The Investment implications of the U.S. strike against Iran

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Thank you, moderator, and good morning, everybody. I'm Brandon Hall, research analyst here at JP Morgan Asset Management. Welcome to today's webcast titled The investment implications of the US strike against Iran. On February 28, the United States and Israel launched attacks on Iranian military targets and political leadership. Shortly after, Iran retaliated with strikes on targets in the Gulf states and Israel to discuss the economic, geopolitical, and investment implications of these events, I'm joined by Dr. David Kelly, Chief Global strategist, and Derek Chollet, former Chief of Staff to the US Secretary of Defense and head of the JPMorgan Chase Center for geopolitics.

Now, after Derek and David each give about 15 minutes of prepared remarks, we will be taking questions from the audience. For those of you joining us via webcast, you can send us your questions using the box on the left hand side of your screen at any point during this call. And with that, that's enough housekeeping items. David, why don't I hand it off to you to get us started.

Great. Well, thank you, Brandon. Thank you, Derek, for joining us. And thank you all for taking time out of your morning to call into this call. I'm very glad to have Derek with us today from the Center of Geopolitics. He's certainly been very busy while he has been here at JP Morgan. There's, certainly, a lot going on.

I'm going to turn it over to him to talk about the situation right now. And then I'm going to talk about the investment implications myself. But I did want to say one thing at the start, which is when you have a fast moving series of events, a complicated set of events, whether it's geopolitics or finance or the pandemic. The key thing, I think, from an investment perspective, is to have a structured approach to analyzing things and make their decisions based on that.

So what we're going to do today is Derek is going to talk about-- just update us on where things stand right now in the Middle East, talk about how this may play out in the months-- or the weeks and months ahead, talk about the implications for geopolitics, implications for oil prices, and maybe some upside and downside risks on how this might play out. And then he's going to turn it over to me.

I'm going to talk about three things, first of all, what was the economic and financial market backdrop before these events. Second of all, how do these events as a baseline scenario feed into that and what are those implications. And then finally, what does all this mean for investors today.

And so we're going to talk about that. I hope we will take less than half an hour to get through that, because I really want to open it up for all of your questions. And Brandon, you're going to try and moderate those questions. So with that, I'm going to pass back to Derrick. Derrick?

Great. Thank you, David. And just to add my thanks to everyone for taking the time to be with us this morning, it's certainly been a dramatic 48 hours in the Middle East and in the broader region. So appreciate you taking the time, so we can try to all through this together. And we have seen a lot of commentary and a lot of hot takes over the last couple of days. And a lot of questions about, is this war legitimate or what's the legal basis for it, was it the wise thing to do, why now.

That's not really my concern. Our concern this morning, what we do want to try to do, just to repeat what David said, is provide you a bit of a framework in a sense of what's going on and where things are going and as I see it with the caveat that this is a very fast moving story. We put a note out for clients last night in time for the opening of Asian markets, things have changed since then. So this is going to be something where every day, every minute, we'll probably be learning something new. It's quite a dynamic situation. So we'll look forward to engaging with you further down the road on this.

I think, first, as a larger point, just to kick things off, it is really important to see what's happened over the last two to three days as a culminating moment of really the past few years. I mean, stretching back to the October 7 attacks against Israel, the Iran and Israel exchanges, since then, in particular, the 12 Day War last June. And since last June, we here at the Center for Geopolitics have been repeatedly describing the situation as to pause, not a peace, and have been assessing that the conflict would resume.

And in fact, this weekend it resumed in a decisive way with this unprecedented joint US and Israeli air campaign. Thousands of targets struck thus far across multiple cities in Iran, counter-strikes against US and allied targets throughout the region, and most significantly, the death of the Supreme leader of Iran, Ayatollah Khomeini, and other senior leaders.

So first, some of the my key takeaways just getting those out of the way right up front first, one cannot understate the importance of the removal of the Supreme Leader of Iran. He is only-- he was only the second Supreme Leader in the history of the Islamic Republic. He was elderly.

We knew that a transition would be coming soon. But this transition and the moving the Supreme Leader out of the picture, along with many of his most senior advisors, is a generational opening for Iran. But it also brings great risks of instability, internal instability along the lines of what we've been seeing in a place like Libya, for example, since 2011, for 15 years since the overthrow of Muammar Gaddafi.

Second, this is not Iraq. There will not be a ground invasion. There is no nation building plan. There's no attempt to own the Iranian future.

Washington has preserved the option to declare mission accomplished, say they have achieved their core goals of diminishing Iran's capacity to export instability and to repress its people, but then leave the next phase to the Iranians. And you've seen that the US administration has been messaging that. This is not about regime change per se, but we are going to set the conditions for the Iranian people to take matters into their own hands.

Third, my assessment from where I sit right now is that I think this is going to last at least a few more days. It could go into weeks, but how long this goes could come down to a simple numbers game of who starts to run out of munitions first. The US and the Israelis are racing to destroy as much of Iran's supply of missiles, as well as missile launchers and drones and production facilities to make all of those as fast as possible, while Iran is trying to inflict as much damage as possible before their supplies run too low.

So the question that I think we're all going to be wrestling with in the coming next few days is what the military calls magazine depth on both sides. How many weapons do both sides have. When the June war wound down after 12 days, last summer, one of the reasons, perhaps, the principal reason, was because the Israelis and the US were running out of missile interceptors, the things that shoot down the missiles, and the Iranians missiles were getting destroyed and they were shooting off a lot of missiles.

So both sides had an incentive to stop where they were. That didn't solve the underlying problem, which is why we are here-- where we are today, but I think we have to be watching how these stockpiles are drawn down.

Next, fourth, diplomacy is in the back seat. I mean, we're hearing some talk of maybe there's going to be talks underway, but this conflict, this campaign is not about nudging Iran back to the negotiating table. It is about creating leverage and permanently weakening the Iranian regime and its ability to project power across the region, its ability to oppress its people at home and, of course, from acquiring a nuclear weapon.

Fifth, my assessment, our assessment is that regime collapse or irreversible degradation of the regime is more likely than regime survival. The Islamic Republic of Iran will never be the same after this is over, if it survives at all, and I think that's a real question.

However, I think there's a real risk that the collapse of the regime will be quite messy, not orderly. These sorts of things over the years, whether you're talking Iraq or Libya or Syria tend to be very messy. So I think we have to expect that. And moreover, this regime, even if it were to fall or weaken significantly through these airstrikes, it still holds all the guns. And as we saw in January, it's willing to use those guns against its own people.

Next, I think in the short term-- and this is, perhaps, stating the obvious, given what we've been watching just this morning already, the short term disruption is going to be quite significant. I think the regional instability where Iran has attacked nine other countries thus far, targeting targets in the Gulf and in Israel. Regional airspace is shut down.

Expats are racing to get out of the Gulf. The Strait of Hormuz is effectively closed. This is going to have massive implications in the short term. It could influence things like insurance prices, for example, a bit longer.

