Select a Role

Terms and conditions

Table of Contents
  • For Professional Clients
  • Terms of Use
For Professional Clients

In order to enter the page please read the information below and affirm by clicking the accept button that you have read and understood the information provided.

 

FOR PROFESSIONAL CLIENTS/ASSET OR WEALTH MANAGERS ONLY – NOT FOR RETAIL USE OR DISTRIBUTION

I affirm that I am a Professional Client / Tied Agent as defined in the Markets in Financial Instruments Directive (MiFID) published by the European Commission.

This is a marketing communication and as such the views contained herein are not to be taken as advice or a recommendation to buy or sell any investment or interest thereto. Reliance upon information in this material is at the sole discretion of the reader. Any research in this document has been obtained and may have been acted upon by J.P. Morgan Asset Management for its own purpose. The results of such research are being made available as additional information and do not necessarily reflect the views of J.P. Morgan Asset Management. 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. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Changes in exchange rates may have an adverse effect on the value, price or income of the products or underlying overseas investments. Past performance and yield are not a reliable indicator of current and future results. There is no guarantee that any forecast made will come to pass. Furthermore, whilst it is the intention to achieve the investment objective of the investment products, there can be no assurance that those objectives will be met. J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. To the extent permitted by applicable law, we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies. Personal data will be collected, stored and processed by J.P. Morgan Asset Management in accordance with our EMEA Privacy Policy https://www.jpmorgan.com/emea-privacy-policy

As the product may not be authorized or its offering may be restricted in your jurisdiction, it is the responsibility of every reader to satisfy himself as to the full observance of the laws and regulations of the relevant jurisdiction. All transactions should be based on the latest available Prospectus, the Key Investor Information Document (KIID) and any applicable local offering document. These documents together with the annual report, semi-annual report and the articles of incorporation for the Luxembourg domiciled products are available free of charge upon request from JPMorgan Asset Management (Europe) S.à r.l., 6 route de Trèves, L-2633 Senningerberg, Grand Duchy of Luxembourg or your J.P. Morgan Asset Management regional contact.

This communication is issued in Europe (excluding UK) by JPMorgan Asset Management (Europe) S.à r.l., 6 route de Trèves, L-2633 Senningerberg, Grand Duchy of Luxembourg, R.C.S. Luxembourg B27900, corporate capital EUR 10.000.000.

Terms of Use

1. General information

  • The information on this Site is approved by JPMorgan Asset Management (Europe) S.à r.l., 6 route de Trèves, L-2633 Senningerberg, Luxembourg.

  • This Site provides information about JPMorgan investment funds ("JPM Funds"). This Site is strictly limited to information ends and is not allowed to be used for subscription or transactions of units/shares of JPM Funds. This information should not be regarded as giving you investment or tax advice about our products. If you are unclear about any of the information on this Site or its suitability for you, please contact your financial or tax adviser, or an independent financial or tax adviser before making any investment or financial decisions.

  • This Site should not be accessed by any person in any jurisdiction where (by reason of that person's nationality, residence or otherwise) the publication or availability of this Site is prohibited. In particular, this Site is reserved exclusively for non-US Persons*. The information in this Site is not for distribution to and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States of America to or for the benefit of US Persons.

  • Messages that you send to us by e-mail may not be secure. We recommend that you do not send any confidential information to us by e-mail. If you choose to send any confidential information to us via e-mail you do so at your own risk with the knowledge that a third party may intercept this information and we do not accept any responsibility for the security or integrity of such information.

  • We will try to keep this site operational at all times. However, we cannot guarantee that this Site or any of the various features upon it will always be available.

  • The hyperlinks provided on this Site are only provided for information and convenience purposes. JPMorgan Asset Management (Europe) S.à r.l. is not responsible for the content of external internet sites that link to or are accessible from this Site. JPMorgan Asset Management (Europe) S.à r.l. does not assume any responsibility or liability with respect to any website accessed via this Site.

