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A slowdown in the US job market will weigh on the S&P 500, offsetting any positive impact from the Fed’s interest rate cuts, according to JPMorgan strategists https://t.co/cEYOYFO5dg ...

Core Insights - JPMorgan's shares reached an all-time high of $289.41, driven by expectations of earlier interest rate cuts due to positive economic data [1] - The Federal Reserve's cautious stance on rate cuts contrasts with market confidence in at least two cuts this year, which may negatively impact JPMorgan's net interest income (NII) [2] - JPMorgan's CFO indicated potential NII growth of $1 billion above previous guidance for 2025, although the current outlook remains unchanged at $94.5 billion [3] Branch Expansion and Acquisitions - JPMorgan operates 4,975 branches, the most of any U.S. bank, and is expanding its presence with new Financial Centers, aiming to double by 2026 [5] - The bank is also enhancing its digital services with remote offices and plans to add 500 branches by 2027 to improve customer relationships and cross-selling opportunities [6] - Strategic acquisitions, including a larger stake in Brazil's C6 Bank and the purchase of First Republic Bank, are diversifying revenues and enhancing digital offerings [8] Capital Markets Performance - JPMorgan's capital markets business saw a significant rebound, with investment banking fees increasing by 37% year-over-year last year, although they declined by 5% in 2023 [9][10] - The bank's markets revenues are expected to grow in the mid-to-high single-digits range due to increased market volatility and client activity [11] - Long-term prospects for the investment banking business remain strong, supported by a solid deal pipeline once economic uncertainty decreases [12] Financial Health and Shareholder Returns - As of March 31, 2025, JPMorgan had total debt of $471.9 billion and cash and deposits of $425.9 billion, maintaining strong liquidity [13] - The company announced a 12% increase in its quarterly dividend to $1.40 per share, following previous hikes, and has a $30 billion share repurchase program [14][17] - JPMorgan's stock has outperformed the S&P 500, rising 20.4% this year compared to a 3.7% increase for the index [20] Asset Quality and Earnings Outlook - JPMorgan's asset quality has deteriorated, with provisions increasing significantly in recent years due to macroeconomic challenges [18] - The company expects card net charge-off rates to be around 3.6% this year, with projections for a rise in 2026 [19] - Earnings estimates for 2025 suggest a 6.1% decline year-over-year, while 2026 estimates indicate a 5.3% growth [26][30] Valuation and Market Position - JPMorgan's stock is trading at a forward P/E of 15.26X, above the industry average of 14.55X, indicating a premium valuation [23][25] - Despite the premium, upward earnings revisions and JPMorgan's leadership position in the industry support a cautious buy recommendation for long-term investors [31]

Market Overview - The stock market shows positive momentum with the Dow up +265 points (+0.62%), S&P 500 up +42 points (+0.70%), Nasdaq up +213 points (+0.97%), and Russell 2000 up +18 points (+0.87%) [1] - Bond yields remain stable with the 10-year yield at +4.35% and the 2-year yield at +3.85% [2] - Oil prices are stable, with WTI at $65 per barrel and ICE Brent crude at $67 [2] Housing Market - The Case-Shiller Home Price Index reports a +2.7% year-over-year increase in home prices, which is below the expected +4% growth [3] - New York City leads in price growth at +7.9%, followed by Chicago at +6.0% and Detroit at +5.5%, while Tampa shows a decline of -2.2% [4] - Thirty-year fixed mortgage rates were in the mid-6% range for most of April, with expectations of further challenges as rates approach 7% [4] Federal Reserve Insights - Fed Chair Jerome Powell is scheduled to testify before the House Financial Services Committee regarding the economy's health and potential interest rate cuts [5] - Powell's previous statements indicate a steady Fed funds rate of 4.25-4.50% for the fourth consecutive meeting, with no significant changes expected in his upcoming appearances [6] Consumer Confidence - The June Consumer Confidence index is anticipated to rise to a consensus of 99.5, following a previous increase to 98.0, after a significant drop to 85.7 due to "Liberation Day" tariffs [7] - Historical data shows Consumer Confidence peaked at nearly 140 in 2018 and fell below 30 during the 2009 financial crisis [8]

