Eye on the Market | J.P. Morgan Asset Management

Latest: Coronavirus (COVID-19) research compilation

Michael Cembalest presents his latest research to-date on the coronavirus. The compilation includes infection, mortality, economic and market research to date, and will be continuously updated.

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LATEST COMMENTARY

The Thing

Some things just cannot be talked about. So in this year’s Thanksgiving piece, I wrote about something else.

Help Wanted

In this Eye on the Market: early signs of goods bottlenecks easing; the more persistent issue of US labor shortages; the US, Taiwan, China, treaty changes and semiconductor capacity; and an update on the most over-indebted US states

Dude, Where’s My Stuff?

The global supply chain mess will require increased vaccination and acquired immunity, semiconductor capacity expansion and the end of extraordinary housing/labor supports to resolve. A close look at some very anomalous charts on shipping, semiconductors, inventories, labor shortages, foreclosures and mortality.

Your Fall 2021 syllabus

Greetings students. We look forward to seeing you back on campus. Your Fall 2021 syllabus is attached. Syllabus update: Biology BI66 “The Origins of COVID” has been cancelled until further notice.

Spaccine hesitancy

Topics: if people avoided SPACs instead of avoiding COVID vaccines, the US would be both wealthier and closer to herd immunity. An update on our SPAC analysis from last February, and a look at the strange mathematical paradox that ends up understating some critical COVID vaccine efficacy data.

Red Med Redemption

Red Med Redemption: A visual depiction of politics, ideology, vaccine resistance and the Delta variant. Other topics: US economic recovery update, and big tech reliance on acquisitions to fuel growth at a time of rising anti-trust enforcement. We conclude with a new “Investor Odds & Ends” section that covers NYC hotel/office markets and possible changes in personal, corporate and international tax rates.

Thy Brother’s Keeper

COVID and the Delta variant; the Fed as firefighter and arsonist; US-China economic divorce picks up steam; and the pig-snake inflation timetable (how long until we know if there’s a permanent wage/price rise).

Food Fight: 2021 private equity update

Every two years, we take a close look at the performance of the private equity industry given its rising share of institutional and individual portfolios. Our findings this year: the private equity industry is still outperforming public equity, but this outperformance narrowed as all markets benefit from non-stop monetary and fiscal stimulus, and as private equity acquisition multiples rise. We examine manager dispersion, benchmarks, co-investing, GP-led secondary funds, the torrid pace of industry fundraising and manager fees in this year’s piece.

An investor’s look at China’s recovery

An investor’s look at China’s recovery, the Sinopharm vaccine and the importance of scientific methods

Inflation. Duh!

Our February and March Eye on the Market pieces discussed shrinking US excess capacity, fiscal stimulus and the contortions people gyrate into to convince themselves that rising inflation would not be a problem for equity markets. My conclusion at the time: expectations for permanently low inflation and rates drove the rise in P/E multiples in recent years, so a reversal in inflation and rate expectations poses a risk to them. Since March, US equity markets hit a plateau as inflation expectations reached their highest levels in a decade. This Eye on the Market addresses questions we’re receiving on markets, inflation, rates and capital gains taxes, and concludes with comments on COVID and India.

Eye on the Market 11th Annual Energy Paper

Even as the world becomes more energy efficient each year, overall levels of CO2 emissions continue to rise. Without decarbonization shock treatment, humans will be wedded to fossil fuels for longer than they would like.

Absolute Value

Topics: Biden goes for broke on growth, driving coincident and leading indicators to all-time highs; the Value recovery and where it goes from here; COVID herd immunity, the path to normalcy and rising concerns about thrombosis risks from vector vaccines.

The Smalligarchy

The Smalligarchy: how the narrowest political margins in decades could deliver one of the biggest taxation and spending increases in the post-war era; a discussion of the investment implications of physical and human infrastructure bills; the US economy approaches lift off; and the latest news on Morone saxatilis.

Interest rate pretzels and the Zoom shock on real estate

If long-term US interest rates stay below 2%, that’s a great sign for equity investors. But if they don’t…it’s amazing to see the pretzels that people contort into to convince themselves that rising rates are not a problem for equities. Also: an early look at the Zoom shock on commercial and residential real estate, and the diverging COVID trends in the US vs Europe.