We'll get into energy in a little bit, but I do think that the energy impacts could be limited, depending on how long this goes. And I think that-- and depending on how much damage Iran does to oil infrastructure, but I think in the short term, we have to expect quite a lot of volatility.

However, in the medium to long term, I remain quite bullish about the Middle East. I think it's important to put this in context. Iran has been the greatest single obstacle to the region's effort to become a global financial hub, a hub for tourism and technology and travel. And so with an Iran that's weakened, that's less able to export instability, an Iran that remains weak and, perhaps, mired in its own internal dramas, that's going to be an Iran-- that's going to be a region that's more congenial to the kinds of success and opportunity we've seen thus far.

So I have a short term, we need to prepare ourselves for what's going to be quite dramatic and volatile. Medium to long term, I'm relatively optimistic about this. So very quickly, how we got here, this was strategic opportunism in many ways. The timing of the strikes reflects both the diplomatic deadlock as well as the operational momentum that the administration had.

Once these forces were deployed in the region last week, it became sort of a use it or lose it opportunity. There'll be lots of time for discussion about the exact timing, but I think it's important to note the exact, perhaps, it was tactical surprise that we all woke up Saturday to see this having started. But my view is it was very likely that by the end of next week this would have started anyway.

Second, the scope of the objectives of this campaign are very different than what we've seen in the previous US military actions, for example, in Venezuela or the attack against Iranian nuclear facilities last June. The targeting has been broad, and the US and Israel have been explicit that their core goal is going to be to bring about a change in the regime even if it's not the Military end game. The military end game is to weaken the regime, to enable the Iranian people to take over. But that is a much broader goal than what we've seen in previous campaigns.

I'd say the immediate international response we've seen thus far has been pretty predictable, with some countries having declared full support and others responding more tepidly. And we've seen Iran in its attacks against the Gulf, as well as even some European interests, have started the discussion about whether the Europeans are going to take military action to defend their own interests or, perhaps, even if Gulf countries may get involved. And that's a space we have to watch-- we have to watch very closely.

Thus far, the damage has been relatively limited. I mean, of course, we have had loss of life by the United States, by Israel, by some of the Gulf partners. But the lasting damage has not been significant thus far. Although this morning we might have seen a quick pivot towards something that's more meaningful with the attack on some Saudi oil infrastructure.

So again, where do I see this going? Let's get to the bottom line. I mean, I think that the US and Israel are betting that the strikes are going to be the nudge, the push that the Iranian regime has needed, in their view, and because Iran's at the most vulnerable point it has been since 1979. They are trying-- the US and Israel are trying to strip the Iranian regime from its ability to project power at home and across the region.

And the most plausible scenario that I see unfolding is a regime that effectively is going to collapse. And I think that it's important to note for the last several decades, for over 40 years, this regime has ruled by Fear, not by inspiration. We saw the regime brutalize its people, killing thousands or, perhaps, even tens of thousands just a few weeks ago in January. So I do think this regime is on its last legs.

That said, it doesn't mean that we're going to necessarily move into a moment of stability. Past efforts to use air power to bring down regimes, whether it was Kosovo more than a quarter century ago or Libya 15 years ago, it's taken a long time, and it's been quite messy. So whereas I do see the regime as changing, it doesn't necessarily mean it's going to change for the better. And it doesn't mean it's going to change anytime soon.

I do expect, as I said at the top, for the campaign to go on days, if not weeks, but then at some point there'll be a declaration of mission accomplished, that we've achieved a certain threshold of weakness of the Iranian regime, and now it's over to the Iranian people to take charge. The trajectory beyond that, I have to say, remains quite uncertain. Given its military and economic dominance, the Iranian Revolutionary Guard Corps, the IRGC that you're hearing a lot about, it does maintain the upper hand at home and its ability to assert its control internally.

I think opposition groups inside Iran will try to coalesce in the coming days and siphon support from those security services, and we're certainly seeing messaging from the US and Israel to try to encourage security services to flip and to defect. But I think this is-- we have to settle in for something that could be a long-term unstable situation.

And so I see the near-term likely outcome is an Iran less able to threaten its neighbors, not without the resources to support terrorist groups or build a nuclear program or invest in a massive missile infrastructure that's threaten the region, but it's mired in instability at home. And again, the analogy comes back to me of something that looks like Libya, which is 15 years of instability.

So very quickly, in terms of what I'm watching in the coming days and weeks, first, whether Iran's retaliatory strikes and the modest damage they've achieved thus far, whether that's a signal of deliberate restraint on the part of the Iranians, perhaps, in a desire to keep some of their arsenal intact for a future, or whether that's a sign that they're running out of gas, whether the effectiveness of US and Israeli strikes against them are working and they're running out of their stockpiles. Second, whether Iran's proxies, including the Houthis and Hezbollah and IRGC units throughout the region, whether they have the capacity or the willingness to join in the fight.

We saw Hezbollah start a fight against Israel just in the last 24 hours. Israel is responding. Whether that's sustained remains to be seen. Third, just on oil very quickly-- and some of my colleagues in JPMorgan research have done great work on this. But I think that first we've seen Brent crude go up a few bucks so far. It closed at 71 on Friday. I think last I checked, it was 77, 78 right now.

If this is a relatively limited conflict our oil experts assess that you could see oil go up to $80, $85 range. There's a lot of factors that go into this, how much of the barrels are actually taken off the market and disrupted, how long this goes on, what reserves can be mobilized.

And the assessment is that there's enough oil on the market and enough in reserves that this could go on for about three weeks and things could remain in that relatively stable zone of 75 to 85 in terms of Brent crude. If this stretches onward, though, that's when the danger signs start. And you could see stuff up into the 100, 120 range. And then we're going to have some genuine economic impacts when it comes to inflation and whatnot.

Fourth, very quickly, what I'm going to be looking for is signs that the strikes are creating fissures within the Iranian leadership, whether it's in the clerical regime and the security services, fifth, whether the US and Israeli defenses hold up. So far, they've been holding up relatively well. But whether they hold up and then, importantly, at this point of munition stocks and how long and what the concerns are on the US and Israeli side about running out of munition stocks.

Six, we ought to be watching the Iranian opposition. It's diffuse. It has not been particularly well-organized in the past. There's no real leader for it. That's apparent right now. There's some prominent exiled leaders trying to organize stuff. But how does that Iranian opposition take shape.

Seventh, whether the Europeans Act to defend their interests, they've been making noises along those lines. We saw the French, the Germans, and the Brits come out with a statement yesterday that they're willing to take defensive, necessary measures to defend their interests. So whether they get in the game or not, that's something we got to watch.

Seventh, whether the Gulf states themselves retaliate against Iran, they have the capacity to do so. They are certainly motivated to do so. Whether or not they choose to actually get in the game is something we need to be watching.

Eight, whether the current conflict actually then over time softens some of the gulf rivalries we've seen spike in recent weeks, particularly, between the Saudi and the United Arab Emirates, and that's something we'll be watching. Ninth, what happens-- and this is, perhaps, a little more in the medium to long term, but what happens if the best case unfolds and we get an Iran that in time stabilizes and it comes in from the cold?

