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Insights to empower better decisions

Tools and resources necessary to help make informed investment decisions and build stronger portfolios

Weekly Market Recap
New U.S. 12 - 04 - 2023
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Guide to the Markets

The J.P. Morgan Guide to the Markets illustrates a comprehensive array of market and economic histories, trends and statistics through clear charts and graphs.

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Discover J.P. Morgan's Long-Term Capital Market Assumptions, drawing on the best thinking of our experienced investment professionals worldwide.

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The Guide to Retirement is here. This guide provides a powerful framework to support advisors’ retirement planning conversations with clients by using data, exhibits and analysis to explain complex retirement issues in a clear and concise manner.

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        Dr. David Kelly, Chief Global Strategist

Our thought leaders sit down for a conversational breakdown of big ideas, future trends, emerging topics and their investment implications complete with key takeaways to help inform building stronger investment plans and portfolios for the long-term.

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Market Commentary

When will higher rates start hurting companies?

For investors, large caps may be better insulated from higher rates than small caps, and falling net interest costs can assist decelerating input costs and wages in supporting stabilizing margins.

Read more

Have other equity market returns been as concentrated as those in the U.S.?

The big story for U.S. equity markets this year has been the remarkable performance of the largest seven technology stocks or the “magnificent 7.” These handful of stocks account for nearly 100% of S&P 500 YTD returns and are up over 72% this year.

Read more

Does technical analysis matter?

Many investors are comfortable with the concept of fundamental analysis but are less confident in the technical aspects of market forecasting. As a result, they may wonder: does technical analysis matter?

Read more

Have equity valuations adjusted to higher rates?

Active stock selection remains of the utmost importance, as investors should look toward attractively priced companies with strong balance sheets and resilient profits.

Read more

What are the implications of cooling inflation?

For markets, disinflation could pose an earnings headwind for certain industries like autos, hotels and airlines while the Fed’s “higher for longer” mantra could instill continued volatility in bond markets.

Read more

Where can investors find sources of diversification?

While many of the traditional sources of diversification have been challenged by market conditions, alternative investments can enhance diversification.

Read more

How to position fixed income under different economic and interest rate scenarios?

Coming into 2023, the rallying cry from the asset management community was “Bonds are Back! ”. There were several reasonable assumptions behind this call.

Read more

After two consecutive pauses, what is next for the Federal Reserve?

While a reacceleration in growth and/or inflation could prompt another rate hike either in December or early next year, short-term bumps in a downward trending economy likely keep the Fed on hold well into 2024.

Read more

Can China turn its economy around?

Historically, Chinese market recoveries can be fast and furious, highlighting the risk of being too underweight China when pessimism is already elevated.

Read more

3Q23 earnings: Here today, what about tomorrow?

At the start of the year, investors and economists were confident that 2023 would be a challenging year for the economy, markets and corporate profits. In the event, however, growth has been better than expected, equity markets are higher, and earnings have surprised to the upside.

Read more

What is the opportunity in the secondary market?

The secondary market can often relieve liquidity issues for investors in private equity by offering the opportunity to sell existing investments to another buyer.

Read more

What is your outlook for the energy sector?

At first glance, the jump in energy equities may seem like a temporary phenomenon, but a variety of economic factors could support the sector’s performance over the longer-term.

Read more

Should investors embrace active or passive in fixed income?

Given the shifting characteristics in the bond market and uncertainty around the path of rates from here, investors should engage in an active approach with proven managers in their fixed income allocations.

Read more

Which measure of earnings should I look at?

The question for investors, however, is which measure of earnings has the highest correlation with stock market returns.

Read more

Does incoming data signal another rate increase by year end?

With two FOMC meetings before year end, investors and policymakers are closely monitoring the totality of incoming data to determine whether the committee will lift rates again or go on an extended pause.

Read more

What is the outlook for 3Q23 earnings season?

Despite many looming threats to the economy, 3Q23 earnings season should hopefully represent a relative bright spot in the landscape.

Read more

Is good news bad news?

As rates have moved higher risk assets have found themselves under pressure, with the S&P 500 down more than 7% from its July 31st high of 4,589. To an extent, this price action has been driven by a shift in investor psychology whereby “good news” is now “bad news.”

Read more

Will the U.S. economy avoid a recession next year?

It is still a close call on whether the economy will enter a recession or not, but we do believe slow growth is the most likely outcome, while risks for a mild recession remain.

Read more

How will the auto worker strike impact the U.S. economy?

If automobile production decreases, prices for vehicles, particularly used ones, may increase once more, unwinding some of recent disinflation and putting renewed upward pressure on “super-core” CPI.

Read more

What happens if the U.S. government shuts down?

After well over a year of anxiously anticipating an economic recession, the U.S. economy continues to look sound. However, as we enter the “fall of worry” there are several risks on the horizon this autumn: impacts from the UAW strike, rising oil prices, the resumption of student loan payments, and the potential for a government shutdown.

Read more

What are the investment implications of the September FOMC meeting?

As widely anticipated, the Federal Open Market Committee (FOMC) voted to leave the Federal funds rate unchanged at a target range of 5.25%-5.50% at its September meeting.

Read more

The transformative power of generative AI

Last quarter, 40% of S&P 500 companies mentioned artificial intelligence (AI) in their earnings calls – more than double from a year earlier – and their collective investments in AI are exploding.

