Making Sense

Matthew Franklin Lyons, a specialist in global rates trading, and Stephen Jeffries, an expert in emerging market currencies, delve into intriguing dynamics affecting global markets. They discuss the factors behind the yield curve steepening and dissect the carry performance in emerging markets. The duo also reveals investor sentiments, highlighting surprising positioning amid uncertainties. Furthermore, they flag potential risks from AI-driven corporate issuance and vulnerabilities in asset swaps, painting a nuanced picture for 2026's financial landscape.

Andrew Tyler, Global Head of Market Intelligence at J.P. Morgan, and Federico Manicardi, International Head of Market Intelligence, dive into the dynamics of the market as 2025 wraps up. They unpack why global equities have surged, crediting robust macro and earnings growth. The duo spotlights emerging markets' rally, attributing it to dollar weakness and strong earnings. They also detail a strategic investment approach, suggesting a mix of mega-cap tech and cyclicals, while warning of potential risks from geopolitical tensions and shifts in AI valuations.

Chris Wu, Head of U.S. Power Trading at J.P. Morgan, delves into the seismic shifts occurring in the U.S. power market driven by AI data centers. He discusses how skyrocketing electricity demand from these centers is reshaping trading dynamics, while contrasting this surge with past trends linked to electric vehicles. Wu also addresses the slowdown in renewable energy projects, the pivotal roles of natural gas and nuclear power, and the critical need for enhanced energy infrastructure and transmission reforms in light of new market entrants.

Arnaud Jobert, co-head of Strategic Indices at J.P. Morgan, dives into the innovative world of quantitative investment strategies. He discusses the impressive growth of the QIS platform, detailing client demand shifts from retail to institutional. Arnaud highlights the evolution of products like equity vol carry and trend strategies, along with new alpha opportunities emerging from market dynamics. The conversation also touches on leveraging AI for better execution and expanding investment horizons into fixed income, showcasing the future of systematic trading.

In a riveting discussion, Michael Feroli, Chief U.S. economist at J.P. Morgan, and Jay Barry, Head of Global Rates Strategy, dissect the implications of the longest government shutdown in U.S. history. Feroli highlights that the shutdown could deduct around 0.25 percentage points from GDP weekly, leading to weaker consumer sentiment. Meanwhile, Barry delves into Treasury market reactions and potential shifts in Fed expectations. They also explore which sectors are most vulnerable and the broader economic uncertainties caused by missing government data.

Michael Gao, a physician-entrepreneur and president of Smarter Technologies, discusses the revolutionary impact of AI on healthcare. He highlights how AI enhances clinical reasoning and operational efficiency, transforming patient care. Michael underscores the importance of collaboration for responsible AI scaling while addressing the challenges of transparency and control. He predicts funds will shift from administration to direct patient care in the coming years, emphasizing AI's role as an augmentation tool to enhance, not replace, the human experience in medicine.

Lori Schwartz, Global Head of Treasury Services at J.P. Morgan Payments, shares her insights on the burgeoning fintech landscape in the Middle East. She discusses how open banking is breaking down barriers to global money movement and the crucial role of technology in facilitating faster cross-border payments. Lori emphasizes the importance of balancing innovation and security, advocating for responsible prototyping. With a focus on tokenization and blockchain, she highlights how these advancements enhance cash mobility while ensuring trust and risk management.

Teresa Ho, Head of U.S. Short Duration Strategy at J.P. Morgan, shares her insights on stablecoins, explaining their mechanics and growing significance in finance. She discusses the implications of the GENIUS Act and contrasts stablecoins with traditional deposits and money market funds. Teresa also highlights a $300 billion market, driven by crypto correlation and emerging market dollarization. While expressing doubts about retail adoption, she sees potential for institutional use and cross-border payments, all amidst ongoing regulatory challenges.

Jahangir Aziz, head of Emerging Markets Research at J.P. Morgan, and Jay Barry, head of Global Rates Strategy, dive deep into the shifting global economic landscape. They discuss how AI is driving growth and why tariffs haven’t significantly disrupted supply chains. Aziz outlines the U.S. economy's ability to bend without breaking, despite inflation challenges. Barry explores the Treasury market outlook, including anticipated Fed rate cuts and potential funding gaps. Together, they highlight the evolving dynamics of U.S.-China relations and the bonds market's future.

Martin Kallström, CEO of Lynx Asset Management and a veteran in actuarial and alternative investments, shares his expertise on trend-following strategies. He explains how these strategies capture long-term market shifts and the unique culture that differentiates Lynx from competitors. Kallström discusses the evolving role of machine learning and the importance of understanding data, while emphasizing the significant human element in trading models. He also reveals Lynx’s exciting plans to leverage LLMs in upcoming systematic equity programs.