On the Minds of Investors | J.P. Morgan Asset Management

Were there any V-shaped recoveries from the COVID recession?

In the end, were there any V-shaped recoveries from the COVID recession? There is only one example around the world: China.

What is the outlook for alternatives in 2021?

Most investors are familiar with the return challenges they may face in the years to come. Elevated equity market valuations and historically low interest rates have led us to forecast that a 60/40 portfolio of global equities and high quality U.S. fixed income will return 4.2% annually over the next 10-15 years.

What can we expect in Biden’s first 100 days?

Inauguration day starts the clock on the first 100 days of a new administration, a symbolic benchmark period to measure early success. During the first 100 days, we anticipate another fiscal package, a pivot on foreign policy, trade and regulation, and a preview of future recovery spending.

How much higher can Treasury yields climb?

Treasury yields have climbed above 1% and investors are asking how much higher Treasury yields could climb in 2021.

When will U.S. debt become unsustainable?

With U.S. federal debt at 100.1% of GDP, the highest since World War II and rising, investors wonder what the breaking point could be.

The investment implications of a “blue ripple”

In the first week of January, two Democratic challengers defeated Republican incumbents in the state of Georgia’s senatorial race, bringing an end to a hotly contested runoff election and solidifying the Democratic hold of both chambers of Congress and the White House.

Will the U.S. dollar continue to fall in 2021?

2020 ended with a depreciation of the U.S. dollar, as 2021 begins, investors wonder: will the U.S. dollar continue to fall?

How did COVID-19 impact the 12 days of Christmas?

2020 is a year that nobody will forget, characterized by the rapid spread of COVID-19, an aggressive policy response, and over the past few weeks, the distribution of vaccines that many hope will bring an end to the pandemic in 2021.

How is the U.S. economy handling the third wave?

Coming into the final quarter of 2020, we expected that U.S. economic activity would slow from the torrid pace seen during the third quarter.

How will the vaccine be distributed globally?

2020 will be remembered as the year of the pandemic, while 2021 promises to be the year of the vaccine.

How does anchor bias impact perceptions of sustainable investing?

Rapid evolution of strategies available under the sustainable investing umbrella has subjected SI perceptions to anchoring bias.

Is there a place for Bitcoin in my portfolio?

Bitcoin and other cryptocurrencies went into hibernation for a number of years. In 2020, however, cryptocurrencies have come roaring back.

Which regions will outperform in the year of the vaccine?

Investors received positive news about the trials of three COVID-19 vaccines, giving them the freedom to look ahead at the broadening of the global recovery

How strong will the fourth quarter economic recovery be?

Last week, researchers at the Atlanta Federal Reserve made waves when they released an updated “nowcast” for 4Q 2020 GDP growth.

Should I be concerned over expiring credit facilities?

In a somewhat surprising move, US Treasury Secretary Mnuchin announced that the PMCCF, SMCCF, MLF, MSLP and TALF will expire at the end of the year and that unused funds be returned to the Treasury.

What can COVID-19 vaccines tell us about the opportunity in small caps?

For investors that can stomach potential risks, small cap stocks may offer opportunities for meaningful upside, particularly as the economic recovery strengthens in 2021.

Will holiday retail sales be naughty or nice?

The holiday shopping season is upon us again, but with economic hardship caused by the ongoing pandemic, there is some concern as to whether this retail season will be merry and bright.

How can I use alternatives for income and diversification?

Although rates have moved higher during the past few weeks, investors are still struggling to generate income without increasing portfolio volatility. More and more, however, alternative investments are providing a solution.

How will the U.S. election impact the U.S. dollar?

In a recent post, we argued that the main way the U.S. election had been impacting international markets was through the U.S. dollar, this continued after Election Day, with a significant move down in the dollar of 1.4% in the three days after the election was held.

No (Fed) news November

In the midst of the busiest political week of the year and with the outcome of the presidential election still uncertain, the Federal Open Market Committee (FOMC) did its best to fly under the radar at its November meeting.

What made 3Q GDP so strong?

The 3Q 2020 GDP print revealed the full strength of the U.S. economic rebound in the aftermath of one of the worst recessions in living memory.

Have 3Q20 earnings been better than expected?

