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Guide to the Markets MARKET INSIGHTS Europe | | 3Q 2020 As of 30 June 2020

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Page 1: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

Guide to the Markets

MARKET INSIGHTS

Europe | |3Q 2020 As of 30 June 2020

Page 2: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

2

Global Market Insights Strategy Team

Vincent JuvynsLuxembourg

Tilmann Galler, CFAFrankfurt

Maria Paola ToschiMilan

Shogo MaekawaTokyo

Lucia Gutierrez MelladoMadrid

Tai HuiHong Kong

Marcella ChowHong Kong

Ian HuiHong Kong

Yoshinori ShigemiTokyo

Kerry Craig, CFAMelbourne

Dr. Jasslyn Yeo, CFASingapore

Karen WardLondon

Ambrose Crofton, CFALondon

Chaoping Zhu, CFAShanghai

Jai Malhi, CFALondon

Manuel Arroyo Ozores, CFAMadrid

Agnes LinTaipei

Michael Bell, CFALondon

John ManleyNew York

Samantha AzzarelloNew York

Dr. David Kelly, CFANew York

Dr. Cecelia MundtNew York

Meera Pandit, CFANew York

Tyler Voigt, CFANew York

Gabriela SantosNew York

David LebovitzNew York

Jordan JacksonNew York

Jennie LiNew York

Hugh Gimber, CFALondon

Max McKechnieLondon

Page 3: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

3

Page reference

� Global economy

4. Global growth5. Global Purchasing Managers’ Index (PMI) for manufacturing6. Global inflation7. Global core inflation and inflation expectations8. Global fiscal policy9. Global monetary policy10. Global currencies11. Global trade12. Productivity and population growth13. Global Covid-19 infection rates14. Global travel and navigation app usage15. US GDP16. US Economic Monitor17. US business surveys18. US business investment19. US consumer20. US labour market21. US non-farm payrolls and initial jobless claims22. US Conference Board indicators23. US household and corporate finances24. US inflation25. US Federal Reserve policy rate26. US politics27. US focus: Labour market and consumer dynamics28. Eurozone GDP29. Eurozone business investment30. Eurozone consumer31. Eurozone labour market32. Eurozone unemployment33. Eurozone inflation34. European Central Bank policy rate35. Eurozone debt36. Eurozone government debt and bond spreads37. Eurozone focus: EU recovery fund and government support for

jobs38. UK GDP39. UK consumer40. UK inflation41. UK focus: Labour market and trade42. Japan GDP43. China GDP44. China debt45. China inflation and policy rates46. Emerging market currencies and current account47. Emerging market structural dynamics48. Emerging market focus: EM debt vulnerabilities

� Equities

49. Global earnings expectations and equity valuations50. Global income51. Global equity sector weights52. Equity net issuance and dividend payout ratios53. US earnings54. US equity valuations55. US valuations and subsequent returns56. Equity market factors57. US bull and bear markets58. US equity market drawdowns and recoveries59. Europe earnings60. Europe equity valuations61. Europe large, mid and small capitalisation equities62. UK earnings63. European stocks and currencies64. Japan earnings65. Japan equity market and currency66. Emerging market equity drivers67. Emerging market equity valuations and subsequent returns68. Equity focus: US sector performance and earnings in recessions69. World stock market returns

� Fixed income

70. Global government bond yields71. US investment-grade bonds72. US high yield bonds73. Europe and UK investment-grade bonds74. Europe high yield bonds75. Emerging market bonds76. Fixed income focus: US debt and yields77. Global fixed income spreads and returns

� Other assets

78. Oil79. Metals80. Alternative sources of diversification81. Alternative investments: Real assets82. Sustainable investment strategies83. Sustainable investment performance and market size84. Asset return expectations85. The cost of hedging

� Investing principles

86. Life expectancy87. The effect of compounding88. Cash investments89. Long-term asset returns90. Annual returns and intra-year declines91. Asset class risk-return trade-off92. S&P 500 and fund flows93. US asset returns by holding period94. Asset class returns (EUR)

Page 4: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

4

|GTM – Europe

-10

-8

-6

-4

-2

0

2

4

6

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Global growth

Real GDP growth Contribution to global real GDP growth% change year on year % change year on year

Source: (Left) BEA, Eurostat, Japan Cabinet Office, ONS, Refinitiv Datastream, J.P. Morgan Asset Management. Forecasts are from J.P. Morgan Securities Research. (Right) Refinitiv Datastream, World Bank, J.P. Morgan Asset Management. EM is emerging markets. DM is developed markets. Past performance and forecasts are not reliable indicators of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

4

Global economy

China

EM ex-China

DM ex-US

US

Global

-3

-2

-1

0

1

2

3

4

5

'85 '88 '91 '94 '97 '00 '03 '06 '09 '12 '15 '18

2020 forecast

-4,7%

-5,6%

-6,4%

-9,2%UK

US

Eurozone

Japan

Page 5: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

5

42,4 47,8

39,5 46,4

45,4 49,6

39,4 47,4

40,6 52,3

36,6 45,2

45,4 47,5

38,3 49,0

41,1 49,4

39,2 51,0

40,0 47,3

42,1 41,9

40,7 50,1

39,8 49,8

38,4 40,1

50,7 51,2

28,6 39,1

41,3 43,4

41,9 46,2

30,8 47,2

38,3 51,6

38,3 38,6

36,2 49,4

2011 2012 2014 20162008 2009 2010'20

2013 20192015 2017 2018 '20

India

Indonesia

Greece

Germany

China

USUK

Eurozone

France

Italy

Spain

Ireland

Japan

Korea

Global

Developed

Emerging

Taiwan

MexicoBrazil

Russia

SwitzerlandSweden

Eur

ozon

eD

evel

oped

Em

ergi

ngGlobal Purchasing Managers’ Index (PMI) for manufacturing

Source: Markit, J.P. Morgan Asset Management. The Global Purchasing Managers’ Index (PMI) for manufacturing assesses the economic health of the sector by surveying manufacturing businesses regarding output, new orders, stocks of purchases, supplier delivery times and employment. A score of 50 indicates that economic activity is neither expanding nor contracting, above 50 indicates expansion. The colours range from red to yellow to green, where red is below 50, yellow is at 50 and green is above 50. Quarterly averages are shown, except the two most recent monthly data points. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

GTM – Europe |

Global economy

5

May Jun

Page 6: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

6

Global inflation

Source: Bank of Mexico, DGBAS, ECB, Goskomstat of Russia, IBGE, India Ministry of Statistics & Programme Implementation, Japan Ministry of Internal Affairs & Communication, Korean National Statistical Office, National Bureau of Statistics China, ONS, Refinitiv Datastream, Riksbank, Statistics Indonesia, Swiss National Bank, US Federal Reserve, J.P. Morgan Asset Management. Figures shown are for headline inflation and are % change year on year. Heatmap colours are based on the respective central bank target inflation rates. Blue is below target, white is at target and red is above target. India inflation data for April and May was not recorded due to inability to record prices during the lockdown phase. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

GTM – Europe | 6

India

Indonesia

Greece

Germany

USUK

EurozoneFrance

ItalySpain

Ireland

JapanChina

Korea

Global

Developed

Emerging

Taiwan

MexicoBrazil

Russia

SwitzerlandSweden

Eur

ozon

eD

evel

oped

Em

ergi

ng

2,6 2,7 2,7 2,7 2,8 2,4 2,1 1,9 1,9 2,2 2,4 2,3 2,1 2,1 2,0 1,9 2,0 2,4 2,7 2,9 2,8 2,2 1,3 1,0

2,3 2,4 2,3 2,1 2,3 1,9 1,6 1,4 1,4 1,6 1,8 1,5 1,5 1,4 1,3 1,3 1,2 1,5 1,7 1,8 1,7 1,1 0,3 0,1

3,0 3,1 3,2 3,5 3,5 3,1 2,9 2,7 2,6 3,1 3,3 3,4 3,2 3,2 3,1 3,0 3,3 3,8 4,2 4,7 4,4 3,9 3,0 2,5

2,0 2,2 2,1 2,1 2,3 1,9 1,5 1,4 1,5 1,4 1,7 1,2 1,3 1,0 1,0 0,8 0,7 1,0 1,3 1,4 1,2 0,7 0,3 0,1

2,3 2,6 2,6 2,5 2,5 2,2 1,9 1,4 1,6 1,3 1,5 1,1 1,4 1,3 1,3 1,1 0,9 1,2 1,6 1,7 1,6 0,8 0,4 0,4

1,9 1,9 1,9 1,9 2,3 2,1 1,6 1,4 1,5 1,3 2,0 1,4 1,6 1,7 1,4 1,2 1,1 1,1 1,5 1,7 1,7 1,4 0,9 0,6

1,4 1,9 1,6 1,5 1,7 1,6 1,2 0,9 1,1 1,1 1,1 0,9 0,8 0,3 0,5 0,2 0,2 0,2 0,5 0,4 0,2 0,1 0,1 -0,3

2,3 2,3 2,2 2,3 2,3 1,7 1,2 1,0 1,1 1,3 1,6 0,9 0,6 0,6 0,4 0,2 0,2 0,5 0,8 1,1 0,9 0,1 -0,7 -0,9

1,0 0,8 0,9 1,1 1,8 1,1 0,6 0,5 0,8 1,0 1,1 0,6 0,2 0,4 0,1 0,2 -0,3 0,5 1,1 1,1 0,4 0,2 -0,9 -0,7

0,7 1,0 0,9 1,2 1,1 0,8 0,8 0,8 0,7 1,1 1,7 1,0 1,1 0,5 0,6 0,6 0,6 0,8 1,1 1,1 0,9 0,5 -0,3 -0,8

2,1 2,2 2,1 2,5 2,4 2,1 2,2 2,0 1,9 1,8 2,1 2,1 1,6 1,5 1,3 1,3 1,6 1,8 1,7 1,5 1,3 0,8 -0,2 0,1

0,9 1,2 1,3 1,1 1,1 1,0 0,8 0,7 0,7 0,7 1,1 0,5 0,7 0,4 0,5 0,1 -0,3 -0,3 -0,1 0,2 -0,2 -0,4 -1,0 -1,0

2,4 2,5 2,7 2,4 2,4 2,3 2,1 1,8 1,9 1,9 2,1 2,0 2,0 2,1 1,7 1,7 1,5 1,5 1,3 1,8 1,7 1,5 0,8 0,5

2,9 2,9 2,7 2,3 2,5 2,2 1,9 1,6 1,5 1,9 2,0 1,8 1,6 1,8 1,7 1,7 1,8 2,1 2,3 2,5 2,3 1,5 0,3 0,1

0,7 0,9 1,3 1,2 1,4 0,8 0,3 0,2 0,2 0,5 0,9 0,7 0,7 0,5 0,3 0,2 0,2 0,5 0,8 0,7 0,4 0,4 0,1 0,1

1,9 2,1 2,3 2,5 2,5 2,2 1,9 1,7 1,5 2,3 2,5 2,7 2,7 2,8 2,8 3,0 3,8 4,5 4,5 5,4 5,2 4,3 3,3 2,4

3,2 3,4 3,4 3,0 3,3 3,4 3,2 2,8 2,7 2,5 2,8 3,1 2,8 2,8 3,1 3,1 2,9 2,7 2,6 2,7 3,0 3,0 2,7 2,2

1,5 1,1 1,4 2,1 2,0 2,0 1,3 0,8 0,5 0,4 0,6 0,7 0,7 0,6 0,0 -0,4 0,0 0,2 0,7 1,5 1,1 1,0 0,1 -0,3

1,4 1,8 1,5 1,7 1,2 0,3 -0,1 0,2 0,2 0,6 0,7 0,9 0,9 0,4 0,4 0,4 0,4 0,6 1,1 1,9 -0,2 0,0 -1,0 -1,2

4,9 4,2 3,7 3,7 3,4 2,3 2,1 2,0 2,6 2,9 3,0 3,0 3,2 3,1 3,3 4,0 4,6 5,5 7,4 7,6 6,6 5,9 N/A N/A

4,4 4,5 4,2 4,5 4,6 4,0 3,7 3,8 3,9 4,6 4,9 4,7 3,4 3,2 3,4 2,9 2,5 3,3 4,3 4,2 4,0 3,3 2,4 1,9

4,7 4,8 4,9 5,0 4,9 4,7 4,8 4,4 3,9 4,0 4,4 4,3 4,0 3,8 3,2 3,0 3,0 3,0 2,8 3,2 3,7 3,3 2,2 2,8

2,3 2,5 3,1 3,4 3,5 3,8 4,3 5,0 5,2 5,3 5,2 5,1 4,7 4,6 4,3 4,0 3,8 3,5 3,0 2,4 2,3 2,5 3,1 3,1Ju

n

Apr

Mar

Dec

Jan

Feb

2018

Mar

May

Jun

Jul

Aug

Nov

Sep

Oct

Dec

Jan

2019

Feb

May

Apr

Jul

Aug

Sep

Oct

Nov

2020

Page 7: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

7

|GTM – Europe

-2

-1

0

1

2

3

4

5

'07 '09 '11 '13 '15 '17 '19

Global core inflation and inflation expectations

Core inflation Market-based inflation expectations% change year on year %, 5y5y inflation swap