Read more

What do financial conditions tell us about future growth?

With the possibility of tighter financial conditions going forward, investors may be well served by looking for any signs that tighter conditions are beginning to weigh on activity.

Read more

What is the outlook for the relationship between stocks and bonds?

Over the long run, duration will be an investor’s friend for both asset classes: not only will lower rates push bond prices higher, but a lower opportunity cost of owning equities and easy monetary policy should allow valuations and earnings expectations to move higher.

Read more

Have the rest of EM been faring as badly as China?

While what happens in China will continue to influence growth, sentiment, and performance in the broader EM universe, powerful structural and cyclical themes can lead to differentiated performance.

Read more

How might the outlook for real yields impact market performance?

We expect a slower growth and cooling inflation environment will allow the Fed to gradually reduce rates next year, thus stabilizing real yields and potentially biasing them lower.

Read more

What do I need to know after summer vacation?

With many parents (and investors!) taking the end of summer to be with their families and go to the beach one last time, kids are not the only ones who need a refresher before they head back to the classroom; in today’s blog, we try to help parents get ready to go “back to school.”

Read more

What is really going on with real assets?

2023 has seen more office conversion activity – while sometimes this can be easier said than done, it does suggest that there is an evolving opportunity in the office space for investors who can deploy additional capital.

Read more

Is the excitement toward Indian equities justified?

India’s smaller share in global manufacturing exports and its lower dependence on the China reopening story helps to explain its strength versus other export-oriented Asian economies’ struggles.

Read more

What is ‘up’ with rates?

While the probability of a soft landing has risen given the generally strong incoming data, the concern is that most leading indicators continue to point to recession.

Read more

Will U.S. investment grade credit spreads remain tight amid economic uncertainty?

The rally in corporate credit may have caught some investors by surprise given the consensus that a recession would materialize this year, a historically bad environment for credit spreads.

Read more

Is it true that when the U.S. sneezes the rest of the world catches a cold?

Looking back at the past six U.S. stock market declines greater than 10%, international has not always sold off more. In some instances, it has performed in line or even better.

Read more

2Q23 earnings: Resilient

This combination of resilient growth, better than expected profits and enthusiasm around artificial intelligence has led to a strong rally in U.S. equities so far this year.

Read more

What is the outlook for oil prices?

The likely cause for declining oil prices is increased U.S. production, which is expected to reach an all-time high in 2023.

Read more

Will the Federal Reserve hike rates again?

While the Fed may need some more convincing over the next two meetings, it seems reasonable to expect this tightening cycle will end this year.

Read more

What is the outlook for private equity?

It would not be surprising to see a more notable re-rating in valuations later this year or in early 2024; this, in turn, will create opportunity for both primary and secondary market investors.

Read more

Have U.S. equities rallied too much?

Beneath the surface are two market dynamics: the megacap tech stocks, which account for the lion’s share of positive market performance year-to-date, and everything else.

Read more

What is the outlook for capital spending?

The combination of slower economic growth, higher interest rates and tightening credit conditions are likely to weigh on CapEx and could be the thing that tips the U.S. economy into a mild recession.

Read more

What trends are persisting across alternative investments?

Fundamentals differ significantly at the sector level. For example, office remains the weakest sector, as vacancy rates remain elevated, and firms struggle to fully exit remote working.

Read more

Was the June FOMC meeting a Fed pause or hawkish skip?

Today’s announcement made it clear that the committee still needs more compelling evidence that inflation is under control and could very well tighten at least once more this summer.

Read more

Is the Fed getting inflation wrong?

While labor market conditions may have had some effect on pushing up services prices, we think its impact is overstated. Over the last 4 months, more than half of the year-over-year gain in core services ex-shelter inflation has come from transportation services alone.

Read more

How can private infrastructure fit in my portfolio?

Core infrastructure continues to represent a way to generate income without taking on more equity risk, while proactively hedging portfolios from the chance that inflation is harder to tame than many currently expect.

Read more

Will the debt ceiling aftermath push up interest rates?

Although rates have risen across the curve in recent weeks due to debt ceiling uncertainty, more hawkish Fed expectations, and resilient economic data, the overall macro landscape is one of slowing growth and receding inflation.

Read more

How have higher rates impacted alternatives?

In real estate, industrial asset valuations have barely flinched given low vacancy rates and rising rents, whereas the office space has seen (and is expected to see) further pain as we determine what the future of work will look like.

Read more

How will challenges in commercial real estate impact regional banks?

Given the rapid tightening from the Federal Reserve, property values are likely to be marked down in the quarters ahead impacting loan values on bank balance sheets.

Read more

How sustainable is equity market performance?

This combination of lower rates, higher equity valuations, and declining earnings – with a potential recession on the horizon – leaves us cautious on the equity market at current levels.

Read more

How could stress in the banking sector impact the real economy?

A pause from the Fed is certainly welcome from a broader macro perspective, but the challenges facing local and regional banks in particular, are still prevalent.

Read more

Beware Medicare: Why is Medicare funding a big problem?

For Americans planning for retirement, the obvious implication is to save and invest more. Beyond this, it has become increasingly necessary to have some assets outside of traditional 401(k)s and IRAs.

