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1、 Outlook 2024 Investing Reconfigured After the Rate Reset:Five considerations for the year ahead The views expressed herein are based on current conditions,subject to change and may differ from other JPMorgan Chase&Co.affiliates and employees.The views and strategies may not be appropriate for all i

2、nvestors.Investors should speak to their financial representatives before engaging in any investment product or strategy.This material should not be regarded as research or as a J.P.Morgan Research Report.Outlooks and past performance are not reliable indicators of future results.Please read additio

3、nal regulatory status,disclosures,disclaimers,risks and other important information at the end of this material.INVESTMENT PRODUCTS:NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE Foreword In many ways,this past year has defied expectations.The widely anticipated U.S.recession hasnt happened.Growt

4、h across many economies has proven surprisingly resilient.Inflation has retreated from its multi-decade highs.Global multi-asset portfolios have regained more than half of the ground that was lost from the market peak in late 2021 to the trough in October 2022.At the same time,a historic rise in glo

5、bal bond yields has reconfigured the investing landscape.Higher rates give investors more choices in crafting their financial plans;investors have not had such an opportunity since the global financial crisis.In our 2023 Outlook,entitled“See the potential,”we encouraged clients to look past the head

6、winds to growth and consider the prospects for stronger markets.That turned out to be pretty good advice.To prepare for the year ahead,we rely on the experience of our Global Investment Strategy Group to help us identify both the risks and opportunities that our clients may face.In their view,higher

7、 bond yields and reasonable equity valuations mean that forward-looking returns across many asset classes seem more promising than they have been in more than a decade.Whatever markets have in store,we rely on each other and on the relationships we have forged over time to deliver you our best.We ar

8、e honored to stand by your side as your financial partner.Thank you for your continued trust and confidence in J.P.Morgan.Sincerely,David Frame CEO,U.S.Private Bank Martin Marron CEO,International Private Bank 03 Highlights from the 2024 Outlook Inflation will likely settle.You should still hedge ag

9、ainst it.Equities are one option.Real assets are another.The cash conundrum.Yes,yields are tempting.But we think this is as good as it gets.Bonds are more competitive with stocks.The rate reset has run its course.Its time to consider locking in higher yields.Equities seem to be on the march to new h

10、ighs.The consensus isnt wrong.AI is a game changer.Contained credit stress.Investors should consider capitalizing on stressed real estate and private credit.04 05Contents INTRODUCTION Pgs.69 After the rate reset INFLATION Pgs.1015 Inflation will likely settleCASH Pgs.1619 The cash conundrum BONDS Pg

11、s.2023 Bonds are more competitive with stocks STOCKS Pgs.2429 Equities seem to be on the march to new highs CREDIT Pgs.3035 Contained credit stress CONCLUSION Pgs.3637 An investment landscape reconfigured GLOBAL PERSPECTIVES Pgs.3847 Extend the horizon 05 INTRODUCTION After the Rate Reset:Investing

12、Reconfigured There havent been this many attractive investment choices to consider in more than a decade.But how do you personalize the possibilities with a strategy that optimizes your specific financial needs and goals?We think the key to harness the dynamics of a new rate world is to understandan

13、d further explore five important considerations.06 fle The big shift to a new interest rate world Three years ago,nearly 30%of all global government debt traded with a negative yield.It seemed the era of super-low interest rates might never end.But it did.Today,negative yielding debt has all but dis

14、appeared.Over half of the developed worlds sovereign debt trades with a yield higher than 4%,and U.S.Treasury yields across the curve,from 3-month bills to 30-year bonds,range from 4.5%to 5.5%.The rise in global bond yields is not just historicit marks the most important development in markets since

15、 the world emerged from the COVID-19 pandemic.It has also reconfigured the investing landscape.Rates near 5%give investors more choices in crafting their goal-aligned wealth plans than at any time since the global financial crisis(GFC).THE RATE RESET HAS DELIVERED SIGNIFICANT MOVES ACROSS THE YIELD

16、CURVE 6%5%4%3%2%1%0%U.S.Treasuryyieldcurve,%June2023 Dec2021 Today 1M 2M 3M 6M 1Y 2Y 3Y 5Y 7Y 10Y20Y30Y Source:BloombergFinanceL.P.DataasofNovember15,2023.07 08INTRODUCTION Many investors have already paid a price for this newfound flexibility.Global multi-asset portfolios have managed only meager g

17、ains since stocks took off in November 2020 on the news of Pfizers successful COVID vaccine trial.For the first time ever,investment grade debt(including sovereign securities,municipal bonds and corporate credit)is at risk of delivering negative total returns for three years in a row.Despite a stron

18、g calendar year in 2023,broad equity markets have also struggled to find direction amid wild swings by certain stocks and sectors.As multi-asset portfolios have treaded water,cash hasnt looked as enticing in over 15 years.Not surprisingly,perhaps,our clients have added at least$120 billion to money

19、market funds,Treasury bills and other short-term fixed income investments to generate incremental yield with limited downside risk.This hasnt drained their depositsthey have We think the key to harness the new dynamics of a 5%rate world is to understandand further explorethese five important conside

20、rations:added at least$18 billion more in checking,savings and certificates of deposit as well.Simply put,our clients are holding significantly more cash than they did two years ago.Cash is understandably tempting.And at the same time,higher bond yields and reasonable equity valuations mean that for

21、ward-looking returns across many asset classes seem more promising than they have since before the GFC.In short,its clear the markets have entered an entirely new interest rate regime.We suggest that investors consider capitalizing sooner rather than later on what we think is a once-in-a-generation

22、opening that may not be available a year from now.But how do you personalize the many possibilities with a strategy that optimizes your specific financial needs and goals?01 Inflation will likely settle.You should still hedge against it.02 The cash conundrum:the benefits and risks of holding too muc

23、h.03 Bonds are more competitive with stocks adjust the mix according to your ambitions.04 With AI momentum,equities seem to be on the march to new highs.05 Pockets of credit stress loom,but they will likely be limited.08 INFLATION 01 Inflation will likely settle.You should still hedge against it.10

24、Its important to mention the circumstances that caused the rate reset in order to explain our view on the course we think inflation and rates will take.In 2021 and 2022,as inflation soared globally,nearly all major central banks aggressively hiked interest rates(except the Bank of Japan and the Peop

25、les Bank of China).While shorter-term interest rates quickly moved higher,longer-term yields only caught up in the late summer and early fall.One possible reason for this move is that investors are starting to believe inflation will be higher than it was in the late 2010s and higher policy rates wil

26、l be needed to help keep it in check.We agree with this assessment.But to be clear:We believe the near-term path for inflation is lower.Inflation has already retreated from its recentand unexpectedhighs.In the United States,inflation has collapsed from a peak of over 9%to under 3.5%today.We are espe

27、cially encouraged by the recent cooling in inflation rates for services sectors such as hotels and recreation,where price increases tend to be stickier.The outlook for shelter inflation,which currently accounts for around three-quarters of all of the year-on-year change in the Consumer Price Index(C

28、PI),gives us the most confidence that price inflation will continue to fall in the United States.The most current data on where shelter inflation is heading,including home prices and new rents,signal that shelter inflation will continue to cool to a manageable level.11 INFLATION Inflation is similar

29、ly decelerating outside the United States,but more slowly.In developed world economies,it has declined to 4%from a peak of 8%.Globally,realized inflation has been coming in below economists forecasts since April 2023,and we think price inflation in both the United States and Europe will approach cen

30、tral banks 2%mandate by the end of 2024.On the wage front,labor demand and supply are in a better balance.The gap between job openings(demand for labor)and unemployed workers(supply of labor)in the United States has shrunk from its peak of over 6 million to close to 2.5 million today.An increase in

31、immigration has also boosted the number of available workers.Year-to-date,foreign-born workers accounted for more than 40%of the 3 millionplus new jobs in the United States.As a result,U.S.wage growth,proxied by the Employment Cost Index excluding incentive pay,has slowed from over 6%to around 4%.Ce