Source: (Left) Bank of Japan, BLS, Eurostat, ONS, Refinitiv Datastream, J.P. Morgan Asset Management. CPI is the Consumer Price Index. Core inflation for the US is defined as CPI excluding food and energy. Core inflation for Japan is defined as CPI excluding fresh food and energy. Core inflation for the UK and the eurozone is defined as CPI less energy, food, alcohol and tobacco. Japan core CPI has been adjusted down by 2% from April 2014 to March 2015 to remove the estimated impact of the consumption tax hike over this period. (Right) Bloomberg, J.P. Morgan Asset Management. 5y5y inflation swap represents the market’s expectation of five-year average inflation, starting in five years’ time. Data for Japan starts in March 2007 due to data availability. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Headline inflation target

-2

-1

0

1

2

3

4

5

'07 '09 '11 '13 '15 '17 '19

Japan

UK

US

Eurozone

7

Global economy

US

Eurozone

Japan

UK

Page 8: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

8

|GTM – Europe

12,311,3

9,4

6,2

3,5 3,4 2,7

6,55,3

4,13,1

1,9 1,2 0,72,6

24,0

31,5

16,9

34,0

10,6

16,2

5,44,2

0,5

9,7

1,1

4,9

0,50

5

10

15

20

25

30

35

40

Global fiscal policy

Global discretionary fiscal stimulus measures in re sponse to Covid-19% of 2020 nominal GDP, based on IMF estimates

Source: IMF Fiscal Monitor, IMF World Economic Outlook, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

8

Revenue and spending measures Loans, equity injections and guarantees

Developed markets Emerging markets

Global economy

US Japan Germany UK Italy Spain France Brazil S. Africa China Korea Russia India Mexico

Page 9: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

9

|GTM – Europe

0

2

4

6

8

10

12

14

16

18

20

22

24

-2

-1

0

1

2

3

4

5

6

7

8

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Forecast*

Global monetary policy

Central bank balance sheetsUSD trillions

Source: (Left) Bank of England (BoE), Bank of Japan (BoJ), Bloomberg, European Central Bank (ECB), J.P. Morgan Securities Research, UK Debt Management Office, US Federal Reserve (Fed), J.P. Morgan Asset Management. Chart data includes the eurozone, Japan, UK and US. 2020 estimates are from J.P. Morgan Asset Management’s Global Fixed Income, Currency and Commodities team. (Right) BoE, BoJ, ECB, Fed, Refinitiv Datastream, Swiss National Bank (SNB), J.P. Morgan Asset Management. Global central bank balance sheet is the sum of the balance sheets of the BoE, BoJ, ECB, Fed and SNB. *Balance sheet forecast assumptions: BoE to have net asset purchases totalling GBP 300 bn during 2020; BoJ to have net asset purchases of JPY 2,5 tn per month; ECB to have net asset purchases totalling EUR 1,35 tn in 2020; Fed to have net asset purchases of USD 120 bn per month; SNB balance sheet to increase by CHF 15 bn per month. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

9

Global central bank balance sheet

12-month change in balance sheet

Major central bank purchases and government bond is suanceUSD trillions

-5

-4

-3

-2

-1

0

1

2

3

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Net government bond issuance

Central bank government bond QE purchases

Net government bond supply

Page 10: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

10

|GTM – EuropeGlobal currencies

USD real effective exchange rate and interest rate differential Global real effective exchange rate valuationsIndex level (LHS); % (RHS) % premium / discount relative to its average since 1999

Source: (All charts) J.P. Morgan Securities Research, Refinitiv Datastream, J.P. Morgan Asset Management. DM is developed markets and the yield is calculated as a GDP-weighted average of the 10-year government bond yields of Australia, Canada, France, Germany, Italy, Japan, Switzerland and the UK. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

10

USD broad real effective exchange rate

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

2,5

3,0

90

95

100

105

110

115

120

125

130

135

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

US minus DM 10-year government bond yield

-40 -30 -20 -10 0 10 20

Developed markets

Emerging markets

China

India

Switzerland

US

Russia

Australia

Eurozone

South Korea

Canada

UK

Sweden

Japan

Norway

South Africa

Mexico

Brazil

Turkey

Page 11: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

11

|GTM – Europe

-25

-20

-15

-10

-5

0

5

10

15

20

25

'01 '03 '05 '07 '09 '11 '13 '15 '17 '190 5 10 15 20 25 30 35 40 45

Global trade

Exports of goods Global export volumes% of nominal GDP, 2019 % change year on year, three-month moving average

Source: (Left) IMF Direction of Trade, IMF World Economic Outlook, J.P. Morgan Asset Management. (Right) CPB Netherlands, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

11

Brazil

US

Eurozone

Canada

India

China

Russia

Mexico

Japan

Korea

UK

China

EM ex-China

US

Eurozone

Other

Emerging markets

Developed markets

Page 12: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

12

|GTM – Europe

-1,0

-0,8

-0,6

-0,4

-0,2

0,0

0,2

0,4

0,6

0,8

1,0

1,2

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

'58 - '67 '68 - '77 '78 - '87 '88 - '97 '98 - '07 '08 - '19

Productivity and population growth

Drivers of US GDP growth Global working-age population growthAnnualised % change Annualised % change

Source: (Left) BEA, BLS, J.P. Morgan Asset Management. GDP drivers are calculated as the average annualised growth between 4Q from the preceding year in the period and 4Q of the last year of the period. (Right) United Nations (UN) Department of Economic and Social Affairs, J.P. Morgan Asset Management. Working-age population is defined as aged 15-69. Data from 2020 onwards are UN forecasts. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

2000-2020 2020-20401980-2000

Growth in workers + Growth in real output per worker

Growth in real GDP

12

US UK Eurozone Japan

1,6%

2,2%

1,9%

1,4%1,1%

0,7%

2,8% 1,0% 1,3% 1,6% 1,9% 1,0%

4,5%

3,2% 3,2%3,0% 3,0%

1,7%

Page 13: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

13

|GTM – EuropeGlobal Covid-19 infection rates

Source: (All charts) Johns Hopkins CSSE, J.P. Morgan Asset Management. Cases include both laboratory confirmed and “presumptive positive” cases. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Daily increase in Covid-19 cases Daily increase in C ovid-19 casesSeven-day moving average Seven-day moving average

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

0

100

200

300

400

500

600

700

800

900

1.000

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

45.000

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000 France

Germany

Italy

Spain

UK

US (RHS)

Russia (RHS)

South Korea

China

India (RHS)

South Africa (RHS)

Brazil (RHS)

13

Global economy

Mar ’20 Apr ’20 May ’20 Jun ’20 Jul ’20 Mar ’20 Apr ’20 May ’20 Jun ’20 Jul ’20

Page 14: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

14

|GTM – Europe

0

20

40

60

80

100

120

Jan ’20 Feb ’20 Mar ’20 Apr ’20 May ’20 Jun ’20 Jul ’20

Global travel and navigation app usage 14

Travel and navigation app usage Travel and navigatio n app usage% of 2019 average % of 2019 average

Source: (All charts) App Annie, J.P. Morgan Asset Management. Data is sourced from App Annie with over 600 travel and navigation apps globally, including Google Maps, Uber, Airbnb and Booking.com. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

0

20

40

60

80

100

120

Russia

South Korea

China

India

South Africa

Brazil

Spain

US

Germany

Italy

UK

France

Global economy

Jan ’20 Feb ’20 Mar ’20 Apr ’20 May ’20 Jun ’20 Jul ’20

Page 15: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

15

|GTM – EuropeUS GDP

Contribution to US real GDP growth and ISM composit e% change year on year (LHS); index level (RHS)

Source: BEA, Bloomberg, ISM, Refinitiv Datastream, J.P. Morgan Asset Management. The Institute for Supply Management (ISM) composite is an economy-weighted average of the manufacturing and non-manufacturing surveys. A score of 50 indicates that economic activity is neither expanding nor contracting, above 50 indicates expansion. ISM data is shown with quarterly frequency. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

Average since 2000

1Q20

2,1% 0,3%

15

Change in inventories

Net exports

Investment

Consumption

Government

ISM composite (RHS)

30

35

40

45

50

55

60

65

-8

-6

-4

-2

0

2

4

6

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Page 16: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

16

|GTM – Europe

0

10

20

30

40

50

60

70

80

90

100

US Economic Monitor

US economic indicatorsPercentile rank relative to historic data since 1990

Source: BLS, Conference Board, ISM, Refinitiv Datastream, J.P. Morgan Asset Management. Elevated recession risk flags are shown when the underlying indicator is at a level consistent with the onset of any of the past three US recessions, as determined by NBER. Transformations used for each of the indicators are: % change year on year for the Leading Economic Index and consumer confidence present situation, index level for Leading Credit Index, ISM non-manufacturing and ISM manufacturing new orders and three-month moving average of monthly absolute change for non-farm payrolls. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

Broad indicators

Latest

Higher recession risk

Consumer and services Manufacturing Labour marketElevated

recession risk

Lower recession risk

Key:

16

ConferenceBoard Leading

Economic Index

ConferenceBoard Leading Credit Index

Consumer confidence:

Present situation

ISM non-manufacturing

ISMmanufacturing:

New orders

Non-farm payrolls

Page 17: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

17

|GTM – Europe

25

30

35

40

45

50

55

60

65

70

75

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

US business surveys

US ISM manufacturing: New orders US ISM non-manufact uringIndex level Index level

Source: (All charts) ISM, Refinitiv Datastream, J.P. Morgan Asset Management. Periods of “recession” are defined using US National Bureau of Economic Research (NBER) business cycle dates. Elevated recession risk line is shown as the highest value of the underlying indicator observed at the start of the past three US recessions, as determined by NBER. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

Recession

17

Elevated recession risk

Elevated recession risk

35

40

45

50

55

60

65

'98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Page 18: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

18

|GTM – Europe

-20

-10

0

10

20

30

40

-20

-15

-10

-5

0

5

10

15

20

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

US business investment

US future capex intentions and business investment% change year on year (LHS); index level (RHS)

Source: BEA, Dallas Fed, Kansas City Fed, New York Fed, Philadelphia Fed, Refinitiv Datastream, Richmond Fed, J.P. Morgan Asset Management. Future capex intentions is an average index level of the five aforementioned Fed districts equally weighted, displayed using a three-month moving average. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Future capex intentions

Global economy

18

Business investment

Page 19: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

19

|GTM – EuropeUS consumer

US consumer confidence: Present situation US house prices relative to income% change year on year Index level

Source: (Left) Conference Board, Refinitiv Datastream, J.P. Morgan Asset Management. (Right) OECD, Refinitiv Datastream, J.P. Morgan Asset Management. Periods of “recession” are defined using US National Bureau of Economic Research (NBER) business cycle dates. Elevated recession risk line is shown as the highest value of the underlying indicator observed at the start of the past three US recessions, as determined by NBER. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

Recession

19

80

90

100

110

120

130

140

'79 '84 '89 '94 '99 '04 '09 '14 '19

Elevated recession risk

-100

-75

-50

-25

0

25

50

75

100

125

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Page 20: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

20

|GTM – EuropeUS labour market

US unemployment rate and wage growth%, wage growth is year on year

Source: BLS, Refinitiv Datastream, J.P. Morgan Asset Management. Wage growth is average hourly earnings of total private production and non-supervisory employees. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

Unemployment

Wage growth

20

May 2020: 13,3%

May 2020:6,7%

0

2

4

6

8

10

12

14

16

'67 '72 '77 '82 '87 '92 '97 '02 '07 '12 '17

Page 21: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

21

|GTM – Europe

-1.200

-1.000

-800

-600

-400

-200

0

200

400

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

US non-farm payrolls and initial jobless claims

US non-farm payrolls US initial jobless claimsMonthly change in thousands, three-month moving average Thousands, 12-week moving average

Source: (All charts) BLS, Refinitiv Datastream, J.P. Morgan Asset Management. Periods of “recession” are defined using US National Bureau of Economic Research (NBER) business cycle dates. Elevated recession risk line is shown as the highest value of the underlying indicator observed at the start of the past three US recessions, as determined by NBER. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

21

Recession

Elevated recession risk

-7.300May 2020: -6.517

200

300

400

500

600

700

800

900

1.000

1.100

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

3.410May 2020: 3.407

Page 22: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

22

|GTM – Europe

Recession

US Conference Board indicators

US Leading Economic Index US Leading Credit Index% change year on year

Source: (All charts) Conference Board, Refinitiv Datastream, J.P. Morgan Asset Management. Periods of “recession” are defined using US National Bureau of Economic Research (NBER) business cycle dates. Elevated recession risk line is shown as the highest value for the Leading Economic Index and lowest for the Leading Credit Index at the start of the past three US recessions, as determined by NBER. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Elevated recession risk

Index level

Elevated recession risk

Lending conditions tightening

Global economy

22

-15

-10

-5

0

5

10

15

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20-4

-2

0

2

4

6

8

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Page 23: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

