J.P. Morgan provides a broad framework for understanding how different market environments shape asset returns, focusing on the interaction between growth, inflation, and policy. The piece suggests that shifting macro regimes can materially change leadership across asset classes, challenging the idea that recent winners will persist. It highlights how even small inflation changes can meaningfully alter expected returns.
Guide to the Markets – US 2Q 2021
J.P. Morgan Asset Management
Michael Cembalest
Research
86 Pages
Key Takeaways
Regime Drives Returns: Equity returns can vary by over 10% annually depending on whether growth and inflation are rising or falling across cycles.
Inflation Sensitivity High: A 1–2% increase in inflation has historically reduced real equity returns by several percentage points across developed markets.
Diversification Still Matters: Multi-asset portfolios historically reduced volatility by ~30–40% compared to equities alone across different macro regimes.
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