32、ntral bankers will continue to look for further moderation,but the progress is clearand encouraging.Still,we think 2%inflation will likely represent more of a floor than a ceiling for price moves.Market-based indicators of future inflation(such as breakeven inflation rates and inflation swaps)sugges

33、t that investors also expect both U.S.and Euro Area inflation to run between 2.0%and 2.5%over the next 510 years.This would compare with the 1.5%to 2.0%range that prevailed from 2015 through 2020.We expect developed world inflation will similarly settle between 2%and 2.5%,and with more variability t

34、han existed in the 2010s.INFLATIONHASALREADYRETREATEDFROMMULTIDECADEHIGHS CPI,YoYpercentagechange 10%9%8%7%6%5%4%3%2%1%0%24 4.0%3.2%UnitedStates AdvancedEconomies*FedTarget 17 18 19 20 21 22 23*Ouruniverseofadvancedeconomiesincludes:Australia,Austria,Belgium,Canada,Denmark,Finland,France,Germany,Gre

35、ece,Ireland,Italy,Japan,Luxembourg,Netherlands,NewZealand,Norway,Portugal,Spain,Sweden,Switzerland,UnitedKingdom,UnitedStates.Sources:BureauofLaborStatistics,HaverAnalytics.DataasofOctober31,2023.12 There are,to be sure,countervailing forces that may push inflation rates higher over the medium term.

36、Industrial policy and the energy transition could lead to higher commodity prices.In fact,at least initially,the shift to clean energy sources could lead to bouts of inflation.Consumer and investor inflation expectations could also nudge inflation higherbecoming in effect a self-fulfilling prophecy.

37、The process of“nearshoring”and global supply chain adjustments will also limit how much goods prices could fall.Fundamentally,it seems to us that many parts of the economy(labor markets,housing,commodities)have insufficient supply to meet demand.This should place more upward pressure on prices than

38、occurred in the 2010s.INFLATION WILL LIKELY SETTLE AT A HIGHER LEVEL THAN THE PAST DECADE Current Average0307 Average1019 LTCMAsMarket Expectation Expectation 4.0%2.13%1.5%2.3%2.3%Developedworldinflation,CPI,YoY%average 2.5%3.0%3.5%4.0%4.5%5.0%0.0%0.5%1.0%1.5%2.0%Sources:J.PMorganAssetManagement,Blo

39、ombergFinanceL.P.,HaverAnalytics.DataasofOctober2023.13 INFLATION How should investors grapple with the prospect of more meaningful inflation in 2024 and beyond?They might look first to equities.Since the end of 2019,U.S.consumer prices have risen almost 19%.S&P 500 earnings are up over 35%.Cruciall

40、y,profit margins for the core of the S&P 500 have stabilized at 12%,in line with pre-pandemic peaks and only one percentage point below the 2021 highs.We believe large public companies will be able to continue to maintain both pricing power and their margins.This is not just a U.S.phenomenon.Look no

41、 further than the European luxury goods sector,which commands pricing power while delivering robust growth.In fact,if inflation ranges between 2%and 3%,as we think it will,it should be good for stocks.The average S&P 500 year-over-year return is nearly 14%when inflation runs in that range.STOCKSSWEE

42、T SPOT:EQUITIES TENDTODO WELL WHEN INFLATION RANGES BETWEEN 2%AND 3%16%14%12%10%8%6%4%2%0%AverageS&P500Return S&P500YoYreturnsindifferentinflationenvironments,%2.4%8.5%13.8%10.7%5%3%5%2%3%0%2%YoYInflationRate Source:BloombergFinanceL.P.DataasofNovember17,2023.Pastperformanceisnoguaranteeoffutureresu

43、lts.Itisnotpossibletoinvestdirectlyinanindex.14 In addition,equities may not provide the only defense against inflation.We think the current environment also argues for potential exposure to real assets such as global real estate,infrastructure,transportation,commodities and timber.Take real estate,

44、as an instructive example.Income growth for real estate tends to outpace inflation,and most leases in commercial properties contain inflation step-ups.Whats more,as commodities(steel,say,or wood)and labor become more costly,existing buildings tend to appreciate because it becomes more expensive to r

45、eplace them.Problems in the office sector and pockets of retail and hospitality are well known,but we believe sectors such as industrial and data centers offer robust growth prospects.In the last cycle,investors used bonds to insulate portfolios from slower growth.In the cycle now emerging,we think

46、investors can use real assets to insulate their portfolios from higher inflation.OVER A 30YEAR STRETCH,REAL ESTATE INCOME HAS ALMOST ALWAYS OUTPACED INFLATION 270 250 230 210 190 170 150 130 110 90 U.S.realestateincome&inflation(1991=100)Inflation Real Estate Income 91 95 99 03 07 11 15 19 23 Source

47、s:J.P.MorganAssetManagementGRAResearch,NCREIF,BureauofLaborStatistics.DataasofJune30,2023.15 CASH 02 The cash conundrum:the benefits and risks of holding too much.16 It feels good to hold cash when rates are high and other markets are this volatile.Frankly,over the last two years,it has paid to stay

48、 in cash.Certainly,5%yields on cash and low volatility have been a magnet for our clients assets.This phenomenon is global,but it is particularly powerful in the United States,where clients have over twice the allocation to short-term Treasuries and money markets as their international peers.Could t

49、his shift into cash cause problems?In the context of your own financial planning,it may help to acknowledge that you may feel differently about cash than you do about stocks,bonds or other assets.But you should consider cash as you do any other assetasking how it fits into your goal-aligned wealth p

50、lan,and whether the timing of an overallocation makes sense.CASHCOMFORT:OVERTHEPASTTWOYEARS,ITHASPAIDTOSTAYINCASH USDtotalreturnsinceDecember2021,%10%0%10%20%30%MSCIWorldGlobalEquities GlobalBondAggregate USDCash Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Sources:BloombergFinanceL.P.,MSCI.Dataa

51、sofNovember17,2023.Pastperformanceisnoguaranteeoffutureresults.Itisnotpossibletoinvestdirectlyinanindex.17 CASH Cash works best relative to stocks and bonds in periods such as the one we just saw:when interest rates are rising quickly,and investors question the durability of corporate earnings growt

52、h.Cash works less well when interest rates are falling(you are reinvesting at lower and lower yields),or when earnings growth expectations are improving and risk sentiment is recovering.We think 2024 will likely deliver a backdrop of falling rates and improving earnings,in which cash will work less

53、well.Our expectation of lower cash rates reflects our view that inflation has likely peaked,that central banks see their current policy positioning as restrictive,and that the labor market is cooling relatively quickly.Indeed,continuing jobless claims in the United States are 30%higher year-over-yea

54、r.Historically,we have only seen that rate of increase when the economy was already in recession.Thus central banks should be willing to lower interest rates if they feel that growth is threatened.Indeed,markets think the Federal Reserve,European Central Bank and Bank of England could lower interest

55、 rates as soon as March 2024.We think 2024 will likely deliver a backdrop of falling rates and improving earnings,in which cash will work less well.18 From a planning perspective,holding more cash today than you did in 2021 or 2017 is probably fine.Cash yields after inflation are at some of their hi

56、ghest levels of the last 20 years.But holding relatively more cash probably isnt the best use of your overall portfolio.Heres why.You can commit less capital to a goal today if you are willing to invest it in a way that increases the expected return.Its a simple but profound principle of investing.L

57、ook at it this way.Based on J.P.Morgan Asset Managements Long-Term Capital Market Assumptions(LTCMAs),we think a person could keep all their assets in cash and still spend 3%of their wealth per year for 30 years and not run out of money.Thats not a terrible scenario.But it leaves no room for error i

58、f an unexpected setback occurs,or if other priorities(such as legacy planning,philanthropic giving or health spending)become more important.In this particular all-cash scenario,your wealth can support your spendingbut nothing more.Now lets think about the alternate approach.Allocating assets outside