And prior to 1979, it's important to note that Iran was a regional powerhouse. It had global influence. It was a vital US energy and military ally. And the entire structure of the modern Middle East is shaped around an Iran that is the opposite of all that, an Iran that is working against the trends we have seen in the Middle East economically, technologically, politically since over the last 10 years or so.

So Iran that has a very different posture could be a game changer and I think would be a game changer in the Middle East. And then 10th and finally brought more broadly geopolitically, what is this going to mean for China, Russia, North Korea, other villains, Iran's partners out there in the world? I think it's notable that their inability to prevent an attack, their inability to actually do much of anything to help Iran does highlight the limits of the cooperation between those countries. And that, I think, could have implications for geopolitics elsewhere.

So with that, I tried to cover a lot of ground. There's a lot still to discuss. I look forward to getting to in your questions. But David, I'll turn it over to you. Thank you.

Great. Well, thank you, Derek. That is a tremendously useful. And we're going to have some questions coming in from the audience. And we will try and some will come for me, but I'm sure most of them will be headed for you. So getting back to so how do you analyze this from an investment perspective? I think the first thing I want to do is just talk about where the economy was and where financial markets were before this and then how these events might play out based on what Derek was saying about how this is unfolding and then talk about what this means for investors.

So looking at the economy, first of all, the truth is we went into this year and the economy was not as bad as it felt in terms of consumer confidence and not as good as it looked in terms of the stock market. There are reasons why confidence is depressed. A lot of it has to do with partisanship, inequality in the US, and social media, all of which tend to drive confidence down but don't necessarily undermine the things that make financial markets financial assets valuable. So I think confidence understates the foundations of financial markets.

But equally, the financial markets themselves have really been overstating things. So there are structural biases which I think are causing money to flow into US equity markets, but find it very hard for money to flow out things like stock buybacks. The defined contribution retirement plans, where money just pours into the equity market and then the perennial problem of, well, once you've got a capital gain and it's this big, how do you get the money out.

And so I think money's been pouring into equity markets for other reasons. And it's not just AI enthusiasm. It's not just earnings. I think that there's been a real systematic bias helping equity markets out, but the economy itself really kind of dull. I mean, I always described it as a healthy tortoise, and I think that's what it is.

A few years ago, my forecast for 2024 for the economy was 2024. That's 2% real growth, 0 recessions, inflation coming down to 2%, unemployment sticking at four. And actually, by the end of this year, I that's exactly where we're going to be.

Now, let me go through these one at a time. First of all economic growth, it's going to look-- I talked about a tortoise-- It's going to look a little bit like the back of a tortoise actually this year I think the first quarter could be as low as 1% growth. We've had some miserable weather here on the East Coast. That's killed vehicle sales, which are down.

We also are still waiting for the bulk of the income tax refunds to come through. We've only had 25% of them paid out so far. And so that stimulus to consumers is really going to be more of a second-quarter, third-quarter issue rather than first quarter. And of course, we've got all this trade volatility. And we've got low employment growth. So all of these things I think are holding the economy back in the first quarter-- maybe 1% growth.

By the second quarter, though, the income tax refunds will really begin to kick in. We've seen about, as I say, a quarter of them paid out so far. They're up about-- in terms of the average refund, up about $350 from last year. We expect that gap to grow. And that's going to feed money into the consumer sector.

I also think that we're going to get-- whether these events had occurred or not, I think the president is going to push for tariff rebate checks to give some extra money to consumers during this year. And that will keep consumer spending looking strong in the third quarter. And of course, you've got the stock market gains of the last few years. That's helping upper-income spending. And we have the AI boom. Of course, chip prices are going up. But there's tremendous amount of spending going on in just building out data centers and building the tech infrastructure.

But by the fourth quarter, the big surge in consumer spending from income tax refunds and tariff rebate checks, that will ease. And it will fade. People will spend the money. And the thing is that there's a level of consumption that is going to be hard to sustain. And so by then, I think you get about 1% growth in the fourth quarter. So the economy is at a 1, 3, 3, 1. It actually averages to 2.

And then going into next year, a key issue is the administration's obviously concerned about the midterm elections. Very, very hard for a sitting president to maintain the same number of seats in the House of Representatives. The average loss in a midterm election is 21 seats. They've only got a five-seat majority right now. So chances are the Democrats take the House.

Now, what that probably means is, going into 2027, yes, you might get some more fiscal stimulus. But it's going to have to be paid for by tax increases elsewhere. I don't think that a Democratic-controlled House is going to give a blank check to the president to stimulate the economy in favor of the Republicans before the '28 elections.

So I think you get less fiscal stimulus going in next year. And I think the economy slows down to about 1.5% growth. And if you look at-- I usually talk-- when I talk about the economy, I talk about growth, jobs, profits, inflation.

On the jobs side, it works out the same way. We're going to get a jobs report this Friday, maybe 50, 60,000 payroll jobs added. I always caution people that the consensus forecast on that is usually wildly wrong because there's just so much variability in the data itself. But overall, it's a good-- that is where, I think, the economy is, creating no more than 50,000 jobs per month.

But looking at the immigration trends, we believe the working-age population is now falling by 20,000 people per month on average. And because of that, the unemployment rate seems to have peaked. It's actually beginning to come down. Even with this low level of job growth, I think, by the end of the year, we're down at 4% unemployment. And I think we'll sustain that going into even slower growth next year because we just don't have labor supply with this big turnaround in immigration, both legal and illegal.

Looking at profits, we've just wrapped up a super fourth-quarter earnings season-- double-digit gains in profits for the quarter, year over year, and for the year, for the second year in a row. Analysts looking for the same thing-- they're forecasting the same thing-- for both 2026 and 2027. I have a hard time believing that we're going to manage to do quite double digits both years because we're looking at nominal GDP growth of about 4% to 5%. It's really hard to get that amount of profit growth. But profits still look pretty good here. And they're certainly being helped out by this capital spending boom.

Remember, if tech company A spends $50 billion on capital spending by buying equipment from tech company B, tech company B calls it revenue. It falls straight to the bottom line. That's profit. Company A only has to record maybe a fifth of that or a sixth of that in depreciation expense. So this capital spending boom is not just about artificial intelligence. There's a level to which it's actually-- a degree to which it's causing artificial profit growth.

Anyway, I think-- but apart from that, US companies are benefiting from good productivity numbers, holding down costs. I think profits looked pretty good going into 2027 and 2028, and indeed for the rest of 2026. On inflation, we have had some better numbers on inflation. Some of it's a little artificial because of some with of the way they calculate shelter costs. But still, the official inflation rate CPI is 2.4% year over year.

Before all of these events, we thought that number would go up to about 3% by June of this year. And the reason for that is a feed-through of tariff effects, which companies had been reluctant to pass on to consumers. But when consumers have all these stimulus checks, well, maybe they'll pay it now. And so we thought that was going to push up inflation. But then, again, it was going to fade in the second half of last year.