After a sharp decline in economic activity during the first half of the year, the U.S. economy bounced back strongly in the third quarter.

Confirmation Bias: How do we view U.S. over International Equities?

Over the last decade, there have been many trends in market leadership, such as large cap outperformance over small cap equities, growth over value equities, and U.S. over international equities.

How will the U.S. election impact international markets?

All eyes have been on the upcoming U.S. election. Its twists and turns have not only been affecting domestic markets, but also international markets, especially via the U.S. dollar.

What do election polls tell us?

Over the last four years, the frequent refrain about election polling is the polls were so wrong in 2016. But just how far off were the polls?

What does the future of energy look like?

As we think about the trajectory of the energy industry going forward, it is evolving in more ways than one.

Does DCA provide better returns than a lump sum strategy?

Discover the benefits of lump sum investing during the current low-interest rate regime, and its consistent outperformance of dollar cost averaging.

When should I dollar cost average?

For those investors feeling uneasy about markets, a DCA approach can help get those clients gradually get invested, says Jackson.

Substitution Bias: Is the disconnect between the economy and the stock market justified?

Many investors find this disconnect between the equity market and the economy perplexing and are constantly asking us: is it justified?

Which sectors perform best around an election?

As we approach Election Day, investors look to best position their portfolios for the next administration.

How should I position my portfolio if inflation comes back?

In recent months, the prospects of higher inflation has become front of mind for many investors.

Should I be worried about the stock market correction?

As we highlight in our 3Q20 Guide to Alternatives, core real assets like real estate and infrastructure can provide both diversification and income, while certain types of hedge fund strategies can zig when the stock market zags.

Recency Bias: How do current trends impact investment decisions?

After the dramatic market declines in March, many investors expected markets would continue to fall.

Are equities expensive?

The rebound from the late-March lows capped the shortest bear market in history and marked the fastest round trip back to all-time highs.

How might the election impact the municipal bond market?

With the presidential election just under two months away, investors are considering how a change in fiscal policies may impact the various sleeves of their overall investment portfolio.

Should I be worried about the market sell-off?

After a strong run, the end of last week saw U.S. equity markets come under pressure.

Is now the time to consider portfolio adjustments?

As the economy & markets continued to grind higher, investors entered into 2020 with prominent portfolio overweight’s into U.S. and Growth oriented equities.

Does the resurgence of COVID cases in Europe derail its investment story?

Fortunately, like the experience in the U.S., this second increase in cases is not being accompanied by the same rise in fatalities as the first.

The Fiscal Elephant in a Monetary Room

The Federal Open Market Committee officially announced an update to its Statement on Longer-Run Goals and Monetary Policy Strategy.

How would a corporate tax hike impact the recovery?

While markets are likely to experience volatility in the lead up to and the aftermath of the election, ultimately, it’s policy, not politics, that matter most.

Loss aversion: How does this impact investors now?

Loss aversion refers is the preference to avoid losing compared to gaining an equivalent amount.

Should I be positioned for higher yields?

Last week, we learned that the unemployment rate fell to 10.2% in July.

Where do we stand in the economic recovery?

Last week, we learned that the unemployment rate fell to 10.2% in July.

Will tensions between the U.S. and China keep rising?

It has become a near daily occurrence to awaken to headlines stating that “tensions between the U.S. and China are rising.

How should current conditions be reflected in asset allocation?

The global economy appears to be in the early innings of recovery, while simultaneously staring down the limitations to growth in a pre-vaccine world.

We had a recession, now what about the recovery?

Last week’s GDP report showed that the U.S. economy contracted at a real, annualized rate of -32.9% in 2Q20.

How do we track the gradual recovery?

The U.S. economy contracted at its fastest pace on record in the second quarter, reflecting the nationwide lockdown and halt in economic activity.

Framing: How do investors interpret equity market returns over time?

Coming into 2020 – against a backdrop of steady and stable economic growth, along with a positive earnings outlook – many investors were worried about the market highs reached over the last few years.

2Q20 Earnings: Guide me to your profits

The second quarter saw one of the fastest stock market rebounds in history.

Is the EU Recovery fund a game changer for investing in Europe?

Over the past ten years, European equities have underperformed the U.S. by 174% pts in U.S. dollar terms.

