J.P. Morgan’s Strategic Investment Advisory Group examines the fading gap between U.S. outperformance and other developed markets. The report argues that while U.S. structural advantages remain intact—spanning capital market depth, innovation, and reserve currency strength—Europe and Japan are showing credible signs of improvement that could prompt a rebalancing of global capital flows.
Narrowing the gap: U.S. exceptionalism and developed markets
J.P. Morgan Asset Management
Research
51 Pages
Key Takeaways
Valuation risk emerging: The U.S. trades at a 35% P/E premium to peers, far above its 20-year average, raising normalization risk.
Europe reawakening: Fiscal expansion, defense spending, and banking reform could add roughly 3 ppt to German GDP over the decade.
Japan’s quiet reform: Corporate governance upgrades and rising buybacks have lifted TOPIX earnings growth to match the S&P 500 since 2010.
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