23

|GTM – Europe

-6

-4

-2

0

2

4

6

50

55

60

65

70

75

80

'90 '94 '98 '02 '06 '10 '14 '180

1

2

3

4

5

6

7

8

9

50

60

70

80

90

100

110

'90 '94 '98 '02 '06 '10 '14 '18

US household debt and net saving US non-financial co rporate debt and net saving% of nominal GDP % of nominal GDP

Source: (All charts) BEA, Refinitiv Datastream, US Federal Reserve, J.P. Morgan Asset Management. Household net saving is defined as net disposable income minus final consumption expenditure. Non-financial corporate net saving is defined as the difference between gross savings (less net capital transfers paid and excluding foreign earnings retained abroad) and capital expenditures. Non-financial corporate net saving data has been smoothed in 2018 to account for the Tax Cuts and Jobs Act of 2017. Periods of “recession” are defined using US National Bureau of Economic Research (NBER) business cycle dates. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Recession

US household and corporate finances

Non-financial corporate debt

Non-financial corporate net

saving

Householddebt

Household net saving

Global economy

23

Page 24: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

24

|GTM – Europe

-3

-2

-1

0

1

2

3

4

5

6

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20-2

-1

0

1

2

3

4

5

6

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Average since 2000

May2020

Headline CPI 2,2% 0,1%

Core CPI 2,0% 1,2%

US inflation

US headline and core inflation US core goods and ser vices inflation% change year on year % change year on year

Source: (All charts) BLS, Refinitiv Datastream, J.P. Morgan Asset Management. CPI is the Consumer Price Index. Core CPI is defined as CPI excluding food and energy. Core goods CPI is defined as goods CPI excluding food and energy. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

Average since 2000

May2020

Services CPI 2,8% 1,9%

Core goods CPI 0,0% -1,0%

Headline inflation target

24

Page 25: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

25

|GTM – Europe

0

1

2

3

4

5

6

7

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23

US Federal Reserve policy rate

Federal funds policy rate expectations% Fed funds rate and market expectations

Source: Bloomberg, US Federal Reserve, J.P. Morgan Asset Management. Market expectations are calculated using OIS forwards. MBS: Mortgage-backed securities, CMBS: Commercial mortgage-backed securities. Past performance is not a reliable indicator of current and future results. The list of policy actions is not exhaustive. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

25

Federal funds rate

Market expectations on 30 June 2020 (mean)

Other Federal Reserve policy actions in 2020

Restarted asset purchase programme• Purchases of Treasuries and agency MBS are now unlimited• Expanded the programme to include agency CMBS

Launched a Primary (PMCCF) and Secondary Corporate Credit Facility (SMCCF)

Restarted Term Asset-Backed Securities Loan Facility (TALF), and launched Municipal Liquidity Facility to purchase short-term notes directly from US states

Enhanced US dollar liquidity swap arrangements with a wide range of central banks

New Paycheck Protection Program Liquidity Facility (PPPLF) and Main Street Lending Program to support funding to small businesses

Page 26: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

26

|GTM – Europe

-20

-15

-10

-5

0

5

10

US politics

Trump vs. Biden polling in swing states US voters that view economic conditions as excellen t or good% points spread % of total survey respondents

Source: (Left) 270 to Win, RealClearPolitics.com, J.P. Morgan Asset Management. EC is electoral college. *The 102 votes in swing states are shown in the chart except for Nebraska’s 2nd congressional district, which has one vote in the electoral college. (Right) Pew Research Center, J.P. Morgan Asset Management. Pew Research Center April 2020; Question: Thinking about the nation’s economy, How would you rate economic conditions in this country today…as excellent, good, only fair, or poor? Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

26

0

10

20

30

40

50

60

70

80

90

100

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Gives Democrats 270+ votesGives Republicans 270+ votes

Trump lead

Biden lead

232 votes in lean Democrat states

204 votes in lean Republican states

102 votes* in swing states

270 to win presidency

Republican / Lean Republican

Democrat / Lean Democrat

Total

37%

23%

11%

Range of poll results since 1 April

Median

Michigan Pennsylvania Arizona Florida Wisconsin North Carolina

+16 +20 +11 +29 +10 +15ECvotes per state

Page 27: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

27

|GTM – Europe

40

50

60

70

80

90

100

110

120

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

US focus: Labour market and consumer dynamics

Global economy

27

0

2

4

6

8

10

12

14

16

18

20

'67 '71 '75 '79 '83 '87 '91 '95 '99 '03 '07 '11 '15 '19

Temporary layoffs

Permanent layoffs

US unemploymentMillions of people

US consumer income and spendingIndex level, rebased to 100 at February 2020

Source: (Left) BLS, Refinitiv Datastream, J.P. Morgan Asset Management. (Right) BEA, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Consumer spending

Income post tax and government benefitsEmployment income

Page 28: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

28

|GTM – EuropeEurozone GDP

Contribution to eurozone real GDP growth and composit e PMI% change year on year (LHS); index level (RHS)

Source: Eurostat, Markit, Refinitiv Datastream, J.P. Morgan Asset Management. PMI is Purchasing Managers’ Index where a score of 50 indicates that economic activity is neither expanding nor contracting, above 50 indicates expansion. PMI data is shown with quarterly frequency. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

28

Change in inventories

Net exports

Investment

Consumption

Government

Composite PMI (RHS)

25

30

35

40

45

50

55

60

65

-10

-8

-6

-4

-2

0

2

4

6

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Average since 2000

1Q20

1,4% -3,1%

Page 29: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

29

|GTM – Europe

-50

-40

-30

-20

-10

0

10

20

-15

-10

-5

0

5

10

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Eurozone business investment

Eurozone business investment and investment confiden ce% change year on year (LHS); index level (RHS)

Source: Eurostat, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

29

Business investment Investment goods industry confidence

Page 30: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

30

|GTM – Europe

0

50

100

150

200

250

'80 '84 '88 '92 '96 '00 '04 '08 '12 '16 '20-25

-20

-15

-10

-5

0

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Eurozone consumer

Eurozone consumer confidence Eurozone house prices rel ative to incomeIndex level Index level

Source: (Left) European Commission, Refinitiv Datastream, J.P. Morgan Asset Management. (Right) OECD, Refinitiv Datastream, J.P. Morgan Asset Management. Light grey columns indicate recession in the eurozone. Pre-2000, recessions are determined by a recession occurring in either Germany or at an EU-15 level. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

30

Germany

Spain

France

Italy

Recession

Page 31: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

31

|GTM – Europe

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

3

4

5

6

7

8

9

10

11

12

13

'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Eurozone labour market

Eurozone unemployment rate and wage growth%, wage growth is year on year

Source: ECB, Refinitiv Datastream, J.P. Morgan Asset Management. Wage growth is compensation per employee. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

31

Wage growthUnemployment

May 2020:7,4%

1Q20:0,3%

Page 32: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

32

|GTM – Europe

0

4

8

12

16

20

24

28

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Eurozone unemployment

Germany, France, Italy and Spain unemployment rates%

Source: Eurostat, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

32

Spain

Germany

France

Italy

Global economy

Page 33: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

33

|GTM – Europe

-0,5

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20-1

0

1

2

3

4

5

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Average since 2000

June 2020(flash)

Services CPI 1,9% 1,2%

Core goods CPI 0,6% 0,2%

Eurozone inflation

Eurozone headline and core inflation Eurozone core goo ds and services inflation% change year on year % change year on year

Source: (All charts) Eurostat, Refinitiv Datastream, J.P. Morgan Asset Management. CPI is the Consumer Price Index. Core CPI is defined as CPI less energy, food, alcohol and tobacco. Core goods CPI is defined as goods CPI less energy, food, alcohol and tobacco. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

33

Headline inflation target

Average since 2000

June 2020(flash)

Headline CPI 1,7% 0,3%

Core CPI 1,4% 0,8%

Page 34: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

34

|GTM – Europe

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23

European Central Bank policy rate

European Central Bank policy rate expectations% deposit rate and market expectations

Source: Bloomberg, European Central Bank, J.P. Morgan Asset Management. Market expectations are calculated using OIS forwards. Past performance is not a reliable indicator of current and future results. The list of policy actions is not exhaustive. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

34

ECB deposit rate

Market expectations on 30 June 2020 (mean)

European Central Bank policy actions in 2020

Launched the Pandemic Emergency Purchase Programme (PEPP)• Up to €1.35trn of purchases, which will run until at least June 2021• Increased flexibility on issuer and maturity limits• Short-term deviations from the capital key permitted • Greek bonds are eligible for purchase

Expanded existing Asset Purchase Programme (APP) by €120bn for 2020

Expanded eligibility of non-financial commercial paper for the Corporate Sector Purchase Programme (CSPP)

Enhanced multiple forms of Longer-Term Refinancing Operations to backstop liquidity

Bonds downgraded to junk since 7 April are eligible collateral to access ECB lending

Page 35: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

35

|GTM – EuropeEurozone debt

Eurozone debt to GDP ratios Eurozone debt service ratios% of nominal GDP % of disposable income

Source: (All charts) Bank for International Settlements, Refinitiv Datastream, J.P. Morgan Asset Management. Debt refers to gross debt. Debt service ratios are a GDP-weighted average of France, Germany, Italy and Spain. For the household sector, gross disposable income is the amount of money that all of the individuals in the household sector have available for spending or saving after income distribution measures (for example, taxes, social contributions and benefits) have taken effect. For the non-financial corporate sector, gross disposable income is essentially akin to gross operating surplus before dividends or interest are paid. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

Non-financial corporatesHouseholds

35

32

33

34

35

36

37

38

39

40

5,0

5,5

6,0

6,5

7,0

7,5

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '2040

50

60

70

80

90

100

110

120

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Households

Non-financial corporates

Government

Page 36: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

36

|GTM – EuropeEurozone government debt and bond spreads

France, Germany, Italy and Spain government debt to GDP European 10-year government bond spreads over G ermany% of nominal GDP % spread

Source: (Left) Bank for International Settlements, Refinitiv Datastream, J.P. Morgan Asset Management. Italy and France data are four-quarter moving averages. Debt refers to gross debt. Dotted lines represent the IMF forecasts for government debt to GDP in 2020. (Right) Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Germany

Spain

France

Italy

Global economy

Spain

France

Italy

36

0

1

2

3

4

5

6

7

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '200

20

40

60

80

100

120

140

160

180

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Page 37: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

37

|GTM – Europe

3%

2%4%

9%6%

4% 12% 11%

-2% -2% -2% -2% -2%-2%

-1%

-2%-80

-60

-40

-20

0

20

40

60

Eurozone focus: EU recovery fund and government support for jobs 37

Global economy

Beneficiaries and contributors of EU recovery fund proposal* Proportion of jobs that have received government su pportEUR billions, labels are % of GDP % of total employment

Source: (Left) European Commission, J.P. Morgan Asset Management. Countries shown are the top eight net beneficiaries / contributors. *Current expectations of the European Commission’s proposal. Yet to be accepted and ratified by EU members. (Right) Bundesagentur für Arbeit, INE, INSEE, Istat, ONS, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Net beneficiaries

Net contributors

0

10

20

30

40

50

60

Italy France UK Germany Spain

Page 38: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

38

|GTM – EuropeUK GDP

Contribution to UK real GDP growth and composite PM I% change year on year (LHS); index level (RHS)

Source: Markit, ONS, Refinitiv Datastream, J.P. Morgan Asset Management. PMI is Purchasing Managers’ Index where a score of 50 indicates that economic activity is neither expanding nor contracting, above 50 indicates expansion. PMI data is shown with quarterly frequency. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

38

Global economy

Change in inventories

Net exports

Investment

Consumption

Government

Composite PMI (RHS)

25

30

35

40

45

50

55

60

65

-10

-8

-6

-4

-2

0

2

4

6

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Average since 2000

1Q20

1,9% -1,7%

Page 39: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

39

|GTM – Europe

-40

-30

-20

-10

0

10

20

'87 '92 '97 '02 '07 '12 '17

UK consumer

UK consumer confidence UK house prices relative to incomeIndex level, three-month moving average Index level

Source: (Left) GfK, Refinitiv Datastream, J.P. Morgan Asset Management. (Right) OECD, Refinitiv Datastream, J.P. Morgan Asset Management. Light grey columns indicate recession. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Recession

39

Global economy

40

50

60

70

80

90

100

110

120

130

'87 '92 '97 '02 '07 '12 '17

Page 40: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

40

|GTM – Europe

-6

-4

-2

0

2

4

6

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20-1

0

1

2

3

4

5

6

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

UK inflation

UK headline and core inflation UK core goods and ser vices inflation% change year on year % change year on year

Source: (All charts) ONS, Refinitiv Datastream, J.P. Morgan Asset Management. CPI is the Consumer Price Index. Core CPI is defined as CPI less energy, food, alcohol and tobacco. Core goods CPI is defined as goods CPI less energy, food, alcohol and tobacco. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Average since 2000