Is the U.S. recession over?

The Business Cycle Dating Committee marked the peak month of the previous expansion in February 2020, officially marking an end to the longest expansion on record.

Is China’s recession really over?

China’s imposition of a strict quarantine in response to the COVID-19 pandemic plunged its economy into a deep contraction in the first quarter of 2020, -6.8% year-over-year, its first negative GDP print in over 40 years.

How disinflationary will prices be in the short term?

The dramatic increase in federal debt and the expansion of monetary policy has many investors wondering if a surge in inflation is on the horizon.

Should I be worried about a double-dip recession?

May and June saw economic activity improve relative to the April lows, and we expect that economic growth will be positive in the back half of the year.

Will fatalities spike as COVID-19 cases rise?

After crushing the curve in the U.S., cases of COVID-19 have begun to rise rapidly again, with the resurgence occurring in new hotspots.

Why should investors consider Sustainable Investing?

Due to COVID-19 and the discussions around social issues and climate change, Sustainable Investing (SI) is more relevant today than ever before.

What does a second wave mean for equity markets?

The past few weeks have seen COVID-19 case growth accelerate in parts of the United States, with the total number of confirmed cases now well above 2.5 million.

What is the outlook for the U.S. dollar?

Since the start of the year, the U.S. dollar has appreciated by roughly 1%, continuing a near-decade long trend that was only briefly interrupted in 2017.

When it comes to fixed income, do you like high yield?

One of the best trades to put on in the aftermath of the financial crisis was going long high yield. Spreads blew out to nearly 18% in November 2008, implying a default rate of almost 30%.

Will investing in European equities ever pay off?

Over the past 15 years, investors have been frustrated with the performance of European equities.

When will we finally see a market correction?

At the end of last week, it looked like the equity market pullback that everyone had been expecting was finally beginning to materialize.

How will the Fed’s forward guidance impact bond investors?

The Federal Open Market Committee (FOMC) met this week and provided investors with a fresh set of economic and interest rate projections after a six month hiatus.

What’s going on with stock market sentiment?

While fundamentals– valuations, earnings and economic growth – dominate in the long run, the short run is a different matter.

What does the downturn mean for private equity?

Earlier this week, the Department of Labor (DOL) announced that defined contribution (DC) plan sponsors can begin to include private equity strategies in diversified investment options like target date funds (TDFs) or balanced funds.

Have markets recovered from the COVID-19 recession?

Investors have had to process a torrent of information and wild swings in sentiment so far this year.

Should I expect a market correction?

The S&P 500 has marched steadily higher from its March 23rd low against a backdrop of investor skepticism. In previous posts, we have discussed how this rally is being driven by three things.

Will the Fed cause inflation?

The balance sheet of the U.S. Federal Reserve (Fed) has increased by 2.9 trillion USD since the start of March, meaning that in just over eleven weeks it has grown more than it did in the five years following the Financial Crisis.

How will COVID-19 affect Sustainable Bonds?

Global governments have been swift and bold in supporting their economies, building a bridge to get consumers, small businesses and corporates over the present abyss to the other side. Given the unknown breadth and depth of the abyss, more stimulus may be required.

Has all EM behaved the same way this year?

Year-to-date, emerging market (EM) equities are down -17.6%, as a combination of the COVID-19 recession and the oil price shock has led to downward revisions to earnings expectations, as well as weaker currencies relative to the U.S. dollar.

Has the Fed done enough?

Ultimately, the Fed’s next step will be dictated by the pathway of the virus, says Dryden.

Should I go to the equity market for income?

In the aftermath of the global financial crisis (GFC), investors have embraced equity markets as a source of income. With the COVID-induced lockdown pushing policy rates back to the zero-bound and government bond yields near all-time lows, this trend has since gained additional momentum.

What opportunities were created by the COVID-19 earthquake?

During the first three weeks of March, investors stampeded out of riskier markets and rushed to safe assets. In the process, 100 billion USD flowed out of emerging market (EM) stocks and bonds –more than three times the outflows seen during each of the previous three risk-off periods.

Impact of being out of the market

This edition of On the Minds of Investors comes from, Katherine Roy, our Chief Retirement Strategist here at J.P. Morgan Asset Management. Her team oversees The Guide to Retirement (GTR), which is a best-in-class resource for breaking down and simplifying complex retirement issues like Social Security and Medicare.