59、 of cash reduces the amount of capital that is required today to fund a goal with a high degree of confidence.It could also allow your wealth to fund more goals than you could with an all-cash approach.As a first step,if you design a portfolio of only core,investment grade bonds,you could need just

60、85%of the all-cash portfolio to maintain the same rate of spending.1 The other 15%is unencumbered,and could be earmarked for anything:buying the next home,giving to charity,funding your grandchildrens education.Indeed,adding more assets to the mix(including equities,high yield bonds and alternatives

61、)could further reduce the initial capital required,or could increase the rate of spending that the portfolio can support.Holding more cash in the near term may not be a poor decision,but it likely isnt the best one either.Cash may offer a viable path to achieve some of your goalsbut probably not man

62、y.1 J.P.Morgan Asset Managements LTCMAs are the product of a deep,proprietary research process that pools the quantitative and qualitative insights of more than 60 investment professionals.BONDS 03 Bonds are more competitive with stocksadjust the mix according to your ambitions.20 4 out of 5 clients

63、 have not materially increased their allocation to fixed income.Higher rates mean that bonds are as competitive with stocks as they have been since before the GFC.Yet four out of every five of our clients have not materially increased their allocations to fixed income over the last two years.The fir

64、st question to ask is,do bonds deserve a larger share of your portfolio?We rely on bonds to help provide stability in a multi-asset portfolio.Coupon payments generate income,and bond prices tend to rise when economic growth slows.Given the recent increase in yields,we think bonds are now well positi

65、oned to deliver on both fronts.Whats more,they could also hold up much better against equities than they have over the past decade.Consider that for the 10 years ended in Q3 2023,bonds have posted annual returns of just 1%versus nearly 15%for equities.21 BONDS STOCKSTYPICALLYOUTPERFORMBONDS,BUTTHEMA

66、GNITUDEVARIESWIDELY 10yearrollingtotalreturn,%annualized 25%20%15%10%5%0%95 00 05 10 15 U.S.Equities U.S.CorporateBonds 60 65 70 75 80 85 90 20 Source:BloombergFinanceL.P.DataasofOctober31,2023.Pastperformanceisnoguaranteeoffutureresults.Itisnotpossibletoinvestdirectlyinanindex.Across many sectors,y

67、ields have reached highs not seen since 2007.The yield on a 5-year Treasury bond is 300 basis points(bps)above the dividend yield on the S&P 500.Tax-equivalent yields on benchmark AAA-rated 15-year municipal bonds are over 6%.Junk bond yields are over 8%,and private credit yields are in the low teen

68、s.The only negative yielding debt left in the world is in Japan.Those higher yieldsand thus lower bond pricesdepressed core bond returns in 2022 and 2023.In fact,the current drawdown for the Barclays Aggregate Bond Index from its prior high is-14%.Thats better than the recent trough of-17%,but still

69、 lower than at any other point in the indexs history.Despite the drawdown,our clients allocations to fixed income are flat relative to the end of 2021.In 2024,we think they should consider continuing to add to the asset class.We make this case with conviction because we believe the new rate regime r

70、epresents a generational reset in bond market pricing.The rate reset means that core bonds may now be poised to deliver strong forward-looking returns.Over a 10-to-15-year investment horizon,J.P.Morgan Asset Managements LTCMAs project that core bonds,as proxied by the Global Aggregate and U.S.Aggreg

71、ate Bond Indices,will deliver 5%plus annual returns.We think strong performance will begin in 2024with modest price appreciation as rates fall,combining with an attractive starting yield.In our view,those returns will reflect a favorable economic backdrop for bonds in the coming year:Economic growth

72、 should slow,inflation 22 will continue to cool,and central banks could start to reverse their rate-hiking cycles.Whats more,higher starting yields mean that a decline in interest rates would provide a gain that is proportionately larger than the loss created by a similarly sized rate increase.To il

73、lustrate,an investment in a U.S.10-year Treasury bond would lose approximately 2%if yields rose one percentage point over the next year.If rates fall 1%over the next year,an investment in a 10-year Treasury bond would gain over 12%.Globally,we are focused on tax efficiency in fixed income allocation

74、s.In the United States,the municipal bond market is the clear expression.Municipals have an extremely low historical default rate(0.1%cumulatively over 10-year periods since 1970 versus 2.2%for corporate bonds).In addition,state and local debt loads have not expanded relative to GDP since 2000,in st

75、ark contrast to the federal debt.Each jurisdiction globally has its own nuances,and we recommend exploring this with your local advisor.Across global markets,the rate reset offers the potential to lock in strong returns in many parts of the yield curve.We believe bonds within the 310 year maturity r

76、ange offer attractive yield,and they are less exposed to longer-term risks regarding government deficits.It has been a brutal stretch for bond investors,no doubt about it.But we think the end of central bank tightening cycles and cooling inflation will offer more than a reprievetheyll bring stabilit

77、y back to the asset class.In short:The rate reset has run its course,and we think it is time to lock in yields.In light of this,the second question to ask is,should you own more fixed income relative to equity?We dont think investors should see this moment as a choice between stocks or bonds.We thin

78、k they should personalize the possibilities by designing a portfolio of stocks and bonds suited to their particular goals and risk tolerances.The rate reset also means that investors should assess existing holdings to make sure their current allocations still make sense.Imagine for a moment that you

79、re evaluating your current assets.Top of mind is likely the concern youve had with market volatility over the last two years.Even though a balanced portfolio has underperformed our expectations,you may now have an opportunity to reduce equity risk,add more fixed income exposure,and still reach your

80、financial goals.If youve got new funds to invest,your perspective may be slightly different.One sign of fixed incomes new appeal:J.P.Morgan Asset Managements long-term return assumptions for bonds today are higher than our equity market return assumptions were at the end of 2021.The rate reset gives

81、 investors the opportunity to add fixed income to portfolios,reduce the range of possible outcomes,and sacrifice relatively little potential return to do so.But remember that fixed income comes with its own risks as well.A concentrated allocation to bonds could depress portfolio returns if inflation

82、 is more persistent than expected.Ultimately,the thing to keep in mind is that the higher-rate regime gives you more options in crafting your goals-based financial plans.If you aim to limit the potential downside for your wealth,and reduce the range of possible outcomes,it could make sense to swap e

83、quity exposure for bond exposure.But if you aim to capture a significant degree of potential upside,youll likely want to hold on to your equities,both public and private.In the end,the right move for most may to keep their strategic asset allocations and look forward to the stronger forward-looking

84、returns that we expect.23 STOCKS 04 With AI momentum,equities seem to be on the mar ch to new highs.24 Equities offer the potential for meaningful gains in 2024.We rely on equities to help provide long-term capital appreciation in portfolios.Though more volatile than bonds,equities have outperformed

85、 bonds 85%of the time on a 10-year basis since 1950.Over the long term,we think equities can continue to outperform bonds and generate capital appreciation for investors.In 2024,equities offer the potential for meaningful gains.Even as economic growth slows amid higher rates,we think large-cap equit

86、y earnings growth should accelerate,and that could propel stock markets higher over the next year.Why do we anticipate improving corporate earnings?Its partly because we believe the U.S.large-cap corporate sector has gone through an earnings recession already(nine of the 11 major sectors in the S&P

87、500 reported negative earnings growth for three consecutive quarters in 20222023).They have emerged with leaner cost structures,which should help them face a still resilient(if slowing)demand environment in 2024.Indeed,since 1950,earnings per share has been accelerating about 25%of the time when GDP

88、 growth has been decelerating.25 STOCKS Higher rates may also make you skeptical of valuations.But we think they appear reasonable in the United States and inexpensive elsewhere.The S&P 500 trades at above-average valuations on a price-to-earnings basis,while U.S.mid-cap and small-cap stocks(and Eur

89、opean,emerging market and Chinese stocks)all trade at a substantial discount.Indian stocks,meanwhile,trade with fair valuations,but we are optimistic about their low leverage and high growth rates.While we prefer the U.S.stock market in 2024,low valuations elsewhere suggest that prices already antic

