The Weekly Strategy Report (April 18, 2016) - J.P. Morgan Asset Management

The Weekly Strategy Report (April 18, 2016)

Contributor Multi-Asset Solutions
In brief
  • The economic recovery in the eurozone after the global financial crisis was delayed relative to other regions by the European sovereign debt crisis of 2011/12; however, the slow pace of reform in the banking sector – relative to the actions taken by the U.S. and UK with regard to their banks – has left a lasting strain on eurozone bank earnings.
  • Now that the eurozone economic recovery is taking hold, lingering concerns over bank earnings and solvency present a material drag on European equity indices. While we don’t expect a V-shaped rebound in bank earnings, we do believe that current earnings forecasts may be excessively negative given the steady improvement in the economy.
  • Asset allocators can view the trough level of earnings and crisis level valuation in the eurozone banking sector as offering an “embedded option” on persistent eurozone growth. As a result, we judge the weakness in European banks and stock indices to be overdone and maintain a modestly positive view on European equities in 2016.
EXHIBIT 1: Path of real GDP for Eurozone, U.S., UK and Japan since the global financial crisis in 2008.

Source: MacData, J.P. Morgan Asset Management Multi-Asset Solutions; data as of April 14, 2016. Note: numbers reindexed to 100 at 2Q06. For illustrative purposes only.

Download the full report:
The Weekly Strategy Report (April 18 2016)

Related products

JPM Global Macro Opportunities Fund
Leveraging global macro themes to generate performance. This fund targets positive returns in various market conditions by capitalising on the opportunities created by economic trends within a risk-controlled framework.
JPM Multi-Asset Income Fund
Using a flexible approach that seeks only the best income opportunities from around the globe, our Multi-Asset Income Fund aims to provide investors with a consistent and attractive income stream and the opportunity for capital growth.
JPMorgan Global Growth & Income plc

The JPMorgan Global Growth & Income plc seeks out strong long-term returns by investing in a best ideas, high-conviction portfolio from across the world's stock market. The Company also delivers predictable quarterly income distributions which are set at the beginning of its financial year.

Important information

Please be aware that this material is for information purposes only. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are, unless otherwise stated, J.P. Morgan Asset Management’s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all-inclusive and are not guaranteed as to accuracy. They may be subject to change without reference or notification to you. JPMorgan Asset Management Marketing Limited accepts no legal responsibility or liability for any matter or opinion expressed in this material.

The value of investments and the income from them can fall as well as rise and investors may not get back the full amount invested. Past performance is not a guide to the future.