May2020

Headline CPI 2,0% 0,5%Core CPI 1,7% 1,2%

Average since 2000

May2020

Services CPI 3,3% 1,9%Core goods CPI -0,6% 0,1%

40

Global economy

Headline inflation target

Page 41: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

41

|GTM – EuropeUK focus: Labour market and trade

UK employment by sector UK trade with partnersThousands % of nominal GDP of exporting country/region, 2019

Source: (Left) HMRC, ONS, Refinitiv Datastream, J.P. Morgan Asset Management. Total jobs are as of 4Q 2019, with jobs furloughed the cumulative amount of employees who have been put on the UK government Job Retention Scheme (JRS). (Right) Eurostat, IMF, ONS, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

41

Jobs not furloughed

Jobs furloughed

0

2

4

6

8

10

12

14

16

18

20

0

1.000

2.000

3.000

4.000

5.000

UK exportsto EU

UK exports to World ex-EU

EU exportsto UK

World ex-EU exports to UK

Page 42: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

42

|GTM – EuropeJapan GDP

Contribution to Japan real GDP growth and manufactu ring PMI% change year on year (LHS); index level (RHS)

Source: Japan Cabinet Office, Markit, Refinitiv Datastream, J.P. Morgan Asset Management. PMI is Purchasing Managers’ Index where a score of 50 indicates that economic activity is neither expanding nor contracting, above 50 indicates expansion. PMI data is shown with quarterly frequency. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

42

Global economy

Change in inventories

Net exports

Investment

Consumption

Government

Manufacturing PMI (RHS)

Average since 2000

1Q20

0,9% -1,9%

30

34

38

42

46

50

54

58

62

-10

-8

-6

-4

-2

0

2

4

6

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Page 43: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

43

|GTM – Europe

-10

-5

0

5

10

15

20

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20-10

-5

0

5

10

15

20

25

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

China GDP

Contribution to China real GDP growth China industri al production and retail sales% change year on year % change year on year

Source: (Left) National Bureau of Statistics of China, Refinitiv Datastream, J.P. Morgan Asset Management. Forecast is from J.P. Morgan Securities Reseach. (Right) National Bureau of Statistics of China, Refinitiv Datastream, J.P. Morgan Asset Management. Industrial production is a three-month moving average and retail sales is a six-month moving average. Past performance and forecasts are not reliable indicators of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

43

Industrial production

Retail sales

1Q 20202020

forecast

-6,8% 1,8%

Consumption

GDP growth

Investment

Net exports

Page 44: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

44

|GTM – Europe

0

5

10

15

20

25

30

35

40

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '200

20

40

60

80

100

120

140

160

180

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

China debt

China debt to GDP ratios China credit growth% of nominal GDP % change year on year

Source: (Left) Bank for International Settlements, Refinitiv Datastream, J.P. Morgan Asset Management. Debt refers to gross debt. (Right) People’s Bank of China (PBoC), J.P. Morgan Asset Management. This chart includes two measures of credit ranging from the narrowest – bank lending – to the more extensive broad credit. Specifically, bank lending is the sum of all loans made by the commercial banking system to domestic borrowers. Broad credit includes all finance provided to non-financial entities in private and public sectors. Broad credit is all funding to domestic borrowers, including bank lending, trust loans, entrusted loans, bankers’ acceptances, corporate bonds, equity financing by non-financial enterprises, asset-backed securities, loan write-offs, central government and local government bonds. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Households

Government

Global economy

Non-financial corporates

44

Broad credit

RMB bank lending

Page 45: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

45

|GTM – Europe

5

10

15

20

25

30

0

1

2

3

4

5

6

7

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20-10

-5

0

5

10

15

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

China inflation and policy rates

China inflation China interbank rate and reserve requirement ratio (RRR)% change year on year % rate

Source: (Left) Bloomberg, Refinitiv Datastream, J.P. Morgan Asset Management. CPI is the Consumer Price Index. Core CPI is defined as CPI excluding food and energy. PPI is the Producer Price Index. (Right) People’s Bank of China, Refinitiv Datastream, J.P. Morgan Asset Management. Average RRR for large and small banks. SHIBOR is the three-month interbank rate. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Average since 2007

May2020

Headline CPI 2,8% 2,4%

Core CPI 1,3% 1,1%Headline PPI 1,0% -3,7%

RRRSHIBOR

Global economy

45

Page 46: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

46

|GTM – Europe

-40

-30

-20

-10

0

10

20

30

'92 '96 '00 '04 '08 '12 '16 '20-2,4

-2,0

-1,6

-1,2

-0,8

-0,4

0,0

0,4

0,8

1,2

1,6

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Emerging market currencies and current account

EM currencies vs. US dollar EM current account balance% from fair value, relative to US dollar % of nominal GDP

Source: (Left) J.P. Morgan Asset Management. Fair value is based on nominal exchange rates relative to PPP exchange rates and is adjusted for GDP per capita. (Right) Bloomberg, J.P. Morgan Asset Management. EM currencies and current account balances are created using the current weighted average of JPM GBI-EM Global Diversified Index countries. Current account balance is the balance of a country’s net trade in goods and services, its net earnings on cross-border investments and its net transfer payments. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

46

EM currencies expensive relative to USD

EM current account balance improving

+1 std. dev.

-1 std. dev.

Average

Page 47: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

47

|GTM – Europe

USA

JPNDEU

GBRFRA

CAN

ITAESP

AUS

NLD

CHN

IND

BRAMEX

TUR

KOR

RUS

IDN

ARG

SAU

THA

HKG

ZAF

-10.000

0

10.000

20.000

30.000

40.000

50.000

60.000

0 20 40 60 80 100

Emerging market structural dynamics

Urbanisation, real GDP per capita and population si ze Share of global real GDPUrbanisation rates, %, and GDP per capita, USD, bubble size is population %

Source: (Left) World Bank, J.P. Morgan Asset Management. Urbanisation rate refers to the proportion of the total population living within an urban area defined by national statistical offices. Countries are labelled using three-letter International Organisation of Standardisation country codes. (Right) Refinitiv Datastream, World Bank, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.Data as of 30 June 2020.

GD

P p

er c

apita

Urbanisation rate

Global economy

47

Emerging markets

Developed markets

0

0

5

10

15

20

25

30

'70 '75 '80 '85 '90 '95 '00 '05 '10 '15

US

Eurozone

China

Japan

India

Page 48: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

48

|GTM – EuropeEmerging market focus: EM debt vulnerabilities

Emerging market government debt to GDP in local and foreign currency% of nominal GDP, 4Q 2019

Source: Institute of International Finance: Global Debt Monitor, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Global economy

48

0

20

40

60

80

100

120

Foreign currency

Local currency

Page 49: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

49

|GTM – Europe

-50

-40

-30

-20

-10

0

10

20

30

40

50

0x

5x

10x

15x

20x

25x

30x

35x

40x

Global earnings expectations and equity valuations

Consensus estimates for global earnings per share g rowth Global forward price-to-earnings ratios % change year on year, earnings per share growth estimates x, multiple

Source: (Left) FTSE, IBES, MSCI, Refinitiv Datastream, Standard & Poor’s, TOPIX, J.P. Morgan Asset Management. MSCI indices are used for Europe ex-UK and EM. UK is FTSE All-Share, US is S&P 500 and Japan is TOPIX. Data used are in local currency, except for EM, which is in US dollars. Year on year growth rates are calculated based on earnings estimates for the end of the calendar year. For Japan the end of the year is the fiscal year, which ends on the 31 March of the following year. (Right) IBES, MSCI, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. MSCI indices are used for all regions/countries (due to data availability), except for the US, which is represented by the S&P 500. 23 March 2020 marks the recent trough of the S&P 500. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

49

Equities

US UKEuropeex-UK

Japan EM

80x

US UKEuropeex-UK

Japan EM

20212020 2021 vs. 2019

Range since 1990

Average since 1990

Current

23 March 2020

77x

Page 50: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

50

|GTM – Europe

0

1

2

3

4

5

6

7

MSCI WorldFTSE All-Share MSCI Europe ex-UKS&P 500 MSCI EMMSCI Japan

-0,5

0,00,9

2,2 2,6 2,7

5,0 5,1 5,66,5

7,5

9,9

-2

0

2

4

6

8

10

MSCI Europe

Cash Global REITsEM equity EM debtGermanBunds

Global infrastructure

DM high yield

Global transport

Global convertibles

Euro IG DM equity

Global income

Equity index yields% yield

Source: (Top) Bloomberg Barclays, BofA/Merrill Lynch, Clarkson, Drewry Maritime Consultants, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management.Additional yield often comes with associated capital and/or liquidity risk. Global transport yield is as of March 2020 and global infrastructure yield is as of December 2019. Yields for the bond indices are yield to worst and dividend yields for the equity indices. Global transport levered yield is rental income minus operating expenses, debt amortisation and interest expenses, expressed as a percentage of equity value. Global convertibles: Bloomberg Barclays Global Convertibles; DM equity: MSCI World; EM equity: MSCI EM; German bunds: Germany 10-year yield; Euro IG: Bloomberg Barclays Euro Agg. – Corporates; Global REITs: FTSE NAREIT Index; DM high yield: BofA/Merrill Lynch Developed Markets High Yield Constrained; EM debt: J.P. Morgan EMBI Global; Global infrastructure: MSCI Global Infrastructure Asset Index – Low risk. (Bottom) Bloomberg, FTSE, MSCI, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. Buyback yield is last 12 months’ buybacks divided by the market cap of the index. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Equities

50

Average Europe inflation: 1,3%(12 months to May 2020)

Fixed income

Equity

Alternatives

% yieldAsset yield comparison

Buyback yield

Dividend yield

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51

|GTM – Europe

0

5

10

15

20

25

30

35

40

IndustrialsHealth Care Cons. StaplesFinancials UtilitiesIT MaterialsEnergyCons. Discr. Comm. Serv.

0

5

10

15

20

25

IndustrialsHealth Care Cons. StaplesFinancials UtilitiesIT MaterialsEnergyCons. Discr. Comm. Serv.

Global equity sector weights

Global equity sector weights

MSCI World Growth and Value sector weights

% of total market cap

% of total market cap

Source: (Top) MSCI, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. Indices are all MSCI, except for US, which is S&P 500. (Bottom) MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Real estate is not included in these sector breakdowns due to the small size of the weight in each index. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Equities

51

Europe ex-UK EMUS UK

MSCI World Growth MSCI World Value

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52

|GTM – Europe

20

30

40

50

60

70

'06 '08 '10 '12 '14 '16 '18 '20

Equity net issuance and dividend payout ratios

US and Europe net equity issuance Dividend payout ra tiosUSD billions, 12-month rolling %, three-month moving average

Source: (Left) Bernstein, Bloomberg, J.P. Morgan Asset Management. Net equity issuance is equity issuance minus buybacks. (Right) FTSE, MSCI, Refinitiv Datastream, Standard & Poor's, J.P. Morgan Asset Management. US: S&P 500; Europe ex-UK: MSCI Europe ex-UK; UK: FTSE All-Share; EM: MSCI Emerging Markets. Dividend payout ratio shows 12-month trailing dividend per share divided by 12-month trailing earnings per share. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Equities

52

Europe ex-UK

US

UK

EM

-1.000

-800

-600

-400

-200

0

200

400

'04 '06 '08 '10 '12 '14 '16 '18 '20

Europe ex-UK

US

UK

Page 53: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

53

|GTM – EuropeUS earnings

S&P 500 earnings and performance US nominal GDP grow th and earnings growthNext 12 months’ earnings per share estimates (LHS); index level (RHS) % change year on year

Source: (Left) IBES, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. Earnings data is based on 12-month forward estimates. (Right) BEA, IBES, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. Earnings data is last 12 months’ earnings per share. Nominal GDP forecasts are from J.P. Morgan Securities Research. Past performance and forecasts are not reliable indicators of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Equities

53

S&P 500 index level

S&P 500 forward EPS

-40

-30

-20

-10

0

10

20

30

40

-6

-4

-2

0

2

4

6

8

10

'86 '90 '94 '98 '02 '06 '10 '14 '18 '22

US nominal GDP

S&P 500 trailing EPS

2020 / 2021 nominal GDP forecasts

0

500

1.000

1.500

2.000

2.500

3.000

3.500

10

30

50

70

90

110

130

150

170

190

'86 '90 '94 '98 '02 '06 '10 '14 '18

Page 54: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

54

|GTM – Europe

Cons. Discr.

Industrials

Energy

S&P 500

Utilities

IT

Financials

Cons. Staples

Comm. Serv.