What is going on with earnings?

Nearly half of S&P 500 companies have reported 1Q20 earnings, and our current estimate is for a -20% decline relative to a year prior. Against this backdrop, however, equity markets have continued trending higher.

Is now the time to invest in small cap stocks?

Global markets have roiled in the face of COVID-19 and social distancing, and many investors are looking to “pick up the pieces,” eagerly hunting for the next big opportunity.

What does post-COVID leverage mean for investing?

While many changes are likely to emerge, one clear trend, with far-reaching macro and market implications, is the increase in leverage, says Azzarello.

Why are oil prices negative?

Earlier this week, oil prices turned negative for the first time in history, with WTI trading as low as -$37 a barrel.

What will the reopening of the economy look like?

Over the past two months investors have digested the COVID-19 shock: the fast spread of the virus around the world, the social distancing measures implemented and the resulting economic and earnings recession.

1Q20 earnings: Virus oddity

1Q20 earnings season will provide an important first look at how the ongoing pause in global activity is impacting corporate earnings.

What does COVID-19 mean for real estate?

The industries most impacted by social distancing account for 20% of payroll employment, and consumer spending across those industries account for 20% of GDP.

How will stocks rebound from COVID-19?

With the equity market having hit its last new high on February 19th of this year, the depth and speed of the market drop has been ferocious.

What are the risks and opportunities in high yield?

Today’s objectively complicated credit market may be an excellent source of future portfolio growth, says Dryden.

Who's buying and who's selling?

The recent U.S. equity market drop and subsequent swings in prices have been dramatic.

Will American small business fire its workers?

Ultimately, how high the unemployment rate gets is dependent on one key question: will American small business fire its workers, says Manley.

A COVID-driven spike in claims

Initial claims for unemployment insurance surged to the highest level ever: 3,283,000, spiking from a slightly revised 282,000 last week.

The COVID-19 Relief Bill-Holding the Economy in Suspended Animation

This paper, written by Dr. David Kelly, reviews the U.S> relief bill and its investment implications.

What is the Fed doing and what does it mean for fixed income?

The U.S. Federal Reserve (Fed) has pulled out its alphabet bazooka in an effort to ensure sufficient liquidity and the smooth functioning of financial markets, while also providing credit to businesses that are affected by the spread of COVID-19 and the stall in global economic activity.

What will an earnings recession look like?

As economists continue to revise down their 2020 GDP estimates, a lot of clients have been asking us about the potential impact on earnings.

Can the Fed do more?

This past Sunday, the U.S. Federal Reserve (Fed) fired a last desperate salvo in an attempt to stabilize financial conditions, the second emergency inter-meeting cut in two weeks.

What policy response would help to stabilize markets?

Coming into this year, we expected an improvement in global economic growth, as 2019’s policy uncertainty clouds dissipated.

The investment implications of COVID-19: An update

The COVID-19 crisis confirms, once again, the value of a diversified portfolio, says David Kelly.

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.

Should I buy the dip?

There is not a clear answer. However, what we can provide perspective on, is where we are finding value, according to David Lebovitz.

How does Super Tuesday affect the election campaign ahead?

Former Vice President Joe Biden made a surprise comeback during the Super Tuesday contests, paving the way for a two-person race to the Democratic nomination.

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.

What do you like more, value or growth?

Equity investors spend a lot time looking for where earnings growth will be strong; what doesn't get as much attention is what happens after they're generated.

Should investors worry about the jobs market?

Taken at face value, the fall in job openings is concerning and warrants careful monitoring.

How sustainable is the interest in sustainable investing?

AUM growth and focus by investors globally suggest interest and adoption of sustainable investing is unlikely to subside anytime soon, says Samantha Azzarello.

What does the coronavirus mean for investors?

Financial markets have fallen sharply on concerns of the coronavirus, a respiratory illness first identified in Wuhan, China, spreading globally.

What is priced in to equity markets?

Equity market valuations have risen substantially in recent months, with the forward P/E ratio of the S&P 500 now at a level of 18.6x.

Should investors worry about inflation?

Investors are now asking whether inflation could return, threatening the rally in financial markets.