And in fact, the IEEPA ruling from the Supreme Court was going to take something out of inflation because when they-- with that ruling, even as those tariffs were replaced partially by a 10% tariff rate, which the president said he was going to push to 15%, but he hadn't pushed it to 15% yet, even with that 10% rate, or even 15% rate, the average effective tariff rate is going to be lower going forward than it was before that ruling. That takes a little bit more out of inflation.

And so overall, I think this is not an inflation-prone economy. Shelter inflation is actually dragging down-- or coming down here. So overall, we were headed for 2% inflation. And the Federal Reserve, I think, was-- maybe they'd hold off on a rate cut maybe for the first half of the year. Maybe we get one in June because of this temporary rise in CPI. But they knew that inflation was likely to come down. So maybe get another rate cut by the end of the year. So maybe two for this year. And then some more rate cuts next year if the economy truly is less than 2% growth, less than 2% inflation.

So that's where we were in the economy. Kind of healthy tortoise, but nothing terribly exciting, and slowing down again in 2027. Also, in terms of financial markets, we've had three blockbuster years for US equities; even stronger, of course, for international equities last year. But still, the markets-- it's been volatile first two months of this year, certainly. But markets are close to their all-time highs. And in general, there's a lot of money that comes into markets every week.

So there are legitimate concerns about, will AI bankrupt a whole lot of software companies? Will the AI hyperscalers-- or the hyperscaler companies, are they all going to be profitable? There are plenty of questions out there. But overall, it is a market that is jittery but having a hard time falling. And long-term interest rates-- again, a lot of money sloshing around the system-- down close to 4%. So really not bad for financial markets going into this year.

I will say that the US dollar came down last year. Looks like it's still going to come down going forward. We were still thinking the dollar is going to fall over time. That would amplify the return on international versus US investments.

That's where we were. So how do these events affect that? Well, the first thing, of course, for the US is energy prices. At the moment, Derek was talking about a $5 increase in oil prices so far. If that's it, that might translate to no more than about 10 cents on a gallon of gasoline. It's not good for American consumers, but I think they'll put up with it.

If-- and I know we're going to get to questions to this-- if the Strait of Hormuz was closed on a extended-- for an extended period of time, it's a completely different ballgame because then it's a world crude oil market. And if crude oil prices shoot up and you have gasoline prices go up by $0.50 or $0.75 or $1, then you have a significant impact on the US economy. But I do want to emphasize one other thing. You have a significant impact on the US economy and on the global economy. But in the US, the big effect is on inflation rather than growth.

Back in 2008, the US-- I think it was in the third quarter of 2008, just before the Great Financial Crisis unfolded-- the US was spending 3% of its GDP just buying net imports of petroleum and petroleum products. We were spending a fortune just putting oil in. All that money was going straight out of the economy, helping other countries grow.

Today, we are a net exporter. In fact, I believe, in the fourth quarter, we exported about $273 billion of petroleum products. We imported just over $200 billion worth. We're actually running a trade surplus in oil, which is fairly significant. And that means that if oil prices go up net, the US economy actually makes money out of it.

Now, there's a distributional issue, which is very important politically and economically. Companies, shareholders make money. The average person paying for gasoline loses money. And that is not politically popular. It hurts the middle class. But overall, what we've seen so far I don't believe affects growth that much. I think it does push up inflation a bit.

So I thought inflation would head to 3.0% in CPI by June. Now I think maybe 3.3%. But I still have it at the same trajectory coming down through the end of the year. Maybe a 2.3 year over year in CPI for December as opposed to 2.0, but not really changing that. And then if the situation in Iran and the Gulf stabilizes, you can get inflation going down even more so in 2027 because of it going up a little bit right now.

For corporate profits, some more money for energy companies net. It's not a significant change. I think for the Federal Reserve, they'll look through this in terms of its direct impacts if it's just about oil prices because they know that oil will have negative impacts on average consumers, or higher gasoline prices will-- they won't want to change policy based on that.

Fiscal policy-- I think it will make the president even more inclined to push for the idea of tariff rebate checks. And also, we're going to have significant further defense spending. Derek was talking about how you run out of missiles, and that's the limitation to these exercises. Well, Iran is an enormous country. And to hit all the potential-- it's one thing to hit the leadership. But to hit all the potential little areas that the republican guard might control or you might want to get them here or get them there, that is an enormous operation.

And if we have a prolonged period where we've got to keep naval resources in the region just to protect the Strait of Hormuz, that's also money. And so all this extra defense spending, my guess, is it's not going to be paid for. It adds to that debt. So where do we come out of this? We've got a little more inflation. We've got a little more government spending, a little more debt. No real sign that this is going to cause a recession in the US. If anything, just a nudge up here in long-term interest rates because of it.

So for investors, I'd say it doesn't change the game very much. Going into this year, we said people need to diversify, try to find a tax-efficient, tax-smart way of diversifying their portfolios. It's quite clear that portfolios are over-concentrated in megacap US growth stocks, and people need to diversify. Spread it around-- value as well as growth, small as well as large, particularly international as well as domestic, and alternative assets as well as those traded in public markets, and to try to make that transition in an efficient way.

I think that is even more urgent today because the last point I want to leave it with-- and then I'll turn it back over to Brandon for your questions-- is this. Derek has talked about the uncertainty of the moment. And I feel that very much, too. And I feel, really going back over the last, really since the start of this century, it is the things out of left field that have got us. This has been the century of tail risks. And I think that this kind of situation only amplifies that.

I mean, we've seen how-- the inability of the Iranians to necessarily retaliate in a big way immediately, locally. But who knows what plan they might have or what might happen down the road? Over time, technology gets more and more powerful. And that means the potential for some huge event occurring gets bigger. You could have cyber attacks. You could have political assassinations. You could have major terrorist attacks. And lots of things could happen. All of those could impact markets.

How do you protect against that? You can't protect against it by just hedging against that risk, because these risks will come from many different angles. The best-- you hedge against a specific risk, but you diversify against general risks. And I think that is even more urgent that people have well-diversified portfolios rather than concentrated portfolios because of the added uncertainty caused by the events of last weekend. So with that, I'm going to pass it back to you, Brandon, for any questions for Derek and myself.

Thank you very much, David. Thank you, Derek, for your comments, as well. We are getting tons of questions. We have about 25 minutes for Q&A. Please do continue sending in your questions using the box at the left-hand side of your screen at any point during our Q&A session.

Derek, I'm going to direct the first question to you. You briefly mentioned China in your comments. People are interested in diving a little bit deeper there. We know the response from China has been limited thus far. But do you see the possibility of them ramping up their response? And then, I guess more broadly, do you view this conflict as more of a risk or an opportunity for China?

So the first part of the question, I do not see China ramping up its response. China doesn't want really any part of this conflict. It's true that China has interests in the sense of it has been the largest recipient of Iranian oil. The little bit of oil that was getting out of Iran was going to China. And obviously China has been a fair-weather partner for Iran. Let's put it that way. But they're not looking to get into this fight in any way.