90、ipate bad news for corporate profits,limiting the downside for stock performance.By the same token,betterthan-expected news could spur greater-than-expected gains.Some investors argue that U.S.stock valuations need to correct further to account for higher interest rates.But todays 18x20 x forward P/

91、E multiples appear reasonable to us,given that the index currently has wider margins(free cash flow margins are 30%higher than they were 10 years ago)and healthy interest coverage(11x EBITDA to interest expense).We also see prospects for better corporate revenue growth over the medium term,given the

92、 tailwinds from fiscal spending and productivity gains from artificial intelligence.In the end,an outlook for slightly higher inflation and better growth means that an equity risk premium(proxied in this case by the difference between 10-year Treasury yields and the earnings yield of the S&P 500)bet

93、ween 0%and 2%makes more sense than the post-GFC environment of 3%5%.DESPITE HIGHER INTEREST RATES,VALUATIONS SEEM REASONABLE ACROSS GLOBAL MARKETS 12monthforwardP/Eratiosrelativetothelast25years 35x 5x 10 x 15x 25x 20 x 30 x CurrentValue InterquartileRange U.S.U.S.U.S.U.S.U.S.Europe EmergingCSI300MS

94、CIMSCILarge Tech EqualMidSmall Markets(Onshore)China India Cap Weight Cap Cap(Ofgshore)Source:BloombergFinanceL.P.DataasofNovember17,2023.Pastperformanceisnoguaranteeoffutureresults.Itisnotpossibletoinvestdirectlyinanindex.26 Finally,we see several trends in public and private equities that we think

95、 could generate long-term outperformance.The promise of artificial intelligence(AI)is hardly a secret.But we do think it could have profound implications for corporate productivity and profitability.AI has already seemingly started a new technology research and development cycle.In fact,the R&D budg

96、ets for the top-five tech companies alone have eclipsed$200 billion per year and are rapidly approaching the U.S.governments own R&D spending($250 billion).The use cases are also broadening.For example,a recent study suggested that an AI model can outperform expert radiologists at spotting malignant

97、 pancreatic cancers,and AI has helped reduce airline contrails that contribute to global warming.At JPMorgan Chase,we expect that incorporating AI and machine learning into our processes could deliver more than$1 billion in impact this year.As investors,we are focused on accessing AIs potential thro

98、ugh both the software and hardware leaders that are set to benefit.On the private side,consider looking to growth equity managers to identify new AI-connected businesses that could prove to be effective disruptors.GLP-1 weight-loss drugs could continue to drive divergences within and outside the hea

99、lthcare sector.We believe that around 2 million people in the United States are currently taking GLP-1 drugs for weight management.Nearly 100 million obese Americans could potentially benefit from the drug,but cost is a real hurdle.For example,the list price for Mounjaro is over$1,000 per month,whic

100、h is higher than the$650 per month cost of shelter per capita for the top 20%of earners.Nonetheless,sales for these types of drugs could reach$100 billion by 2030(up from$6 billion today),using relatively conservative assumptions regarding total market penetration.27 From an investors perspective,we

101、 see potential upside in the stocks of drug makers with a growing share of the weight-loss market.STOCKS At the same time,we think some consumer staples and medical device company stocks have been unduly punished by investors exclusively focused on the impact of GLP-1s.We see selective opportunities

102、 here.Finally,companies across sectors should benefit from a renewed focus on infrastructure,construction and defense spending.Real private spending on manufacturing structures has doubled since 2021,largely driven by semiconductor factories.Earnings estimates have doubled for companies whose busine

103、sses are tied to electrification.28 How can you best evaluate these different stock scenarios?Bear in mind that youre investing in a higher rate environment,which could be useful if you want to structure your equity holdings to limit downside exposure,extract yield or increase potential upside based

104、 on our expectations for next year.In private markets,we continue to see opportunity in secondary private equity funds,as the lack of distributions(the lowest since 2009)creates a catalyst for institutional investors to monetize their current holdings.Further,we are focusing on offsetting higher cos

105、t of debt by concentrating on buyout managers who operate in higher-growth sectors such as technology,healthcare and security.We expect the equity market rally of 2023 to carry on into 2024.And when it comes to capital appreciation,a critical element of any financial plan,stocks can continue to prov

106、ide long-term compound growth to investment portfolios.We see opportunity in secondary private equity funds.CREDIT 05 Pockets of credit stress loom,but they will likely be limited.30 We expect the coming year to see more stress in certain sectors of the credit complex.An inescapable fact of the busi

107、ness cycle is that higher interest rates make credit harder to come by.Of course,companies and households can still borrow money when credit is tight,but not as easily,and not in the ways they are used to.Not surprisingly,we expect the coming year to see more stress in certain sectors of the credit

108、complex.Vulnerable sectors include:commercial real estate loans,leveraged loans,and some areas of consumer credit(e.g.,autos and credit card)and high yield corporate credit.Small-cap equities may be similarly affected by higher rates,given the levels of debt on their balance sheets.31 CREDIT But we

109、think these stresses of higher rates will be manageableand more importantlynot enough to cause a recession in 2024.Indeed,some sectors of the economy have fared better than some might have expected in the face of rising rates.For example,U.S.residential home values have accommodated the recent and s

110、ubstantial jump in mortgage rates.Even though financing activity has collapsed(J.P.Morgan Private Bank and Wealth Management is on pace to underwrite just one-third of the mortgages that we did in 2021),home prices have been supported by the lowest supply on record.Corporate credit has also held up

111、well across a number of global markets,as U.S.and European corporates(both investment grade and high yield)took advantage of the low interest rates of prior years to“term out”(extend the maturities)of their debts.It is also notable that to take advantage of higher rates in their own fixed income por

112、tfolios,companies increased their holdings of shorter-duration cash equivalents,which are now yielding higher coupon payments.2 All of this means that non-financial corporate interest payments as a share of after-tax profits are at their lowest levels since 1980.ALL CLEANED UP:CORPORATE BALANCE SHEE

113、TS SHOW INTEREST BURDENS AT HISTORIC LOWS Netinterestpaymentsasashareofaftertaxprofits 80838689929598010407101316120%0%60%80%100%40%20%1922Sources:HaverAnalytics,U.SDepartmentofCommerce.DataasofJune30,2023.2 According to the Flow of Funds data,the share of assets in the nonfinancial corporate sector

114、 that are cash equivalents(checkable deposits+savings deposits+money market fund shares)is currently around 5.5%,which is up from 4%in the 2010s and 23.5%in the 1990s and 2000s.3232 Still,we believe higher interest rates are limiting the flow of credit.U.S.corporate and household borrowing is roughl

115、y comparable to most of the 2010s,a time when the economy was still deleveraging from the GFC.In the Euro Area,bank lending both to households and corporates is barely growing,and at the slowest pace since 2015.Indeed,higher interest rates look to be much more onerous for the European economy than t

116、he American economy.We are also starting to see cracks in pockets of the credit complex,specifically those that are either most exposed to floating interest rates or facing near-term maturities.Over 50%of commercial real estate loans are at a floating rate,and nearly$2 trillion of commercial real es

117、tate debt matures by 2025.Indeed,BBB-rated commercial mortgage-backed securities spreads are nearing 1,000 bps(which is higher than their COVID crisis peaks),while high yield spreads remain well anchored.In corporate credit,the healthcare sector is under particular stress,accounting for more than a

118、quarter of all corporate credit defaults YTD.The sector faces regulatory headwinds,labor inflation(which crimps margins)and liability payments(e.g.,from opioid lawsuits).3 The longer that interest rates stay elevated,the faster interest coverage metrics will deteriorate,especially for smaller compan

