US MARKET INTELLIGENCE:

MORNING BRIEFING

DECEMBER 8, 2022

TOP OF THE AGENDA

• SPX +0.1%, NDX +0.2%, RTY +0.0%. WTI +92bps at $72.67, NatGas +217bps to $5.85, UK
NatGas +307bps to £3.8600, Gold -20bps to $1,783, Silver -13bps to $22.69, 10Y @
3.446%, and VIX @ 22.86.
• US: Futs are higher, revising some of yesterday’s loss. Yields are slightly higher after 10yr
reached 3.41% yesterday. The 2y/10y spread recovered 1.3bp overnight but still at a 40-
year record low of -83bp. US Consumer borrowing rose by $27.1bn in October vs. $28bn
survey; $24bn prior; the lower than expected borrowing grew the recession risks. Bank of
Canada raised its policy rate by a surprising 50bp to 4.25% while signaling the pause at the
current level. Our economic team sees there is no more hike from BoC in 2023. Today’s
macro data include Initial Jobless Claims.
• EMEA: Major markets are lower. UK RICS House Price fell 25% vs 10% survey; 2% prior.
RICS expects a shallow but short housing downturn given the still low unemployment rate.
Jeremy Hunt told UK lenders to aid mortgage borrowers. Today, we will receive multiple
speaks from ECB including Lagarde (7am ET), De Cos (7.15am) and Villeroy (11am ET).
International Reopening and China Exposure are leading, while Momentum Short is lagging.
UKX -0.1%, SX5E -0.3%, SXXP -0.4%, DAX -0.1%.
• 2023 OUTLOOK CALL TODAY: December 8, 2022 at 10:00 AM ET. What’s the 2023 Year
Ahead Outlook for regions and asset classes? J.P. Morgan’s award-winning analysts offer a
deep dive across asset classes and provide their insights on the outlook for 2023. You may
register here.
• US MACRO DATA: Initial Jobless Claims at 8.30am ET.
• US EARNINGS: AVGO, MTN, CHWY, DOCU, RU, COST, COO
• MARKO’S 2023 OUTLOOK is here
• DUBRAVKO’S GLOBAL EQUITY STRATEGY OUTLOOK is here
• MISLAV’S EUROP & CROSS-REGIONAL 2023 OUTLOOK is here
• DA&A PODCAST: Have European equities rallied too far, too fast? The team focus on
the strong rally in European equities from the late September lows, and question whether it
is sustainable. The podcast may be accessed here.
• MARKET INTELLIGENCE MACRO WEEK AHEAD is here.
• JPM X-ASSET & CLIENT SURVEY: JPM Chief Market Strategist, Marko Kolanovic, and
his team, conduct a weekly survey that takes about 1-min to complete, please access the
survey here. A full copy of The J.P. Morgan View (Kolanovic, et. al.) is here.
• JPM RESEARCH MACRO PUBLICATIONS: A copy of the JP Morgan Economics team’s
2023 Global Economic Outlook can be found here (Kasman, et. al. November 21). A copy
of JPM US Economics team’s 2023 US Economic Outlook can be found here (Feroli, et. al.
November 16). A copy of the US Fixed Income 2023 Outlook can be found here (Barry, et.
al. November 22). A copy of the US Treasuries 2023 Outlook can be found here (Barry, et.
al. November 22). A copy of the US TIPS 2023 Outlook can be found here (White, et. al.
November 22). A copy of Oil Outlook 2023/2024 can be found here (Kaneva, et. al.
November 28). A copy of FX Strategy’s Global FX Strategy 2023 can be found here
(Chandan, et. al. November 22).

