The first phase of the COVID-19 crisis is passing. Now the skies are clearing just enough so that we can assess the damage and get a sense of where we’re headed.

Our Top Market Takeaways for June 26, 2020.

Our mid-year 2020 outlook

 

As 2020 began, we expected it to be another year of positive growth, although not one without its own set of challenges. We stood ready to take advantage of opportunities while navigating investment risks such as the U.S. presidential election, the U.S.-China trade dispute, and a historically low yield environment. What we—and everyone else—didn’t expect was the COVID-19 pandemic, which effectively shut down the global economy and put stock markets through one of the quickest and most severe bear markets in history.  

Now, halfway through the year, the first phase of the COVID-19 crisis seems to be behind us; the storm clouds are clearing enough to allow us to assess the fallout and determine where we may be headed. The virus itself remains one of the most important variables for the investment landscape going forward, and it’s particularly difficult to project. For example, we don’t know when a vaccine may be available, and we don’t know if second waves will force policymakers’ hands into reimposing lockdowns.

So, as we discuss in our mid-year 2020 outlook, we urge investors to focus on what we do know and what we can control. For example:

  • The power of policy support: Governments and central banks have both proven they’re willing to do whatever it takes to shepherd the economy through this crisis. Policymakers have earmarked ~$18 trillion in support, and central banks around the globe have cut interest rates more than 130 times in total. The swiftness and magnitude of the response have helped stave off a devastating wave of bankruptcies and business failures, and we’re confidently hopeful this support will continue.
  • There are winners, and there are losers: Investors have keenly distinguished between the pandemic’s “winners” (i.e., those based in the digital economy and in sectors like healthcare) and the “losers” (i.e., those that rely on a resumption of “normal life,” like travel and hospitality). We’re being deliberate about risk exposures in portfolios, and selectively leaning in to areas like high yield fixed income and some more cyclically oriented parts of the stock market that we think could benefit as the recovery finds its legs.
  • Growth is there, if you know where to look: Investors are hungry for exposures that still offer compelling growth trends that may be less sensitive to the ebbs and flows of the business cycle. We’ve identified three megatrends—digital evolution, healthcare innovation and sustainability—that we think will continue to drive growth into the next decade.
  • Invest with intent: Your specific individual financial goals are the most important determinant of how you should invest. Whether saving for retirement, a new house, or building generational wealth, you can work with your J.P. Morgan team in seeking to build a portfolio tailored to offer a higher probability of success—even in the face of future wildcards that might cause the next 30% selloff in equity markets.
  • Think beyond investments: Your financial well-being is about more than just stocks and bonds. Strategic wealth planning can complement or amplify your investment strategy, and we have ideas around how to leverage low interest rates, make the most of volatility, review what’s changed from a policy perspective, and foster family cohesion and communication around money. Here are four actions you can take this summer to help shape your financial future.

We encourage you to experience our mid-year 2020 outlook in full by visiting the page here. You can also watch a replay of Andrew Goldberg, Global Head of Market Strategy & Advice, discuss the outlook with Richard Madigan, Chief Investment Officer, and Jeanne Sun, Head of the Advice Lab and The Philanthropy Centre at J.P. Morgan Private Bank.

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All market and economic data as of June 2020 and sourced from Bloomberg and FactSet unless otherwise stated.

We believe the information contained in this material to be reliable but do not warrant its accuracy or completeness. Opinions, estimates, and investment strategies and views expressed in this document constitute our judgment based on current market conditions and are subject to change without notice.

RISK CONSIDERATIONS

  • Past performance is not indicative of future results. You may not invest directly in an index.
  • The prices and rates of return are indicative, as they may vary over time based on market conditions.
  • Additional risk considerations exist for all strategies.
  • The information provided herein is not intended as a recommendation of or an offer or solicitation to purchase or sell any investment product or service.
  • Opinions expressed herein may differ from the opinions expressed by other areas of J.P. Morgan. This material should not be regarded as investment research or a J.P. Morgan investment research report.