Read more

What happens if the U.S. breaches the debt ceiling?

The U.S. reached its debt limit of USD 31.4 trillion on January 19th and has since been relying on funds in the Treasury General Account (TGA) and so-called “extraordinary measures” to fund its obligations.

Read more

How to position after a Fed pause?

The statement language has shifted from “ongoing increases will be appropriate” to a data-dependent approach “in determining the extent to which additional policy firming may be appropriate”, hinting the committee is ready to pause rate increases.

Read more

When will Chinese markets react to China’s economic reopening boost?

After an initial rally of 60% from late October to late January, Chinese equities have corrected 15% and are now down marginally for the year.

Read more

1Q23 earnings: Better than expected

The bottom line is that performance in U.S. equity markets so far this year has been all about rates, a theme that should persist as earnings expectations gradually align with reality.

Read more

Have the odds of a U.S. recession this year increased?

The first estimate of 1Q23 real GDP showed the economy grew at a 1.1% annualized rate, below the consensus expectation for 1.9% growth.

Read more

What is going on with private credit?

Moreover, many banks stepped away from riskier lending in the aftermath of 2008, creating an opportunity for private credit firms and other direct lenders to increase their market share.

Read more

Are inflation and employment signaling the Fed is not done?

Those waiting for a pick-up in unemployment to signal a looming recession or that the Fed can finally declare victory may be too late.

Read more

Achieving net zero: The path to a carbon-neutral world

Governments are aligning behind the goal of achieving net zero emissions by 2050, but dramatic changes to the global economy will be required to get us there. Learn more about the policies and innovations that could pave the way to a carbon-neutral world.

Read more

Will the U.S. dollar go “digital”?

These financial institutions would incorporate FedNow into their existing transfer infrastructure, so consumers, businesses and non-bank payment providers would use the system indirectly, rather than treat it as a third-party application.

Read more

The changing shape of Europe’s energy transition

Accelerating efforts to achieve a green and secure energy supply are having an impact on the economy and markets.

Read more

Will the March CPI print force the Fed to hike in May?

The key point, though, is that much of the “stickiness” that has been ascribed to core services may largely reflect the lingering hangover of supply chain issues, where Fed policy has little impact.

Read more

Is the window of opportunity closing for bond investors?

As the Fed ponders its next step, investors should be mindful that the window of opportunity that has emerged in fixed income may slam shut quickly.

Read more

What mattered for equity markets in 1Q23?

The bottom line is that performance in U.S. equity markets so far this year has been all about rates, a theme that should persist as earnings expectations gradually align with reality.

Read more

A new supercycle – the clean tech transition and implications for global commodities

A forced and rapid energy transition is under way. Discover what impact this will have on commodity markets and clean energy investment opportunities.

Read more

What are the opportunities in municipal bonds?

However, with a potential recession on the horizon and vulnerabilities in the financial system, investors ought to be selective, gearing towards the highest quality areas of the bond market.

Read more

The March FOMC decision: Is the Fed done tightening?

In the statement, the Federal Reserve (Fed) acknowledged the potential implications of banking turmoil on the economic outlook but highlighted that at this point, it’s uncertain how big that impact will be.

Read more

Where will the U.S. dollar go from here?

However, we seem to be at the beginning of a turnaround given the change in the international growth and interest rate backdrop, together with a potential shift in market leadership.

Read more

How do investors make sense of economic data, bank failures and central bank actions?

Putting aside the obvious implications of the above – namely uncertainty and, in turn, volatility – it would be wise to also consider what this means for the March Federal Open Market Committee (FOMC) meeting.

Read more

How does the February CPI print influence the FOMC’s March rate decision?

This highly anticipated print was overshadowed by the fallout from regional bank failures, which could also impact how the Federal Reserve (Fed) approaches its March rate decision.

Read more

What is the outlook for commercial real estate?

With the U.S. housing market struggling under the weight of higher mortgage rates, higher home prices, and limited supply, more and more questions have been coming in around the outlook for commercial properties.

Read more

Are the stars aligning for Emerging Markets?

While uncertainty remains about the cyclical path of U.S. policy and growth, the picture has gotten much clearer (and more positive) in China since late 2022.

Read more

Will higher rates return inflation to 2%?

The recent surge in inflation has been driven by both demand and supply factors as fiscal stimulus and low rates supported a boost in demand, while lockdowns put significant pressure on supply chains.

Read more

Have government labor data become unreliable?

In general, these concerns remind us that the government’s monthly jobs report should be seen as just one piece of the broader labor market mosaic.

Read more

Can bonds again provide both income and insurance?

By the second half of the year, growth is likely to slow as the cumulative effects of higher rates are felt and inflation moderates as food and shelter consumer price index (CPI) soften.

Read more

Should Certificates of Deposit be a part of portfolio construction?

Ultimately, the conversation around cash and traditional long-term assets should not be framed as “either/or”, but rather as “both, for different reasons.”

Read more

Is China unavoidable in 2023?

Several pro-growth changes occurred late last year that investors should not ignore: support to the real estate sector, conclusion of the regulatory review of the internet sector, dialing down of geopolitical tensions – and crucially, a changing of the “Zero COVID policy".

Read more

Will disinflation be transitory?