119、ies.TODAYSCREDITGROWTHRECALLSTHE2010S,ADECADE0FPOSTGFCDELEVERAGING 30%15%10%5%0%5%10%15%20%25%60 65 70 75 80 85 90 95 00 05 10 15 20 Nonfinancialcorporateandhouseholdnewborrowingasa%ofGVA Source:HaverAnalytics.DataasofApril2023.3 Nelson Jantzen&Tony Linares,“Default Monitor:High Yield and Leveraged

120、Loan Research,”J.P.Morgan Corporate Investment Bank Global Research,October 2,2023.33 CREDIT U.S.leveraged loan markets have already felt the sting of higher rates.As a result,default rates are now higher than they are for high yield bonds(a historical anomaly).And,of course,many U.S.regional banks

121、are under the strain of earning low rates on old loans while having to pay higher and higher rates on cash to attract deposits.Commercial real estate debt on regional bank balance sheets only exacerbates those strains.OVERLEVERAGEDSECTORSALREADYSHOWSIGNSOFSTRESS Commercialmor tgagebackedsecurity&hig

122、hyieldspreads,%13 15 17 19 21 23 12%0%2%8%10%CommercialMortgageBackedSecuritySpread HighYieldSpread 6%4%Sources:HaverAnalytics,BloombergFinanceL.P.DataasofNovember19,2023.34 Ultimately,though,we think these problems will be contained.We do not see tighter credit conditions leading to a full-blown cr

123、edit crunch.For investors,stresses in the credit complex can create a wide range of investment opportunities.We think relative value strategies,with a focus on fund managers who can identify stress and dislocations at the sector,or even subsector,level,are positioned to take advantage of the coming

124、credit cycle.Moreover,U.S.private credit funds could continue to take market share from high yield and leveraged loan markets.Currently,direct loans by private lenders are yielding upwards of 12%,even though risk metrics,such as net debt to EBITDA for borrowers,have improved.In addition,covenants fo

125、r lenders are stronger than they are in leveraged loan markets.In our view,private credit is competitive with private equity for a place in investors portfolios.Finally,stress in commercial real estate markets could create opportunities for investors who have the capital to provide as regional banks

126、 look to offload loans,or existing borrowers may need to bring in partners to help refinance.Inevitably,perhaps,the rate reset has had a material impact on interest-rate-sensitive sectors of the economy.But we think the fallout will be contained.The combination of strong household and corporate cash

127、 flows and a more benign inflation environment should allow central banks to lower interest rates before these pockets of credit stress do serious damage to portfolios.CONCLUSION Conclusion An investment landscape reconfigured 36 As we head into 2024,investors find more options for their portfolios

128、than at any time since before the GFC.Bond yields are high.Equity valuations are fair.Private markets continue to offer premiums over their public counterparts,while also becoming more accessible to investors.Even cash doesnt look so bad.Almost certainly,new or resurgent risks will emerge.A presiden

129、tial election cycle looms in the United States.Growth in Europe appears to be quickly succumbing to higher interest rates.China may continue to balance the competing interests of alleviating leverage in the property sector while supporting domestic consumption.War in Ukraine and the conflict in Isra

130、el and Gaza are ongoing,and new geopolitical flashpoints may well appear.Consider those risks as you weigh your investment options.Evaluate the implications,for 2024 and beyond.Personalize the possibilities.And finally,harness the power of markets to help realize your long-term financial goals.37 GL

131、OBAL Global Perspectives In our Global Perspectives,we highlight three areas of opportunity for global investors:01 Indian equity,one of the few emerging markets where equity investors have been rewarded for underlying economic growth 02 Europes luxury goods sectorglobal brands with enduring pricing

132、 power,renewed by digital innovation 03 Latin American beneficiaries of nearshoring,especially in Mexico The rate reset could create more dispersion between corporate winners and losersand thus more opportunity for active management.In our view,equity markets outside the United States offer especial

133、ly fertile ground for active managers.38 India Emerging market exception:India investors have been rewarded for economic growth Investors have turned to emerging markets for the promise of stronger economic growth,and many of these economies have indeed expanded at a faster pace than their developed

134、 market counterparts.But theres a twist,which many investors dont fully appreciate:In most emerging market(EM)economies,corporate earnings have failed to keep pace with GDP growth.India is a striking exception.It is one of the few emerging markets where equity investors can benefit from underlying e

135、conomic growth.Indian company profits,and thus stock returns,have tended to grow in line with nominal GDP.Data over the past 20 years show that India has one of the closest relationships between economic growth and market returns.INDIANCORPORATEEARNINGSKEEPPACEWITHGDPGROWTH.THATSARARITYINEMERGINGECO

136、NOMIES Annualized nominal GDP growth vs.local equity index price returns since 2009,%Nominal GDPEquity Returns(Domestic Index)ChinaOnshoreBrazilHongKongIndiaIndonesiaMalaysiaMexicoSingaporeSouth AfricaSouthKoreaTaiwan8%10%12%4%2%6%0%-2%Source:HaverAnalytics.DataasofDecember2022.Pastperformanceisnogu

137、aranteeoffutureresults.Itisnotpossibletoinvestdirectlyinanindex.39 GLOBAL J.P.Morgan Asset Managements LTCMAs project that Indias economy will deliver nominal growth of around 10%annually over the next 10 to 15 years.In our view,this makes India one of the most compelling investment destinations in

138、emerging markets.To the extent that growth prospects become tougher to source in a world of tighter credit,Indian markets may look especially attractive to global investors.FAVORABLE DEMOGRAPHICS,LOW CORRELATION WITH CHINA Indias growth potential reflects an expanding middle class,digitization and,e

139、specially,favorable demographics.Indias labor supply will likely increase steadily until the 2030s,and because labor supply is strongly linked to output,this gives it a long runway to deliver sustained high rates of economic growth.Indias prospects look especially appealing at a time when Chinas lon

140、g-term growth potential has declined,with far-reaching effects for the global economy broadly and emerging markets in particular.For example,China represents the largest source of trade demand for Korea and Taiwan,due to its large appetite for semiconductors.It also ranks as the largest importer and

141、 consumer of many major commodities,directly impacting leading commodity exporters such as Brazil and South Africa.In many ways,EM economies are highly correlated with Chinas economic cycle,especially major emerging markets.Indeed,given the market capitalization of Chinese companies,the country effe

142、ctively dominates the broad EM complex.For precisely that reason,Indias lack of correlation appeals to many investors.The lack of correlation applies to equity market performance as well.Indian equity markets are among the least correlated to China.INDIANEQUITYMARKETSAREAMONGTHELEASTCORRELATEDTOCHIN

143、A EMequitymarketcorrelations,Sept.20092023,quarterly MSCIChina MSCITaiwan MSCIIndia MSCIKorea MSCIBrazil MSCIChina MSCITaiwan MSCIIndia MSCIKorea MSCIBrazil 1.00 0.63 0.37 0.68 0.40 1.00 0.64 0.86 0.56 1.00 0.61 0.52 1.00 0.58 1.00 Source:BloombergFinanceL.P.DataasofNovember2023.40 READING VALUATION

144、S AGAINST A BRIGHTENING LONG-TERM OUTLOOK Indian equities are not undervalued.Stocks now trade at forward price-to-earnings(P/E)multiples that are higher than their historical averages.But the long-term outlook for Indias economy and equity markets appears better than it has in years.Wed point to se

145、veral reasons:A likely sustained increase in foreign direct investment,due to U.S.-China tensions and a redirection of supply chains benefiting India Companies have steadily reduced debt levels over the past 10 years,leaving room for a new credit cycle to emerge Structural reforms in the banking sec

146、tora dominant component of the equity marketare designed to improve profitability and reduce risk Indias business-friendly policies(including lower corporate tax rates)and preferential credit terms to set up manufacturing facilities in the country We think that collectively these factors could spur

147、profits to grow at compound annual growth rates(CAGR)in the low-to mid-teens over the next few years.That would justify Indian equitys current valuation premium versus history.In short,we expect earnings growthclosely linked to the fast-growing Indian economyto drive Indian equities higher over time

