The Weekly Strategy Report (27 March 2017) - J.P. Morgan Asset Management
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The Weekly Strategy Report (27 March 2017)

Contributor Multi-Asset Solutions
In brief
  • The global reflation theme that has taken hold of markets in recent months
    encompasses, in our view, several phenomena, including a broadening of strong
    growth beyond the U.S.
  • Growth has shifted upward in both the euro area and Japan, and solid economic
    performance will likely continue through this year for both.
  • Japan grew at a satisfactory pace last year without much support from fiscal easing,
    which should represent a significant tailwind in 2017. Cyclical forces are operating in the euro area after years of weakness, and episodes of country-specific political
    uncertainty have not damaged growth recently.
  • Concerns linger in both markets as investors await the two rounds of the French
    presidential election in April and May; and consider the lack of success the Abenomics program has had in changing private sector behavior in Japan.
  • As a reflection of these fundamental views, we hold an overweight position in Japanese equities and an underweight in German Bunds, while staying neutral, for now, in euro area stocks.
EXHIBIT 1: ESTIMATED GROWTH EFFECT OF JAPANESE FISCAL POLICY

Source: Japan Cabinet Office, J.P. Morgan Asset Management Multi-Asset Solutions; data and forecasts as of February 2017. For illustrative purposes only.

The Weekly Strategy Report (27 March 2017)

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