As investors eye US presidential race, JPMorgan exec says focus should be on policies
By Divya Chowdhury and Mehnaz Yasmin
July 23 (Reuters) -U.S. equity markets will remain volatile ahead of the country's November presidential election, but the policies of the two candidates should take priority over reacting to "incendiary" rhetoric from their political parties, the chief investment officer of JPMorgan JPM.N Private Bank said on Tuesday.
"There is a Republican Party trade and there is a Democratic Party trade. But it's anchored on themes," Richard Madigan, the JPMorgan Private Bank CIO, told the Reuters Global Markets Forum, when asked if he sees signs in the market of the "Trump-trade."
"They have very different policy positions, but both seem to lead on a road that is going to have rising Treasury issuance and fiscal deficits," which could worsen inflation and bond markets, he said.
The Trump trade, which is based on expectations that the tax polices of Republican nominee Donald Trump would lift corporate profits while undermining the country's long-term budget health, gained ground following Democratic President Joe Biden's disastrous TV debate last month.
Wall Street recorded a strong start this week after Biden announced his withdrawal from the race and endorsed Vice President Kamala Harris' candidacy for the November election on Sunday, prompting investors to shift back to mega-cap growth stocks and tempering the recent rally in small-cap stocks. In addition, U.S. government bond investors unwound some of the trades put in place on expectations of a second Trump presidency.
The S&P 500 .SPX is not poised to produce outsized returns of the scale that it already has so far this year, Madigan said. He said JPMorgan Private Bankstepped back from its "overweight" position on equity when the benchmark index hit 5,600 earlier this month.
But even more important than the outcome of the U.S. presidential race, Madigan said, "is how we see Congress is distributed. If we end up with a sweep one way or the other, they put a great deal more focus on the policy narrative, because you can actually get actions from it, it's no longer just words."
The U.S. Senate is now narrowly controlled by the Democrats, while the House of Representatives is narrowly controlled by the Republicans.
The earnings among Big Tech and the companies known as the Magnificent Seven have continued to outperform, while small-cap companies are saddled with expensive debt, depressed earnings and margins, Madigan said.
Still, he expects more volatility over the next few months due to valuations and political headlines.
"If I don't think I'm playing for higher short-term returns in the equity market and I'm getting more volatility, I can have a very clear view on default risk and on yields," Madigan said. He also said he has been "overweight" U.S. high-yield, European high-yield, and emerging market debt.
(Join GMF, a chat room hosted on LSEG Messenger, for live interviews: https://lseg.group/3TN7SHH)
Reporting by Divya Chowdhury and Savio Shetty in Mumbai; Writing by Mehnaz Yasmin; Editing by Leslie Adler
Aloqador aktivlar
Eng oxirgi yangiliklar
Javobgarlikdan voz kechish: XM Group korxonalari har biri faqat ijro xizmatlarini koʻrsatadi va onlayn savdo platformamizdan foydalanish huquqini beradi, bu odamga veb-saytda yoki veb-sayt orqali mavjud boʻlgan kontentni koʻrish va/yoki undan foydalanishga ruxsat beradi hamda uni oʻzgartirishga moʻljallanmagan va uni oʻzgartirmaydi yoki kengaytirmaydi. Bunday kirish va foydalanish huquqi doimo quyidagilarga boʻysunadi: (i) Shartlar va qoidalar; (ii) Risklar haqida ogohlantirish; va (iii) Javobgarlikni toʻliq rad etish. Shuning uchun bunday kontent umumiy maʼlumot sifatida taqdim etiladi. Xususan, shuni esda tutingki, bizning onlayn savdo platformamiz mazmuni moliyaviy bozorlarda biror bitimni amalga oshirishga oid maslahat yoki taklif emas. Har qanday moliyaviy bozorda savdo qilish sizning kapitalingiz uchun jiddiy risk darajasini oʻz ichiga oladi.
Onlayn savdo platformamizda chop etilgan barcha materiallar faqat taʼlim/axborot maqsadlari uchun moʻljallangan va unda moliyaviy, investitsiya soligʻi yoki savdo maslahatlari va tavsiyalar; yoki bizning savdo narxlarimizning qaydlari; yoki har qanday moliyaviy vositalar bilan bitim tuzish maslahati yoki taklifi; yoki sizga kerak boʻlmagan moliyaviy reklama aksiyalari hisoblanmaydi
Har qanday uchinchi tomon kontenti, shuningdek XM tomonidan tayyorlangan kontent, masalan: fikrlar, yangiliklar, tadqiqotlar, tahlillar, narxlar va boshqa maʼlumotlar yoki bu veb-saytda joylashgan uchinchi tomon saytlariga havolalar umumiy bozor sharhi sifatida "boricha" taqdim etiladi va investitsiya maslahatini tashkil etmaydi. Har qanday kontent investitsiya tadqiqoti sifatida talqin qilinsa, siz bunday kontentni investitsiya tadqiqotlarining mustaqilligini ragʻbatlantirish uchun moʻljallangan qonun talablariga muvofiq moʻljallanmagan va tayyorlanmaganligini eʼtiborga olishingiz va qabul qilishingiz kerak, shuning uchun unga tegishli qonunlar va qoidalarga muvofiq marketing kommunikatsiyasi sifatida qaraladi. Mustaqil boʻlmagan investitsiya tadqiqoti va yuqoridagi maʼlumotlarga oid risk haqida ogohlantirishimizni oʻqib chiqqaningizga va tushunganingizga ishonch hosil qiling, unga bu yerdan kirish mumkin.
