Equity Strategy Market leadership: look for risk-on, Cyclical trading in 2H, Europe, and potentially Consumer plays, included

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Equity Strategy Market leadership: look for risk-on, Cyclical trading in 2H, Europe, and potentially Consumer plays, included

l.kochar@jpmchase.com

J.P. Morgan India Private Limited

report. They appeared oversold in terms of positioning metrics, trading at lows

- middle chart. We do not expect them to bounce far, but perhaps to reclaim half

of their 19% peak-through ytd drawdown, as bond yields move lower - they are We remain bullish on equities, and note that the market

at +5% from lows at present. We also suggested that Cyclicals are potentially breadth, which was at lows of late, should start to

improve in 2H...

facing some short term stalling ahead, post a strong run, see A bridge too far?.

We believe any Low Vol/beta rotation will be short lived, and we do not 70%

expect it to have legs in 2nd half. As outlined above, we think macro momentum 65%60%55%

should be strong, and Iran conflict impact likely moves behind us, with the trade 50%45%40%

likely just a digestion of strong past run, “sell the good news” type. 35%30%

25%

• Alongside the tactical rotations out of the momentum factor, which short term 20% 20 % of 21MSCI AC World stocks outperforming22 on a 3m/m basis23 Average 24 +1.5 Stdev 25 -1.5 Stdev 26

favours SPW over SPX, also small vs large caps and Value vs Growth style, in ...Low Vol stocks could show spells of better

the US as well, and not just Internationally, the rotation into Consumer space performance, post a poor run… this is especially if bond

yields move lower, as we suspect…

is showing some signs of life. Of course, the outlook here remains highly

106 3.8%

dependent on Iran conflict newsflow, through oil price and interest rates, but we 104103 4.0%

are starting to see some better trading in certain consumer subcategories. The 10110099 4.2%4.4%