Un court extrait de 2021 Global Strategy Outlook de jp morgan version Us
Keep Faith in the Recovery
A'V-shaped' recovery, greater clarity on vaccines and continued policy support point to
early-cycle dynamics and a supportive outlook for risk assets. Keep the faith, trust the
recovery, and overweight equities and credit against government bonds and cash.
Keep Faith in the Recovery
It's a recovery – keep the faith: Rising COVID-19 cases are a risk, but keep the faith. We think
this global recovery is sustainable, synchronous and supported by policy, following much of
the 'normal' post-recession playbook. Overweight equities and credit against cash and government
bonds, and sell USD. Be patient in
Commodities; we think that index-level returns will
be back-loaded.
Global equities – strong growth, strong returns: Across regions, we see +25-30% EPS
growth and double-digit
total returns through end-2021. We are O/W cyclicals and U/W
defensives across regions, and expect US small-caps to outperform large-caps. We think that
EM/APxJ equities will lag DM slightly, but upgrade India to O/W. We see the S&P 500
AT 3,900
by end-2021.
G10 rates – reflation versus liquidity: Duration will see a struggle between strong global
growth and ample liquidity. We think the former ultimately wins out, raising yields above forwards
and steepening curves. We like US 5s30 steepeners, long ACGB 10y versus NZGB 10y
and long CAGB 10y versus UST 10y. We see UST 10yr
AT 1.45% by end-2021.
G10 FX – global recovery = USD weakness: Better global growth and the availability of a
COVID-19 vaccine cause the DXY to weaken ~4% by end-2021 and that weakness to be frontloaded.
NOK, SEK, NZD, AUD and EUR should outperform.
EM fixed income – modest upside: Recent gains have reduced upside in EM credit and local
rates, and we'd be neutral. EMFX still offers value; top currencies include INR, IDR, RUB, ZAR
and BRL.
Corporate credit – early-cycle crossroads: Across all regions, we favor HY over
ig and position
for compression themes across the ratings buckets, and favor leveraged loans over HY
bonds. We forecast above-average excess returns across major cash indices.
Securitized credit – don't change the channel: With the
FED on hold until late 2023 and a
continued V-shaped recovery, investors should follow the portfolio balance channel. We recommend
investors go down in quality and up in risk across the securitized space; we expect
higher-yielding, lower-rated sectors to outperform less risky assets. We like long CMBX.11
BBB- outright.
Commodities – macro versus fundamentals: Stronger growth, higher
Inflation and a
weaker dollar are offset by bottom-up fundamentals that remain soft in most markets.
Supply/demand dynamics are supportive in copper and natural gas, and more negative in oil
and iron ore. 2021 may be a turning point for gold, and we revise our price forecast lower.
For individual investors, our market outlook should be seen in the context
of a long investment horizon that is underpinned by a comprehensive
financial plan. Your clients' financial plan should reflect the
goals they are looking to achieve over time and a disciplined approach
to asset allocation, saving and withdrawals.
Cross-asset strategy: Keep faith in the recovery
2020 was defined by abnormality. A global pandemic. A 31%Q drop
in 2Q20 US real GDP. US$7.3 trillion of G4 central bank balance sheet
expansion year-to-date. Oil prices trading
AT -US$37. Some of the
fastest declines, and rallies, for markets on record.
We think that 2021, in contrast, will be defined by a return to more
normal conditions. This feels odd to write, as the global pandemic
rages and many lives remain disrupted. But we think that it will be
true. The year ahead should see economic growth recover, control of
the virus improve and uncertainty decline. Challenges remain, 'new
normals' will materialize
AT the 'micro' level and we doubt that the
recovery will be a smooth, one-way street. But we think that things
will be better. Trust the recovery, keep the faith.
Similarities to 2010
2010 followed a terrible recession and an aggressive policy response.
It dawned with a still-weak economy, the
FED AT the zero lower bound
and a significant outperformance of ‘liquid’ indices such as CDX
ig and
the S&P 500 relative to equity volatility or securitized credit. It saw
a major growth scare and a 15%+ correction in global equities. But
2010 was ultimately a solid, above-average year for returns.
Exhibit 3:
Markets today versus 2010 – risk premiums and implied vol elevated
then and now
The lesson from 2010, which we think also applies to 2021, is that the
cycle usually wins out. We are strong believers that markets care
more about '
rate of change' than level and, following a recession,
these cyclical tailwinds are powerful. We forecast 6.4%Y global real
GDP growth next year, 25-30% earnings growth across major markets
and significant declines in corporate leverage. Yes, this is partly
because these are coming off 'weak' levels, but we think that the
effect will be powerful all the same.
Key investment ideas
• 2020 witnessed once-in-a-century swings in the economy, policy and markets.
2021 will bring more normality. Trust the recovery, and the post-recession
playbook.
• O/W global equities and credit, funded by an U/W in government bonds and
cash.
Commodities lag other risk assets, as mixed fundamentals drive
dispersion. USD to weaken, volatility to fall.
Exhibit 4:
It gets better: Forecast change in global GDP, US GDP, earnings and US
leverage
Exhibit 5:
Equities and credit do the best when data are below-average and
improving ('repair' phase)
Exhibit 6:
Technicals remain largely favorable
Exhibit 7:
Risk-adjusted valuations are reasonable
Exhibit 8:
Owning 'cyclicality' is cheap now
Exhibit 9:
Our framework likes equities and credit
Exhibit 14:
We forecast solid equity returns across all DM regions over the next 12
months
Exhibit 15:
We expect a strong recovery in EPS across all regions next year