Health Care

Materials

10

12

14

16

18

20

22

24

26

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

US equity valuations

S&P 500 forward P/E ratio S&P 500 forward P/E ratio sector breakdownx, multiple % premium / discount of the P/E ratio relative to average since 1995

Source: (Left) FactSet, IBES, Refinitiv Datastream, Robert Shiller, Standard & Poor’s, J.P. Morgan Asset Management. P/E ratio calculated using IBES earnings estimates for next 12 months. P/E data may differ from Guide to the Markets - US, which uses FactSet earnings estimates. Shiller cyclically-adjusted P/E (CAPE) is price-to-earnings ratio adjusted using trailing 10-year average inflation-adjusted earnings. P/B ratio is trailing price-to-book ratio. (Right) IBES, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Average: 15,9x

Valuation measureAverage

since 1990

Latest

Shiller CAPE ratio 25,9x 30,0x

P/B ratio 2,9x 3,4x

Equities

54

30 Jun 2020:21,8x

-20 -10 0 10 20 30 40 50 60 70

95,8

39,2

22,4

21,8

21,6

20,4

17,2

24,3

14,0

19,3

15,9

Current P/E ratio

400

112%

392%

Premium relative to history

Page 55: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

55

|GTM – EuropeUS valuations and subsequent returns

S&P 500 forward P/E ratios and subsequent 1-year re turns S&P 500 forward P/E ratios and subsequent 10-y ear returns%, annualised total return* %, annualised total return*

Source: (All charts) IBES, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. *Dots represent monthly data points since 1988, which is earliest available. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Equities

55

-60

-40

-20

0

20

40

60

8,0x 11,0x 14,0x 17,0x 20,0x 23,0x

Current level

-20

-15

-10

-5

0

5

10

15

20

25

30

8,0x 11,0x 14,0x 17,0x 20,0x 23,0x

Current level

Page 56: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

56

|GTM – Europe

90

100

110

120

130

140

150

160

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Equity market factors

Equities

S&P 500 Quality/S&P 500 relative performance MSCI Wo rld Growth and Value forward P/E ratioRelative total return index level, rebased to 100 in 1990 x, multiple

Source: (Left) J.P. Morgan Asset Management Quantitative Beta Solutions, Standard and Poor’s, J.P. Morgan Asset Management. S&P 500 Quality index is the top quartile quality stocks in the S&P 500 determined by JPMAM Quantitative Beta Strategies based on measures of profitability, financial risk and earnings quality. Periods of “recession” are defined using US National Bureau of Economic Research (NBER) business cycle dates. (Right) MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Forward P/E ratio is the price to 12-months forward ratio, as published by MSCI. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Recession

56

8

12

16

20

24

28

32

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Value

Growth

Page 57: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

57

|GTM – Europe

-70

-60

-50

-40

-30

-20

-10

0

'58 '60 '62 '64 '66 '68 '70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

0

100

200

300

400

500

600

'58 '60 '62 '64 '66 '68 '70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

US bull and bear markets

S&P 500 bull markets, %

S&P 500 bear markets, %

Source: (All charts) Bloomberg, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. A bear market represents a 20% or more decline from the previous market high using a monthly frequency; a bull market represents a 20% increase from a market trough. Charts and labels refer to price return. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

60 months101%

147 months582%

32 months74%

50 months86%

74 months126%

60 months229%

43 months80% 26 months

48%

57

Equities

17 months-57%

30 months-49%

3 months-34%

20 months-27%

21 months-48%

18 months-36%

8 months-22%6 months

-28%

131 months401%

Duration:19 Feb-23 MarPrice return: -34%

Duration:Since 23 MarPrice return: 39%

Page 58: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

58

|GTM – EuropeUS equity market drawdowns and recoveries

S&P 500 drawdowns and recoveries% price return since market peak

Source: Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Trading days after S&P 500 market peak

58

Equities

-60

-50

-40

-30

-20

-10

0

0 180 360 540 720 900 1.080 1.260 1.440 1.620 1.800

2020

1987 2007 20001980 19731968

Page 59: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

59

|GTM – Europe

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

0

20

40

60

80

100

120

140

'88 '92 '96 '00 '04 '08 '12 '16 '20-50

-40

-30

-20

-10

0

10

20

30

40

50

-6

-4

-2

0

2

4

6

8

10

'97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21

Europe nominal GDP growth and earnings growth

Europe earnings

MSCI Europe earnings and performanceNext 12 months’ earnings per share estimates, EUR (LHS); index level (RHS) % change year on year

Source: (Left) IBES, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Earnings data is based on 12-month forward estimates. (Right) Eurostat, IBES, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Earnings data is last 12 months’ earnings per share. Nominal GDP forecasts are from J.P. Morgan Securities Research. Past performance and forecasts are not reliable indicators of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Equities

59

MSCI Europe index level

MSCI Europe forward EPS

Eurozone nominal GDP

MSCI Europe trailing EPS

2020 / 2021 nominal GDP forecasts

Page 60: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

60

|GTM – Europe

-20 0 20 40 60 80

Cons. Discr.

Industrials

Energy

Materials

Utilities

Cons. Staples

Health Care

Financials

MSCI Europe

Comm. Serv.

IT

7

9

11

13

15

17

19

21

23

25

27

'90 '94 '98 '02 '06 '10 '14 '18

Europe equity valuations

MSCI Europe forward P/E ratio MSCI Europe forward P/ E ratio sector breakdownx, multiple % premium / discount of the P/E ratio relative to average since 1995

Source: (Left) FactSet, IBES, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. P/E ratio calculated using IBES earnings estimates for next 12 months. Cyclically-adjusted P/E (CAPE) is price-to-earnings ratio adjusted using trailing 10-year average inflation-adjusted earnings. P/B ratio is trailing price-to-book ratio. (Right) IBES, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

30 Jun 2020:17,4x

Average: 14,4x

Valuation measure

Average since 1990

Latest

CAPE ratio 19,4x 16,6x

P/B ratio 2,1x 1,7x

60

Equities

21,1

23,7

21,6

18,5

17,4

26,9

16,4

19,6

18,1

11,4

14,6

Current P/E ratio

Premium relative to history

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61

|GTM – Europe

7

9

11

13

15

17

19

21

23

25

'95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '1950

100

150

200

250

300

350

400

450

500

'95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19

Europe large, mid and small capitalisation equities

MSCI Europe large, mid & small cap performance MSCI Europe large, mid & small cap valuationsIndex level, rebased to 100 in Jan 1995 x, 12-month forward price-to-earnings ratio

Source: (All charts) MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Mid & small cap

Large cap

Mid & small cap

Large cap

61

Equities

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62

|GTM – Europe

1.500

2.000

2.500

3.000

3.500

4.000

4.500

100

150

200

250

300

350

'99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21

UK earnings

FTSE All-Share earnings and performance FTSE All-Sha re earnings per share growthNext 12 months’ earnings per share estimates, GBP (LHS); index level (RHS) % change year on year

Source: (All charts) FTSE, IBES, Refinitiv Datastream, J.P. Morgan Asset Management. Earnings data are based on 12-month forward estimates. Margin growth is the growth rate of earnings per share divided by sales per share. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Equities

62

FTSE All-Share index level

FTSE All-Share forward EPS

Margin growth

Sales growth

Earnings growth

-40

-30

-20

-10

0

10

20

30

40

50

60

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

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63

|GTM – EuropeEuropean stocks and currencies

Index level (LHS); US dollars per UK pound (RHS)

Source: (Left) MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. (Right) FTSE, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Equities

63

FTSE All-Share and sterling vs. US dollar

GBPUSD

FTSE All-Share

Sterling depreciating

1,0

1,2

1,4

1,6

1,8

2,0

2,2

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MSCI Europe and euro vs. US dollarIndex level (LHS); US dollars per euro (RHS)

EURUSD

MSCI Europe

Euro depreciating

0,8

0,9

1,0

1,1

1,2

1,3

1,4

1,5

1,6

1,7

400

600

800

1.000

1.200

1.400

1.600

'99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19

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64

|GTM – Europe

0

500

1.000

1.500

2.000

2.500

3.000

0

20

40

60

80

100

120

140

160

180

'88 '92 '96 '00 '04 '08 '12 '16 '20

Japan earnings

TOPIX earnings and performance TOPIX earnings per sh are growthNext 12 months’ earnings per share estimates, JPY (LHS); index level (RHS)

Source: (All charts) FactSet, IBES, Refinitiv Datastream, TOPIX, J.P. Morgan Asset Management. Earnings data are based on 12-month forward estimates. Margin growth is the growth rate of earnings per share divided by sales per share. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Equities

64

% change year on year

TOPIX index level

TOPIX forward EPSMargin growth

Sales growth

Earnings growth

-80

-60

-40

-20

0

20

40

60

80

100

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

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65

|GTM – EuropeJapan equity market and currency

TOPIX and the yen vs. US dollarIndex level (LHS); Japanese yen per US dollar (RHS)

Source: Refinitiv Datastream, TOPIX, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

USDJPY (inverted)

TOPIX

Equities

Yen depreciating

65

70

80

90

100

110

120

130

140400

600

800

1.000

1.200

1.400

1.600

1.800

2.000

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

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66

|GTM – EuropeEmerging market equity drivers

EM/DM relative equity performance and growth gap EM/ DM relative equity performance and USD REERRelative index level (LHS); %, next 12 months’ growth estimates (RHS) Relative index level (LHS); index level (RHS)

Source: (Left) Consensus Economics, Refinitiv Datastream, J.P. Morgan Asset Management. “EM minus DM GDP growth” is consensus estimates for emerging markets growth in the next 12 months minus consensus estimates for developed markets growth in the next 12 months, provided by Consensus Economics. (Right) J.P. Morgan Securities Research, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. For all charts, EM equity is MSCI Emerging Markets and DM equity is MSCI World. Relative equity performance is calculated from price indices in USD, and is rebased to 100 in 1997. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Equities

66

EM equity outperformance & USD weakening

EM growth & equity outperformance

EM minus DM GDP growth

EM / DM relative equity performance

USD REER (inverted)

EM / DM relative equity performance

-1

0

1

2

3

4

5

10

40

70

100

130

160

'97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19

85

95

105

115

125

13520

40

60

80

100

120

140

160

180

'97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19

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67

|GTM – EuropeEmerging market equity valuations and subsequent returns

MSCI EM price-to-book ratio MSCI EM price-to-book ratio and subsequent 10-year returnsx, multiple %, annualised total return*

Source: (All charts) MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. *Dots represent monthly data points since 1996, which is earliest available. MSCI EM Index returns are in USD. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Average: 1,8xEquities

67

0,8

1,0

1,2

1,4

1,6

1,8

2,0

2,2

2,4

2,6

2,8

3,0

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

30 Jun 2020:1,6x

-20

-10

0

10

20

30

0,8x 1,3x 1,8x 2,3x 2,8x 3,3x

Current level

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68

|GTM – EuropeEquity focus: US sector performance and earnings in recessions 68

Equities

-60

-40

-20

0

20

40

60

80

S&P 500 sector performance S&P 500 earnings-per-share (EPS) in recessions% price return Index level, rebased at pre-recession earnings peak, 12-month forward EPS

Source: (Left) Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. (Right) ) IBES, Refinitiv Datastream, Standard & Poor's, J.P. Morgan Asset Management. Earnings data is based on IBES 12-month forward consensus estimates. Dates refer to the year of the peak in 12-month forward earnings-per-share. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

19 Feb peak to 23 Mar low

Change since 23 Mar low

Change since 19 Feb peak

Months after peak in 12-month forward EPS

50

60

70

80

90

100

110

0 6 12 18 24 30 36 42

2007

2000

1989

2020

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69

-23,0% TOPIX -40,6%

73,5% MSCI EM

62,8%

28,3% Asia ex-

Jp 15,6%

5,5% US S&P

500 2,1%

20,8% Asia ex-

Jp 19,7%

26,7% US S&P

500 32,4%

29,5% US S&P

500 13,7%

24,4% TOPIX 12,1%

15,3% US S&P

500 12,0%

24,8% Asia ex-

Jp 35,9%

0,4% US S&P

500 -4,4%

33,9% US S&P

500 31,5%

-3,1% US S&P

500 -3,1%

17,8% US S&P

500 20,5%

11,5% US S&P

500 9,1%

-33,7% US S&P

500 -37,0%

67,2% Asia ex-

Jp 67,2%

27,5% MSCI EM

14,4%

-5,7% Portfolio

-7,5%

18,1% Europe 16,4%

21,5% TOPIX 54,4%

19,7% Asia ex-

Jp 7,7%

12,9% US S&P

500 1,4%

14,9% MSCI EM

10,1%

21,0% MSCI EM

31,0%

-6,8% Portfolio

-9,1%

26,9% Portfolio

24,5%

-4,7% Asia ex-

Jp -3,6%

15,5% MSCI EM

16,8%

7,2% Portfolio

5,9%

-40,2% Portfolio -40,3%

36,0% Portfolio

34,9%

23,9% TOPIX 1,0%

-7,5% Europe -8,8%

16,8% MSCI EM

17,4%

20,5% Europe 22,3%

16,2% Portfolio

8,6%

8,8% Portfolio

2,2%

9,5% Portfolio

8,5%

12,7% Portfolio

21,8%

-9,4% TOPIX -16,0%

26,9% Europe 24,6%

-7,5% TOPIX -8,2%

14,4% Portfolio

16,1%

6,0% TOPIX 3,5%

-43,3% Europe -38,5%

32,6% Europe 28,6%

23,1% US S&P

500 15,1%

-9,6% TOPIX -17,0%

15,8% Portfolio

17,2%

16,2% Portfolio

24,1%

11,8% MSCI EM

5,6%

8,8% Europe 5,4%

8,9% Asia ex-

Jp 6,4%

11,2% TOPIX 22,2%

-9,8% Asia ex-

Jp -12,0%

21,4% TOPIX 18,1%

-8,0% Portfolio

-6,8%

14,1% Asia ex-

Jp 15,6%

5,9% Asia ex-

Jp 4,4%

-49,8% Asia ex-

Jp -47,7%

22,5% US S&P

500 26,5%

20,4% Portfolio

10,9%

-14,3% Asia ex-

Jp -14,6%

14,2% US S&P

500 16,0%

-1,1% Asia ex-

Jp 6,2%

10,1% TOPIX 10,3%

1,5% Asia ex-

Jp -5,3%

6,6% TOPIX 0,3%

10,9% Europe 13,7%

-9,9% MSCI EM

-9,7%

21,1% MSCI EM

18,5%

-9,7% MSCI EM

-5,4%

12,9% Europe 13,4%

4,5% Europe 4,4%

-50,8% MSCI EM

-45,7%

1,5% TOPIX 7,6%

11,7% Europe 7,5%

-15,4% MSCI EM

-12,5%

5,9% TOPIX 20,9%

-6,5% MSCI EM

3,8%

7,4% Europe 5,2%

-4,9% MSCI EM

-5,4%

3,2% Europe 7,9%

7,0% US S&P

500 21,8%

-10,0% Europe -10,0%

20,7% Asia ex-

Jp 18,2%

-12,5% Europe -11,2%

8,8% TOPIX 11,3%

4,1% MSCI EM

4,3%

World stock market returns

Source: MSCI, Refinitiv Datastream, Standard & Poor’s, TOPIX, J.P. Morgan Asset Management. Annualised return covers the period 2008 to 2019. Hypothetical portfolio (for illustrative purposes only and should not be taken as a recommendation): 35% Europe; 30% S&P 500; 15% EM; 10% Asia ex-Japan; 10% TOPIX. All indices are total return. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

