Data releases and third-quarter earnings growth to drive markets higher, says JPMorgan Bond markets are in a better position from which to rally and September's weak seasonality is now behind us, argues JPMorgan A JPMorgan unit that focuses on short-term trading signals has turned bullish again after a month of caution. At the end of August, JPMorgan’s market intelligence team turned neutral on stocks, citing a whole range of threats to performance. As September draws to a close, though, Andrew Tyler’s team identifies a more favorable setup, and now is going tactically bullish as they anticipate more stable bond markets and the oil price trending lower.
JPMorgan’s market-intelligence team focused on short-term, or what’s called tactical, strategy, looking at daily sentiment, order flows and positioning, vs the more fundamental research the bank also provides. A month ago, however, uppermost among Tyler’s concerns were widening credit spreads, Fed uncertainty, heavy positioning, seasonality concerns and a worry about the AI momentum trade unwinding. To reflect the cautious stance, Tyler had recommended taking a long position in Nasdaq index.
In four weeks, that strategy delivered a 7.9% return. Don’t Short Yourself offers weekly money tips to help you earn it, stack it and grow it. I agree to the Terms of Use, Privacy Notice and Cookie Notice.
I would like to receive updates and special offers from Dow Jones and affiliates. I can unsubscribe at any time. On Monday, JPMorgan’s desk note dispatched to clients provided several arguments in favour of turning more constructive in the short-term.
Chief among them is the fundamental strength of the macro drivers. Flash purchasing manager index surveys have come in hotter than expected. In fact, the last composite PMI showed the strongest growth, Covid excepted, since 2015.
Tyler makes the point that the S&P 500 earnings per share growth forecasts are tied to nominal GDP expansion. It follows then that earnings expectations may need to be adjusted higher. Analyst EPS forecasts are closely tied to nominal GDP expectations JPMorgan Market Intelligence Moreover, the much-vaunted resilience of the American consumer shows no signs of diminishing.
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