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Weekly Market Recap: April 27, 2020

The week in review

  • Existing/new home sales at 5.270M/627K
  • Initial jobless claims at 4.427M
  • Flash mfg./srvs. PMI at 36.9/27.0
  • Durable goods orders at -14.4% m/m

The week ahead

  • FOMC meeting
  • 1st est. 1Q20 real GDP
  • PCE/core PCE
  • Markit/ISM mfg./srvs. PMI
  • Consumer confidence

Thought of the week

Last week, for the first time in history, the price of WTI oil closed in negative territory at -$37/barrel. We highlight the factors that likely contributed to this in this week’s On the Minds of Investors’ post. While oil prices quickly rebounded into positive territory, they remain at very low levels and investors are now considering the potential for outright deflation in the U.S. It should be recognized that deflation at the headline level (incl. food and energy) would not be a new phenomenon. As shown in this week’s chart, headline CPI turned negative during the Global Financial Crisis and again during the oil collapse in 2015; and with oil prices now down roughly 80% relative to a year ago, we may experience some deflation in the months ahead.

Importantly, however, these periods of deflation are typically short lived as coordinated efforts amongst oil producers correct supply/demand imbalances fairly quickly, which we expect will be the case in the coming weeks. Still,
the effects of social distancing are likely to keep oil prices below $35/barrel in the near term and inflation at very low levels. For investors, this week’s FOMC meeting will likely show that the committee views the recent volatility in oil markets as transitory. Instead, they are likely to focus on the steps taken to ensure businesses remain afloat amidst a collapse in revenues.

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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.

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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 27, 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.

 

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