Source: Both charts sourced from Bloomberg

MARKET SUMMARY

EQUITY AND MACRO NARRATIVE: The market narrative remains the same overnight in absence
of macro catalysts. Yesterday, 2y/10y spread inverted to a 40-year record low of -84bp. In addition,
both 30yr and 10yr dropped below 3.45% without macro headlines. While the moves may be justified
by a more dovish Fed or peak inflation narrative, Jay Barry told us that “Treasuries are trading about
30bp rich after controlling for their the market’s Fed policy, inflation, and growth expectations,
suggesting this move has not been driven by fundamentals alone.” He thinks “position technicals are
playing a role” as the Treasury Client Survey and CFTC data “on speculative positions in interest
rate futures both show positioning has turned more bearish over the last two months.” (his full note is
here)

MARKO – 2023 Year Ahead Outlook is here; excerpts are below

• In this report, we present the Global 2023 Year-Ahead Outlook from the J.P. Morgan
Research department. We also provide summaries and links to individual year-ahead reports
that our department produced for every asset class, sector and region – in total ~95 reports
published over the past few weeks.
• As we approach 2023, we see a growing recession risk. In fact, our view is that market and
economic weakness may occur in 2023 as a result of central bank overtightening, with
Europe first and the US to follow later next year. Additionally, we think that central banks are
likely to induce market turmoil and subsequently be forced to reverse their course. We
expect that the lows we’ve seen this year in equity markets will likely be re-tested in the S&P
500 early next year, and we see an ongoing trend of pullback in risk assets, and a rise in
allocation to bonds.
• Our view is that central banks will likely signal interest rate cuts sometime next year, which
will result in a sustained recovery of asset prices by the end of 2023, and subsequently the
economy. DM monetary policy next year will likely monitor the impact of financial tightening,
and the evolution of the labor market and its implications on the near- to medium-term
inflation outlook. However, for that pivot to take place, we will first need to see some
combination of economic deterioration, an increase in unemployment, market volatility,
decline in levels of risky assets, and decline in inflation. All of these are likely to cause or
coincide with downside risk in the near term, with the continued low positioning in risk assets
potentially acting as a mitigating factor. Then, at some point in the second half of 2023,
markets will likely turn their focus towards the better economic prospects and corporate
fundamentals later in 2024, and trade at levels higher than now.
 • As you navigate increasingly complex markets, J.P. Morgan Global Research is looking
forward to continuing our partnership, providing investment insights and ideas in 2023 and
beyond.