Markets had largely expected the uptick, but the underlying components showed a more mixed inflation picture compared to the broad-based declines seen in prior months.

Read more

How might financial conditions impact Federal Reserve rate hikes?

Although financial conditions are tighter now than in early 2022, they have retreated significantly in recent months.

Read more

Is international equity outperformance sustainable this time?

The next decade is likely to be characterized by more “normal” inflation. As a result, not all recent central bank rate hikes will be unwound - the era of free money is over.

Read more

How soon could the Federal Reserve finish hiking?

The statement language and press conference were somewhat dovish.

Read more

Is there an opportunity in small caps?

Importantly, however, significant valuation dispersion suggests that as investors gain more clarity about the health of the U.S. economy and trajectory of inflation and rates, small caps could lead the charge as we embark on the next bull run.

Read more

4Q22 Earnings: The calm before the storm?

2022 was a year to forget in the capital markets. Stock/bond correlations turned positive and left traditional investors with nowhere to hide as volatility spiked and prices plunged.

Read more

Are bonds a good investment?

Compared to the past decade, bond yields across every major sector are above their ten-year median.

Read more

What does the rental market mean for inflation this year?

To have a clear view on where inflation may be heading, it is therefore worth understanding how the rental market is faring.

Read more

Can alternative investments deliver in 2023?

Looking ahead to 2023 we see slower growth, a gradual deceleration in inflation, and monetary policy that remains tight; as always, this will create risks, as well as opportunities, across the spectrum of alternative investments.

Read more

Will the U.S. run out of funding after reaching the debt ceiling?

For investors, we anticipate a slowdown in economic growth and inflation should bring bond yields lower, but debt ceiling risks, although certainly not our base case, could derail the bond market recovery and foment significant volatility if realized.

Read more

What do you expect from 4Q earnings?

Operating leverage, which is the relationship between changes in revenue and changes in earnings, continues to be key for profitability.

Read more

What to do with fixed income in 2023?

Current data suggest three realities: inflation is cooling; job growth remains firm, but is likely to moderate, as will wage growth; and services and manufacturing data point to broader economic slowing.

Read more

What are the investment implications of China’s reopening?

China’s resumption of normal manufacturing activity should continue to support supply chain normalization, maintaining global inflation on its cooling trend.

Read more

Will diversification make a comeback in 2023?

For long-term investors, buying the dips – in both stocks and bonds—could become attractive in 2023, and diversification could stage a comeback.

Read more

How will investors remember 2022?

2022 was a roller coaster for investors with Russia’s invasion of Ukraine challenging global energy supply, central banks pivoting aggressively to combat high inflation, fading, yet still widespread effects of a global pandemic impacting consumers, businesses, and supply chains, and elevated political uncertainty shifting the landscape of economies globally. In summary, 2022 was a volatile year.

Read more

What is the consumer spending on?

The past few weeks have seen much ink spilled on 2023 outlooks, with strategists and analysts suggesting an increased likelihood of recession next year as the consumer begins to show signs of stress at a time when the Federal Reserve (Fed) has signaled there is more room for rates to rise.

Read more

Why isn’t the market agreeing with the Federal Reserve?

As widely anticipated, the Federal Open Market Committee (FOMC) voted unanimously to raise the federal funds rate target range by 0.50% to 4.25%-4.50% at its December meeting.

Read more

Is inflation finally slowing?

November’s CPI report showed a second month of softening inflation despite still-elevated price growth. Headline CPI increased 0.1% month-over-month (m/m) and 7.1% year-over-year (y/y), while core CPI (ex-food and energy) increased 0.2% m/m and 6.0% y/y, all below consensus expectations.

Read more

Is the labor market as strong as investors fear?

Today’s investing landscape is dominated by a sentiment that may seem odd at first glance: namely, that good news is bad news. More specifically, good news for the economy is bad news for the stock market.

Read more

Have international equity markets already priced in the worst?

International equities are down -13.6% year-to-date (in U.S. dollars), with multiple contraction and weaker currencies dragging on returns, as investors price in higher rates and more uncertainty about fundamentals.

Read more

Are we in or headed towards a recession?

The US economy is showing signs that the post pandemic surge is beginning to moderate, but we do not think a recession is imminent. Nonetheless, stocks are near correction territory, consumer sentiment has soured to levels last seen in 2011, geopolitical tensions are elevated, and prices are higher everywhere; all of which challenge this view.

Read more

1Q22 Earnings: Don’t stop believin’

A re-rating of valuations has led to negative equity returns year-to-date, but importantly, earnings estimates have continued to trend higher. In an environment of rising rates, earnings will be the key driver of returns.

Read more

Inflation: A Somewhat Sticky Situation

As we emerge from this pandemic with inflation now rising at its fastest pace since the 1980s, the biggest question for investors is whether some of this inflation will prove “sticky”.

Read more

What kind of equities should I own if inflation is rising?

The remainder of 2021 should see an acceleration in economic activity, rising inflation, and higher interest rates. In general, this dynamic should support the outperformance of value relative to growth, with attractive relative valuations acting as an additional tailwind for value outperformance.

Read more

What does the latest oil price collapse mean for investors?

It is important to avoid trying to predict the future; rather, clients are best served by monitoring the present situation and maintaining composure.

