Latest news with #MislavMatejka
Yahoo
4 days ago
- Business
- Yahoo
JPMorgan sees the US facing a 'stagflationary episode.' Investors should monitor these 5 headwinds.
JPMorgan warns S&P 500 gains could slow due to US-China trade tensions and stagflation. Slow growth and rising inflation could set the backdrop for a stagflationary episode. JPMorgan flagged five headwinds for investors to monitor in the market. May was a strong month for the market, with the S&P 500 marking its best monthly performance since November 2023, but JPMorgan isn't confident that the winning streak will continue. The bank sees renewed US-China trade tensions, softening consumer sentiment, and growing chatter around the "S-word" — stagflation — as signs that the stock market's momentum will slow this summer. "Post the recent bounce, we think softer leg is in store next, which could resemble a bit of a stagflationary episode, and during which trade negotiations play out," JPMorgan equity strategists, led by Mislav Matejka, wrote in a note on Monday. JPMorgan CEO Jamie Dimon also recently flagged the risk of stagflation, which economists have said can be worse than a recession. That's because central bankers would be unable to stimulate growth by lowering interest rates due to fears of exacerbating inflation. Torsten Sløk, Apollo's chief economist, also thinks the groundwork for stagflation has already been laid. JPMorgan identified five headwinds for stocks that investors should be on the lookout for. The gap between soft and hard data While recent inflation prints have started to come down closer to the Fed's 2% target, consumer sentiment has been weak, indicating a disparity between backwards-looking economic data and forward-looking sentiment. Many on Wall Street are also skeptical that cooler inflation is a durable trend, and strategists suspect inflation is likely to pick up in the back half of this year as tariffs are felt in the economy more fully. JPMorgan believes there's room for the soft data to deteriorate further after consumers and businesses front-loaded purchases in the beginning of the year. "Past front-loading of orders in the run-up to tariffs is likely to have a payback, there will be some weakening in consumer due to squeeze in purchasing power, and even with dramatic backpedalling, the current tariffs picture is worse than most thought at the start of the year," the bank wrote. Bond yields could creep back up Increased inflation concerns, combined with the growing deficit, could send bond yields rising and stall a rally. The Moody's downgrade of the US debt and Trump's tax bill, which is projected to add trillions to the deficit, have caused bond yields to spike in recent weeks, while deficit concerns could also lead to a weaker US dollar. The 10-year US Treasury yield is about 4.4%, down from recent spikes, but JPMorgan believes it's likely that bond yields move up again due to inflationary pressures. According to a survey of institutional investors conducted by Evercore ISI, 45% of respondents said a 10-year yield of 4.75% would halt stock market gains. Downwards earnings revisions Looking forward, the Wall Street consensus on earnings-per-share growth seems overly optimistic, JPMorgan said. Consensus estimates project 10% growth this year and 14% growth next year, which the bank believes is too aggressive. Expect negative EPS revisions to materialize, the bank predicts. Higher input costs and interest costs are likely to eat into profit margins. Historically, S&P 500 earnings growth has required above 2% GDP growth, which is unlikely in a period of stagflation. US stocks remain expensive At 22x, the forward price-to-earnings of the S&P 500 is elevated, which might not be sustainable for the long term in light of inflation and tariff concerns. International stocks were a bright spot in the market as tariff concerns roiled the S&P 500, and JPMorgan thinks international strength could continue. While US stocks have typically been the best performers in times of market volatility, the bank believes stagflationary pressures could allow international stocks to shine. "If markets relapse into weakness, the US has typically held up better than other regions during risk-off periods, but this time around Tech and USD might not be the 'safe' havens," the bank wrote. US households hold record amounts of stock Retail investors have been flooding the market recently as they buy the dip, but retail enthusiasm could be a contrarian signal for the stock market, as it's often seen as a sign that the market is overbought. Right now, US households' stock ownership is approaching 30% of total assets, higher than the peak in 2000 before the dot-com crash. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
- Business
- Yahoo
JPMorgan sees the US facing a 'stagflationary episode.' Investors should monitor these 5 headwinds.