Very short stories

Short stories on the global recovery, plummeting COVID infections, Larry Summers & the bond market, SPAC sponsors, renewable energy, the Texas power outage and the battle for the Republican Party.

Hydraulic Spacking

The SPAC capital raising boom, and why Biden’s early stage energy policies are more likely to increase oil imports rather than reduce emissions.

Fear of Flying

Equity markets are flying. So is COVID. So are corporate reactions to Congressional objectors.

Eye on the Market Outlook 2021: The Hazmat Recovery

Michael Cembalest’s views on what will drive markets and the economy in 2021, as well as the challenges we face that stimulus and vaccines can’t solve.

Special EOTM: Jan 6 Joint Session of Congress

The Jan 6 Joint Session of Congress is shaping up to be a very contentious meeting. Here’s a brief 2-page primer on the rules of engagement, for those interested.

Holiday Eye on the Market: The Winter of Our Discontent

The belief in election illegitimacy is spreading faster than COVID. With field reporting from Alexander Fleming, Rutherford B Hayes, Richard III, Bob Newhart and the Attorney General of Ohio.

Election 2020 - Praying for Time

The election as referendum on America: how well does the “system” work, and for whom?

The Needle and the Damage Done

The cost of engineering a US recovery as the world waits for a vaccine; Biden agenda on taxes/spending; Tech stocks (2020 vs 1999); COVID and The Fountainhead; US election rules, dates and process in light of derogatory comments on mail-in voting by the President and Attorney General

The Bounce

The US recovery; The flood of money and market returns; Globalization lives; Reducing COVID mortality through vascular treatments; Realistic timetables for never-been-done before vaccines; Sweden’s COVID experiment is not what you think

The Day After

Tracking the rebirth of the US consumer with real time data as a function of infection levels and state policy. Additional topics: no evidence yet of material second waves of COVID infection, and a round-up of the latest news on vaccine trials (Moderna, Oxford, Sinovac) and anticoagulants.

Zoom Room

In this week’s Eye on the Market, we review topics from our recent client Zoom calls. Topics include: risk of inflation, second waves of infection, the effectiveness of lockdowns and Biden’s taxation and spending agenda.

Ready or Not: The US prepares to reopen

An update on the COVID-19 crisis as the US prepares to reopen despite having one of the highest infection rates in the world. Additional topics: monoclonal antibodies and anti-viral trials; the growing gap between markets and the economy; S&P 500 earnings haves and have-nots; regional equity performance (Europe loses again) and leveraged loans at a time of rising bankruptcies.

State's Rights

In this week’s note, we discuss the latest news on US infection trends and reopening plans, Remdesivir trial results and whether US fiscal stimulus is “enough”.

Are we there yet?

Lockdown relaxation and economic reawakening…are we there yet?

COVID and culture

In this week's note, we take a close look at country and regional virus data, and examine the pitfalls of over-extrapolating trends that often reverse.

The equity rally and herd immunity

After the equity rally, P/E multiples are back at around 16x 2021 consensus earnings.

Man vs Nature Part II

Virus trends and head-fakes, convalescent plasma and U.S. vs. China lockdowns.

Man vs Nature: what the government can and cannot fix

There are things the government can try and fix during a pandemic and other things which it can't.

John Stuart Mill and the road from ruin to recovery

There are some difficult days ahead as quarantines and lockdowns grow. I want to share something with you from John Stuart Mill as we head into the unknown.

Coronavirus (COVID-19) research compilation

Michael Cembalest, Chairman of Market and Investment Strategy, has compiled his extensive research on coronavirus.

The pandemic gap

A lot of data is being made available on the coronavirus, but most of it requires careful analysis before drawing conclusions.

Berning Man

Confounding almost every forecast we saw last week, Senator Biden appears to have emerged from Super Tuesday with a sizeable delegate lead. Why might the night have turned out so differently from what was expected just a few days ago?

COVID-19 update

A Coronavirus update: severity, consequences and implications for investors.

Millions and Trillions

Answers to questions on the coronavirus, US megacap stocks, the cost of Democratic Healthcare plans, the Iowa caucus and the problem with the student loan system.