Read more

Monetary medicine of limited effectiveness

Even with this Fed action, there will likely be calls for fiscal action to support to businesses suffering from the response to virus fears, says David Kelly.

Read more

On the Minds of Investors

12/01/2023

When will higher rates start hurting companies?

For investors, large caps may be better insulated from higher rates than small caps, and falling net interest costs can assist decelerating input costs and wages in supporting stabilizing margins.

Read more
11/29/2023

Have other equity market returns been as concentrated as those in the U.S.?

The big story for U.S. equity markets this year has been the remarkable performance of the largest seven technology stocks or the “magnificent 7.” These handful of stocks account for nearly 100% of S&P 500 YTD returns and are up over 72% this year.

Read more
11/22/2023

Does technical analysis matter?

Many investors are comfortable with the concept of fundamental analysis but are less confident in the technical aspects of market forecasting. As a result, they may wonder: does technical analysis matter?

Read more
11/17/2023

Have equity valuations adjusted to higher rates?

Active stock selection remains of the utmost importance, as investors should look toward attractively priced companies with strong balance sheets and resilient profits.

Read more
11/15/2023

What are the implications of cooling inflation?

For markets, disinflation could pose an earnings headwind for certain industries like autos, hotels and airlines while the Fed’s “higher for longer” mantra could instill continued volatility in bond markets.

Read more
11/10/2023

Where can investors find sources of diversification?

While many of the traditional sources of diversification have been challenged by market conditions, alternative investments can enhance diversification.

Read more
11/08/2023

How to position fixed income under different economic and interest rate scenarios?

Coming into 2023, the rallying cry from the asset management community was “Bonds are Back! ”. There were several reasonable assumptions behind this call.

Read more
11/02/2023

After two consecutive pauses, what is next for the Federal Reserve?

While a reacceleration in growth and/or inflation could prompt another rate hike either in December or early next year, short-term bumps in a downward trending economy likely keep the Fed on hold well into 2024.

Read more
11/01/2023

Can China turn its economy around?

Historically, Chinese market recoveries can be fast and furious, highlighting the risk of being too underweight China when pessimism is already elevated.

Read more
10/27/2023

What is the opportunity in the secondary market?

The secondary market can often relieve liquidity issues for investors in private equity by offering the opportunity to sell existing investments to another buyer.

Read more
10/25/2023

What is your outlook for the energy sector?

At first glance, the jump in energy equities may seem like a temporary phenomenon, but a variety of economic factors could support the sector’s performance over the longer-term.

Read more
10/20/2023

Should investors embrace active or passive in fixed income?

Given the shifting characteristics in the bond market and uncertainty around the path of rates from here, investors should engage in an active approach with proven managers in their fixed income allocations.

Read more
10/18/2023

Which measure of earnings should I look at?

The question for investors, however, is which measure of earnings has the highest correlation with stock market returns.

Read more
10/13/2023

Does incoming data signal another rate increase by year end?

With two FOMC meetings before year end, investors and policymakers are closely monitoring the totality of incoming data to determine whether the committee will lift rates again or go on an extended pause.

Read more
10/11/2023

What is the outlook for 3Q23 earnings season?

Despite many looming threats to the economy, 3Q23 earnings season should hopefully represent a relative bright spot in the landscape.

Read more
10/06/2023

Is good news bad news?

As rates have moved higher risk assets have found themselves under pressure, with the S&P 500 down more than 7% from its July 31st high of 4,589. To an extent, this price action has been driven by a shift in investor psychology whereby “good news” is now “bad news.”

Read more
10/04/2023

Will the U.S. economy avoid a recession next year?

It is still a close call on whether the economy will enter a recession or not, but we do believe slow growth is the most likely outcome, while risks for a mild recession remain.

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09/29/2023

How will the auto worker strike impact the U.S. economy?

If automobile production decreases, prices for vehicles, particularly used ones, may increase once more, unwinding some of recent disinflation and putting renewed upward pressure on “super-core” CPI.

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09/27/2023

What happens if the U.S. government shuts down?

After well over a year of anxiously anticipating an economic recession, the U.S. economy continues to look sound. However, as we enter the “fall of worry” there are several risks on the horizon this autumn: impacts from the UAW strike, rising oil prices, the resumption of student loan payments, and the potential for a government shutdown.

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09/21/2023

What are the investment implications of the September FOMC meeting?

As widely anticipated, the Federal Open Market Committee (FOMC) voted to leave the Federal funds rate unchanged at a target range of 5.25%-5.50% at its September meeting.

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09/20/2023

What do financial conditions tell us about future growth?

With the possibility of tighter financial conditions going forward, investors may be well served by looking for any signs that tighter conditions are beginning to weigh on activity.

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09/15/2023

What is the outlook for the relationship between stocks and bonds?

Over the long run, duration will be an investor’s friend for both asset classes: not only will lower rates push bond prices higher, but a lower opportunity cost of owning equities and easy monetary policy should allow valuations and earnings expectations to move higher.

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09/13/2023

Have the rest of EM been faring as badly as China?

While what happens in China will continue to influence growth, sentiment, and performance in the broader EM universe, powerful structural and cyclical themes can lead to differentiated performance.

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09/08/2023

How might the outlook for real yields impact market performance?

