Summary of J.P. Morgan's European Quantitative Strategy Conference Call Company and Industry - **Company**: J.P. Morgan - **Industry**: European Equity Markets and Quantitative Investment Strategies Key Points and Arguments 1. Current Market Sentiment and Economic Indicators - Global equity indices are near all-time highs, with bullish investor sentiment, although it is slightly declining from recent peaks [11][12] - Central banks are easing policies, and the US dollar is weakening, contributing to a favorable environment for small caps and value stocks [11][12] - Economic growth expectations are fragile, leading to consensus profit downgrades, suggesting a defensive sector stance may be necessary [11][12] 2. European Quant Macro Index (QMI) Insights - The European QMI indicates a 'Recovery' phase, with the index rising from a recent trough, although it remains in the bottom third of its historical range [11][12][28] - Three inputs are rising (changes in European bond yields, ECB money supply growth, SEK/USD exchange rate) while three are falling (German manufacturing confidence, OECD economic lead indicator, consensus global EPS revisions) [2][28] - The QMI's upward trend is expected to be sustainable over a 12-month view, but short-term downside risks are present [11][12][28] 3. Sector Performance Dynamics - Defensive sectors are outperforming cyclical sectors, which is atypical during a recovery phase [17][18] - Traditional defensive sectors such as Communication Services, Real Estate, Financials (Insurance), and Utilities are preferred, while cyclical sectors like Technology, Industrials, and Discretionary rank poorly [17][18] - The relationship between cyclical and defensive sectors is evolving, with defensive sectors potentially outperforming even as cyclical styles gain traction [17][18] 4. Investment Style Recommendations - J.P. Morgan recommends overweighting Value and Low Size (Small Caps) while underweighting Momentum, Quality, and Low Volatility [8][9] - The correlation between Value and Momentum is expected to turn negative, indicating a shift in investment strategy [40] - The analysis suggests that as the yield curve flattens, Value and high-risk stocks may benefit, while Growth stocks could underperform [21][24] 5. Risks and Considerations - There is a growing risk that high-quality stocks may become more volatile, particularly if the QMI continues to rise [30] - The potential for a reversal in long/short momentum strategies poses a risk to investors' portfolios [12][17] - The divergence between the QMI and equity versus bond returns has narrowed, raising concerns about the sustainability of equity performance relative to bonds [31] 6. Conclusion - The current market environment presents a complex landscape where traditional sector relationships are shifting, and defensive strategies may be warranted despite a nominal recovery phase [11][12][17] - Investors are advised to navigate carefully, focusing on sector and style selection as the macroeconomic backdrop evolves [44] This summary encapsulates the critical insights and recommendations from J.P. Morgan's conference call regarding the European equity market and quantitative strategies, highlighting the nuanced dynamics at play in the current investment landscape.

Summary of Deutsche Bank Research Conference Call Industry Overview - **Industry**: Securitization, specifically focusing on Commercial Mortgage-Backed Securities (CMBS), Asset-Backed Securities (ABS), and Collateralized Loan Obligations (CLO) [18][20][46] Key Points and Arguments 1. CMBS Market Dynamics - **Lower Rates Impact**: Lower interest rates are expected to improve the backdrop for Commercial Real Estate (CRE) and CMBS credit [18] - **Delinquency Rates**: Suburban office delinquencies are accelerating, with CMBS suburban office 60+ delinquencies at 7.4% compared to 6.5% for Central Business District (CBD) offices [18][34] - **Conduit Refi Success**: The conduit refinancing success rate has declined to 65% [22] 2. Securitization Volume and Forecast - **2024 Forecast**: ABS issuance is forecasted at $310 billion, CLO at $185 billion, and Non-Agency RMBS at $105 billion [3] - **Current Issuance**: As of 2024 YTD, ABS issuance is at $252 billion, CLO at $136 billion, and Non-Agency RMBS at $96 billion [3] 3. Economic Perspectives - **US Economic Outlook**: Economic consensus expects Fed Funds to be at 3.6% by year-end 2025 and 3.2% by end 2026, with the 10-year Treasury expected to be around 3.9% by the end of 2025 [20] - **CRE Transaction Volume**: CRE transaction volume rebounded by 3% in Q2 2024 compared to a 59% decline in Q2 2023 [21] 4. Interest Shortfalls - **Accumulated Interest Shortfalls**: Conduit accumulated interest shortfall is approximately $900 million, while SASB's is around $380 million [28][30] - **AAA Shortfalls**: SASB Class A bonds originally rated AAA have experienced interest shortfalls totaling $29 million [31] 5. Regulatory Developments - **Local Law 97 in NYC**: Increased enforcement for Local Law 97 aims to ensure compliance with climate legislation, potentially impacting property valuations and investment strategies [48][50] - **San Francisco Rent Control**: Proposition 33 could significantly expand rent control, affecting up to 100,000 additional apartments, raising concerns among developers and landlords [51] 6. Notable Transactions - **Morgan Stanley Securitization**: Morgan Stanley is set to securitize $490 million in multifamily mortgages from Signature Bank, which could serve as a template for banks to de-risk CRE [46][47] Additional Important Insights - **Market Sentiment**: The overall sentiment in the CMBS market indicates a cautious optimism due to lower rates, but challenges remain, particularly for floating rate loans and office spaces undergoing "obsolescence reset" [20][21] - **Delinquency Trends**: The rise in delinquency rates, particularly in suburban offices, suggests a shift in market dynamics post-COVID, with implications for future underwriting and investment strategies [34][37] This summary encapsulates the critical insights from the Deutsche Bank research conference call, highlighting the current state and future outlook of the securitization market, particularly in relation to CMBS and regulatory changes impacting the real estate sector.