I also think it'd be interesting to watch this play out in the coming weeks. Could be the Chinese military, which is having its own issues right now, and the Chinese leadership looks at this campaign, just as they looked at the Venezuela campaign a few months ago, and it's a further reminder of, despite all of their efforts to modernize their military, that they still have a lot of work to do.

I mean, the operational capacity, operational success thus far of this campaign is something the Chinese simply cannot yet do. And so that might affect some of their thinking and timelines when it comes to scenarios like Taiwan. All that said, if I put myself in the shoes of leaders in Beijing, if this were to become a protracted conflict, if this were to be something that would be very messy, weakening the United States, preoccupying the United States, that's not something that they would be particularly sad about.

I mean, the US, for the better part of a quarter century, has been engaged one way or another in conflict in the Middle East. And some would argue that that's been an opportunity for China and, in some ways, given China a little bit of an open field to which its rise can really take shape. And so if this were to lead to that kind of scenario, which I don't think is likely, but if it were to happen, I think China would see upside for them.

But I do think the knock-on effects aren't going to be very direct here, I guess, because I don't see China as playing much of a role in this. And frankly, neither do I see Russia playing a role, either, just given Russia continues to have its hands full with Ukraine. And one of the reasons Iran today and a week ago and two months ago was at the weakest point it had been in since 1979 was in part because China couldn't do very much for it and Russia was preoccupied by its war in Ukraine.

Thank you, Derek. David, I'm going to come to you with a question related to the dollar, usually considered a safe-haven asset. Does this conflict at all change your outlook for the dollar for the rest of 2026?

Not really. I think there's a natural knee-jerk reaction to regard it just as that, as a safe-haven asset, when you don't know what's going to happen. But what happens with these kind of events is you have a surge in uncertainty and-- like a big cloud of uncertainty. And that cloud necessarily dissipates over time. And as it does, the flight to safety, the knee-jerk reaction fades. So what are you left with after that?

I think you are left with a US government that's going to have an even higher trajectory in terms of deficits and spending because of this. I think you're going to be left with the possibility of more fiscal stimulus, a little bit more inflation in the short run. But ultimately, I still think that what's going to happen is, as we go into next year, there's going to be a-- we'll see inflation and growth slow in the US. And that's going to give a reason for the Fed to cut rates. That call really hasn't changed.

And we have a great chart in our "Guide to the Markets" which shows the relationship between-- or we will have in our next edition coming out in a few weeks-- which shows the relationship between the gap in two-year yields between the US and other countries and the dollar. And if the US is cutting rates at a time where the Bank of Japan is raising rates and the European Central Bank is on hold, we expect the dollar to come down.

And as the dollar comes down, it's causing more and more investors to say, do I want to have all my money in the US basket here? And that very flow of US money and international money to other markets is a downward sign for the dollar, also. It's pushing the dollar down. So I still firmly believe that over the next few years-- and it's in our long-term capital market assumptions-- I believe the dollar will come down over the next few years, amplifying the return on non-US assets relative to US assets.

Perfect. Thank you, David. Derek, I'm going to come back to you. After you mentioned Russia and Ukraine in your last answer, people are wondering if you could dive a little bit deeper there, the implications of this conflict for the Russia-Ukraine War.

Well, pretty indirect, to be honest. I mean, Iran and Russia are close partners. And for the first several years of the Ukraine war, Iran was a principal supplier of drones to Russia, for example. But Russia has now been able to reverse engineer those drones and is now making those indigenously.

And again, pointing out Iran's vulnerability, it's connected to Russia-Ukraine because when Israel took out sophisticated Iranian air defense in 2024 and then again last June, in 2025, the Iranians went back to the Russians and said-- because these were Russian-provided air defense-- went back to the Russians and said, can we get a resupply? Can we get replacements? And the Russians said, sorry, our shelves are empty. We don't have anything to give you.

So the place Iran has found itself in-- truly alone in the international system without anyone on the sidelines who can come into the game to help it-- is a function of Russia's war in Ukraine in many ways. I think it's important to note-- I know this call is not about that-- but diplomacy along those lines, in terms of Russia-Ukraine, remains quite intensive.

And despite this conflict in the Middle East, there will still be some important meetings this week on that. And I do believe that the administration, despite its attention-- understandable attention-- to this war-- where it needs to be-- is also going to be continuing to drive hard in the coming weeks and months for some sort of settlement in Ukraine. And if this conflict were to end in a way the administration wants it to end-- and I personally believe it can end-- in terms of an outcome that is better for the future of Iran, that will put further wind in the sails of the administration when it comes to trying to bring about some resolution to the Russia's war against Ukraine. So I do think that there could be an impact, but it will be very indirect.

Thank you, Derek. I want to draw the attention back to energy markets. I'm going to stick with you for this next question, Derek. We're talking about the Strait of Hormuz. We know it has not been formally closed, but traffic is down pretty meaningfully. The question we're getting is, are there any actions the US government could take to ensure that-- or help traffic pick up?

Yeah, sure, absolutely. And it's effectively closed. And I think in the coming days, as companies assess the risk, we'll see whether that stays that way or gets worse. Or the Iranians could actually move to close it altogether. That said, the US military and the Gulf partners have prepared for this contingency. They have military capability in place to try to bust through any sort of closure of the Strait.

I think many of the airstrikes that have been conducted thus far, particularly by the US side, whereas the Israelis have been spending a lot of their munitions on leadership targets, regime targets, going after Iran's missiles-- US has been hitting those. But I think, also the US has been hitting those targets, particularly the Iranian navy and other assets that Iran has that would be threatening to global energy supplies and particularly the Strait.

So I think it's a temporal issue. I think that obviously, again, right now it's effectively closed, or traffic is slowed to a trickle. That could remain that way for a bit. The Iranians could move to formally close it. But I do think, over time, measures could be taken, as we've seen in the past-- during the 1980s, for example, when US Naval ships were escorting tankers. I don't know that it would even need to come to that. But I do think that the Straits will, over time, be able to flow energy and other commerce.

Perfect. Thank you, Derek. David, I know we mentioned oil above $100 as more of a tail risk. But people are wondering if you could rediscuss your comments as to why you would view-- if oil were to spike above $100-- that more as inflationary rather than recessionary.

Well, because-- well, it's a great question. So if you go back to the traditional role that oil has played in the economy, it has been stagflationary. And that goes back to the 1970s, goes back to the Iranian revolution, or even as recently as 2008. When you have a spike in oil prices, it did two things.

First of all, it pushes up gasoline prices, and so it adds directly, immediately, to inflation. But second of all, because we were importing so much oil from the rest of the world, it was sucking money out of the economy. So, essentially, American consumers were paying, and foreign oil producers were getting the money.

Now, we've got a situation where the US is a net oil exporter. So if global oil prices go up, US oil production, US oil producers, actually make more money out of it than US consumers have to spend. You still get an inflation effect, of course, but you'll get significant pickup in the revenues profits of US oil companies.

Suddenly, if you're talking about $80 a barrel as opposed to $60 a barrel, a lot of fracking makes more sense. And so you'll see an increase in US oil production. And it has, actually, a very immediate effect. You can see it in investment spending on energy exploration, which is a line item in our total investment spending. That will pick up.