We expect a slower growth and cooling inflation environment will allow the Fed to gradually reduce rates next year, thus stabilizing real yields and potentially biasing them lower.

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09/06/2023

What do I need to know after summer vacation?

With many parents (and investors!) taking the end of summer to be with their families and go to the beach one last time, kids are not the only ones who need a refresher before they head back to the classroom; in today’s blog, we try to help parents get ready to go “back to school.”

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08/30/2023

What is really going on with real assets?

2023 has seen more office conversion activity – while sometimes this can be easier said than done, it does suggest that there is an evolving opportunity in the office space for investors who can deploy additional capital.

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08/23/2023

Is the excitement toward Indian equities justified?

India’s smaller share in global manufacturing exports and its lower dependence on the China reopening story helps to explain its strength versus other export-oriented Asian economies’ struggles.

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08/16/2023

What is ‘up’ with rates?

While the probability of a soft landing has risen given the generally strong incoming data, the concern is that most leading indicators continue to point to recession.

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08/09/2023

Will U.S. investment grade credit spreads remain tight amid economic uncertainty?

The rally in corporate credit may have caught some investors by surprise given the consensus that a recession would materialize this year, a historically bad environment for credit spreads.

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08/02/2023

Is it true that when the U.S. sneezes the rest of the world catches a cold?

Looking back at the past six U.S. stock market declines greater than 10%, international has not always sold off more. In some instances, it has performed in line or even better.

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07/19/2023

What is the outlook for oil prices?

The likely cause for declining oil prices is increased U.S. production, which is expected to reach an all-time high in 2023.

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07/19/2023

Will the Federal Reserve hike rates again?

While the Fed may need some more convincing over the next two meetings, it seems reasonable to expect this tightening cycle will end this year.

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07/12/2023

What is the outlook for private equity?

It would not be surprising to see a more notable re-rating in valuations later this year or in early 2024; this, in turn, will create opportunity for both primary and secondary market investors.

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07/05/2023

Have U.S. equities rallied too much?

Beneath the surface are two market dynamics: the megacap tech stocks, which account for the lion’s share of positive market performance year-to-date, and everything else.

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06/28/2023

What is the outlook for capital spending?

The combination of slower economic growth, higher interest rates and tightening credit conditions are likely to weigh on CapEx and could be the thing that tips the U.S. economy into a mild recession.

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06/21/2023

What trends are persisting across alternative investments?

Fundamentals differ significantly at the sector level. For example, office remains the weakest sector, as vacancy rates remain elevated, and firms struggle to fully exit remote working.

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06/15/2023

Was the June FOMC meeting a Fed pause or hawkish skip?

Today’s announcement made it clear that the committee still needs more compelling evidence that inflation is under control and could very well tighten at least once more this summer.

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06/14/2023

Is the Fed getting inflation wrong?

While labor market conditions may have had some effect on pushing up services prices, we think its impact is overstated. Over the last 4 months, more than half of the year-over-year gain in core services ex-shelter inflation has come from transportation services alone.

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06/07/2023

How can private infrastructure fit in my portfolio?

Core infrastructure continues to represent a way to generate income without taking on more equity risk, while proactively hedging portfolios from the chance that inflation is harder to tame than many currently expect.

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05/31/2023

Will the debt ceiling aftermath push up interest rates?

Although rates have risen across the curve in recent weeks due to debt ceiling uncertainty, more hawkish Fed expectations, and resilient economic data, the overall macro landscape is one of slowing growth and receding inflation.

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05/26/2023

How have higher rates impacted alternatives?

In real estate, industrial asset valuations have barely flinched given low vacancy rates and rising rents, whereas the office space has seen (and is expected to see) further pain as we determine what the future of work will look like.

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05/24/2023

How will challenges in commercial real estate impact regional banks?

Given the rapid tightening from the Federal Reserve, property values are likely to be marked down in the quarters ahead impacting loan values on bank balance sheets.

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05/19/2023

How sustainable is equity market performance?

This combination of lower rates, higher equity valuations, and declining earnings – with a potential recession on the horizon – leaves us cautious on the equity market at current levels.

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05/17/2023

How could stress in the banking sector impact the real economy?

A pause from the Fed is certainly welcome from a broader macro perspective, but the challenges facing local and regional banks in particular, are still prevalent.

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05/12/2023

Beware Medicare: Why is Medicare funding a big problem?

For Americans planning for retirement, the obvious implication is to save and invest more. Beyond this, it has become increasingly necessary to have some assets outside of traditional 401(k)s and IRAs.

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05/10/2023

What happens if the U.S. breaches the debt ceiling?

The U.S. reached its debt limit of USD 31.4 trillion on January 19th and has since been relying on funds in the Treasury General Account (TGA) and so-called “extraordinary measures” to fund its obligations.

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05/04/2023

How to position after a Fed pause?

The statement language has shifted from “ongoing increases will be appropriate” to a data-dependent approach “in determining the extent to which additional policy firming may be appropriate”, hinting the committee is ready to pause rate increases.

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05/03/2023

When will Chinese markets react to China’s economic reopening boost?

After an initial rally of 60% from late October to late January, Chinese equities have corrected 15% and are now down marginally for the year.

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04/28/2023

Have the odds of a U.S. recession this year increased?

