JPMorgan: Barrel-proof Earnings, Bad Breadh & Supercycle Trades. Squeeze Risk via call ratio/fly on EU Equities - FJElite

Wether it’s the structural change in oil intensity of GDP or the Cushions - AI capex, solid private-sector balance sheets, fiscal stimulus in US, Japan and GE etc. - global growth is holding up surprisngly well, and earnings have truly been barrell-proof. This backdrop - together with positioning and the view that SoH closure has to be resolved in a matter of weeks - has been enough for risk sentiment to remain supported and we have been tactically bullish since April 8th.

Truth told, the macro is not spotless, inflation risks are rising - may take months to fully play out - CBs are turning more hawkish and the market has traded differently from what we saw through Jan/Feb, when the prevailing hypothesis was a Global Growth Reboot. Bad Breadth since mid April, even in regions making new highs (e.g. EM Equities), and the strong preference for supercvcle/secular trades are two related changes. In these respects, Mag7, AI facilitators & bottlenecks, Phyisical AI but also Critical Minerals, Clean Energy, Oil Infra, Industrial Software, Quantum & Cybersecurity have all in common a mix of new ATHs and breadth- thrust that you struggle to find on country level benchmarks. JPM David Perry has called the bottom on Defence last week - see our Thematic deep-dive on Modem Warfare & Energy Security.