J.P. Morgan examines how the US China trade war disrupted global growth, earnings, and capital spending heading into 2020, arguing that markets may already reflect much of the expected recovery. It highlights that tariffs cut S&P 500 earnings potential by 7% to 8%, raising questions about how much upside remains if growth normalizes.
Eye On The Market Outlook 2020
J.P. Morgan Asset Management
Michael Cembalest
Research
35 Pages
Key Takeaways
Trade War Earnings Hit: Tariffs reduced S&P 500 earnings growth potential by 7% to 8%, contributing to a global slowdown from 4.1% to 2.9% between 2018 and 2019.
Global Growth Deceleration: Worldwide GDP growth fell from 4.1% in early 2018 to 2.9% by Q3 2019, with Europe and Japan disproportionately impacted due to export dependence.
Recovery Already Priced: Equity markets appear to reflect a 2020 earnings rebound, limiting upside as prior earnings contractions occurred without a formal GDP recession.
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