The first estimate of 1Q23 real GDP showed the economy grew at a 1.1% annualized rate, below the consensus expectation for 1.9% growth.

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04/26/2023

What is going on with private credit?

Moreover, many banks stepped away from riskier lending in the aftermath of 2008, creating an opportunity for private credit firms and other direct lenders to increase their market share.

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04/21/2023

Are inflation and employment signaling the Fed is not done?

Those waiting for a pick-up in unemployment to signal a looming recession or that the Fed can finally declare victory may be too late.

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04/21/2023

Achieving net zero: The path to a carbon-neutral world

Governments are aligning behind the goal of achieving net zero emissions by 2050, but dramatic changes to the global economy will be required to get us there. Learn more about the policies and innovations that could pave the way to a carbon-neutral world.

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04/19/2023

Will the U.S. dollar go “digital”?

These financial institutions would incorporate FedNow into their existing transfer infrastructure, so consumers, businesses and non-bank payment providers would use the system indirectly, rather than treat it as a third-party application.

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04/18/2023

The changing shape of Europe’s energy transition

Accelerating efforts to achieve a green and secure energy supply are having an impact on the economy and markets.

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04/12/2023

Will the March CPI print force the Fed to hike in May?

The key point, though, is that much of the “stickiness” that has been ascribed to core services may largely reflect the lingering hangover of supply chain issues, where Fed policy has little impact.

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04/05/2023

Is the window of opportunity closing for bond investors?

As the Fed ponders its next step, investors should be mindful that the window of opportunity that has emerged in fixed income may slam shut quickly.

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03/31/2023

What mattered for equity markets in 1Q23?

The bottom line is that performance in U.S. equity markets so far this year has been all about rates, a theme that should persist as earnings expectations gradually align with reality.

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03/30/2023

A new supercycle – the clean tech transition and implications for global commodities

A forced and rapid energy transition is under way. Discover what impact this will have on commodity markets and clean energy investment opportunities.

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03/29/2023

What are the opportunities in municipal bonds?

However, with a potential recession on the horizon and vulnerabilities in the financial system, investors ought to be selective, gearing towards the highest quality areas of the bond market.

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03/23/2023

The March FOMC decision: Is the Fed done tightening?

In the statement, the Federal Reserve (Fed) acknowledged the potential implications of banking turmoil on the economic outlook but highlighted that at this point, it’s uncertain how big that impact will be.

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03/22/2023

Where will the U.S. dollar go from here?

However, we seem to be at the beginning of a turnaround given the change in the international growth and interest rate backdrop, together with a potential shift in market leadership.

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03/17/2023

How do investors make sense of economic data, bank failures and central bank actions?

Putting aside the obvious implications of the above – namely uncertainty and, in turn, volatility – it would be wise to also consider what this means for the March Federal Open Market Committee (FOMC) meeting.

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03/15/2023

How does the February CPI print influence the FOMC’s March rate decision?

This highly anticipated print was overshadowed by the fallout from regional bank failures, which could also impact how the Federal Reserve (Fed) approaches its March rate decision.

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03/10/2023

What is the outlook for commercial real estate?

With the U.S. housing market struggling under the weight of higher mortgage rates, higher home prices, and limited supply, more and more questions have been coming in around the outlook for commercial properties.

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03/08/2023

Are the stars aligning for Emerging Markets?

While uncertainty remains about the cyclical path of U.S. policy and growth, the picture has gotten much clearer (and more positive) in China since late 2022.

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03/03/2023

Will higher rates return inflation to 2%?

The recent surge in inflation has been driven by both demand and supply factors as fiscal stimulus and low rates supported a boost in demand, while lockdowns put significant pressure on supply chains.

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03/01/2023

Have government labor data become unreliable?

In general, these concerns remind us that the government’s monthly jobs report should be seen as just one piece of the broader labor market mosaic.

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02/24/2023

Can bonds again provide both income and insurance?

By the second half of the year, growth is likely to slow as the cumulative effects of higher rates are felt and inflation moderates as food and shelter consumer price index (CPI) soften.

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02/22/2023

Should Certificates of Deposit be a part of portfolio construction?

Ultimately, the conversation around cash and traditional long-term assets should not be framed as “either/or”, but rather as “both, for different reasons.”

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02/17/2023

Is China unavoidable in 2023?

Several pro-growth changes occurred late last year that investors should not ignore: support to the real estate sector, conclusion of the regulatory review of the internet sector, dialing down of geopolitical tensions – and crucially, a changing of the “Zero COVID policy".

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02/15/2023

Will disinflation be transitory?

Markets had largely expected the uptick, but the underlying components showed a more mixed inflation picture compared to the broad-based declines seen in prior months.

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02/10/2023

How might financial conditions impact Federal Reserve rate hikes?

Although financial conditions are tighter now than in early 2022, they have retreated significantly in recent months.

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02/08/2023

Is international equity outperformance sustainable this time?

The next decade is likely to be characterized by more “normal” inflation. As a result, not all recent central bank rate hikes will be unwound - the era of free money is over.

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02/02/2023

How soon could the Federal Reserve finish hiking?

The statement language and press conference were somewhat dovish.

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02/01/2023

Is there an opportunity in small caps?

Importantly, however, significant valuation dispersion suggests that as investors gain more clarity about the health of the U.S. economy and trajectory of inflation and rates, small caps could lead the charge as we embark on the next bull run.