JPMorgan warns S&P 500 gains could slow due to US-China trade tensions and stagflation. Slow growth and rising inflation could set the backdrop for a stagflationary episode. JPMorgan flagged five headwinds for investors to monitor in the market. May was a strong month for the market, with the S&P 500 marking its best monthly performance since November 2023, but JPMorgan isn't confident that the winning streak will continue. The bank sees renewed US-China trade tensions, softening consumer sentiment, and growing chatter around the "S-word" — stagflation — as signs that the stock market's momentum will slow this summer. "Post the recent bounce, we think softer leg is in store next, which could resemble a bit of a stagflationary episode, and during which trade negotiations play out," JPMorgan equity strategists, led by Mislav Matejka, wrote in a note on Monday. JPMorgan CEO Jamie Dimon also recently flagged the risk of stagflation, which economists have said can be worse than a recession. That's because central bankers would be unable to stimulate growth by lowering interest rates due to fears of exacerbating inflation. Torsten Sløk, Apollo's chief economist, also thinks the groundwork for stagflation has already been laid. JPMorgan identified five headwinds for stocks that investors should be on the lookout for. The gap between soft and hard data While recent inflation prints have started to come down closer to the Fed's 2% target, consumer sentiment has been weak, indicating a disparity between backwards-looking economic data and forward-looking sentiment. Many on Wall Street are also skeptical that cooler inflation is a durable trend, and strategists suspect inflation is likely to pick up in the back half of this year as tariffs are felt in the economy more fully. JPMorgan believes there's room for the soft data to deteriorate further after consumers and businesses front-loaded purchases in the beginning of the year. "Past front-loading of orders in the run-up to tariffs is likely to have a payback, there will be some weakening in consumer due to squeeze in purchasing power, and even with dramatic backpedalling, the current tariffs picture is worse than most thought at the start of the year," the bank wrote. Bond yields could creep back up Increased inflation concerns, combined with the growing deficit, could send bond yields rising and stall a rally. The Moody's downgrade of the US debt and Trump's tax bill, which is projected to add trillions to the deficit, have caused bond yields to spike in recent weeks, while deficit concerns could also lead to a weaker US dollar. The 10-year US Treasury yield is about 4.4%, down from recent spikes, but JPMorgan believes it's likely that bond yields move up again due to inflationary pressures. According to a survey of institutional investors conducted by Evercore ISI, 45% of respondents said a 10-year yield of 4.75% would halt stock market gains. Downwards earnings revisions Looking forward, the Wall Street consensus on earnings-per-share growth seems overly optimistic, JPMorgan said. Consensus estimates project 10% growth this year and 14% growth next year, which the bank believes is too aggressive. Expect negative EPS revisions to materialize, the bank predicts. Higher input costs and interest costs are likely to eat into profit margins. Historically, S&P 500 earnings growth has required above 2% GDP growth, which is unlikely in a period of stagflation. US stocks remain expensive At 22x, the forward price-to-earnings of the S&P 500 is elevated, which might not be sustainable for the long term in light of inflation and tariff concerns. International stocks were a bright spot in the market as tariff concerns roiled the S&P 500, and JPMorgan thinks international strength could continue. While US stocks have typically been the best performers in times of market volatility, the bank believes stagflationary pressures could allow international stocks to shine. "If markets relapse into weakness, the US has typically held up better than other regions during risk-off periods, but this time around Tech and USD might not be the 'safe' havens," the bank wrote. US households hold record amounts of stock Retail investors have been flooding the market recently as they buy the dip, but retail enthusiasm could be a contrarian signal for the stock market, as it's often seen as a sign that the market is overbought. Right now, US households' stock ownership is approaching 30% of total assets, higher than the peak in 2000 before the dot-com crash. Read the original article on Business Insider
Business Insider
4 days ago
- Business
- Business Insider
JPMorgan sees the US facing a 'stagflationary episode.' Investors should monitor these 5 headwinds.
