Economic Outlook - JP Morgan Asset Management anticipates a resilient U.S. economic expansion in 2026, characterized by a K-shaped recovery where wealthier households and capital-rich corporations thrive, while middle-income consumers and rate-sensitive sectors like housing struggle [1] - The firm projects real GDP growth to be above 3% in the first half of 2026, tapering to approximately 1% to 2% later in the year, with inflation expected to rise towards 4% year-over-year before decreasing to 2% by year-end [1] Interest Rates and Market Strategy - The bank maintains a conservative outlook on interest rate cuts, predicting a "more patient" Federal Reserve due to persistent inflation around 3% and tariff impacts, with 2-year Treasuries expected to yield between 3.5% and 3.75% and 10-year yields in the 4.0% to 4.5% range [2] - Market participants are advised to focus on duration rather than direction, emphasizing income in fixed income investments tied to strong corporate, consumer, and municipal balance sheets [3] Investment Themes - JP Morgan identifies four structural themes for investors to consider: 1. **Tariffs**: Increased U.S. tariffs are generating over USD 29 billion in monthly revenue, with expectations that costs will be passed to consumers, temporarily raising inflation [8] 2. **Immigration Policy**: A decline in net immigration may lead to a contraction in the working-age population, stabilizing unemployment but limiting job growth and long-term GDP [8] 3. **AI Investment**: Projected data-center and AI capital expenditures are expected to reach approximately USD 588 billion in 2026, representing about 1.2% to 1.3% of U.S. GDP, with AI being a key driver of earnings strength [8] 4. **Global Focus on Shareholder Returns**: An increasing emphasis on buybacks and higher dividends is becoming more prevalent globally, as Europe and Asia adopt policies similar to those in the U.S. [10] Global Market Dynamics - International equities outperformed U.S. equities by about 1,520 basis points in 2025, with potential for further catch-up as the U.S. dollar remains 10% over its fair value and the U.S. equity premium over international markets stands at 34% [5] - The U.S. accounts for over 65% of global benchmarks and 40% of domestic market capitalization in just 10 companies, suggesting a gradual rotation towards select value and international markets while maintaining exposure to AI leaders [6]

Core Insights - The offshore wind sector is facing significant challenges, leading to project cancellations and strategic restructuring among major companies [1][3][6] Group 1: Project Cancellations and Financial Impacts - Ørsted canceled the construction of a wind turbine installation vessel for the Hornsea 4 offshore wind farm, paying $110 million in compensation due to rising costs and construction risks [1] - Equinor abandoned its plans to invest in Vietnam's offshore wind sector, marking a significant setback for the country's green energy ambitions [2] - Cadeler upgraded its 2025 revenue forecast to EUR 588 million to EUR 628 million, boosted by termination compensation [4] - Seatrium's contract with Maersk Offshore Wind, valued at $475 million, was terminated, leading to a nearly 15% drop in its shares [5] Group 2: Market Dynamics and Growth Projections - The global offshore wind sector is experiencing supply chain constraints and policy volatility, which are hindering growth [3] - The U.S. offshore wind sector is facing policy headwinds, with the Trump administration canceling approximately $679 million in project funding [7] - Europe remains the largest offshore wind market, accounting for 92% of the floating offshore wind market, while the Asia-Pacific region is projected to grow at a 156% CAGR through 2030 [7]