GTM – Europe |

Equities

69

EUR

Local

2010 201620122008 2011 YTD2009 2013 2014 2015 2017 2Q ’202018Ann.

return since ’08

2019

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70

|GTM – EuropeGlobal government bond yields

Nominal 10-year government bond yields Real 10-year government bond yields% yield % yield

Source: (All charts) Bloomberg, J.P. Morgan Asset Management. Real government bond yields are the difference between nominal bond yields and inflation breakeven yields and so reflect inflation-protected yields. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

70

US

Germany

UK

Fixed income

US

Germany

UK

-1

0

1

2

3

4

5

6

7

'98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20-3

-2

-1

0

1

2

3

4

5

'98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

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71

|GTM – Europe

0

1

2

3

4

5

6

7

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

US investment-grade bonds

US investment-grade spread%, option-adjusted spread over US government bond yield

Source: (Left) Bloomberg Barclays, Refinitiv Datastream, J.P. Morgan Asset Management. Index is Bloomberg Barclays US Corporate Investment Grade. (Right) Bloomberg Barclays, J.P. Morgan Asset Management. Index used is Bloomberg Barclays US Agg. Corporate – Investment Grade. Fallen angels are credit names that have been downgraded from investment-grade rating to high yield. Rising stars are credit names that have been upgraded from high yield status to investment-grade. YTD is year-to-date. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Fixed income

71

30 Jun 2020:1,5%

US investment-grade fallen angels and rising stars% of the index (par value, average for the year)

Rising stars

Fallen angels

-10

-8

-6

-4

-2

0

2

4

'98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

YTD

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72

|GTM – EuropeUS high yield bonds

Fixed income

72

US high yield ex-energy spread and defaults%, default rate (LHS); %, option-adjusted spread (RHS)

Source: (All charts) Bloomberg Barclays, J.P. Morgan Securities Research, J.P. Morgan Asset Management. HY spreads are using the Bloomberg Barclays US High Yield Energy and ex-Energy indices. Default rates are defined as the par value percentage of the total market trading at or below 50% of par value and include any Chapter 11 filing, prepackaged filing or missed interest payments. *2020 default rate is for the last 12 months. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

US high yield energy sector spread and defaults%, default rate (LHS); %, option-adjusted spread (RHS)

0

3

6

9

12

15

18

21

24

0

2

4

6

8

10

12

14

16

18

20

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '200

3

6

9

12

15

18

21

24

0

2

4

6

8

10

12

14

16

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Latest

Ex-energy default rate* (LHS) 3,9%

Ex-energy spread (RHS) 5,8%

Latest

Energy default rate* (LHS) 18,6%

Energy spread (RHS) 9,8%

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73

|GTM – Europe

0

1

2

3

4

5

6

7

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Europe and UK investment-grade bonds

Euro and UK investment-grade spreads%, option-adjusted spread over local government bond yield

Source: (Left) Bloomberg Barclays, Refinitiv Datastream, J.P. Morgan Asset Management. Indices are Euro inv. grade: Bloomberg Barclays Euro Agg. – Corporate; UK inv. grade: Bloomberg Barclays Sterling Agg. – Corporate. (Right) Bloomberg Barclays, J.P. Morgan Asset Management. Index used is Bloomberg Barclays Euro Agg. Corporates – Investment Grade. Fallen angels are credit names that have been downgraded from investment-grade rating to high yield. Rising stars are credit names that have been upgraded from high yield status to investment-grade. YTD is year-to-date.Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Euro

UK

Fixed income

73

30 Jun 2020:1,8%

30 Jun 2020:1,5%

Euro investment-grade fallen angels and rising star s% of the index (par value, average for the year)

Rising stars

Fallen angels

-5

-4

-3

-2

-1

0

1

2

'01 '03 '05 '07 '09 '11 '13 '15 '17 '19

YTD

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74

|GTM – EuropeEurope high yield bonds

Fixed income

74

0

3

6

9

12

15

18

21

24

0

2

4

6

8

10

12

14

16

18

20

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Euro high yield spread and defaults%, default rate (LHS); %, option-adjusted spread (RHS)

Source: BofA/Merrill Lynch, Refinitiv Datastream, J.P. Morgan Securities Research, J.P. Morgan Asset Management. Option-adjusted spread shown for BofA/Merrill Lynch Euro Non-Financial High Yield Constrained. Defaults are defined as bonds downgraded to C rating. The calculation universe is based on par value percentage of the EUR and GBP HY Non-Financials Corporate bond universe. Defaults include missed coupon payments, restructuring and distressed exchanges. *2020 default rate is for the last 12 months. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

34%40Latest

Default rate* (LHS) 1,5%

Spread (RHS) 5,4%

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75

|GTM – Europe

2

3

4

5

6

7

8

9

10

11

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Emerging market bonds

Real 10-year government bond yields% yield, local currency

Source: (Left) Bloomberg, J.P. Morgan Asset Management. Real yield is calculated by using nominal yield less current CPI for the respective countries. India and Malaysia real yields are calculated using inflation data for March and April 2020, respectively, given data availability. (Right) J.P. Morgan DataQuery, J.P. Morgan Asset Management. EM sovereigns local currency is the J.P. Morgan GBI-EM; EM sovereigns USD is the J.P. Morgan EMBIG; EM corporates USD is the J.P. Morgan CEMBI. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Fixed income

75

Developed markets

Emerging markets

Corporate and sovereign EMD spreads %, spread over 10-year US Treasury

Average since 2008

Latest

EM sovereigns local 4,2% 4,0%

EM sovereigns USD 3,7% 4,5%

EM corporates USD 3,6% 4,1%

-2

-1

0

1

2

3

4

5

6

7

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76

|GTM – Europe

0

20

40

60

80

100

120

140

160

'15 '25 '35 '45 '55 '65 '75 '85 '95 '05 '15

Fixed income focus: US debt and yields

US federal debt outstanding US nominal GDP growth and 10-year Treasury yield% of nominal GDP, by fiscal year %, nominal GDP growth is % change year on year

Source: (Left) Haver Analytics, US Office of Management and Budget, J.P. Morgan Asset Management. Dotted line represents J.P. Morgan Asset Management forecast. Forecast accounts for all of the fiscal packages announced to date and assumes an additional USD 1 trillion in fiscal spending in both this and the following fiscal year. (Right) BEA, Haver Analytics, Robert Shiller, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Fixed income

76

1915-4

-2

0

2

4

6

8

10

12

14

16

'15 '25 '35 '45 '55 '65 '75 '85 '95 '05 '15

US nominal GDP 10-year moving average

US 10-year Treasury yield

1915

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77

|GTM – Europe

1,5 1,5 1,8

4,45,4

6,5

2,5

3,72,8

6,6

8,9

10,9

0

2

4

6

8

10

12

14

16

18

20 21,0% US HY 17,5%

6,1% Euro HY

6,1%

5,9% US Treas.

0,9%

16,6% US IG

14,5%

8,7% US Treas.

8,7%

11,2% Euro HY 11,2%

10,0% US HY 7,6%

13,5% EM Debt 10,2%

2,4% Euro IG 2,4%

2,7% US HY -2,3%

16,5% EM Debt 14,4%

5,0% US IG 5,0%

8,6% EM Debt 11,2%

9,0% EM Debt

6,6%

10,1% Euro HY 10,1%

1,4% Infl Linked

1,4%

2,4% US IG -2,5%

16,5% US HY 14,4%

2,0% Euro Gov

2,0%

7,0% US HY 9,5%

8,0% US IG 5,7%

9,3% US IG 6,1%

0,2% Euro Gov

0,2%

1,3% Portfolio

-1,4%

11,1% Portfolio

10,0%

1,1% Portfolio

1,2%

6,5% US IG 9,0%

6,9% Euro HY

6,9%

8,1% Portfolio

6,4%

-2,9% Portfolio

4,2%

1,0% Euro Gov

1,0%

10,7% Euro HY 10,7%

-1,2% Euro IG -1,2%

5,3% Euro IG 5,3%

6,7% Portfolio

5,4%

4,7% Euro IG

4,7%

-4,0% EM Debt

9,3%

0,2% EM Debt

-4,6%

8,8% US Treas.

6,9%

-1,6% Infl Linked

-1,6%

4,5% Portfolio

5,9%

5,7% US Treas.

3,4%

4,1% US Treas.

1,0%

-5,6% US HY 7,5%

-1,3% Euro IG -1,3%

6,8% Euro Gov

6,8%

-1,9% EM Debt

-1,9%

3,9% Infl Linked

3,9%

4,7% Euro Gov

4,7%

3,8% Infl Linked

3,8%

-6,5% US IG 6,4%

-1,5% Infl Linked

-1,5%

6,6% Infl Linked

6,6%

-4,9% US HY -4,8%

1,7% Euro Gov

1,7%

4,4% Euro IG 4,4%

3,2% Euro Gov

3,2%

-10,1% US Treas.

2,3%

-3,7% Euro HY -3,7%

6,2% Euro IG

6,2%

-5,1% Euro HY

-5,1%

-1,8% US Treas.

0,5%

2,9% Infl Linked

2,9%

Global fixed income spreads and returns

Fixed income spreads Fixed income returns%, option-adjusted spread

Source: (All charts) Bloomberg Barclays, BofA/Merrill Lynch, J.P. Morgan Economic Research, Refinitiv Datastream, J.P. Morgan Asset Management. 23 March 2020 marks the recent high in US credit spreads. UK IG: Bloomberg Barclays Sterling Agg. – Corporates; US HY: BofA/Merrill Lynch US High Yield Constrained; EM Debt: J.P. Morgan EMBI Global; Euro HY: BofA/Merrill Lynch Euro Non-Financial High Yield Constrained; US IG: Bloomberg Barclays US Agg. – Corporate – Investment Grade; US Treasuries: Bloomberg Barclays US Agg. Gov. – Treasury; Euro IG: Bloomberg Barclays Euro Agg. – Corporate; Euro Gov.: Bloomberg Barclays Euro Agg. Government; Infl Linked: Bloomberg Barclays Euro Gov. Inflation-Linked. Hypothetical portfolio (for illustrative purposes only and should not be taken as a recommendation): 20% Euro Gov.; 15% US Treasuries; 10% Linkers; 15% US IG; 10% Euro IG; 10% US HY; 5% Euro HY; 15% EM Debt. Annualised return covers period 2008 to 2019. Returns are unhedged in euros and local currencies. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

|

Fixed income

77

€:

LCL:

Range since 2000

Average

Current

20172016 2018 2019 2Q ’20YTDAnn. return

since ’08

US IGEuro IG UK IG US HYEuro HYEMD

(USD Sov.)

