved from 17x in January to 19x forward at present. Even ex Tech, multiples have rerated. Relative to this optimism, it is not clear to us that the Growth-Policy tradeoff has materially improved. China continues to disappoint, we believe one should keep fading any stimulus-induced bounces, and Europe has also lost momentum, especially since May, coinciding with our downgrade. On the inflation/policy front, it is likely easier for inflation to move down from say 10% to 5%, but the move from 5% to 2% becomes incrementally harder. Central banks could stay higher for longer, which would limit any prospect for multiple expansion, and the market would then need to solely rely on earnings growth for upside. On earnings, we note that full-year EPS projections are not inflecting meaningfully higher, current PMIs are consistent with continued earnings downgrades. European equity indices have struggled to deliver gains for a while now. SX5E is currently at the same levels it held in February, it didn’t advance for 6 months. Despite this, we do not see any upside from here into year end, and we reiterate our year-end targets that we first unveiled last December, of 4150 for SX5E. This offers only marginal downside from current levels, but we think there is a good chance that equity markets move meaningfully below our year-end projections in the interim. In terms of key positioning, we were OW Growth vs Value this year, but the Tech run is becoming heavy, so we think that pure Defensives look the best into year end, in addition to the Energy sector.   This podcast was recorded on 20 August 2023. This communication is provided for information purposes only. Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-4493429-0  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2022 JPMorgan Chase & Co. All rights reserved.

Recent developments such as the spectre of property default, worsening exports, and disappointing TSF credit point to further slowing in China, and Chinese stocks must cheapen further before they become interesting again. Ex-China, EM stocks are still cheap and under-owned, with the current P/E discount much wider than the already wide historical discount. Speakers: Thomas Salopek, Global Cross Asset Strategy Pedro Martins, Chief EM Equity strategist This podcast was recorded on date. This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4486467-0, www.jpmm.com/research/content/GPS-4486687-0, for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

      Speakers: Thomas Salopek, Global Cross Asset Strategy Jay Barry, Co-Head of US Rates Strategy   This podcast was recorded on 07 August 2023 This communication is provided for information purposes only. Institutional clients can view the related report https://www.jpmm.com/research/content/GPS-4479744-0  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Speaker: Mislav Matjeka, CFA, Head of Global Equity Strategy Consensus projections for Q2 have been cut significantly over the past months, resulting in the -12% yoy EPS growth expectation for S&P500, and -17% for SXXP. Ex commodities, this improves, and median EPS growth projections are around zero. At the same time, Q2 activity was overall robust, with global PMIs in expansion territory, and consistent with sequential EPS growth. Put together, the unassuming hurdle rate, coupled with activity which held up well during the quarter, is pointing to beats. Having said that, the stock price reactions in general could be more muted than in Q1, or at least any positive momentum might not have legs. Ahead of Q1, sentiment and positioning were cautious, but the equity market was strong coming into Q2 reporting season, suggesting buyside expectations are more elevated, even as analyst projections are subdued. Also, the question is whether the guidances will be raised on the back of quarterly beats, as there was some loss of momentum as we moved through the quarter, and China dataflow continues to disappoint. Out of early reports, with 70 S&P500 results and 90 in Europe, the majority are beating the consensus projections, but the stock price reaction to the beats is worse than typical. For the full year 2023, the S&P500 EPS growth rate currently stands at -1.0%, down from 3.2% in January, and SXXP at ‒0.4%, down from 1.6%. The full year projections are not overly conservative, even with these near zero growth rates assumed, as 2H earnings are expected to bounce 8% vs 1H levels. If in 2H the PMI momentum loses steam further, China activity stays disappointing, and pricing power erodes, all of which we subscribe to, and the lead indicators are pointing to, then EPS growth projections are set to move further down, with EPS revisions bound to spend time largely in negative territory. This podcast was recorded on 23 July 2023. This communication is provided for information purposes only. Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-4467241-0  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2022 JPMorgan Chase & Co. All rights reserved.

Tune into our latest podcast on J.P. Morgan Research’s All into Account channel where we discuss why “de-coupling” is neither possible nor desirable but see new trade corridors emerging as supply chains are disrupted, commodity markets reshaped and industrial policy on the rise. We highlight the themes transforming the supply chain, examining the shift in traditional trading patterns and capital flows, and the regional implications. ASEAN and northern Asian countries are benefiting the most from shifts in global value chains, while Latin America is also well-positioned to benefit from friend- and near-shoring with the US and there’s long-term potential and incentives for supply chains to relocate to India. Russia-Ukraine war has permanently reshaped China-Russia trade and global commodities markets with diversification of currencies used to settle commodity trades, though de-dollarization fears are overstated. Speakers: Joyce Chang, Chair of Global Research  Sin Beng Ong, Chief ASEAN Economist  Sajjid Chinoy, Chief India Economist Gabriel Lozano, Chief Mexico & Central America Economist Haibin Zhu, Chief China Economist Natasha Kaneva, Head of Global Commodities Strategy Alexander Wise, Strategic Research This podcast was recorded on July 18, 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.