148、.41 GLOBAL Europe Digital reinvention fuels a fast-growing luxury sector Luxury goods have long evoked craftsmanship and exclusivity.Now digital transformation and shifting demographics are changing the way luxury good companies interact with their customers.Its a particular boon for Europe,home to

149、around 90%of globally listed luxury goods companies.Whats changed?Curated digital experiences,in which polished retail theater adapts to the online world(think high production value live-streaming and digital salespeople with one-on-one client relationships).The strategy has proved to be a big succe

150、ss,drawing in new consumers increasingly comfortable paying for big ticket items online.Bain&Co.consultants recently predicted4 that websites could become the leading channel for luxury purchases,with an estimated 32%34%market share by 2030.Beyond the digital innovations,growth drivers include:An ex

151、panding customer base(from around 400 million people in 2022 to an estimated 500 million by 2030),increasingly dominated by the wealthy A rising EM consumer Pent-up demand,including from European consumers with still-ample excess savings Fundamentals for Europes leading luxury goods businesses are s

152、trong.We believe demand will remain robust.And in an environment of broadly higher inflation,the sector could sustain the pricing power it has commanded for decades.THE POWER OF THE WEALTH EFFECT The luxury markets growing consumer base is increasingly concentrated among the wealthy,whose spending i

153、s less sensitive to economic downturns.The wealthiest 2%of global consumers accounted for 40%of luxury spending in 2022,up from 35%in 2009,according to analysts at Bain&Co.Bain projects that the global luxury market will reach 1.5 trillion in 2023,an 8%10%increase over 2022.Competition to win those

154、customers may intensify if economic growth slows in 2024(as we expect it will)and aspirational luxury consumers reduce their spending.The likely outcome:The strongest luxury brands will get even stronger.4 Bain&Company,Renaissance in Uncertainty:Luxury Builds on Its Rebound Data as of December 2022.

155、42 THE HIGHESTQUALITY BRANDS COMMAND EXCEPTIONAL PRICING POWER OVER MULTIPLE CYCLES Luxurygoodspricingsince1950 11,000 8,250 5,500 2,750 0 54 59 64 69 75 80 85 90 96 01 06 11 17 22 27 HermsKelly25 HermsBirkin25 ChanelFlap CartierLoveBracelet RolexSubmariner Source:BlackRock.Data as of August 30,2023

156、.All companies referenced are shown for illustrative purposes only,and are not intended as a recommendation or endorsement by J.P.Morgan in this context.GENERATIONAL SHIFT,RISING EM CONSUMER As the industrys digital shift helps spur new customer engagement,a generational shift is underway,as well:Po

157、st-pandemic,we see more younger consumers with a growing interest in sustainable lifestyles.This sensibility plays well to the luxury sectors appeal“buy less,buy better.”Across generations,EM consumers are gathering strength.Emerging economy countries could gain around 70 million middle-and high-inc

158、ome consumers by 2030,Bain estimates.Although Chinas stalling recovery(and especially its struggling property market)has recently depressed consumer sentiment,Chinese consumers luxury spending will likely recover through 2024.Newer luxury markets,such as India and EM Southeast Asia and Africa,look p

159、romising.Among the rising stars,India stands out.It could see 3540 million new mid-and high-income consumers between 2022 and 2030,implying that its luxury market could expand to 3.5 times todays size by 2030.43 GLOBAL EMERGINGECONOMYCOUNTRIESCOULDGAINAROUND70MILLIONMIDDLEANDHIGHINCOMECONSUMERSBY203

160、0 Emergingmarketluxurygoodsconsumers India+34MM40MM SoutheastAsia+20MM25MM EmergingAfrica+10MM 2022 2030F 2022 2030F 2022 2030F Source:Bain&Company.DataasofNovember10,2022.PENT-UP DEMAND,DRAWNDOWN SAVINGS In Europe,consumers appear set to spend some of the excess savings they have accumulated since

161、the outbreak of COVID.Between the end of 2019 and the second quarter of 2023,Euro Area households accumulated savings of around 1 trillion more than they would have otherwise.The European Central Bank estimates that this is approximately 12%of their average disposable incomes.So far,the overall amou

162、nt of excess savings has not declined;indeed,households in the highest-income quintile own about half of those excess savings.We do not believe money put aside during the pandemic will support a broad surge in consumption.But even allowing for a considerable degree of consumer caution,some of the sa

163、vings will likely be spent,supporting continued spending on high-end goods.ATTRACTIVE INVESTOR ENTRY POINT Amid uncertainty about the European economy and concerns about Chinas growth outlook,luxury stocks sold off in recent months.The top 10 names lost$190 billion in market value,or roughly 17%,sin

164、ce the end of March.Investors looking to benefit from the industrys long-term growth prospects may find an attractive entry point.44 Latin America Nearshoring creates new openings for Latin American markets Globalization has been on the wane since the GFC.The latest chapter in this historic change:I

165、nternational trade shifted significantly in the wake of pandemic-induced supply chain bottlenecks and amid growing geopolitical tensions.One trend has firmly taken hold:nearshoring,in which companies move production closer to their main markets.Companies larger goalsmaking supply chains more resilie

166、ntare even more important now,as management teams focus on sustaining profit margins and diversifying their supply chains in an increasingly polarized world.GEOGRAPHY AND HISTORY MAKE MEXICO A CLEAR WINNER Mexico is a clear beneficiary of the nearshoring trend,given its geographical position and lon

167、g-held ties to the United States.But many countries in Central America and South America could also increase their exports to the United States.The Inter-American Development Bank estimates that nearshoring could lead to an additional$800 billion of goods and services being sourced from Latin Americ

168、a and Caribbean countries in the next few years.As Latin American companies boost their trade with the United States,Chinese exporters have been in retreat.At its peak in 2016,Chinas share of U.S.imports stood at 21.6%.By August 2023,that share had nearly halved,to 13.5%.During that seven-year stret

169、ch,ASEAN(Association of Southeast Asian Nations)countries boosted their share of U.S.imports from 13%to 17%,and European Union countries from 15%to 19%.When we assess the potential impact of nearshoring on countries GDPs,Central American countries and Mexico stand to reap the greatest benefits.On an

170、 individual country basis,Mexicos share increased the most,rising from 13%to 16%as it became the main trading partner of the United States.Its success could open the door for other countries in the region to benefit from Mexicos geographical proximity to the continents largest economy.45 GLOBAL CENT

171、RALAMERICACANFINDMANYOPPORTUNITIESTOINCREASEMARKETSHARE Potentialopportunitiesforincreasedexportsas%of2022nominalGDP QuickWinsUnitedStatesTotal INTRALACQuickWins MediumTermOpportunitiesTopFive SelectedMajorEconomies 3.9%3.6%3.2%2.6%2.5%0.7%0.6%0.6%0.4%Honduras Nicaragua ElSalvador Guyana Mexico Colo

172、mbia Chile Peru Brazil Sources:IADB,BloombergFinanceL.P.DataasofDecember2022.Investors may be hard pressed to access the benefits of higher growth in Central America through equity markets.On the other hand,Mexicos stock market broadly captures the GDP growth that nearshoring has helped to spur,give

173、n the indexs exposure to domestic consumption,as nearshoring-related manufacturing creates jobs,drives disposable income and thus domestic economic activity.Notably,even after Mexican stocks have outperformed EM and global peers over the last two years,valuations are still trading below their 10-yea

174、r average.On a sector basis,we think industrial real estate in Mexico should continue to outperform.Investors can uncover industrial real estate opportunities in both public markets and private markets.When we examine the potential impact of nearshoring on specific product categories,industrial good

175、s(electrical,machinery,vehicles)and consumer goods(footwear,toys,optical)are among the U.S.imports that could be subject to Latin American and Central American gains in market share.REGIONAL INTEGRATION AND POLICY CHALLENGES But market share gains are far from guaranteed.On one end,public spending a

