What we're seeing in the markets so far this year is very healthy. says JPMorgan's Stephen Parker
Speakers
Stephen Parker
— Head of Advisory Solutions, J.P. Morgan Private Bank
Summary
Stephen Parker of JPMorgan Private Bank says the market action this year is healthy, with a broadening recovery beyond tech. He outlines a constructive S&P 500 base case and bull case, likes tech despite consolidation but warns AI could disrupt software, favors US industrials/power and EM Asia ex-Japan, and remains bullish on gold while cautious on silver. He also views the sell-America trade as a rational rebalancing rather than a sustained exit from US assets, expecting the dollar to stabilize and flows to return.
- Market broadening and cyclical rotation are healthy.
- S&P 500 base case is 7,200-7,400; bull case is 8,000-8,200.
- Tech still liked but consolidation expected; AI disruption is a software risk.
- Favor US industrials/power and non-US/EM Asia ex-Japan.
- Gold is a conviction buy with upside above $6,000.
- Silver is less attractive due to speculative flows and industrial substitution.
- Sell-America is seen as buy-less-America rebalancing; dollar stabilization expected.
- Recession bear case is low probability; volatility expected with elevated valuations.
Ideas
AI disruption pressures software sector.
AI beneficiaries are likely to cause disruptions, particularly in software, even as the broader market broadens away from tech leadership. This creates a distinct risk for software within an otherwise liked tech story.
Still likes tech despite near-term consolidation.
Still likes the tech story, though he expects a period of consolidation as tech companies grow into earnings. The market broadening and rotation are healthy after years of tech concentration risk.
Favoring US industrials and power.
Cyclicals are picking up the slack in a broadening recovery, and within US cyclical opportunities he specifically likes the industrial and power stories as non-tech beneficiaries.
Non-US and EM Asia ex-Japan favored.
Non-US market leadership that started last year has continued into this year, and the global broadening story benefits markets not specifically focused on technology; emerging markets, particularly Asia ex-Japan, should be big beneficiaries.
Base case sees high single-digit returns.
Base case for US equities is high single-digit returns with the S&P 500 at 7,200-7,400, driven by low double-digit earnings growth while multiples compress slightly; the bull case at 8,000-8,200 requires a broadening cyclical recovery, earnings growth outside tech, and AI productivity benefits translating into higher multiples. A recession-driven 20% drawdown is seen as very low probability.
Gold conviction buy, upside above $6,000.
Gold is a conviction buy and could exceed $6,000/oz. The trade is about diversifying dollar exposure for central banks, institutions, and individuals, with demand supported by geopolitical concerns and inflation; the rotation and demand should remain robust.
Cautious on silver, prefer gold.
More cautious on silver than gold because silver is a more speculative precious-metals expression, its smaller market makes it harder for central banks to buy in size, and higher prices could push industrial users such as solar panel producers to seek alternatives. Prefers gold as the core diversifier.
Dollar should stabilize, flows return US.
Does not see a sustained sell-America trade, but rather a rational buy-less-America rebalancing after US stocks rose to 70% of global equity market cap and investors became very long dollars. US fundamentals, growth drivers, and controlled inflation should ultimately stabilize the dollar and bring flows back to the US.
