87 days ago • Posted by Charles-Henry Monchau

JP Morgan expects 7th heaven for equities with the melt-up continuing into the spring

JP Morgan Bullish stance in 7 points: 1) Expect next year to be front-loaded with most of the market upside realized in the first six months of the year; 2)  Continued exceptionally easy monetary policy (US M2 money supply +24% y/y, largest increase since 1940s) and another round of fiscal stimulus ($700-900b) in the near future; 3) COVID-19 vaccine distribution and easing of mobility restrictions fueling further earnings, labor market, and business cycle recovery; 4) Election outcome with an expected balance of power and likely legislative gridlock is a goldilocks scenario for equities; 5) Steady decline in USD trade-weighted index (-11% since Mar peak and -5% since 1yr ago) is expected to be a significant tailwind for multinational earnings in the coming quarters and for broader liquidity conditions; 6) Corporates should begin to release excess balance sheet cash starting next year (S&P 500 record cash balance at ~$2.1 trillion ex-Financials), revitalizing capex, M&A, and capital return; 7) Expect ~$1 trillion of equity inflow / demand in 2021 driven by systematic flows, hedge fund positioning, retail buying, share buybacks, rotation from non-equity into equity - source: Refinitiv, The Market Ear

JP Morgan 7 reasons to be bullish equities next year