176、nd private investments will be needed to spur the necessary improvements in infrastructure and energy availability(especially“green”energy).For the entire region to reap the benefits of nearshoring,regional integration will be required as well,especially as it relates to 46 infrastructure,logistics

177、and business regulations.For example,textile exports from Central America might move through the Mexican border without incurring hefty logistical costs.Finally,public policy will be of paramount importance,as the strains of extreme income inequality,and left-leaning politics more broadly,may limit

178、the structural investment needed to fully capitalize on the export opportunity.Challenges abound,and the path wont be smooth.But nearshoring and supply chain diversification could spur meaningful GDP gains in Latin America.We see this as a multi-year investment opportunity,benefiting the region over

179、allbut with Mexico as the clear big winner.We think current market pricing does not yet reflect the full potential.Latin American equities,trading below historical multiples,offer investors access to the potential long-term benefits nearshoring may deliver through private and public investment,impro

180、ved infrastructure and rising commodity prices.For global investors,we believe this is a compelling combination.MEXICOBENEFITSFROMITSLONGHELDTIESTOTHEUNITEDSTATES SourceofU.S.imports,perregion&maintradingpartners 100%74%50%25%0%92 95 98 01 04 07 10 13 16 19 22 Other Canada India Japan China Mexico E

181、U LatAmex.MexicoAsiaex.Japan,India&China Source:DataWeb.DataasofAugust31,2023.47 APPENDIX Our mission The Global Investment Strategy Group provides industry-leading insights and investment advice to help our clients achieve their long-term goals.They draw on the extensive knowledge and experience of

182、 the Groups economists,investment strategists and asset-class strategists to provide a unique perspective across the global financial markets.EXECUTIVE SPONSOR Clay Erwin Global Head of Investments Sales&Trading GLOBAL INVESTMENT STRATEGY GROUP Elyse Ausenbaugh Global Investment Strategist Christoph

183、er Baggini Global Head of Equity Strategy Nur Cristiani Head of LatAm Investment Strategy Madison Faller Head of Market Intelligence Kristin Kallergis Rowland Global Head of Alternative Investments Tom Kennedy Chief Investment Strategist Jacob Manoukian Head of U.S.Investment Strategy Grace Peters G

184、lobal Head of Investment Strategy Xavier Vegas Global Head of Credit Strategy Alex Wolf Head of Asia Investment Strategy There can be no assurance that the professionals currently employed by JPMorgan Chase Bank,N.A.will continue to be employed by JPMorgan Chase Bank,N.A.,or that the past performanc

185、e or success of any such professional serves as an indicator of such professionals future performance or success.48 ABBREVIATIONS BpsBasis points COVID-19Coronavirus disease 2019 CPIConsumer Price Index DMDeveloped Markets EMEmerging Markets EMEAEurope,Middle East and Africa EUREuro FedFederal Reser

186、ve GDPGross Domestic Product GFCGlobal Financial Crisis LATAMLatin America U.K.United Kingdom U.S.United States USDU.S.dollar YOYYear-over-year YTDYear-to-date 49 APPENDIX IMPORTANT INFORMATION Past performance is no guarantee of future results.It is not possible to invest directly in an index.All c

187、ompanies referenced are shown for illustrative purposes only,and are not intended as a recommendation or endorsement by J.P.Morgan in this context.All market and economic data as of December 2023 and sourced from Bloomberg Finance L.P.and FactSet unless otherwise stated.INDEX DEFINITIONS Note:Indice

188、s are for illustrative purposes only,are not investment products,and may not be considered for direct investment.Indices are an inherently weak predictive or comparative tool.All indices denominated in U.S.dollars unless noted otherwise.The Bloomberg Barclays Global Aggregate Bond Index provides a b

189、road-based measure of the global investment grade fixed-rate debt markets.The Global Aggregate Index contains three major components:the U.S.Aggregate(USD 300mn),the Pan-European Aggregate(EUR 300mn),and the Asian-Pacific Aggregate Index(JPY 35bn).In addition to securities from these three benchmark

190、s(94.1%of the overall Global Aggregate market value as of December 31,2009),the Global Aggregate Index includes Global Treasury,Eurodollar(USD 300mn),Euro-Yen(JPY 25bn),Canadian(USD 300mn equivalent),and Investment Grade 144A(USD 300mn)index-eligible securities not already in the three regional aggr

191、egate indices.The Global Aggregate Index family includes a wide range of standard and customized subindices by liquidity constraint,sector,quality,and maturity.A component of the Multiverse Index,the Global Aggregate Index was created in 1999,with index history backfilled to January 1,1990.All indic

192、es are denominated in U.S.dollars.The Bloomberg U.S.Corporate Bond Index measures the investment grade,fixed-rate,taxable corporate bond market.It includes USD-denominated securities publicly issued by U.S.and non-U.S.industrial,utility and financial issuers.NCREIF Real Estate is a quarterly time se

193、ries composite total rate of return measure of investment performance of a very large pool of individual commercial real estate properties acquired in the private market for investment purposes only.All properties in the NPI have been acquired,at least in part,on behalf of tax-exempt institutional i

194、nvestorsthe great majority being pension funds.As such,all properties are held in a fiduciary environment.The MSCI China Index captures large-and mid-cap representation across China A shares,H shares,B shares,Red chips,P chips and foreign listings(e.g.,ADRs).The S&P 500 is widely regarded as the bes

195、t single gauge of large-cap U.S.equities and serves as the foundation for a wide range of investment products.The index includes 500 leading companies and captures approximately 80%coverage of available market capitalization.The NASDAQ-100 Index is a modified capitalization-weighted index of the 100

196、 largest and most active non-financial domestic and international issues listed on the NASDAQ.No security can have more than a 24%weighting.Prior to December 21,1998 the Nasdaq 100 was a cap-weighted index.Standard and Poors Midcap 400 Index is a capitalization-weighted index that measures the perfo

197、rmance of the mid-range sector of the U.S.stock market.The Russell 2000 Index is composed of the smallest 2,000 companies in the Russell 3000 Index,representing approximately 8%of the Russell 3000 total market capitalization.The S&P 500 Equal Weight Index(EWI)is the equal-weight version of the widel

198、y used S&P 500.The index includes the same constituents as the capitalization-weighted S&P 500,but each company in the S&P 500 EWI is allocated a fixed weightor 0.2%of the index total at each quarterly rebalance.The STOXX Europe 600 Index is derived from the STOXX Europe Total Market Index(TMI)and i

199、s a subset of the STOXX Global 1800 Index.With a fixed number of 600 components,the STOXX Europe 600 Index represents large,mid and small capitalization companies across 17 countries of the European region.The MSCI EM(Emerging Markets)Index is a free-float weighted equity index that captures large-a

200、nd mid-cap representation across Emerging Markets(EM)countries.The index covers approximately 85%of the free-float adjusted market capitalization in each country.The CSI 300 Index is a free-float weighted index that consists of 300 A-share stocks listed on the Shanghai or Shenzhen Stock Exchanges.Th

201、e MSCI India Index is designed to measure the performance of the large-and mid-cap segments of the Indian market.The MSCI World Index is a free-float adjusted SPX market capitalization-weighted index that is designed to measure the equity market performance of developed markets.The index consists of

202、 23 Developed Market country indexes.The STOXX Europe 600 Index(SXXP Index):An index tracking 600 publicly traded companies based in one of 18 EU countries.The index includes small-cap,medium-cap and large-cap companies.The countries represented in the index are Austria,Belgium,Denmark,Finland,Franc

203、e,Germany,Greece,Holland,Iceland,Ireland,Italy,Luxembourg,Norway,Portugal,Spain,Sweden,Switzerland and the United Kingdom.The IBOV Index is a gross total return index weighted by free float market cap and is composed of the most liquid stocks traded on the So Paulo Stock Exchange.The Hang Seng Index

204、 is a free-float capitalization-weighted index of a selection of companies from the Stock Exchange of Hong Kong.The components of the index are divided into four subindices:Commerce and Industry,Finance,Utilities,and Properties.The S&P BSE Sensex Index is a cap-weighted index.The index members have