23 March 2020

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78

|GTM – EuropeOil

Source: (Left) Baker Hughes, Bloomberg, J.P. Morgan Asset Management. (Right) EIA, Refinitiv Datastream, J.P. Morgan Asset Management. Dotted lines are J.P. Morgan Asset Management estimates based on announced cuts. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Other assets

78

WTI crude oil price and US rig countUSD/barrel (LHS); number of rigs (RHS)

RigsOil price

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

0

20

40

60

80

100

120

140

160

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Crude oil production by countryMillion barrels per day

US

OPEC (ex-Saudi Arabia & Iraq)

Russia

Saudi Arabia

Iraq

0

5

10

15

20

25

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22

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79

|GTM – Europe

-1,0

-0,8

-0,6

-0,4

-0,2

0,0

0,2

0,4

0,6

0,8

1,0

1,21.000

1.100

1.200

1.300

1.400

1.500

1.600

1.700

1.800

'12 '13 '14 '15 '16 '17 '18 '19 '20

Metals

Gold vs. real US 10-year Treasury yield$ per Troy ounce (LHS); %, inverted (RHS)

Source: (Left) Refinitiv Datastream, J.P. Morgan Asset Management. Real yield is the US 10-year Treasury inflation-protected security yield. (Right) Bloomberg, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Other assets

79

30 Jun 2020

Gold (LHS) $1.784

Real 10-year yield (RHS) - 0,7%

Metal pricesIndex level, rebased to 100 in Jan 2007

0

25

50

75

100

125

150

175

200

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Nickel

Copper

Zinc

Aluminium

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80

|GTM – EuropeAlternative sources of diversification

Source: (Left) CBOE, Hedge Fund Research Indices (HFRI), Refinitiv Datastream, J.P. Morgan Asset Management. Macro hedge fund (total return in USD) relative performance is calculated relative to MSCI Europe (total return in local currency). VIX is the implied volatility of S&P 500 Index based on options pricing.(Right) Hedge Fund Research Indices (HFRI), Refinitiv Datastream, J.P. Morgan Asset Management. 2000 bear market is from 31 March 2000 to 31 October 2002, 2008 bear market is from 31 October 2007 to 28 February 2009, 2020 bear market is from 31 January 2020 to 30 April 2020. Hedge fund strategies are defined in the HFRI hedge fund strategy classification system. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Other assets

80

Hedge fund style returns during bear markets% total return

VIX

Macro hedge fund relative performance & volatilityIndex level (LHS); % change year on year (RHS)

2000 bear market

2008 bear market

2020 bear market

Macro hedge fund relative performance to MSCI Europe

-40

-20

0

20

40

60

80

0

10

20

30

40

50

60

70

'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

-40

-30

-20

-10

0

10

20

30

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81

|GTM – Europe

0

1

2

3

4

5

6

7

0 5 10 15 20

% annual compound return in EUR

Alternative investments: Real assets

Source: (Left) MSCI, J.P. Morgan Asset Management. Infrastructure returns represented by the “low risk” category of the MSCI Global Quarterly Infrastructure Asset Index. Data show rolling one-year returns from income and capital appreciation. The chart shows the full index history, beginning in the first quarter of 2009. (Right) 2020 Long-Term Capital Market Assumptions, J.P. Morgan Multi-Asset Solutions, J.P. Morgan Asset Management. The resulting projections include only the benchmark return associated with the portfolio and do not include alpha from the underlying product strategies within each asset class. The assumptions are presented for illustrative purposes only. Past performance and forecasts are not reliable indicators of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Other assets

81

Global core infrastructure returns%, rolling 4-quarter returns from income and capital appreciation

Income

Capital appreciation

Expected returns and volatility in coming 10-15 yea rs

Com

poun

d re

turn

Volatility

60% Eurozone large cap40% Euro government bonds

60% Eurozone large cap10% Euro government bonds

10% Europe ex-UK core real estate10% Global infrastructure equity10% Macro hedge funds hedged

100% Eurozone large cap

100% Euro government bonds

-5

0

5

10

15

20

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

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82

Sustainable investment strategies

Source: J.P. Morgan Asset Management. Guide to the Markets - Europe. As of 30 June 2020.

| 82

ESG INTEGRATION: Consideration of material ESG information as part of the investment decision-making process

DEDICATED SUSTAINABLE STRATEGIES

EXCLUSIONS POSITIVE TILT BEST-IN-CLASS THEMATIC IMPACT

The exclusion from a fund or portfolio of

certain sectors, companies or practices based on specific ESG

criteria

An investment style in which the portfolio will

be tilted towards sectors, companies or projects with positive ESG characteristics, while also excluding companies based on

ESG criteria

A comparative investment style that

involves investing only in companies that lead

their peer groups in ESG performance, while

also excluding companies based on

ESG criteria

Top-down investment approach, investments

in themes or assets specifically related to

sustainability

Investments made with the primary goal of achieving specific,

positive environmental/social benefits while also

delivering a financial returnO

ther assets

GTM – Europe

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83

|GTM – Europe

0

2

4

6

8

10

12

14

16

Sustainable investment performance and market size

Sustainable investment assets under managementUSD trillions

Source: (Left) MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. The MSCI World ESG Leaders Index is a capitalization weighted index that provides exposure to companies with high Environmental, Social and Governance (ESG) performance relative to their sector peers. The MSCI World Governance-Quality Index aims to reflect the performance of a strategy that is seeking to capture both the financial and corporate governance aspects of Quality investing. (Right) Global Sustainable Investment Alliance (GSIA), J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

17%

114%25%

19%

8%

2016

Compound annual growth rate

2018

Other assets

83

Europe US Japan Canada Australia/New Zealand

MSCI World ESG performanceIndex level in USD, rebased to 100 at Jan 2020

MSCI World

MSCI World Governance-Quality

MSCI World ESG leaders

Jan ’20 Feb ’20 Mar ’20 Apr ’20 May ’20 Jun ’20 Jul ’2060

65

70

75

80

85

90

95

100

105

110

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84

|GTM – Europe

0

2

4

6

8

10

12

14

16

18

Asset return expectations

2020 Long-Term Capital Market Assumptions expected returns in coming 10-15 years%, annualised return in EUR

Source: 2020 Long-Term Capital Market Assumptions, J.P. Morgan Multi-Asset Solutions, J.P. Morgan Asset Management. Returns are nominal and in EUR. Past returns are calculated from the start of 2009 up to the end of 2019, or the most recent available data. The projections in the chart above are based on J.P. Morgan Asset Management’s proprietary long-term capital market assumptions (10-15 years) for returns of major asset classes. The resulting projections include only the benchmark return associated with the portfolio and do not include alpha from the underlying product strategies within each asset class. The assumptions are presented for illustrative purposes only. Past performance and forecasts are not reliable indicators of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Other assets

84

Fixed income

Equity

Alternatives

Historical return since 2009

Euro cash Euro government bonds

Euro government inflation-linked

bonds

Euro investment-grade corporate

bonds

US large cap Global infrastructure

European ex-UK core real estate

Eurozone large cap

EM equity

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85

|GTM – Europe

-4,0

-3,5

-3,0

-2,5

-2,0

-1,5

-1,0

-0,5

0,0

'16 '17 '18 '19 '20

The cost of hedging

Hedging cost heatmap Rolling hedging costsCurrent annualised hedging cost based on 3-month FX forwards %, annualised hedging cost based on 3-month FX forwards

Source: (All charts) Bloomberg, J.P. Morgan Asset Management. A positive number implies that an investor gains a yield pickup when hedging currency risk, and a negative number implies that an investor pays to hedge currency risk, based on 3-month FX forward rates. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

…and hedged into home currency

USD EUR GBP JPY

Foreign asset in…

USD - - 0,8% - 0,2% - 0,5%

EUR + 0,8% - + 0,6% - 0,3%

GBP + 0,2% - 0,6% - - 0,3%

JPY + 0,5% - 0,3% + 0,3% -

Hedging getting more expensive

USD asset to EUR

Positive = yield pickup to hedgeNegative = cost to hedge

85

Other assets

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86

|GTM – EuropeLife expectancy

Probability of reaching ages 80 and 90% probability, persons aged 65, by gender and combined couple

Source: ONS 2016-2018 Life Tables, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results.Guide to the Markets - Europe. Data as of 30 June 2020.

Men

Women

Couple – at least one lives to specified age

Investing

principles

86

67

24

76

35

92

51

0

20

40

60

80

100

80 years 90 years

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87

|GTM – Europe

0

100.000

200.000

300.000

400.000

500.000

600.000

700.000

25 30 35 40 45 50 55 60 650

20.000

40.000

60.000

80.000

'86 '90 '94 '98 '02 '06 '10 '14 '18

The effect of compounding

€5.000 invested annually with 5% growth per year €5. 000 investment with/without income reinvestedEUR EUR, MSCI Europe returns

Source: (Left) J.P. Morgan Asset Management. For illustrative purposes only, assumes all income reinvested, actual investments may incur higher or lower growth rates and charges. (Right) Bloomberg, MSCI, J.P. Morgan Asset Management. Based on MSCI Europe Index and assumes no charges. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Investing

principles

Starting at age 35

Starting at age 25

Without dividends reinvested

With dividends reinvested

Age

€354.000

€640.000

87

€72.000

€25.000

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88

|GTM – Europe

0

1

2

3

4

5

-1.000

0

1.000

2.000

3.000

4.000

5.000

'01 '03 '05 '07 '09 '11 '13 '15 '17 '19

0

10

20

30

40

50

60

70

80

90

100

0 5 10 15 20 25 30 35 40

Cash investments

Income generated by €100.000 in a three-month bank depositEUR (LHS); % change year on year (RHS)

Source: (Left) Bloomberg, Eurostat, J.P. Morgan Asset Management. Inflation is the percentage change year on year for the eurozone harmonised index of consumer prices. Data shown are yearly averages. (Right) J.P. Morgan Asset Management. For illustrative purposes only, assumes no return on cash and an inflation rate of 2%. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Investing

principles

88

Income Inflation

EUR, thousandsEffect of 2% inflation on purchasing power of €100. 000

Years

€100.000

€44.5002020: €0

2008: €4.600

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89

|GTM – Europe

0

1

10

100

1.000

10.000

1900 1920 1940 1960 1980 2000 2020

Long-term asset returns

Total return of $1 in real termsUSD, log scale, total returns

Source: Bloomberg, Bloomberg Barclays, FactSet, Shiller, Siegel, Standard & Poor’s, J.P. Morgan Asset Management. Pre 2010 returns: Shiller, Siegel; from 2010: Equities: S&P 500; Bonds: Bloomberg Barclays US Treasury 20+ year Total Return Index; Cash: Bloomberg Barclays US Treasury Bills Total Return Index. Latest point as of end of 2019. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Investing

principles

89

Equities: $2.448

Bonds: $14

Cash: $2

Annualised real returns

1900–2019 2000–2019

Equities 6,7% 3,9%

Bonds 2,2% 5,4%

Cash 0,6% -0,4%

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90

|GTM – EuropeAnnual returns and intra-year declines

MSCI Europe intra-year declines vs. calendar-year r eturnsDespite average intra-year drops of 15,2% (median 12,0%), annual returns are positive in 31 of 40 years%

Source: MSCI, Refinitiv Datastream, J.P Morgan Asset Management. Returns are local currency price returns. Intra-year decline refers to the largest market fall from peak to trough within a short time period during the calendar year. Returns shown are calendar years from 1980 to 2019. YTD is year-to-date. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Intra-year decline

Calendar-year return

Investing

principles

90

13

2

15

34

16

39

21

-18

22

28

-19

13

6

34

-8

12

20

35

20

28

-4

-18

-31

17

9

22

16

3

-41

23

4

-12

12

18

2 24

10

-13

20

-13-11

-15

-7-4

-11

-3

-10

-35

-6

-11

-24

-11

-18

-4

-16

-6 -5

-12

-31

-9-12

-35-37

-22

-8-6

-12 -12

-48

-26

-15

-25

-15-12 -12

-17-15

-4

-18

-7

-34

-50

-40

-30

-20

-10

0

10

20

30

40

'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

YTD

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91

|GTM – Europe

0

1

2

3

4

5

6

7

8

9

10

0 2 4 6 8 10 12 14 16 18

Asset class risk-return trade-off

Historic risk vs. return for selected asset classes%, annualised return 2004 – 2019 in EUR

Source: Bloomberg Barclays, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Volatility is the standard deviation of annual returns since 2004. Cash: JP Morgan Cash EUR (3M); Euro government bonds: Bloomberg Barclays Euro Aggregate - Treasury; Global investment-grade bonds: Bloomberg Barclays Global Aggregate – Corporate; Emerging market debt: J.P. Morgan EMBI Global; Global high yield bonds: Bloomberg Barclays Global High Yield; Global equities: MSCI All-Country World Index (includes developed and emerging markets). Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Investing

principles

Volatility

Com

poun

d re

turn

91

Higher return

Higher risk

Cash

Euro government bonds

Global investment-grade bonds

Emerging market debtGlobal equities

Global high yield bonds

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92

|GTM – Europe

0

500

1.000

1.500

2.000

2.500

3.000

3.500

-100

-75

-50

-25

0

25

50

75

100

125

150

175

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

S&P 500 and fund flows

US mutual fund and ETF flows and S&P 500USD billions, three-month net flows (LHS); index level (RHS)

Source: FactSet, Investment Company Institute, J.P. Morgan Asset Management. Fund flows are US long-term equity fund flows with ETF flows included from 2006 onwards. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.In

vesting

principles

92

Avoid selling at the bottom

3-month net fund flows S&P 500 index level

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93

|GTM – Europe

48% 49%

30%24% 24%

21%17% 17% 18%

13% 15%

-18%-24%

-7% -3% -1% -3%0% 1%

4%1%

4%

-50

-25

0

25

50

75

61%

-43%

US asset returns by holding period

Range of equity and bond total returns%, annualised total returns, 1950-present

Source: Strategas/Ibbotson, J.P. Morgan Asset Management. Large cap equity represents the S&P 500 Composite and Bonds represents the Strategas/Ibbotson US Government Bond Index and US Long-term Corporate Bond Index. Returns shown are per annum and are calculated based on monthly returns from 1950 to latest available and include dividends. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

Investing

principles

Large cap equity

Bonds

50/50 portfolio

93

1-yr rolling 5-yr rolling 10-yr rolling 20-yr rolling

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94

Asset class returns (EUR)

Source: Bloomberg Barclays, FTSE, J.P. Morgan Economic Research, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Annualised return covers the period from 2008 to 2019. Vol. is the standard deviation of annual returns. Govt bonds: Bloomberg Barclays Global Aggregate Government Treasuries; HY bonds: Bloomberg Barclays Global High Yield; EMD: J.P. Morgan EMBI Global; IG bonds: Bloomberg Barclays Global Aggregate – Corporates; Cmdty: Bloomberg Commodity; REITs: FTSE NAREIT All REITS; DM Equities: MSCI World; EME: MSCI EM; Hedge funds: HFRI Global Hedge Fund Index; Cash: JP Morgan Cash Index EUR (3M). Hypothetical portfolio (for illustrative purposes only and should not be taken as a recommendation): 30% DM equities; 10% EM equities; 15% IG bonds; 12,5% government bonds; 7,5% HY bonds; 5% EMD; 5% commodities; 5% cash; 5% REITs and 5% hedge funds. All returns are total return, in EUR, and are unhedged. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2020.