Geopolitical Risk and Market Reaction - Markets are uncertain about escalation or de-escalation of geopolitical conflicts, lacking a clear view of future developments [2][3] - The market has been conditioned to "fade" geopolitical shocks, but the cost of being wrong is high, particularly in the oil market [3] - Oil prices are unstable, with a potential $15/barrel downside due to excess supply or a $15/barrel upside if major Middle East supply disruptions occur [4] Economic Implications - Direct effects on US growth and inflation are uncertain, dependent on whether the US strike on Iran escalates or de-escalates the conflict [5] - Indirect effects include precautions on the supply side and potential hesitancy on the demand side, though smaller and more dispersed than direct effects [6] Monetary Policy - The market is now pricing in two rate cuts this year, with the probability of a September cut rising to almost 80% and a July cut at around 20% [9] - There's a debate within the FOMC regarding the timing of rate cuts, with some advocating for sooner rather than later [10][11] - Concerns exist about the real economy and the need to avoid choking demand, given a less flexible supply side [11][12] - Political influence may be increasingly impacting the FOMC, making it difficult for Chair Powell to unify the message [9][10][13]

Core Viewpoint - The Company reported a decline in net asset value (NAV) and total return for the six months ending March 31, 2025, reflecting challenging market conditions and investment performance [3][4][13]. Financial Highlights - NAV per share decreased from 40.55p to 34.48p, representing a total return of -8.19% [4][13]. - Market capitalization fell from £150.60 million to £124.25 million [4]. - Share price also declined from 42.20p to 33.80p, with a share price discount to NAV per share of 1.97% [4]. - Dividends paid per share increased from 1.50p to 2.75p during the period [4][6]. Investment Activity - The Company invested £3.6 million in qualifying companies during the period, maintaining 92.29% of its portfolio in qualifying investments [6][30]. - An offer for subscription launched on October 9, 2024, aimed to raise up to £20 million, with £5.4 million raised by issuing 14 million shares [6][31]. Performance of Qualifying Investments - Positive contributors included Aquis Exchange (+95.8%, +£1.71 million) and Cohort (+26.1%, +£1.12 million) due to increased defense spending [15][16]. - Negative contributors included Kidly (-100.00%, -£1.26 million) which went into administration, and Zoo Digital (-74.3%, -£1.14 million) which issued a disappointing trading update [20][21]. Non-Qualifying Investments - The non-qualifying portfolio saw a decline of £1.27 million, with notable losses in WH Smith and Hollywood Bowl due to a weaker economic outlook [27][28]. - The fixed income portfolio returned +£0.35 million, offsetting some losses from direct equities [29]. Market Outlook - The UK economy is expected to see a modest GDP growth of +1.0% in 2025, supported by increased public spending despite inflation concerns [10][39]. - The AIM index has shown resilience post 'Liberation Day', indicating potential growth opportunities despite ongoing market volatility [12][40]. Portfolio Structure - The Company maintained a strong liquidity position with net cash of £11.7 million and a focus on recurring revenue, which represented 82% of total revenue [26][29]. - The portfolio's weighting to qualifying investments increased to 58.4%, while cash weighting decreased to 7.6% [36].