205、been selected on the basis of liquidity,depth,and floating-stock-adjustment depth and industry representation.50 The Jakarta Stock Price Index is a modified capitalization-weighted index of all stocks listed on the regular board of the Indonesia Stock Exchange.The FTSE Bursa Malaysia KLCI Index comp

206、rises the largest 30 companies by full market capitalization on Bursa Malaysias Main Board.The S&P/BMV IPC seeks to measure the performance of the largest and most liquid stocks listed on the Bolsa Mexicana de Valores.The index is designed to provide a broad,representative,yet easily replicable inde

207、x covering the Mexican equities market.The constituents are weighted by modified market cap subject to diversification requirements.The Straits Times Index(STI),maintained and calculated by FTSE,is the most globally recognized benchmark index and market barometer for Singapore.Dating back to 1966,it

208、 tracks the performance of the top 30 largest and most liquid companies listed on the Singapore Exchange.The FTSE/JSE Top 40 Index is a capitalization-weighted index.Companies included in this index are the 40 largest companies by market capitalization included in the FTSE/JSE All Shares Index.The K

209、OSPI Index is a capitalization-weighted index of all common shares on the KRX main board.The TWSE,or TAIEX,Index is capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange.The MSCI Taiwan Index is designed to measure the performance of the large-and mid-cap segm

210、ents of the Taiwan market.The MSCI Korea Index is designed to measure the performance of the large-and mid-cap segments of the South Korean market.The MSCI Brazil Index is designed to measure the performance of the large-and mid-cap segments of the Brazilian market.The Consumer Price Index(CPI)is a

211、measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.KEY RISKS Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors.Alternative investments invol

212、ve greater risks than traditional investments and should not be deemed a complete investment program.They are not taxefficient and an investor should consult with his/her tax advisor prior to investing.Alternative investments have higher fees than traditional investments and they may also be highly

213、leveraged and engage in speculative investment techniques,which can magnify the potential for investment loss or gain.The value of the investment may fall as well as rise and investors may get back less than they invested.Bonds are subject to interest rate risk,credit and default risk of the issuer.

214、Bond prices generally fall when interest rates rise.Investors should understand the potential tax liabilities surrounding a municipal bond purchase.Certain municipal bonds are federally taxed if the holder is subject to alternative minimum tax.Capital gains,if any,are federally taxable.The investor

215、should note that the income from tax-free municipal bond funds may be subject to state and local taxation and the Alternative Minimum Tax(AMT).International investments may not be suitable for all investors.International investing involves a greater degree of risk and increased volatility.Changes in

216、 currency exchange rates and differences in accounting and taxation policies outside the United States can raise or lower returns.Some overseas markets may not be as politically and economically stable as the United States and other nations.Investments in international markets can be more volatile.S

217、mall capitalization companies typically carry more risk than well-established blue-chip companies since smaller companies can carry a higher degree of market volatility than most large cap and/or blue-chip companies.This material is for informational purposes only,and may inform you of certain produ

218、cts and services offered by private banking businesses,part of JPMorgan Chase&Co.(“JPM”).Products and services described,as well as associated fees,charges and interest rates,are subject to change in accordance with the applicable account agreements and may differ among geographic locations.Not all

219、products and services are offered at all locations.If you are a person with a disability and need additional support accessing this material,please contact your J.P.Morgan team or email us at for assistance.Please read all Important Information.JPMAM LONG-TERM CAPITAL MARKET ASSUMPTIONS Given the co

220、mplex risk-reward trade-offs involved,we advise clients to rely on judgment as well as quantitative optimization approaches in setting strategic allocations.Please note that all information shown is based on qualitative analysis.Exclusive reliance on the above is not advised.This information is not

221、intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance.Note that these asset class and strategy assumptions are passive onlythey do not consider the impact of active management.References to future returns are not promises or even estim

222、ates of actual returns a client portfolio may achieve.Assumptions,opinions and estimates are provided for illustrative purposes only.They should not be relied upon as recommendations to buy or sell securities.Forecasts of financial market trends that are based on current market conditions constitute

223、 our judgment and are subject to change without notice.We believe the information provided here is reliable,but do not warrant its accuracy or completeness.This material has been prepared for information purposes only and is not intended to provide,and should not be relied on for,accounting,legal or

224、 tax advice.The outputs of the assumptions are provided for illustration/discussion purposes only and are subject to significant limitations.“Expected”or“alpha”return estimates are subject to uncertainty and error.For example,changes in the historical data from which it is estimated will result in 5

225、1 APPENDIX different implications for asset class returns.Expected returns for each asset class are conditional on an economic scenario;actual returns in the event the scenario comes to pass could be higher or lower,as they have been in the past,so an investor should not expect to achieve returns si

226、milar to the outputs shown herein.References to future returns for either asset allocation strategies or asset classes are not promises of actual returns a client portfolio may achieve.Because of the inherent limitations of all models,potential investors should not rely exclusively on the model when

227、 making a decision.The model cannot account for the impact that economic,market,and other factors may have on the implementation and ongoing management of an actual investment portfolio.Unlike actual portfolio outcomes,the model outcomes do not reflect actual trading,liquidity constraints,fees,expen

228、ses,taxes and other factors that could impact the future returns.The model assumptions are passive onlythey do not consider the impact of active management.A managers ability to achieve similar outcomes is subject to risk factors over which the manager may have no or limited control.The views contai

229、ned herein are not to be taken as advice or a recommendationto buy or sell any investment in any jurisdiction,nor is it a commitment fromJ.P.Morgan Asset Management or any of its subsidiaries to participate in any ofthe transactions mentioned herein.Any forecasts,figures,opinions or investmenttechni

230、ques and strategies set out are for information purposes only,based oncertain assumptions and current market conditions and are subject to changewithout prior notice.All information presented herein is considered to be accurateat the time of production.This material does not contain sufficient infor

231、mation tosupport an investment decision and it should not be relied upon by you in evaluatingthe merits of investing in any securities or products.In addition,users should makean independent assessment of the legal,regulatory,tax,credit and accountingimplications and determine,together with their ow

232、n financial professional,if anyinvestment mentioned herein is believed to be appropriate to their personal goals.Investors should ensure that they obtain all available relevant information beforemaking any investment.It should be noted that investment involves risks,thevalue of investments and the i

233、ncome from them may fluctuate in accordance withmarket conditions and taxation agreements and investors may not get back thefull amount invested.Both past performance and yield are not a reliable indicatorof current and future results.Investments in commodities may have greatervolatility than invest

234、ments in traditional securities.The value of commoditiesmay be affected by changes in overall market movements,commodity indexvolatility,changes in interest rates,or factors affecting a particular industry orcommodity,such as drought,floods,weather,livestock disease,embargoes,tariffsand internationa

235、l economic,political and regulatory developments.Investing incommodities creates an opportunity for increased return but,at the same time,creates the possibility for greater loss.GENERAL RISKS&CONSIDERATIONS Any views,strategies or products discussed in this material may not be appropriate for all i

236、ndividuals and are subject to risks.Investors may get back less than they invested,and past performance is not a reliable indicator of future results.Asset allocation/diversification does not guarantee a profit or protect against loss.Nothing in this material should be relied upon in isolation for t

237、he purpose of making an investment decision.You are urged to consider carefully whether the services,products,asset classes(e.g.,equities,fixed income,alternative investments,commodities,etc.)or strategies discussed are suitable to your needs.You must also consider the objectives,risks,charges,and e

238、xpenses associated with an investment service,product or strategy prior to making an investment decision.For this and more complete information,including discussion of your goals/situation,contact your J.P.Morgan team.NON-RELIANCE Certain information contained in this material is believed to be reli

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240、aphs,tables,diagrams or commentary in this material,which are provided for illustration/reference purposes only.The views,opinions,estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice.JPM assumes no du

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