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01/27/2023

Are bonds a good investment?

Compared to the past decade, bond yields across every major sector are above their ten-year median.

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01/25/2023

What does the rental market mean for inflation this year?

To have a clear view on where inflation may be heading, it is therefore worth understanding how the rental market is faring.

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01/20/2023

Can alternative investments deliver in 2023?

Looking ahead to 2023 we see slower growth, a gradual deceleration in inflation, and monetary policy that remains tight; as always, this will create risks, as well as opportunities, across the spectrum of alternative investments.

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01/18/2023

Will the U.S. run out of funding after reaching the debt ceiling?

For investors, we anticipate a slowdown in economic growth and inflation should bring bond yields lower, but debt ceiling risks, although certainly not our base case, could derail the bond market recovery and foment significant volatility if realized.

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01/13/2023

What do you expect from 4Q earnings?

Operating leverage, which is the relationship between changes in revenue and changes in earnings, continues to be key for profitability.

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01/11/2023

What to do with fixed income in 2023?

Current data suggest three realities: inflation is cooling; job growth remains firm, but is likely to moderate, as will wage growth; and services and manufacturing data point to broader economic slowing.

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01/06/2023

What are the investment implications of China’s reopening?

China’s resumption of normal manufacturing activity should continue to support supply chain normalization, maintaining global inflation on its cooling trend.

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01/04/2023

Will diversification make a comeback in 2023?

For long-term investors, buying the dips – in both stocks and bonds—could become attractive in 2023, and diversification could stage a comeback.

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12/28/2022

How will investors remember 2022?

2022 was a roller coaster for investors with Russia’s invasion of Ukraine challenging global energy supply, central banks pivoting aggressively to combat high inflation, fading, yet still widespread effects of a global pandemic impacting consumers, businesses, and supply chains, and elevated political uncertainty shifting the landscape of economies globally. In summary, 2022 was a volatile year.

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12/21/2022

What is the consumer spending on?

The past few weeks have seen much ink spilled on 2023 outlooks, with strategists and analysts suggesting an increased likelihood of recession next year as the consumer begins to show signs of stress at a time when the Federal Reserve (Fed) has signaled there is more room for rates to rise.

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12/16/2022

Why isn’t the market agreeing with the Federal Reserve?

As widely anticipated, the Federal Open Market Committee (FOMC) voted unanimously to raise the federal funds rate target range by 0.50% to 4.25%-4.50% at its December meeting.

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12/14/2022

Is inflation finally slowing?

November’s CPI report showed a second month of softening inflation despite still-elevated price growth. Headline CPI increased 0.1% month-over-month (m/m) and 7.1% year-over-year (y/y), while core CPI (ex-food and energy) increased 0.2% m/m and 6.0% y/y, all below consensus expectations.

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12/09/2022

Is the labor market as strong as investors fear?

Today’s investing landscape is dominated by a sentiment that may seem odd at first glance: namely, that good news is bad news. More specifically, good news for the economy is bad news for the stock market.

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12/07/2022

Have international equity markets already priced in the worst?

International equities are down -13.6% year-to-date (in U.S. dollars), with multiple contraction and weaker currencies dragging on returns, as investors price in higher rates and more uncertainty about fundamentals.

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05/20/2022

Are we in or headed towards a recession?

The US economy is showing signs that the post pandemic surge is beginning to moderate, but we do not think a recession is imminent. Nonetheless, stocks are near correction territory, consumer sentiment has soured to levels last seen in 2011, geopolitical tensions are elevated, and prices are higher everywhere; all of which challenge this view.

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03/12/2021

What kind of equities should I own if inflation is rising?

The remainder of 2021 should see an acceleration in economic activity, rising inflation, and higher interest rates. In general, this dynamic should support the outperformance of value relative to growth, with attractive relative valuations acting as an additional tailwind for value outperformance.

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03/09/2020

What does the latest oil price collapse mean for investors?

It is important to avoid trying to predict the future; rather, clients are best served by monitoring the present situation and maintaining composure.

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03/03/2020

Monetary medicine of limited effectiveness

Even with this Fed action, there will likely be calls for fiscal action to support to businesses suffering from the response to virus fears, says David Kelly.

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Featured Portfolio Insights

Global Asset Allocation Views 4Q 2023

As growth and inflation moderate and the U.S. economy shows resilience, we favor carry trades, relative value positions and manager selection alpha above bold directional calls. We modestly overweight duration and remain neutral on equities.

Learn more

Global Equity Views 4Q 2023

Our portfolio managers are taking a somewhat conservative view of the outlook, with average returns in prospect. We favor quality industrial and technology companies but remain cautious about paying too much for the “expensive defensive” groups.

Learn more

Global Fixed Income Views 4Q 2023

Recession and Sub Trend Growth are now our equal-weighted base cases at 50% each. We reduced the probability of Recession by 5% and increased the likelihood of Sub Trend Growth by 10%. Our top pick: short-duration securitized credit.

Learn more

Factor views 4Q 2023

Despite shifting regimes and changing market conditions, factors enjoyed another strong quarter. The equity value and equity quality factors rallied, signaling that investors were more focused on company fundamentals than earlier in 2023.

Learn more
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