Rotten Tomatoes

Consensus reactions to the Phase I US-China deal are very skeptical, but may be missing the broader point. A brief note on what happened, and the alternatives.

Ghosts of Christmas Past

After a very positive year for investors in 2019, we expect lower positive returns on financial assets in 2020 as some Ghosts of Christmas Past reappear.

War of the Worlds

How a discussion about China and Hong Kong morphed into a chart war about Trump, Hoover, Taft, Rachel Maddow and Anderson Cooper.

The Armageddonists

While recessions and bear markets are a fact of life, something peculiar happened after the Global Financial Crisis: the rise of the Armageddonists.

Warren Peace

A close look at the Progressive Agenda, China’s deteriorating welcome mat in DC and US Tech IPOs.

Active Management and QE-distorted markets

Michael Cembalest analyzes the performance of over 6,700 domestic and international active equity managers and discusses the challenges they face.

Cold Turkey

A brief comment on a proposal from leading Presidential candidates to ban hydraulic fracturing everywhere, immediately.

So long Yellow Brick Road

It was a long, hot summer at the Heritage Foundation. An update from the front lines of the Trade War.

Lost in Space: The Search for Democratic Socialism in the Real World

Michael went on a search for Democratic Socialism in the real world, and ended up halfway around the globe from where he began.

Listen when people tell you who they are

Michael discusses how he should have taken Trump at his word on tariffs, and the impact of the widening trade war on global growth and equity markets as proposed tariffs approach pre-war levels.

Smoot Hardly

The US-China trade war, prescription drug price legislation and the 2020 election.

Energy Outlook 2019: Mountains and Molehills

Topics: unattainable objectives of the Green New Deal; overview of the world’s decarbonization challenges; Germany’s energy transition; Trump’s War on Science.

SPECIAL REPORTS

Annual Outlooks Energy Outlooks

Annual Outlooks

Outlook 2019: The Decline of Western Centralization, Part II

For the first time in 20 years, markets will have to survive without support from central banks.

Outlook 2018: The Decline of Western Centralization

There’s a global recovery under way that is broadening across regions.

Outlook 2017: True Believers

Prepare for another single digit portfolio return year in 2017.

Outlook 2016: Planet of the Aches

Some aches and pains are constraining the global economy, with more severe strains occurring in the emerging world.

Outlook 2014: The Great Race

Thanks to extra fuel from the Fed, the U.S. is running at a steady pace and should accelerate modestly in 2014.

Outlook 2011: The Printing Press

As we head into 2011, global profits are rising, U.S. household incomes and debt burdens are improving and global services are starting to rebound.

Energy Outlooks

Energy Outlook 2019: Mountains and Molehills

This year's paper gets into the details of where energy comes from, how it’s used, and the de-carbonization challenges facing the world’s industrialized and emerging economies.

Energy Outlook 2018: Pascal's Wager

This year’s topics: examples of how energy transitions are gradual rather than sudden, defying the expectations of futurists: climate goals, natural gas, electric vehicles.

Energy Outlook 2017: Many Rivers to Cross

The cost of solar, wind and storage continues to fall, improving cost-emissions tradeoffs for electricity grids. Yet there are still many rivers to cross on the road to decarbonization.

Energy Outlook 2016: Sentimental Journey

The journey to a renewable energy future is taking longer than many analysts and agencies expected.

Energy Outlook 2015: A Brave New World

We look at how the individual components of the energy grid fit together in a system dominated by renewable energy, with a focus on cost and CO2 emissions.

Energy Outlook 2014: The Arc of History

This year’s topics: the eventual transition to renewable energy; renewable energy stocks; US energy independence, wind, solar and energy/electricity storage.

Energy Outlook 2013: Reality Check

This year’s topics: U.S. energy independence, growing cottage industry, liquified natural gas, coal and Japan's reconsideration of nuclear generation.

Energy Outlook 2012: How countries are planning for Independence Day

The most important energy developments of 2012: Energy independence initiatives in the US, Europe and Japan; geopolitical implications of rising Chinese oil demand; and another rough year for the electric car.

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Latest: Coronavirus (COVID-19) research compilation

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