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Weekly Market Recap: April 20, 2020

The week in review

  • Retail sales fell -8.7% m/m
  • Industrial production fell -5.4% m/m
  • Jobless claims at 5.245M
  • Housing starts fell to 1.216M

The week ahead

  • Flash mfg. & services PMIs
  • Durable goods, consumer sentiment
  • New & existing home sales

Thought of the week

The 1Q20 earnings season unofficially kicked off last week, providing investors with a first glimpse of how businesses are faring since the outbreak of COVID-19. Overall, 41 companies (12.1% of market cap) have reported, and we currently estimate that S&P 500 profits contracted -14.6% in the first quarter relative to a year ago. However, not all sectors are created equal. In general, those sectors that are more sensitive to a social distancing shutdown of the economy are set to see profits come under severe pressure, while those sectors that are somewhat insulated or are seeing benefits from a stay-at-home economy are expected to see profits grow on a year-over-year basis.

Against this backdrop, a strong rally in equity markets suggests that investors have been more focused on the spread of COVID-19, and less focused on the fundamental data, as evidenced by the tight correlation between the slowing growth in COVID-19 cases and the strong rally in the S&P 500 since the market low on March 23. This may also suggest that investors are simply looking past the bad fundamental data that is expected over the next few months and focusing more on what comes after the COVID-19 pandemic. Given widespread uncertainty, we do not believe that investors should be blindly adding beta exposure, but should instead focus on quality companies with high profit margins and low leverage that will be better equipped to navigate this difficult and uncertain environment.

JPM Chart of the week april 20 2020

Click here to access the material on J.P. Morgan’s website.

Past performance does not guarantee future results.

Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

The price of equity securities may rise or fall because of changes in the broad market or changes in a company’s financial condition, sometimes rapidly or unpredictably. International investing involves a greater degree of risk and increased volatility. There is no guarantee that companies that can issue dividends will declare, continue to pay, or increase dividends. Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage.

JPMorgan Distribution Services, Inc., member of FINRA.

J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co. Those businesses include, but are not limited to, J.P. Morgan Investment Management Inc., Security Capital Research & Management Incorporated and J.P. Morgan Alternative Asset Management, Inc. and JPMorgan Asset Management (Canada) Inc.

©JPMorgan Chase & Co., April 2020

Unless otherwise stated, all data is as of April 20, 2020 or as of most recently available.

Disclosure: J.P. Morgan

Past performance does not guarantee future results.

Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

The price of equity securities may rise or fall because of changes in the broad market or changes in a company’s financial condition, sometimes rapidly or unpredictably. International investing involves a greater degree of risk and increased volatility. There is no guarantee that companies that can issue dividends will declare, continue to pay, or increase dividends. Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage.

JPMorgan Distribution Services, Inc., member of FINRA.

J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co. Those businesses include, but are not limited to, J.P. Morgan Investment Management Inc., Security Capital Research & Management Incorporated and J.P. Morgan Alternative Asset Management, Inc. and JPMorgan Asset Management (Canada) Inc.

 

Disclosure: Interactive Brokers

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This material is from J.P. Morgan and is being posted with permission from J.P. Morgan. The views expressed in this material are solely those of the author and/or J.P. Morgan and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

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