PENG CHENG ON RETAIL TRADING – his full note is here

• Retail net bought $780MM in the cash equity market, -0.7 standard deviations below 12M
average. They continued to be sellers of rallies, and offloaded -$404MM of equities on Nov
30, when the market rallied +3.09%. Demand for S&P 500 (-0.5z) and NASDAQ 100 (-0.0z)
trackers continued to be tepid. On the other hand, inflows into international equity ETFs
picked up notably, including EEM (+6.1z), EWJ (+2.3z), and EFA (+2.0z).
• At the single stock level, retail net sold -$1.48B. Growth was the most heavily sold style
factor (-1.0z) whereas Momentum (+0.9z) and Low Vol (+0.3z) were net bought. In our view,
this shift in demand signifies a growing bearishness of retail investors.
• In options, retail traders net bought $1.9B of delta and $4.0B of gamma. The imbalances
were mainly driven by index upside buying, specifically, SPX/SPY +$1.1B delta / +$4.0B
gamma, and QQQ +$185MM delta / +$321MM gamma.
• Average retail volumes this past week (as a % of total orders) were down for Large-caps (-
1.0% to 9.9%) and SMid-caps (-1.5% to 20.3%). Average monthly volumes in November
were the 2nd highest since this past August for Large-caps and the highest for SMid-caps
(compared to the past two years).
• Retail Positioning
o Large-cap: At the industry group level, volumes were down slightly led by Software
and Semis. Looking at Large-cap single-stock flows, retail continued to be a net
seller (-$1.5B vs. -$1.1B prev week). The heaviest selling (roughly -$1B) was
concentrated within the Tech complex with notable drags from Software, Semis,
Tech Hardware and Media. This was partially offset again this week by net buying
within Retailing.
o Thematic: Retail investor outflows continued this week (~1% across key themes).
Despite inflows into international equity ETFs, Retail continued to shed exposure to
geographic themes, notably China Exposure (JPAMCNEX). Retail also showed a
slight preference for Cyclicals (JPAMCYCL) over Defensives (JPAMDEFN). Note,
Retail did not favor Energy within Cyclicals having shed exposure to Oil
Outperformers (JPAMOILO). Growth themes remain under pressure with continued
outflows from US Growth (JPAMGROW).
2023 EQUITY DERIVATIVES OUTLOOK – Bram Kaplan’s full note is here
• In the first part of the report, we discuss the outlook for volatility next year, the impact of
higher rates on derivatives markets, and trends in volatility demand/supply.
• Given the combination of tight monetary policy, a weakening macro environment and still
structurally weak market liquidity, for 2023 we expect volatility to remain above its long-term
average, with the VIX averaging ~25 in our baseline forecast scenario. The VIX is likely
biased higher than this in the early part of the year as we expect equity markets to re-test
this year’s lows, and then biased below this average once central banks pivot and markets
recover.
• In Europe, our VSTOXX target is 27 next year and we expect the spread between the
VSTOXX and the VIX to remain positive but small, as the excess volatility due to the Ukraine
war and European energy fragility are offset by a more restrictive monetary policy outlook in
the US. And in Asia we expect volatility to come down modestly y/y in China, with execution
of reopening policies being the primary volatility driver, but to increase in Japan as the BoJ
begins to normalize policy and weak external demand weighs on the earnings outlook for
Japan’s export-oriented companies.
• Rising rates have had a significant impact on long-term equity derivatives markets this year
given the large impact on forwards, and we expect the shifts in demand/supply they have
kicked off to continue in 2023. We believe that the higher participation rates in bond plus call
 structures will lead to a further increase in the issuance of capital-protected structured
products (at the expense of capital-at-risk structures like auto-callable). The net effect of this
would be less pressure on long-dated skew and volatility.
• In the second part of the report, we detail our favorite derivatives trade ideas into 2023,
including a range of macro directional trades, risk premia trades and hedging trades. Our
recommended trades include:
• Macro/Directional Trades
o DM Country/Regional trades: SX5E KI call spreads, resettable SPX call spreads,
UKX call ratios, US credit/equity relative value, and NKY vanilla/lookback calls
o China and EM upside trades: HSCEI hybrid calls, worst-of calls on HK/Korea/Taiwan
tech names, M1MS call spreads vs puts, China vs. US outperformance options,
EWZ call ratios, and CSI 1000 call ratios vs puts
o Sector trades: Retailer put spreads, US HC vs. Real Estate call switches, EU Miners
call ratios, EU Utilities call spreads, and EU vs. US Energy call switches
o Thematic ideas: return dispersion among EU names with high/low refinancing risk,
call spread collars on EU basket with high China exposure, and global thematic
baskets
• Volatility/Risk Premia Trades
o Dividend futures trades: long 2023 SX5E and SX7E dividends, long 2023/24 SPX
and 2023 RTY dividends
o Skew/convexity trades: SPX var vs. vol swap, SPX up-var vs. var, HSCEI vs. SPX
skew lock spreads, HSCEI up-var vs. vol swap, HSCEI calendar strangle spread,
HSTECH KO straddle, and SPX puts vs. VIX calls
o Correlation/Dispersion trades: rate-sensitive European thematic dispersion, and
machine learning based dispersion baskets
• Hedging Trades
o Hybrid option hedges: SPX puts contingent on rates down, SPX puts contingent on
oil higher, SX5E down / EUR down dual digital or hybrid put spread, JPY double-no-
touch contingent on NKY down, and NKY VKO put
o Vanilla index hedges: SX5E put spreads, and SPX OTM puts

