JPM result/WSJ economic survey
JPM
Interesting comments from the JPM quarterly.
Here’s CEO Jamie Dimon, responding to what credit stresses they are seeing across commercial real estate, consumer, wherever it might be. His response is quite firmly bullish, all things considered. “We don’t see any cracks”, essentially.
Now Jamie himself is not bullish, but overall it is a sign that the US economy isn’t falling apart just yet.
WSJ
In contrast to the above, the Wall Street Journal survey data suggests a recession is the base case consensus view.
Conclusion
There isn’t a strong call to action here. However, it is worth keeping in mind that for diversified investment portfolios, there’s no doubt that a huge amount of negative sentiment is embedded in asset prices.
That doesn’t mean “fully” embedded, and it doesn’t mean markets can’t go down, but with earnings commentary like that above (the JPM bit, fairly bullish) and with survey data like that above (the WSJ bit, fairly bearish) I think we can feel broadly correct sitting modestly defensively within our DAA tilts, but not going too defensive. There remain good reasons to be bullish and good reasons to be bearish.
As usual, we are a bit “growthier” than median manager, and thus are probably closer to equal weight growth vs defensives by comparison.
Should risky assets correct further, we will narrow our underweights, likely moving overweight, relative to the median manger and our portfolios’ SAAs.
Perhaps a modest postscript.
Here’s Larry Summers, whose views we don’t always agree with but certainly enjoy following. I think he sums up the macro pretty well. It’s very, very murky out there.
I’ve been partial to quoting Stanley Druckenmiller, who had a very similar line about it being the most challenging stock picking backdrop for 40 years.
They are right.
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