JPM’s Normand: Underweight U.S. Assets on a Cross-Market Basis

The video discusses the current market pricing in anticipation of a contested US election, noting that markets expect little change in economic behavior regardless of the election outcome. It highlights the presence of volatility but not a significant drop in asset prices. The video also explores hedging strategies for investors, suggesting underweighting US assets and considering currency dynamics. It emphasizes that credit markets are supported by limited issuance and potential Fed interventions.

What is the market's current expectation regarding the US election?

• A smooth election with a clear winner

• A contested election with minimal economic impact

• A significant economic downturn

• A major increase in corporate profits

What is one strategy investors might use to hedge against a tight US election race?

• Invest in emerging markets

• Underweight US assets compared to non-US assets

• Increase holdings in US bonds

• Overweight US equities

Which currency pair is mentioned as potentially benefiting from de-risking strategies?

• Canadian dollar versus the yen

• Pound versus the euro

• Yen versus the dollar

• Euro versus the dollar

Why is the hedging behavior not expected to extend to credit markets?

• Credit markets are not affected by elections

• Credit markets are too volatile

• Investors prefer equities over credit

• There is a lack of issuance and potential Fed support

What is the primary focus for investors in the context of the US election?

• Buying more real estate

• Underweighting US assets

• Overweighting US assets

• Investing in technology stocks