The Blob: Capital, China, Chips, Chicago and Chilliwack

J.P. Morgan Asset Management

Michael Cembalest

Research

11 Pages

J.P. Morgan’s Michael Cembalest examines the convergence of AI, industrial policy, and fiscal stress across markets and governments. The report explores the “AI and data center takeover,” U.S. government equity investments in Intel and MP Materials, China’s industrial oversupply, Chicago’s municipal solvency crisis, and how shrinking equity supply continues to support U.S. markets.

Key Takeaways

AI concentration: AI-linked firms have driven 75% of S&P 500 returns since late 2022, reshaping capex and energy demand.
Industrial policy shift: U.S. investments in Intel and critical minerals reflect a global race toward state-backed manufacturing.
Fiscal fragility: Chicago devotes 35% of revenues to pensions and healthcare, highlighting deep structural solvency issues.
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