  • Prospective investors should consult their own professional advisers on the tax implications of making an investment in, holding or disposing of any JPM Fund and the receipt of distributions with respect to such a fund.

2. Privacy and cookie policies

Please refer to our Privacy and Cookie Policies via the footer link.

3. Key investment risks

  • It is important that you read the relevant documentation (funds prospectus, Key Investor Information Document ‘KIID’) before you invest in JPM Funds to ensure you understand the specific risks involved and to determine whether it is a suitable product for you. A copy of the funds prospectus, the Key Investor Information Document ‘KIID’, as well as the annual and semi annual reports of the JPM Funds are available free of charge upon request from JPMorgan Asset Management (Europe) S.à r.l..

  • The value of shares/units of JPM Funds and any income from them can go down as well as up and you may not get back all that you have invested.

  • Estimates of future returns or indications of past performance on this Site are for information purposes only and should not be construed as a guarantee of current or future returns or performance.

  • Exchange rate changes may cause the value of underlying overseas investments to go down as well as up. Changes in currency rates of exchange may have an adverse effect on the value or income (if any) of the JPM Funds.

  • When investing in emerging market funds, emerging markets may be more volatile and the risk to your capital is greater.

  • The level of tax benefits and liabilities will depend on individual circumstances and may be subject to change in the future.

4. Combating financial crime

We are committed to combating financial crime and the prevention of money laundering. Accordingly we may need to verify your identity and carry out appropriate security checks.

5. Company information

  • J.P. Morgan Asset Management is a trading name. This business is mainly provided through subsidiaries or affiliate of J.P.Morgan Chase & Co.

  • JPMorgan Asset Management (Europe) S.à r.l., registered office is at 6, route de Trèves, L-2633 Senningerberg, Luxembourg.

6. Legal information

Whilst we will use every reasonable effort to ensure that the information contained on this Site is accurate as at the date of publication of such documents, we cannot guarantee the accuracy, suitability or completeness of any such information or the availability of the Site. We accept no liability for any data transmission errors such as data loss or damage or alteration of any kind. Accordingly JPMorgan Asset Management (Europe) S.à r.l. excludes any liability for any loss and/or damage (direct or consequential) arising from the use of any part of this Site. 

All copyright, patent, intellectual and other property in the information contained in this Site is held by JPMorgan Asset Management (Europe) S.à r.l., unless otherwise indicated. No rights of any kind are licensed or assigned or shall otherwise pass to persons accessing this information. You may download or print copies of the reports or information contained within this Site for your own private non-commercial use only, provided that you do not change any copyright, trade mark or other proprietary notices; all other copying, reproducing, transmitting, distributing or displaying of material on this Site (by any means and in whole or in part) is prohibited.

 

* US Person includes, but is not limited to, a person (including a partnership, corporation, limited liability company or similar entity) that is a citizen or a resident of the United States or is organised or incorporated under the laws of the United States. Certain restrictions also apply to any subsequent transfer of Shares in the United States or to US Persons. Should a Shareholder become a US Person and such US Person is not compulsory redeemed, such US Person may be subject to US withholding taxes and tax reporting.

Please read through the disclaimer before entering the site
AcceptDecline
Skip to main content
logo
Log in
Welcome
Log in for exclusive access and a personalized experience
Log in
Hello
  • My collections
    View saved content and presentation slides
  • Accounts and documents
    Digital servicing offering for active investors
  • Log out
  • Funds
    Overview

    Fund Explorer

    • SICAVs
    • Exchange-Traded Funds
    • Liquidity Funds

    Fund Information

    • Regulatory Documents
    • Regulatory Updates
  • Investment Strategies
    Overview

    Investment Options

    • Alternatives
    • Beta Strategies
    • Equities
    • Fixed Income
    • Global Liquidity
    • Multi-Asset Solutions

    Capabilities & Solutions

    • ETFs
    • Global Insurance Solutions
    • Pension investment solutions
    • Outsourced CIO
    • The power of active
    • Sustainable investing
    • Fixed income
  • Insights
    Overview

    Market Insights

    • Market Insights Overview
    • Eye on the Market
    • Guide to the Markets
    • Guide to Alternatives
    • Mid-Year Investment Outlook 2025
    • Why Alternatives?