September 24, 2024 10:00 AM GMT M Update | --- | --- | --- | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ...

M Asia Pacific Insight September 24, 2024 08:00 PM GMT Jiangsu Changjiang Electronics Tech Slow recovery with share loss; downgrade to UW | --- | --- | --- | --- | --- | --- | --- | |-----------------------|--------------------|-------|-------------------------------------------------|-------|------------------------------------|-----------------------------| | Rating \nPrice Target | What's Changed \n | | Jiangsu Changjiang Electronics Tech (600584.SS) | | From \nEqual-weight \nRmb28.00 | To \nUnderweight ...

September 24, 2024 05:53 AM GMT M Foundation Video | Japan | --- | --- | --- | |-------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

M Update Enterprise Storage | North America September 24, 2024 04:01 AM GMT Telecom & Networking Equipment North America Industry View In-Line IT Hardware North America Industry View In-Line CQ2 Storage Market Data Update CQ2 Storage Market update shows stronger external storage growth (+10% Y/Y) and AFA growth (+23% Y/Y), which was largely not seen in CQ2 company results for our coverage. Data most positive for NTAP (of names in our coverage), reflecting success of new product releases. Key Takeaways CQ2 e ...

September 23, 2024 11:00 PM GMT M Foundation India Economics – Macro Indicators Chartbook | Asia Pacific Resolute Trend Domestic demand picked up pace on a sequential basis in Aug24. CPI remained below the 4% mark, while weaker exports and higher gold imports widened the trade deficit to near all-time high. We expect the expansion cycle to continue; watchful of risks stemming from external factors. 1) Growth – Improving trend: Domestic demand-based high-frequency data for August recorded positive growth in ...

Key Themes and Industry Insights **1. Autonomous Driving**: * **Problem**: High road fatalities and increasing demand for multiple incomes. * **Forecast**: L5 autonomous vehicles expected by 2030, with L1/2 cars still dominating. * **Implications**: Waymo could capture 4-3% market share in Phoenix and SF by 2025. **2. Multi-Earning Agents**: * **Problem**: Housing affordability worsened, under-30s living with parents increased, and record number of Americans require multiple incomes. * **Forecast**: Generative AI applications to save time and money, leading to increased income for individuals. * **Implications**: $400bn income TAM for small businesses. **3. Humanoid Robots**: * **Problem**: High number of work-related deaths and injuries, and aging population leading to labor shortages. * **Forecast**: Humanoid robots to become cost-effective in domestic US food preparation and logistics by 2030. * **Implications**: $1trn TAM in 2050 for humanoid robots. **4. AI Sovereignty**: * **Problem**: Limited control of raw inputs for AI models by the US and Europe. * **Forecast**: Reshoring of critical infrastructure, including semiconductors and clean energy components. * **Implications**: Increased investment in data centers and grid infrastructure. **5. Negative Power Prices**: * **Problem**: Increasing solar power leading to negative energy prices at peak loads. * **Forecast**: 10% of annual hours could have negative power prices by 2027. * **Implications**: CATL could benefit from increased battery storage demand. **6. Nuclear Renaissance**: * **Problem**: Limited venture funding for nuclear power compared to other sectors. * **Forecast**: Nuclear power to contribute 5% more to electricity supply by 2030. * **Implications**: Strong prospects for uranium and nuclear enablers. **7. Obesity**: * **Problem**: Growing obesity rates and associated health complications. * **Forecast**: 25% CAGR in prescriptions for obesity medications by 2030. * **Implications**: Novo Nordisk and Eli Lilly well positioned for the future. **8. Smart Chemotherapy**: * **Problem**: Traditional chemotherapy still accounts for over 37% of cancer prescriptions. * **Forecast**: Antibody Drug Conjugates (ADCs) to become a $140bn market. * **Implications**: Companies like Daiichi Sankyo, AstraZeneca, and Pfizer well positioned. **9. AI Assisted Fertility**: * **Problem**: Declining fertility rates and increasing difficulty in conception. * **Forecast**: AI models to improve embryo selection accuracy. * **Implications**: Companies like Cooper Companies and Google well positioned. **10. The Rise & Rise of Private Capital**: * **Problem**: Private equity-backed businesses surpassing publicly listed companies. * **Forecast**: $13tn of private capital assets under management. * **Implications**: Private equity-backed businesses to continue growing at a double-digit pace.

Takuho Morimoto (81-3) 6736-6682 takuho.morimoto@jpmorgan.com Japan Economic Research Benjamin Shatil (81-3) 6736-1730 benjamin.shatil@jpmorgan.com JPMorgan Securities Japan Co., Ltd. Ayako Fujita (81-3) 6736-1172 ayako.fujita@jpmorgan.com Japan • BoJ stands pat as expected • Ueda's comments continue to emphasize gradual approach to future hikes • August export volumes rise on tech cycle support • Next week: Tokyo underlying core CPI to firm in Sep; PMI turns up The BoJ kept the policy rate unchanged at 0.2 ...

M Update Hong Kong/China Insurance | Asia Pacific September 24, 2024 02:37 PM GMT PBoC policy to further benefit insurance sector We believe the market policy enables better earnings expectations for 3Q, while investment actions, especially in stocks, will remain relatively stable and disciplined. We expect improved fundamentals in the short term, with sales trends and interest rates acting as key catalysts in the medium term. Insurers will benefit from PBoC policies: 1) PBoC is supporting insurers to impro ...