Investment Rating - The report maintains an Overweight (OW) rating on US stocks, Treasuries, and US Investment Grade Corporate Credit, while recommending a focus on quality assets [4][5][6]. Core Insights - The report highlights a global growth slowdown due to the imposition of tariffs by the US, which is expected to impact demand and supply dynamics across various regions [2][8]. - Despite the anticipated slowdown, the report does not foresee a global recession, citing a strong starting point for growth entering the year [2]. - The US GDP growth is projected to decline from 2.5% in 2024 to 1.0% in both 2025 and 2026, with global growth expected to decrease from 3.5% to 2.5% in the same period [2][9]. Economic Outlook - The report anticipates a step-down in global growth, with specific forecasts indicating a 2.5% growth rate for 2025 and 2.8% for 2026 [9]. - Inflation rates are projected to be 2.1% for global inflation in 2025 and 2.0% in 2026, with the US expected to see inflation rates of 3.0% and 2.5% respectively [9]. Sector Recommendations - In the US, the report favors quality cyclicals, large caps, and defensives with lower leverage and cheaper valuations [6]. - For Japan, the focus is on domestic reflation and corporate reform beneficiaries, as well as companies involved in defense and economic security spending [6]. - In Europe, the report suggests repositioning into resilient sectors such as defense, banks, software, telecoms, and diversified financials [6]. - Emerging Markets (EM) recommendations are skewed towards financials and domestic-focused businesses over exporters and semiconductors/hardware [6]. Equity Valuations - The report provides specific price targets and earnings per share (EPS) estimates for major indices, including S&P 500 at 6,000 with a target of 6,500, and MSCI EM at 1,183 with a target of 1,200 [7]. - The expected EPS growth for S&P 500 is +7% for 2025 and +9% for 2026, while MSCI EM is projected to grow by +6% in 2025 and +10% in 2026 [7]. Currency and Interest Rate Forecasts - The report predicts a depreciation of the USD, with the DXY expected to fall by 9% to 91 by mid-2026 due to converging US rates and growth with global peers [14]. - US Treasury yields are expected to remain range-bound until late 2025, with significant rate cuts anticipated in 2026 [14][21]. Commodity Insights - Oil prices are expected to face downward pressure due to potential supply increases, with Brent prices projected to drop into the mid-$50s by 1H26 [16]. - Gold is highlighted as a top pick due to strong central bank demand and safe-haven appeal amid growth concerns [18].

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Group 1 - The article discusses the impact of high inflation on the average American's budget and suggests that interest rate cuts may be on the horizon despite the current wait-and-see approach by Jerome Powell [1] - It highlights the profile of a typical low-budget dividend investor, characterized as a Generation X individual seeking income-generating strategies in a challenging economic environment [1] - The investor's strategy combines conservative income-generating methods with an acknowledgment of growth investment wisdom, indicating a blend of traditional and modern investment approaches [1]

Market Overview - The Nasdaq Composite and the Dow Jones Industrial Average have lost 1.03% and 0.52% year-to-date, while the S&P 500 has gained 0.60% [1] - Investor hesitance is attributed to President Trump's announcement of sweeping tariffs on all U.S. trading partners, although a potential truce between the U.S. and China may lead to reduced import duties [1] Economic Indicators - The consumer price index (CPI) rose 0.2% sequentially in April and 2.3% year-over-year, marking the lowest increase since February 2021 [2] - Federal Reserve Chair Jerome Powell indicated that more clarity is needed before considering further interest rate cuts, with analysts expecting no cuts until at least September [2] - Ongoing trade conflicts raise fears of a potential recession, which could negatively impact inflation and key economic indicators [2] Investment Opportunities - In volatile market conditions, dividend-paying stocks are recommended for portfolio diversification [3] - Notable dividend-paying companies include Marriott International (MAR), HNI, Sun Life Financial, ESAB Corporation, and Victory Capital Holdings [3] - Companies that consistently pay dividends indicate a healthy business model, and those that have recently raised dividends show a sound financial structure [3] Company Spotlight: Marriott International - Marriott International is a leading global hospitality company involved in the operation, franchising, and licensing of various lodging properties [4] - The company has a Zacks Rank of 3 (Hold) [4] - On May 9, Marriott declared a dividend of 67 cents per share, with a dividend yield of 0.9% [5] - Over the past five years, Marriott has increased its dividend five times, with a current payout ratio of 26% of earnings [5]