Should I wait to buy the dip?

Buying the dip - the coveted strategy (almost) all investors like to employ.

Will tensions with Iran cause an oil spike?

Rising geopolitical tensions with Iran have led to some fears over potential oil supply shocks out of the Middle East.

Why should I stay invested?

Rising geopolitical tensions with Iran have led to some fears over potential oil supply shocks out of the Middle East.

Investment Options

Capabilities & Solutions

Market Insights

Portfolio Insights

Retirement Insights

Dr. David Kelly

Samantha Azzarello

Alex Dryden

David Lebovitz

Jack Manley

Gabriela Santos

Katherine Roy

Dr. David Kelly

Samantha Azzarello

Alex Dryden

David Lebovitz

Jack Manley

Gabriela Santos

Katherine Roy

Copyright 2021 JPMorgan Chase & Co. All rights reserved.

LATEST COMMENTARY

Were there any V-shaped recoveries from the COVID recession?

What is the outlook for alternatives in 2021?

What can we expect in Biden’s first 100 days?

How much higher can Treasury yields climb?

When will U.S. debt become unsustainable?

The investment implications of a “blue ripple”

Will the U.S. dollar continue to fall in 2021?

How did COVID-19 impact the 12 days of Christmas?

How is the U.S. economy handling the third wave?

How will the vaccine be distributed globally?

How does anchor bias impact perceptions of sustainable investing?

Is there a place for Bitcoin in my portfolio?

Which regions will outperform in the year of the vaccine?

How strong will the fourth quarter economic recovery be?

Should I be concerned over expiring credit facilities?

What can COVID-19 vaccines tell us about the opportunity in small caps?

Will holiday retail sales be naughty or nice?

How can I use alternatives for income and diversification?

How will the U.S. election impact the U.S. dollar?

No (Fed) news November

What made 3Q GDP so strong?

Have 3Q20 earnings been better than expected?

Confirmation Bias: How do we view U.S. over International Equities?

How will the U.S. election impact international markets?

What do election polls tell us?

What does the future of energy look like?

Does DCA provide better returns than a lump sum strategy?

When should I dollar cost average?

Substitution Bias: Is the disconnect between the economy and the stock market justified?

Which sectors perform best around an election?

How should I position my portfolio if inflation comes back?

Should I be worried about the stock market correction?

Recency Bias: How do current trends impact investment decisions?

Are equities expensive?

How might the election impact the municipal bond market?

Should I be worried about the market sell-off?

Is now the time to consider portfolio adjustments?

Does the resurgence of COVID cases in Europe derail its investment story?

The Fiscal Elephant in a Monetary Room

How would a corporate tax hike impact the recovery?

Loss aversion: How does this impact investors now?

Should I be positioned for higher yields?

Where do we stand in the economic recovery?

Will tensions between the U.S. and China keep rising?

How should current conditions be reflected in asset allocation?

We had a recession, now what about the recovery?

How do we track the gradual recovery?

Framing: How do investors interpret equity market returns over time?

2Q20 Earnings: Guide me to your profits

Is the EU Recovery fund a game changer for investing in Europe?

Is the U.S. recession over?

Is China’s recession really over?

How disinflationary will prices be in the short term?

Should I be worried about a double-dip recession?

Will fatalities spike as COVID-19 cases rise?

Why should investors consider Sustainable Investing?

What does a second wave mean for equity markets?

What is the outlook for the U.S. dollar?

When it comes to fixed income, do you like high yield?

Will investing in European equities ever pay off?

When will we finally see a market correction?

How will the Fed’s forward guidance impact bond investors?

What’s going on with stock market sentiment?

What does the downturn mean for private equity?

Have markets recovered from the COVID-19 recession?

Should I expect a market correction?

Will the Fed cause inflation?

How will COVID-19 affect Sustainable Bonds?

Has all EM behaved the same way this year?

Has the Fed done enough?

Should I go to the equity market for income?

What opportunities were created by the COVID-19 earthquake?

Impact of being out of the market

What is going on with earnings?

Is now the time to invest in small cap stocks?

What does post-COVID leverage mean for investing?

Why are oil prices negative?

What will the reopening of the economy look like?

1Q20 earnings: Virus oddity