    Portfolio Insights

    • Portfolio Insights Overview
    • Alternatives
    • Asset Class Views
    • Equity
    • ETF Perspectives
    • Fixed Income
    • Long-Term Capital Market Assumptions
    • Sustainable Investing Insights
    • Strategic Investment Advisory Group

    ETF Insights

    • ETF Insights Overview
    • Guide to ETFs
  • Resources
    Overview
    • Center for Investment Excellence Podcasts
    • Library
    • Insights App
    • Webcasts
    • Morgan Institutional
    • Investment Academy
  • About us
    Overview
    • Diversity, Opportunity & Inclusion
    • Our Leadership Team
  • Contact Us
  • English
  • Institutional Investors
  • Ireland
Hello
  • My collections
    View saved content and presentation slides
  • Accounts and documents
    Digital servicing offering for active investors
  • Log out
Log in
Search
Menu
Search
You are about to leave the site Close
J.P. Morgan Asset Management’s website and/or mobile terms, privacy and security policies don't apply to the site or app you're about to visit. Please review its terms, privacy and security policies to see how they apply to you. J.P. Morgan Asset Management isn’t responsible for (and doesn't provide) any products, services or content at this third-party site or app, except for products and services that explicitly carry the J.P. Morgan Asset Management name.
CONTINUE Go Back
  1. Silver bullets are not magnetic

  • LinkedIn Twitter Facebook WhatsApp

Silver bullets are not magnetic

03-10-2019

Andrew Norelli

Since my last dispatch, the Fed executed two hawkish rate cuts, waited one meeting too long to cut the IOER rate an extra 5 basis points, and was forced to intervene in the funding markets to keep the Fed Funds rate from breaching the top of their target band; President Trump twice escalated his tariffs, got a Chinese retaliation, continued his assault on independent monetary policy in the United States, called both Xi Jinping and Jay Powell “Enemies” on Twitter, very clearly “ordered” US firms to stop doing business with China, and opened himself up to an official impeachment inquiry; the ECB was compelled to cut rates further negative, adopt a tiering mechanism for bank reserves, and restart their QE program.

But hey the US data got better there for a bit! I was asked repeatedly whether I thought the probability of recession in 2020 was dropping and global growth was rebounding. The answer was (and remains) unfortunately no, because the damage done by the US-China geopolitical conflict has simply not been undone, at all. To me, the global economy seems to be in a perilous situation, because economic momentum is weakening (trade is the epicenter), and monetary policymakers have far less ammunition than in prior cycles to address the problem. The ECB and the BOJ never got any hikes done during the entire the business cycle1, so they’re staring down the pike at rising recession risk with policy rates already negative, and all central bankers seem either reluctant or unable to ease aggressively without the clear and present danger of imminent recession. If I put it like that, it seems fairly concerning, with no clear long-term solution or endgame.

And yet, stocks are high, spreads are tight, volatility is low. Financial conditions are still remarkably easy; capital is cheap, unicorn implosions notwithstanding. Why is this? Well I think the reason is at least partially a form of modern, market-related “whataboutism,” the classic propaganda technique. In markets, there is an expectation of support from policymakers and governments that is bordering on entitlement. After all, post-crisis markets have been clearly supported by a very diverse array of stimulus. So now, markets expect more: yes, growth is slowing, but whatabout Chinese stimulus? Whatabout more QE? Whatabout fiscal stimulus? Whatabout a shock-and-awe interest rate cut by the Fed? Whatabout a payroll tax cut? Whatabout indexing capital gains for inflation? Whatabout “whatever it takes?”