So overall, the US economy, in terms of economic activity, you lose something in consumption, you gain something on investment spending, it could be close to a wash in terms of growth. But it does leave you with more inflation. And it also worsens inequality because the people who are pumping more tend to be rich, and the people who are trying to fill their tanks tend to be poorer.

Perfect. Thank you, David. Let's talk about another commodity here that has been top of mind-- that is precious metals, more specifically, gold, often considered a safe haven asset as well. Can you talk a little bit about your outlook for gold and whether or not these events change that outlook at all?

Yeah. It is highly speculative. Obviously, we've seen an enormous increase in gold. And people have said, well, that's because of greater geopolitical uncertainty. I have a hard time really believing that. I think that you've had plenty of bouts of geopolitical uncertainty over time. And this, certainly, is about geopolitical uncertainty.

But it's not more so than, perhaps, we saw with the outbreak of the Ukraine war or other events like that. So we've had plenty of bouts of geopolitical uncertainty. But I think what's happened is, as money has poured into financial markets, as equity prices have gone up, as bond prices have gone up, we've seen a compression on yields in the fixed income markets. We've seen money pour into things like Bitcoin.

Now, Bitcoin is a little less popular these days for various reasons. And I think some of the money that was being bet on that is getting transferred over to gold. What I do know is this-- people have said that gold goes up for two reasons. One, because of insecurity and two because of inflation fears.

We know it's not inflation fears. And the reason we know this is because there's a very good measure of what the market thinks inflation is going to be in what are called treasury break-evens-- the gap in the yield between a nominal treasury bond and a tip of the same maturity. And that does not show any increase in inflation expectations over the last year or two. And so any increase in gold was not because of that.

My guess is it wasn't really because of greater geopolitical uncertainty either. But it's because more money is chasing after it. Now, could that continue? Yeah. And, I mean, I do prefer as an asset to cryptocurrencies, but I would still be-- you're still basically betting on the idea that somebody else will buy it off you for a higher price.

There is no stream of income. Apart from a few jewelry uses, it's really not that significant in terms of its consumption. So I think it is still a very speculative asset. I don't mind having a small allocation, certainly no more than 5% of a portfolio. But I think it's pretty risky to be playing gold just because you think that geopolitical tensions will continue to rise.

Thank you, David. Derek, I'm going to come back to you for the next question. If we zoom out a bit, if we look, really, over the past few months, we've seen the US launch military operations in Venezuela. And then now, we're talking about Iran. Do you think the United States will continue to go after its historical adversaries in a way they really haven't? And, I guess, who could come into focus next?

So I don't think that there's going to be any big surprises here, because even though maybe the folks woke up to the news this weekend surprised, I wasn't particularly surprised-- in the sense that this has been, as I said at the top, a long running struggle against Iran. And it's one that Iran's vulnerability, matched with its capacity for continuing to make very bad decisions, and not willing to negotiate in a meaningful way, and continuing to adhere to the dream of having a nuclear weapon, and being able to threaten the Middle East, that it wasn't going to move off those goals.

So it sort of felt to me that this use of force was somewhat inevitable in many ways. And similarly with Venezuela, yes, the military operation that abducted the leader of Venezuela was a surprise, but it was a pretty targeted, finite operation and, in my view, did not foretell some kind of future military action. I think there's two realities that the US military is going to be dealing with. And those realities, obviously, do have investment implications.

One is it's pretty stretched right now. The combination of Venezuela, even though the operation itself didn't drain many resources, the force posture in the Caribbean, one of the carriers that's currently part of the operation today in Iran, the USS Ford, was in the Middle East earlier last year than in the Caribbean, now back in the Middle East.

It is long over its deployment. You have thousands of sailors and airmen who've not seen their families in months. That ship's going to have to go back into maintenance sooner rather than later. So there's a lot of wear and tear that's out there.

And, as we were talking earlier, the munitions issue is a real one in terms of US stockpiles. So, as we draw down those stockpiles, as US military draws down those stockpiles, it's going to be absorbing risk elsewhere. But I do think that the priority will be to conduct these operations, but do so in a way that it does not invite any sort of risk in other theaters that are important to the United States-- in particular, I would say, in the Indo-Pacific, and vis a vis China, and particularly related to Taiwan.

So from where I sit, I don't see this as the beginning of some dawn of US military intervention everywhere. It's one of the reasons why I think that, sooner rather than later in the coming days, maybe a little more than a week, there's going to be more of a discussion of winding this down in some way, because there will be concerns about US and Israeli weapon stockpiles, and at the same time remaining vigilant in terms of maintaining the capability for other theaters.

And I'll close with this. Obviously, the huge caveat is on how all of this ends. If this were to end in a way that I don't think it will, but it could-- completely sideways, regional war, Iran stays in the fight for weeks and weeks on end, and this is the US' worst case scenario, then that's a different story. But I don't see that as the direction of travel as we sit here this morning.

Thank you, Derek. David, I'm going to come back to you here. Not related to US-Iran, but last week we saw an article come out from a research firm that discussed this hypothetical worst case scenario of AI implementation, showed mass unemployment, weaker consumer spending, stress across financial markets. We're getting a lot of questions wondering if you share your views on that and whether or not you see it as a semi-feasible outcome.

Yeah. What is it, Sarine?

Citrini.

Citrini. That's what it was. Yes. So, yeah, I've thought a lot about this. The standard answer economists give, having looked at the introduction of new technologies ever since the Industrial Revolution started, is that people always say it's going to cost jobs. And it does cost some jobs. But it creates other jobs.

And I think AI is probably going to be in that camp also. There are certainly plenty of coding jobs that are being lost because, as our colleague, Stephanie Aliaga, has pointed out, the people who are coding AI are uniquely capable of designing AI to be good at coding, because that's what they do.

But when you get to other jobs, if I look through-- and I know you do too-- the long lists of types of employment in America when we're trying to forecast the employment numbers, you're not going to be able to replace the doctors, and the nurses, and the social workers, and the construction workers. You're not going to be able to do that all immediately or the flip of a bit of code here.

So I think it's going to be much more gradual in other fields. More importantly, I think what you're going to see is growth in demand in various areas. My brother-in-law is a radiologist. And one of the very exciting potential uses of AI is the ability to read scans better than humans. Well, first of all, they're not quite there yet, perhaps because of the nature of large language models or AI, there's some error rate that's kind of inevitable there.

But more than that, as soon as you do that, then everybody wants to have a scan. And so the demand for scans has gone through the roof. And, really, the question you've got to ask yourself is this-- at what point will Madison Avenue wave the white flag and say that it has no longer got the capability of convincing Americans to buy stuff they don't need with money they don't have?

Because I think that capability is infinite. There is an infinite stockpile of ads which will convince people to buy stuff or experiences, which is going to need humans. So I think you will generally get a productivity gain over time. You get some bumps along the way.

If you had a recession, people might well use AI as a reason not to hire people. And I think there's a lot of uncertainty out there, which is slowing down hiring also. But the Citrini article was talking about imagining a world in which unemployment spikes to 10%. It's not going to spike to 10% because of layoffs caused by AI.

