J.P. Morgan Asset Management walks through the macro and market backdrop following the COVID shock, highlighting the disconnect between economic damage and asset prices. The piece leans into aggressive policy support and recovery dynamics, while raising the question of whether markets pricing a swift rebound are getting ahead of reality.
Guide to the Markets – US 3Q 2020
J.P. Morgan Asset Management
Research
72 Pages
Key Takeaways
Policy Support Scale: Global fiscal and monetary stimulus exceeded $10 trillion, helping drive a ~40% rebound in equities from March 2020 lows despite weak economic data.
Earnings Recovery Gap: S&P 500 earnings fell roughly -20% in 2020, yet valuations expanded toward ~22x forward P/E, implying optimism well ahead of fundamentals.
Labor Market Damage: U.S. unemployment spiked to nearly 15% in April 2020, with millions still unemployed even as markets recovered sharply.
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