May was a strong month for the market, with the S&P 500 marking its best monthly performance since November 2023, but JPMorgan isn't confident that the winning streak will continue. The bank sees renewed US-China trade tensions, softening consumer sentiment, and growing chatter around the "S-word" — stagflation — as signs that the stock market's momentum will slow this summer. "Post the recent bounce, we think softer leg is in store next, which could resemble a bit of a stagflationary episode, and during which trade negotiations play out," JPMorgan equity strategists, led by Mislav Matejka, wrote in a note on Monday. JPMorgan CEO Jamie Dimon also recently flagged the risk of stagflation, which economists have said can be worse than a recession. That's because central bankers would be unable to stimulate growth by lowering interest rates due to fears of exacerbating inflation. Torsten Sløk, Apollo's chief economist, also thinks the groundwork for stagflation has already been laid. JPMorgan identified five headwinds for stocks that investors should be on the lookout for. The gap between soft and hard data While recent inflation prints have started to come down closer to the Fed's 2% target, consumer sentiment has been weak, indicating a disparity between backwards-looking economic data and forward-looking sentiment. Many on Wall Street are also skeptical that cooler inflation is a durable trend, and strategists suspect inflation is likely to pick up in the back half of this year as tariffs are felt in the economy more fully. JPMorgan believes there's room for the soft data to deteriorate further after consumers and businesses front-loaded purchases in the beginning of the year. "Past front-loading of orders in the run-up to tariffs is likely to have a payback, there will be some weakening in consumer due to squeeze in purchasing power, and even with dramatic backpedalling, the current tariffs picture is worse than most thought at the start of the year," the bank wrote. Bond yields could creep back up Increased inflation concerns, combined with the growing deficit, could send bond yields rising and stall a rally. The Moody's downgrade of the US debt and Trump's tax bill, which is projected to add trillions to the deficit, have caused bond yields to spike in recent weeks, while deficit concerns could also lead to a weaker US dollar. The 10-year US Treasury yield is about 4.4%, down from recent spikes, but JPMorgan believes it's likely that bond yields move up again due to inflationary pressures. According to a survey of institutional investors conducted by Evercore ISI, 45% of respondents said a 10-year yield of 4.75% would halt stock market gains. Downwards earnings revisions Looking forward, the Wall Street consensus on earnings-per-share growth seems overly optimistic, JPMorgan said. Consensus estimates project 10% growth this year and 14% growth next year, which the bank believes is too aggressive. Expect negative EPS revisions to materialize, the bank predicts. Higher input costs and interest costs are likely to eat into profit margins. Historically, S&P 500 earnings growth has required above 2% GDP growth, which is unlikely in a period of stagflation. US stocks remain expensive At 22x, the forward price-to-earnings of the S&P 500 is elevated, which might not be sustainable for the long term in light of inflation and tariff concerns. International stocks were a bright spot in the market as tariff concerns roiled the S&P 500, and JPMorgan thinks international strength could continue. While US stocks have typically been the best performers in times of market volatility, the bank believes stagflationary pressures could allow international stocks to shine. "If markets relapse into weakness, the US has typically held up better than other regions during risk-off periods, but this time around Tech and USD might not be the 'safe' havens," the bank wrote. US households hold record amounts of stock Retail investors have been flooding the market recently as they buy the dip, but retail enthusiasm could be a contrarian signal for the stock market, as it's often seen as a sign that the market is overbought. Right now, US households' stock ownership is approaching 30% of total assets, higher than the peak in 2000 before the dot-com crash. JPMorgan JPMorgan
Bloomberg
5 days ago
- Business
- Bloomberg
JPMorgan Strategists Warn US Stock Rally at Risk From Stagflation
Higher prices and weaker US economic growth over the summer are likely to threaten the S&P 500's rally, according to JPMorgan Chase & Co. strategists. 'Post the recent bounce, we think softer leg is in store next, which could resemble a bit of a stagflationary episode,' the team led by Mislav Matejka wrote in a research note.
CNBC
19-05-2025
- Business
- CNBC
JPMorgan upgrades emerging markets. How to play the improved outlook
Emerging market stocks couldn't catch a break the past four years. Now their fortunes may be turning. JPMorgan upgraded emerging markets to overweight from neutral on Monday. Strategist Mislav Matejka cited several reasons for the change, including easing trade tensions and attractive valuations. "De-escalation on U.S.-China trade front reduces one significant headwind for EM equities," Matejka wrote. "Big picture, the [year-to-date] increase in tariffs is still extremely large in a long term context. … We remain concerned about the impact of tariffs on medium term growth in U.S. and elsewhere; however, last week's news is clearly positive, especially for China." China and the U.S. agreed last week to temporarily lower tariffs as part of an attempt to negotiate a broader trade agreement. The news sent the iShares MSCI Emerging Markets ETF (EEM) higher by 3% last week — its fifth weekly advance in six. The strategist also noted that emerging markets are trading at 12 times forward earnings "and at a bigger than typical discount to" developed markets. The EEM exchange-trade fund is up 10.6% so far in 2025, outperforming the S & P 500's meager 1.3% advance. That's also better than the European Stoxx 600's 7.6% gain. EEM's 2025 advance puts it on pace for its best year since 2020, when it rose 15.2%. This performance also marks a stark contrast from the previous four years, when the EEM lagged both the U.S. and Europe. Check out how the fund — along with the S & P 500 and Stoxx 600 — did between 2021 and 2024: Declines during that time for emerging markets were led in part by China, as the country's economy struggled to recover following strict Covid-related lockdowns. EEM also suffered after President Donald Trump last month announced steep tariffs on dozens of countries. The fund has since recovered, however. Matejka highlighted India and Brazil as potentially notable EM winners. The iShares MSCI India ETF (INDA) is up nearly 4% year to date. EWZ , its Brazilian counterpart, has soared 24%.