In much the same way as whataboutism has worked for generations as a political propaganda tool, so too it appears to be working to engender market optimism even when it is difficult to extrapolate the various “whatabouts” into sustainable and painless prosperity. For skeptics who try to look forward, the question is: how does it all end… are we really going to deficit spend and QE our way to a new business cycle? In a nutshell, the simultaneous increase in fiscal deficits and central bank bond purchases at near full employment reeks of “MMT” or Modern Monetary Theory. MMT suggests that as long as governments control the use and supply of their own currency, central bank-financed deficits may persist without limit until inflation pressure arises. Or, inflation is the only limit to governmental profligacy financed with printed money. I am almost embarrassed to admit that the theoretical underpinnings of MMT make some sense to me2, but much like other controversial economic systems, I think it can only work in theory. Human nature, especially (but not only) in democracies, prevents MMT from fulfilling its promises.

In practice MMT would go something like this: when faced with the current environment of slowing global growth, tenuous labor market stability, and unremarkable inflation pressure, the political pull toward MMT’s magnetic combination of deficit spending and central bank bond buying will overcome the handwringing over sky-high debt levels. Tax cuts will happen. Near-term, there will be no adverse effects, and the economic expansion will be prolonged for a time. But at some point, inflation pressure will arise. I see no other possible outcome when taken to the extreme3. Politicians will then be faced with a choice: under MMT, the budget deficit rather than monetary policy is supposed to regulate inflation, so when inflation pressure occurs, politicians must shrink the budget deficit rapidly. The other option is to deviate from MMT, and maintain (or increase!) the budget deficit. Ramping down that deficit, after a period of time in which economic growth has been sustained by the deficit, will trigger a self-inflicted recession almost for sure, and likely result in politicians’ ouster from office. On the other hand, politicians can roll the dice with inflation and keep their jobs until it gets really bad. Which do you think will occur? This element of political economy is a reason why young democracies or tenuous authoritarian regimes periodically have to lop off a bunch of zeros from their currencies, and why a rescue lender like the IMF still occasionally faces political opposition in countries which need its help.

It doesn’t take a huge philosophical leap to see that central-bank financed fiscal profligacy (whether restrained in the case of MMT or completely unrestrained) ultimately leads to pain, so there should always be some opposition to it. It’s not clear that the major economies will even pursue it in the absence of a crisis and lots of labor market slack. But if they do, which would satisfy many of the “whatabout” questions supporting the market today, it is not a silver bullet. On the contrary, adopting such policies to extend an ageing business cycle can deepen the eventual pain of a recession. If a country pursues pro-cyclical fiscal policy or MMT, it takes the option off the table when it’s truly needed in the depths of a recession (the traditional counter-cyclical response), just like the seemingly more limited monetary policy options we have now.


1 Except for the pair of quickly regrettable ECB hikes under Draghi’s predecessor back in 2011.

2 See: Seven Deadly… by Warren Mosler, founder of the hedge fund Triple-I, and also the builder of the fabulous MT900.

3 Other than perhaps an implausibly huge level of wealth inequality I discussed here and here, and like that satirized in the movie Elysium.

  • Federal Reserve
  • Trade war
  • Central Banks
  • Market Views
  • Growth
  • Inflation
  • Monetary Policy
  • Economic Outlook

RELATED ARTICLES

FOMC statement & potential impact on fixed income

Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).

Read more

FOMC statement & potential impact on fixed income

Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).

Read more

Confirmation, Conflict, Hope

Top of mind insights from our Global CIO

Read more
J.P. Morgan Asset Management

  • About us
  • Investment stewardship
  • Privacy policy
  • Cookie policy
  • Sitemap
J.P. Morgan

  • J.P. Morgan
  • JPMorgan Chase
  • Chase

READ IMPORTANT LEGAL INFORMATION. CLICK HERE >

The value of investments may go down as well as up and investors may not get back the full amount invested.

Copyright 2025 JPMorgan Chase & Co. All rights reserved.