Back

JP Morgan Quarterly Market Guide

January 3, 2013

Strategists at J.P. Morgan Funds believe that the New Year will not be without its own set of challenges as the Federal Reserve continues to expand its balance sheet, the economy continues to feel the effects of fiscal restraint and geopolitical tensions continue to bubble.

-JP Morgan Funds

Financial markets in 2012 reflected a conflict between “tail risks” and “tail valuations.” The risks included the European debt crisis, the danger of too great a slowdown in China and the ongoing fiscal cliff negotiations. At the same time, long-term interest rates fell to extraordinarily low levels relative to the earnings yield on stocks. As the tail risks subsided, the extreme relative valuations seemed less justifiable, allowing equities to rally around the world. Strategists at J.P. Morgan Funds believe that the New Year will not be without its own set of challenges as the Federal Reserve continues to expand its balance sheet, the economy continues to feel the effects of fiscal restraint and geopolitical tensions continue to bubble. With very low yields on cash and high-quality bonds, investors continue to need to diversify the sources from which they intend to draw income.

This quarter’s Guide can be helpful in addressing key topics, such as:

  • The short-term and long-term outlook for U.S. economic growth and corporate earnings (p. 9, 10, 16 and 17)
  • The investment implications of a hyper-easy monetary policy (p. 35, 37 and 44)
  • Potential shocks to the global economy (p. 21, 31 and 48)
  • The evolution of emerging market opportunities (p. 43, 46 and 52)
  • Finding income in a low-yield environment (p. 36, 39, 41 and 58)
  • The importance of weighing relative valuations against fundamentals in asset markets (p. 11, 35 and 55) 

 

Read the Full Report