GTM – Europe |

Investing

principles

94

Govt bonds 15,9%

EME 73,5%

REITs 36,4%

EMD 12,1%

REITs 18,3%

DM Equities 21,9%

REITs 44,8%

REITs 13,9%

HY bonds 17,7%

EME 21,0%

Govt bonds 4,6%

DM Equities 30,8%

Govt bonds 3,2%

DM Equities 16,8%

REITs 10,6%

EME 28,6%

Cash 5,7%

HY bonds 54,4%

EME 27,5%

REITs 10,9%

HY bonds 17,8%

Portfolio 3,3%

EMD 20,2%

EMD 12,8%

Cmdty 15,1%

DM Equities 8,1%

IG bonds 1,3%

REITs 30,4%

IG bonds 2,6%

EME 15,5%

HY bonds 9,8%

REITs 20,1%

IG bonds -3,9%

DM Equities 26,7%

Cmdty 24,9%

Govt bonds 9,9%

EME 16,8%

HY bonds 2,7%

DM Equities 20,1%

DM Equities 11,0%

EME 14,9%

Portfolio 1,7%

HY bonds 0,8%

EME 21,1%

Cash -0,1%

REITs 11,3%

EMD 9,0%

HY bonds 17,5%

EMD -6,3%

Portfolio 25,4%

HY bonds 22,8%

IG bonds 7,8%

EMD 16,7%

Hedge Funds 2,1%

IG bonds 17,5%

HY bonds 8,4%

EMD 13,5%

Cash -0,3%

REITs 0,7%

Portfolio 18,8%

Hedge Funds -1,3%

HY bonds 9,6%

DM Equities 8,5%

DM Equities 17,4%

Hedge Funds -19,3%

EMD 24,2%

DM Equities 20,1%

HY bonds 6,6%

DM Equities 14,7%

Cash 0,2%

Portfolio 16,2%

Govt bonds 7,7%

REITs 12,6%

HY bonds -3,0%

EMD 0,2%

EMD 16,5%

EMD -1,9%

Portfolio 9,5%

Portfolio 6,8%

Cmdty 15,5%

Portfolio -20,9%

REITs 23,5%

EMD 19,8%

Cash 1,7%

Portfolio 10,7%

REITs -1,3%

HY bonds 13,9%

IG bonds 7,4%

DM Equities 11,4%

EMD -4,0%

Cash -0,3%

HY bonds 14,6%

Portfolio -4,1%

EMD 8,6%

IG bonds 6,5%

Portfolio 11,7%

HY bonds -23,1%

IG bonds 15,5%

Portfolio 18,9%

Portfolio 1,2%

IG bonds 9,5%

IG bonds -4,0%

Hedge Funds 13,2%

Hedge Funds 7,3%

Portfolio 10,3%

REITs -4,0%

Portfolio -1,6%

IG bonds 13,6%

HY bonds -4,7%

IG bonds 6,0%

Govt bonds 4,9%

EMD 11,2%

Cmdty -32,3%

Cmdty 15,2%

Govt bonds 13,3%

DM Equities -1,8%

Hedge Funds 1,9%

EME -6,5%

Govt bonds 13,0%

Portfolio 6,4%

IG bonds 7,4%

IG bonds -4,2%

Hedge Funds -2,0%

Hedge Funds 10,6%

DM Equities -5,5%

Hedge Funds 3,6%

EME 4,1%

Hedge Funds 9,2%

REITs -34,1%

Hedge Funds 9,9%

IG bonds 13,2%

Hedge Funds -5,8%

Cash 1,2%

Govt bonds -8,4%

EME 11,8%

Cash 0,1%

Hedge Funds 5,6%

Govt bonds -5,8%

DM Equities -3,6%

Cmdty 9,7%

EME -9,7%

Cmdty 2,7%

Hedge Funds 2,0%

IG bonds 7,5%

DM Equities -37,2%

Cash 2,3%

Hedge Funds 12,5%

Cmdty -10,4%

Govt bonds 0,3%

EMD -10,6%

Cash 0,3%

EME -4,9%

Govt bonds 4,7%

Hedge Funds -6,9%

Cmdty -6,8%

Govt bonds 7,5%

REITs -15,1%

Cash 0,0%

Cash 1,0%

Govt bonds 7,3%

EME -50,8%

Govt bonds -0,6%

Cash 1,1%

EME -15,4%

Cmdty -2,6%

Cmdty -13,4%

Cmdty -5,5%

Cmdty -16,1%

Cash -0,1%

Cmdty -10,7%

EME -9,9%

Cash -0,3%

Cmdty -19,4%

Govt bonds -0,5%

Cmdty -4,0%

Cash 1,7%

2010 20122011 20162009 2013 2014 2015

Ann. return

since ’08 Vol.20182017 20192008 2Q ’20YTD

Page 95: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

J.P. Morgan Asset Management: Index definitions

All indexes are unmanaged and an individual cannot invest directly in an index. Index returns do not include fees or expenses. The S&P 500 Index is widely regarded as the best single gauge of the U.S. equities market. This world-renowned index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Although the S&P 500 Index focuses on the large-cap segment of the market, with approximately 75% coverage of U.S. equities, it is also an ideal proxy for the total market. An investor cannot invest directly in an index. The Russell 1000 Index ® measures the performance of the 1,000 largest companies in the Russell 3000. The Russell 1000 Growth Index ® measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Value Index ® measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The MSCI Emerging Markets IndexSM is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. As of June 2007, the MSCI Emerging Markets Index consisted of the following 25 emerging market country indices: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.The MSCI ACWI (All Country World Index) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. As of June 2009 the MSCI ACWIconsisted of 45 country indices comprising 23 developed and 22 emerging market country indices. The Tokyo Price Index (TOPIX) is a capitalization-weighted index lists all firms that are considered to be under the 'first section' on the TSE, which groups all of the large firms on the exchange into one pool. The second section groups all of the remaining smaller firms.The FTSE 100 Index is an index of the 100 largest companies (by market capitalization) in the United Kingdom.The FTSE All Share Index is an index of the 630 largest companies (by market capitalization) in the United Kingdom.The MSCI Value and Growth IndicesSM cover the full range of developed, emerging and All Country MSCI Equity indexes. As of the close of May 30, 2003, MSCI implemented an enhanced methodology for the MSCI Global Value and Growth Indices, adopting a two dimensional framework for style segmentation in which value and growth securities are categorized using different attributes - three for value and five for growth including forward-looking variables. The objective of the indexdesign is to divide constituents of an underlying MSCI Standard Country Index into a value index and a growth index, each targeting 50% of the free float adjusted market capitalization of the underlying country index. Country Value/Growth indices are then aggregated into regional Value/Growth indices. Prior to May 30, 2003, the indices used Price/Book Value (P/BV) ratios to divide the standard MSCI country indices into value and growth indices. All securities were classified as either "value" securities (low P/BV securities) or "growth" securities (high P/BV securities), relative to each MSCI country index.The following MSCI Total Return IndicesSM are calculated with gross dividends:This series approximates the maximum possible dividend reinvestment. The amount reinvested is the dividend distributed to individuals resident in the country of the company, but does not include tax credits.The MSCI Europe IndexSM is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Europe. As of June 2007, the MSCI Europe Index consisted of the following 16 developed market country indices: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. West Texas Intermediate (WTI) is underlying commodity in the New York Mercantile Exchange's oil futures contracts. The Bloomberg Barclays U.S. Aggregate Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. This U.S. Treasury Index is a component of the U.S. Government index. The Bloomberg Barclays High Yield Index covers the universe of fixed rate, non-investment grade debt. Pay-in-kind (PIK) bonds, Eurobonds, and debt issues from countries designated as emerging markets (e.g., Argentina, Brazil, Venezuela, etc.) are excluded, but Canadian and global bonds (SEC registered) of issuers in non-EMG countries are included. The Bloomberg Barclays Euro-Aggregate Index consists of bond issued in the euro or the legacy currencies of the sovereign countries participating the European Monetary Union (EMU).The Global Bond Index Emerging Market Broad Diversified Index (GBI-EM) is a comprehensive global local emerging markets index, and consists of liquid, fixed-rate, domestic currency government bonds.

The Bloomberg Barclays Global Aggregate Corporate Index consists of corporate issues in Europe, the US and Asia-pacific regions. The J.P. Morgan EMBI Global Index includes U.S. dollar denominated Brady bonds, Eurobonds, traded loans and local market debt instruments issued by sovereign and quasi-sovereign entities.The JPMorgan Corporate Emerging Markets Bond Index (CEMBI): The CEMBI tracks total returns of US dollar-denominated debt instruments issued by corporate entities in Emerging Markets countries, and consists of an investable universe of corporate bonds. Both indices are also available in Diversified version. The MSCI World High Dividend Yield Index is composed of those securities that have higher-than-average dividend yield within its parent index, a track record of consistent dividend payments and the capacity to sustain future dividend payments.

Page 96: MI Guide to the Markets - J.P. Morgan...and future results. Guide to the Markets - Europe. Data as of 31 March 2020. Global economy GTM –Europe | 7 India Indonesia Greece Germany

J.P. Morgan Asset Management: Risks and disclosures

The Market Insights program provides comprehensive data and commentary on global markets without reference to products. Designed as a tool to help clients understand the markets and support investment

decision-making, the program explores the implications of current economic data and changing market conditions. For the purposes of MiFID II, the JPM Market Insights and Portfolio Insights programs are

marketing communications and are not in scope for any MiFID II / MiFIR requirements specifically related to investment research. Furthermore, the J.P. Morgan Asset Management Market Insights and Portfolio

Insights programs, as non-independent research, have not been prepared in accordance with legal requirements designed to promote the independence of investment research, nor are they subject to any

prohibition on dealing ahead of the dissemination of investment research.

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product,

strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used

are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing

in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own professional advisers, if any

investment mentioned herein is believed to be suitable to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or

investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is

considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of

investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not a

reliable indicator of current and future results. J.P. Morgan Asset Management is the brand for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. To the extent permitted by applicable law,

we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies. Personal data will be collected, stored and processed by J.P. Morgan Asset

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Limited; in Singapore by JPMorgan Asset Management (Singapore) Limited (Co. Reg. No. 197601586K), or JPMorgan Asset Management Real Assets (Singapore) Pte Ltd (Co. Reg. No. 201120355E), this advertisement or

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(registration number “Kanto Local Finance Bureau (Financial Instruments Firm) No. 330”); in Australia to wholesale clients only as defined in section 761A and 761G of the Corporations Act 2001 (Cth) by JPMorgan Asset

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J.P. Morgan Institutional Investments, Inc., member of FINRA; J.P. Morgan Investment Management Inc. or J.P. Morgan Alternative Asset Management, Inc.

In APAC, distribution is for Hong Kong, Taiwan, Japan and Singapore. For all other countries in APAC, to intended recipients only.

Copyright 2020 JPMorgan Chase & Co. All rights reserved.

Prepared by: Karen Ward, Tilmann Galler, Vincent Juvyns, Maria Paola Toschi, Michael Bell, Hugh Gimber, Ambrose Crofton, Jai Malhi and Max McKechnie.

Unless otherwise stated, all data as of 30 June 2020 or most recently available.

Guide to the Markets - Europe

JP-LITTLEBOOK

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