locate an office

offices near you

office near you

Investment Strategy

Market Thoughts: What, me worry?

As markets struggle to find their footing, investors are caught in a headline fettered whirlwind. The pace and misdirection of swirling narratives is weighing on sentiment. The match of ‘fear and greed ping-pong’ continues. Your serve. What, me worry? Increasingly, the answer is yes.

The Conference Board’s March consumer confidence reading came in at its lowest level in four years. Expectations for the outlook are at their lowest since 2013. The delta between individuals that believe there’ll be fewer versus more jobs in six months leapt higher. One-year forward inflation expectations rose to 6.2%. Bad karma.

Soft data continues to move in the wrong direction. That said, soft data is just that… “vibey”, to borrow an overused trending word. If sentiment continues to worsen it may eventually affect behavior. Company and consumer action are the inputs to hard data. Today they’re guarded, not overreacting.

I began my money management career in emerging markets (EM) many moons ago. We invested in corporate and sovereign debt, equities and currency markets. George Soros is credited with developing the concept of reflexivity. It was built off an exchange rate overshoot theory by Rudi Dornbusch at MIT. Both argue for the inefficiency inherent in markets, my bread and butter investing.

Emerging markets by nature experience more than their fair share of overreaction. Soros’ reflexivity, not to mention Dornbusch’s overshooting model, seemed designed for EM investing. Certainly back in the day. Reflexivity argues that investors base decisions on their perception of reality. That creates pockets of overshooting, up or down, in prices. Disequilibria.

Reflexivity rhymes with Benjamin Graham’s observation that markets are a voting machine in the short run and a weighing machine in the long run. Like reflexivity, the short term voting machine attempting to redefine reality’s more grounded weighing. Greed is good until it isn’t.

I say all of that because it rhymes with the disconnect we’re seeing between soft and hard data. Soft data reflects perception of future reality. Hard data’s the ‘weighing machine’ part of the market equation. It continues to reflect an economy in late cycle, waning. It’s backward looking.

Exogenous shocks can quickly cause a market sell-off. A correction becomes something worse when a shift in sentiment is sustained. It changes behavior, for better or worse… averting or causing recession. Self-reinforced action redefining price equilibria. Boom to bubble. Bubble to burst. Burst to boom.

Hard data matters. Inflation, employment and earnings importantly. We get first-quarter earnings in a few weeks. If they deliver to the upside, investors can breathe a bit easier. Company calls will be keenly focused on for any hint or insight to capital spending and hiring. We’re not out of the woods yet. I say that as a pragmatist, not alarmist. Emotion has nothing to do with investing.

A large part of the market correction we’ve seen was driven by investors rightfully taking froth off big tech valuations. While those valuations were built on the back of incredibly strong earnings and free cash flow, they’d overshot. The sell-off to date is healthy. That doesn’t make it any less stinging.

I’m optimistic we’ll see higher earnings growth than 8% this year. I’m anchoring on 10% growth. I hope earnings growth in 2026 is 8% or higher. A lot depends on the policy action coming from Washington. The tail risk around earnings is rising.

Where markets go from here will be as much defined by consumer and corporate action as it will inflation and growth expectations. Both up against the ropes. Tariffs are a tax that keeps giving. They add to inflation as they pass through the economy. Then they level off. It remains a tax.

Consumers will continue to feel the bite of permanently higher costs. Prices are already high for consumers. To point out something obvious, inflation measures the rate of change of prices. When you read that tariffs are ‘transitory’ in their impact on inflation, they are… sort of.

Tariffs raise prices. All else equal–it never is–those prices remain high. Less inflation means those prices are rising at a slower pace, not in decline. A slowdown in consumption generally follows. It’s why we keep hearing about stagflation. Rising inflation, stalling growth.

We saw a flash of this in February’s real personal spending data. It came in lower than forecast. January was revised lower as well. The Fed’s favored measure of inflation, the core personal consumption expenditure price index, came in higher than forecast at 2.8% yoy. Neither alarming, both worth noting.

The Fed expects inflation to remain high this year. Growth forecasts have been revised lower. That keeps them on hold for longer than investors expect. The Fed will be watching labor markets and growth for a signal to cut rates. Also inflation, hoping to avoid rate hikes.

With auto tariffs announced, “Liberation Day” is fast approaching. Reciprocal tariffs to follow. They’ll likely beget reciprocity from those targeted. A tit for tat escalation is bad for consumers and corporate margins. Ultimately, for the global economy. We’re not there yet.

Unless explicitly stated otherwise, all data is sourced from Bloomberg, Finance LP, as of 3/28/25.

KEY RISKS

Standard and Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

Indices are not investment products and may not be considered for investment.


IMPORTANT INFORMATION

This webpage content is for information/educational purposes only and may inform you of certain products and services offered by private banking businesses, part of JPMorgan Chase & Co. 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 products and services are offered at all locations. 

GENERAL RISKS & CONSIDERATIONS

Any views, strategies or products discussed in this content may not be appropriate for all individuals 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 content should be relied upon in isolation for the 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 expenses 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 content is believed to be reliable; however, J.P. Morgan does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this content. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this content, which are provided for illustration/ reference purposes only. The views, opinions, estimates and strategies expressed in this content constitute our judgment based on current market conditions and are subject to change without notice. J.P. Morgan assumes no duty to update any information on this website in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of J.P. Morgan , views expressed for other purposes or in other contexts, and this content should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.

Nothing in this website shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this website shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.

As markets struggle to find their footing, investors are caught in a headline fettered whirlwind. The pace and misdirection of swirling narratives is weighing on sentiment. What, me worry? Increasingly, the answer is yes.

EXPERIENCE THE FULL POSSIBILITY OF YOUR WEALTH

We can help you navigate a complex financial landscape. Reach out today to learn how.

Contact us

LEARN MORE About Our Firm and Investment Professionals Through FINRA BrokerCheck

 

To learn more about J.P. Morgan’s investment business, including our accounts, products and services, as well as our relationship with you, please review our J.P. Morgan Securities LLC Form CRS and Guide to Investment Services and Brokerage Products

 

JPMorgan Chase Bank, N.A. and its affiliates (collectively "JPMCB") offer investment products, which may include bank-managed accounts and custody, as part of its trust and fiduciary services. Other investment products and services, such as brokerage and advisory accounts, are offered through J.P. Morgan Securities LLC ("JPMS"), a member of FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMCB, JPMS and CIA are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

 

Please read the Legal Disclaimer for J.P. Morgan Private Bank regional affiliates and other important information in conjunction with these pages.

INVESTMENT AND INSURANCE PRODUCTS ARE: • NOT FDIC INSURED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, JPMORGAN CHASE BANK, N.A. OR ANY OF ITS AFFILIATES • SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED

Bank deposit products, such as checking, savings and bank lending and related services are offered by JPMorgan Chase Bank, N.A. Member FDIC.

Not a commitment to lend. All extensions of credit are subject to credit approval.

Equal Housing Lender Icon