There are going to be lots of jobs created by AI and created by new demands for goods and services from various people in America and around the world. So I'm not buying it. I think it will increase inequality. And I think there are real issues in terms of regulating it, both from a long term perspective of just how dangerous it is, but even a short term perspective of how much it can manipulate humans.

I think there are some really serious questions to ask. I just wish we would focus on those a little bit more and a little bit less on its impact on the macro economy, which I think is probably stable enough to take it.

Thank you, David. We have time for one more question for each of you, so we'll make them play off each other. Derek, the question we're getting is more broad. Can you share what you view as the biggest geopolitical risk facing investors for the remainder of 2026? And then, David, after he answers, can you discuss how you would recommend investors hedge or prepare for that risk?

Well, sitting here in early March, where we've had a quite dramatic two months to the year, we've had calls on Venezuela, and Greenland, and now Iran, one hesitates to guess. Look, I think the biggest risk it's not so much a crisis, per se, it's more of a trend, which is what I think of as the global rewiring of the international system.

As the US has been changing its approach to global trade over the last few years, not just the last year-- it's accelerated in the last year, but it's a change that's underway for a while-- and the rest of the world hasn't changed it, as there's been greater questions out there about US reliability and US intentions-- whatever one thinks of what the US is doing in the world, there's no question that many key parts of the world see the US as a source of a lot of disruption right now-- perhaps necessary disruption, but still disruption and how that encourages hedging behavior and de-risking behavior by some long standing US partners, some middle power countries, as Prime Minister Mark Carney, of Canada, would call them.

So I think that's something that we haven't quite wrapped our heads around in terms of what the implications are going to be. The US is still going to be a premier, and the foremost, and most desirable investment destination. It's still going to be the generator of the world economy. But these changes are real. They will be meaningful. And they will, perhaps, be the thing of trend lines, not headlines-- not like a crisis, like a war, but something where we could wake up four years from now and realize that we're living in a world that's a bit different than the one we've grown up being used to.

Thank you, Derek. David, how do you think investors should prepare for those risks?

Well, I think what's interesting is, again, if you look at this century so far, is just the heterogeneity of the risks that we have confronted, the shocks we've seen. We went into the century thinking about Y2K, which we were actually very well able to prepare for. But then we get hit by 9/11, we get hit by derivatives and Lehman taking down the global financial system. We get hit by the pandemic.

And what I see here is the three trends. One is the economy itself is actually becoming more stable in terms of its own internal behavior. And I'm not that worried about that. But we are seeing greater political volatility in the United States one way or the other-- and this may be, indeed, around the world-- you can see that in Europe also and, of course, in geopolitics.

We've got a lot of political volatility. And we've got these more powerful technologies. In financial markets over the decades, there's been a huge growth in various kinds of derivative bets, which have made the markets more unstable. We've also got huge advances in biotech, which, arguably, is what was going on when the pandemic kicked in.

We've had huge increases in cyber capabilities, in AI, danger of a cyber attack, the danger of military technology. All of these things, in some ways, need some regulation. They don't need ham-fisted regulation. They need smart regulation. But maybe we don't get that.

And so what that leaves me with is the fat tails I talked about earlier on. There are plenty of fat tails out there, but you don't know which direction they're coming from. So what investors should do is this-- they should ask themselves how appropriately safe is my portfolio.

First of all, if you haven't rebalanced in a few years, chances are you are more exposed than you were before. We have a chart in our guide to the markets which shows that if you had a balanced portfolio at the start of 2020, just before the pandemic, a 60/40 stock bond split, just to make it simplistic, you've now got a 72/28 portfolio. So you're significantly more risky in your portfolio than you were back then. Have you rebalanced?

But also, we have seen, obviously, a surge in excitement about AI and about the hyperscalers, which, in many ways, in the long run, is deserved. The question is, are these the companies that are going to benefit from it? And are those valuations a little too high? And what I always say about-- eventually, we'll have a bear market.

And I always say we know not the hour nor the day, but we do know the location. The epicenter of the next financial crisis will come in the areas of markets which are built on the most speculation, the most hype, the most euphoria. And if you're overweight in those areas, and we all know what they are-- if you're overweight in those areas, don't just get balanced in terms of diversifying, but get balanced in terms of valuations. You want to make sure that you can look at different parts of portfolio and say, OK, this valuation is more or less OK.

Now, let me make sure I spread it around, because that's the way you protect yourself against this. It's not by trying to hedge against a specific risk. It's trying to protect yourself against a general set of risks, which may be rising because of the different directions we're seeing technology move in and regulation move in.

Thank you, David. That is a great place to leave us. We are at time. So, David, Derek, thank you both for your timely and insightful comments today. And thank you all for tuning in and submitting questions. If we did not get to your question, please do reach out to your JP Morgan representative, and someone from our team will be happy to get back to you as soon as possible. Thank you. Have a great rest of the day.

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LEGAL ENTITY, BRAND and REGULATORY INFORMATION. In Germany, this material is issued by J.P. Morgan SE, with its registered office at Taunustor 1 (TaunusTurm). 6 0 3 1 0 Frankfurt am Main, Germany, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB). In Luxembourg this material is issued by J.P. Morgan SE- Luxembourg Branch, with registered office at European Bank and Business Centre, 6 route de Treves, L-2633, Senningerberg Luxembourg, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE- Luxembourg Branch is also supervised by the Commission de Surveillance du Secteur Financier (CSSF): registered under R.C.S Luxembourg 8 2 5 5 9 3 8 in the United Kingdom, this material is issued by J.P. Morgan SE- London Branch, registered office at 25 Bank Street, Canary Wharf, London E14 5JP, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE London Branch is also supervised by the Financial Conduct Authority and Prudential Regulation Authority. In Spain, this material is distributed by J.P. Morgan SE, Sucursal en España, with registered office at Paseo de la Castellana, 31, 2 8 0 4 6 Madrid, Spain, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE, Sucursal en Espana is also supervised by the Spanish Securities Market Commission (CNMV); registered with Bank of Spain as a branch of J.P. Morgan SE under code 1 5 6 7. In Italy, this material is distributed by J.P. Morgan SE - Milan Branch, with its registered office at Via Cordusio, n.3. Milan 2 0 1 2 3, Italy, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE Milan Branch is also supervised by Bank of Italy and the Commissione Nazionale per le Società . la Borsa (C O N S O B): registered with Bank of Italy as a branch of J.P. Morgan SE under code 80 76; Milan Chamber of Commerce Registered Number: REA MI 2 5 3 6 3 2 5.

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Not for retail distribution. This communication has been prepared exclusively for institutional, wholesale, professional clients and qualified investors, only as defined by local laws and regulations. For the purposes of MiFID II, the JPM Market Insights and Portfolio Insights programs are marketing communications and are not in scope for any MiFID II, MiFID requirements specifically related to investment research.

Furthermore, the JP Morgan Asset Management Market Insights and Portfolio Insights programs, as non-independent research, have not been prepared in accordance with legal requirements designed to promote the independence of investment research, nor are they subject to any prohibition on dealing ahead of the dissemination of investment research. This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment, product, strategy, plan, feature, or other purpose in any jurisdiction, nor is it a commitment from JP Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein.

Any examples used are generic, hypothetical, and for illustration purposes only. This material does not contain sufficient information to support an investment decision. And it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professional.

If any investment mentioned herein is believed to be appropriate to their personal goals, investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions, or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions, and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted.

It should be noted that investment involves risks. The value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements. And investors may not get back the full amount invested.

Both past performance and yields are not reliable indicators of current and future results. JP Morgan Asset Management is the brand for the asset management business of JPMorgan Chase and Company and its affiliates worldwide. To the extent permitted by applicable law, we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies.

Personal data will be collected, stored, and processed by JP Morgan Asset Management in accordance with our privacy policies at https://am.JPmorgan.com/global/privacy. This communication is issued by the following entities-- in the United States, by JP Morgan Investment Management, Inc or JP Morgan Alternative Asset Management, Inc, both regulated by the Securities and Exchange Commission.

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LEGAL ENTITY, BRAND & REGULATORY INFORMATION. This communication is an advertisement for the purposes of the Markets in Financial Instruments Directive (MIFID II) and the Swiss Financial Services Act (FINSA). Investors should not subscribe for or purchase any financial instruments referred to in this advertisement except on the basis of information contained in any applicable legal documentation, which is or shall be made available in the relevant jurisdictions (as required). In Hong Kong. this material is distributed by JPMCB, Hong Kong branch JPMCB, Hong Kong branch is regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission of Hong Kong. In Hong Kong, we will cease to use your personal data for our marketing purposes without charge if you so request. In Singapore, this material is distributed by JPMCB, Singapore branch JPMCB, Singapore branch is regulated by the Monetary Authority of Singapore Dealing and advisory services and discretionary investment management services are provided to you by JPMCB, Hong Kong/Singapore branch (as notified to you). Banking and custody services are provided to you by JPMCB Singapore Branch. The contents of this document have not been reviewed by any regulatory authority in Hong Kong, Singapore or any other jurisdictions. You are advised to exercise caution in relation to this document. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. For materials which constitute product advertisement under the Securities and Futures Act and the Financial Advisers Act, this advertisement has not been reviewed by the Monetary Authority of Singapore. JPMorgan Chase Bank, N.A., a national banking association chartered under the laws of the United States, and as a body corporate, its shareholder's liability is limited.

With respect to countries in Latin America the distribution of this material may be restricted in certain jurisdictions. We may offer and/or sell to you securities or other financial instruments which may not be registered under, and are not the subject of a public offering under, the securities or other financial regulatory laws of your home country. Such securities or instruments are offered and/or sold to you on a private basis only. Any communication by us to you regarding such securities or instruments, including without limitation the delivery of a prospectus, term sheet or other offering document, is not intended by us as an offer to sell or a solicitation of an offer to buy any securities or instruments in any jurisdiction in which such an offer or a solicitation is unlawful. Furthermore, such securities or instruments may be subject to certain regulatory and/or contractual restrictions on subsequent transfer by you, and you are solely responsible for ascertaining and complying with such restrictions. To the extent this content makes reference to a fund, the Fund may not be publicly offered in any Latin American country, without previous registration of such fund's securities in compliance with the laws of the corresponding jurisdiction

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In Latin America, for intended recipients use only, by local JP Morgan entities, as the case may be.

In Canada, for institutional clients' use only, by JP Morgan Asset Management Canada, Inc, which is a registered portfolio manager and exempt market dealer in all Canadian provinces and territories except the Yukon, and is also registered as an investment fund manager in British Columbia, Ontario, Quebec and Newfoundland, and Labrador.

In the United Kingdom, by JP Morgan Asset Management UK, Limited, which is authorized and regulated by the Financial Conduct Authority. In other European jurisdictions, by JP Morgan Asset Management, Europe S. [INAUDIBLE] In Asia-Pacific, APAC. By the following issuing entities and in the respective jurisdictions in which they are primarily regulated JP Morgan Asset Management Asia-Pacific, Limited, or JP Morgan Funds, Asia Limited, or JP Morgan Asset Management Real Assets, Asia Limited, each of which is regulated by the Securities and Futures Commission of Hong Kong. JP Morgan Asset Management, Singapore Limited, Company, Reg number 197601586K, which this advertisement or publication has not been reviewed by the Monetary Authority of Singapore.

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Commonwealth, by JP Morgan Asset Management, Australia Limited. AB55143832080AFSL376919.

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LEGAL ENTITY, BRAND & REGULATORY INFORMATION. JPMorgan Chase Bank N.A. (J P M C B N A) (ABN 43 074 112 011/AFS License No: 2 3 8 3 6 7) is regulated by the Australian Securities and Investment Commission and the Australian Prudential Regulation Authority. Material provided by J P M C B N A in Australia is to "wholesale clients" only. For the purposes of this paragraph the term "wholesale client' has the meaning given in section 761G of the Corporations Act 2001 (Cth). Please inform us if you are not a Wholesale Client now or if you cease to be a Wholesale Client at any time in the future. JPMS is a registered foreign company (overseas) (ARBN 1 0 9 2 9 3 6 1 0) incorporated in Delaware, U.S.A. Under Australian financial services licensing requirements, carrying on a financial services business in Australia requires a financial service provider, such as J.P. Morgan Securities LLC (JPMS), to hold an Australian Financial Services License (AFSL), unless an exemption applies. JPMS is exempt from the requirement to hold an AFSL under the Corporations Act 2001 (Cth) (Act) in respect of financial services It provides to you, and is regulated by the SEC, FINRA and CFTC under US laws, which differ from Australian laws. Material provided by JPMS in Australia is to "wholesale clients" only. The information provided in this material is not intended to be, and must not be, distributed or passed on, directly or indirectly, to any other class of persons in Australia. For the purposes of this paragraph the term "wholesale client" has the meaning given in section 761G of the Act. Please inform us immediately if you are not a Wholesale Client now or if you cease to be a Wholesale Client at any time in the future. This material has not been prepared specifically for Australian investors It may contain references to dollar amounts which are not Australian dollars; may contain financial information which is not prepared in accordance with Australian law or practices; may not address risks associated with investment in foreign currency denominated investments; and does not address Australian tax issues.

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For all other markets in APAC, to intended recipients only.

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LEGAL ENTITY. BRAND & REGULATORY INFORMATION. References to "J.P. Morgan" are to JPM, its subsidiaries and affiliates worldwide 'J.P. Morgan Private Bank" is the brand name for the private banking business conducted by JPM. This material is intended for your personal use and should not be circulated to or used by any other person, or duplicated for non-personal use, without our permission. If you have any questions or no longer wish to receive these communications, please contact your J.P. Morgan team. Copyright 2026 JPMorgan Chase & Co. All rights reserved.

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Text: JP Morgan.