DUBRAVKO ON LIQUID TACTICAL MACRO BASKETS – his full note is here

• Macro developments are playing a more prominent role in driving asset prices. The speed of
market reaction to macro events is becoming compressed in time, and there is a need for
investment instruments that can be tailored to play novel macro themes rapidly.
• Tactical portfolios that help investors react quickly to macro moves should – (1) efficiently
capture the macro idea; (2) have broadly diversified stock risk; and (3) be liquid enough to
facilitate large transactions with less market impact.
• The following eight macro baskets provide tactical opportunities in the current environment
given higher macro sensitivity of the market. They are liquidity weighted to lower market
impact and achieve faster execution compared to other implementations.
IN DATA
 PERCENT RETURN
LEVEL 1D 5D YTD
SPX 3,933.92 -0.2% -3.6% -17.5%
NDX 11,497.39 -0.5% -4.4% -29.6%
R2K 1,807.82 -0.3% -4.2% -19.5%
S&P 400 (MID CAP) 2,476.33 -0.2% -3.9% -12.9%
S&P 600 (SML CAP) 1,199.54 -0.9% -3.5% -14.4%
R2K - GROWTH 1,115.22 -0.2% -4.3% -25.2%
R2K - VALUE 2,147.39 -0.4% -4.0% -13.8%
R1K - GROWTH 2,241.69 -0.4% -4.2% -27.1%
R1K - VALUE 1,510.88 -0.1% -3.4% -8.7%
RUSS MIDCAP 2,756.05 -0.3% -3.6% -17.0%
PERCENT RETURN
LEVEL 1D 5D YTD
SPX 3,933.92 -0.2% -3.6% -17.5%
COMM SRVCS 164.99 -0.9% -4.6% -38.3%
CONS DISC 1,073.98 -0.5% -5.3% -33.3%
CONS STPLS 791.79 0.4% -1.5% -1.6%
ENERGY 647.45 -0.3% -6.7% 53.2%
FINANCIALS 573.10 -0.5% -4.9% -11.8%
HEALTHCARE 1,611.63 0.8% -0.4% -2.0%
INDUSTRIALS 837.74 -0.1% -2.4% -6.4%
MATERIALS 509.20 -0.3% -2.0% -10.6%
REAL ESTATE 238.56 0.3% -3.0% -26.5%
TECH 2,260.23 -0.5% -4.7% -26.0%
UTILITIES 357.42 -0.5% -1.1% -1.7%
Source: Bloomberg. Data as of 12/7/2022

SELECTED REOPENING STOCKS

 PRICE %1D %5D %1M %3M %6M %YTD
CCL $ 8.92 -4.09% -10.32% 1.83% -9.17% -35.38% -55.67%
RCL $ 56.66 -1.68% -5.51% 8.94% 29.39% -0.19% -26.32%
NCLH $ 15.46 -2.37% -5.99% -7.29% 10.08% -2.74% -25.48%
MAR $ 157.57 -1.81% -4.64% 5.78% 3.41% -11.01% -4.64%
HLT $ 134.59 -2.17% -5.64% 3.52% 6.09% -6.42% -13.72%
H $ 95.80 -0.67% -4.52% 6.34% 6.49% 1.80% -0.10%
AAL $ 13.57 -5.32% -6.03% -5.26% -2.32% -18.72% -24.46%
DAL $ 34.42 -4.16% -2.71% 3.16% 6.78% -13.41% -11.94%
UAL $ 44.11 -3.95% -0.15% 3.10% 14.26% -5.05% 0.74%
LUV $ 37.75 -4.86% -5.39% 1.81% 2.75% -15.86% -11.88%
CZR $ 49.20 1.01% -3.09% 15.38% 12.84% -5.98% -47.40%
WYNN $ 84.99 -0.49% 1.63% 17.58% 40.92% 26.04% -0.06%
PENN $ 33.28 -2.05% -5.41% 1.79% 7.83% -2.96% -35.82%
MGM $ 36.58 -1.98% -0.76% 8.10% 11.63% 3.06% -18.49%
LVS $ 47.02 0.46% 0.42% 16.84% 32.62% 31.27% 24.91%
BYD $ 58.57 0.40% -4.48% 4.28% 10.25% -3.06% -10.68%
Source: Bloomberg data as of 12/7/2022

SECTOR & THEMES

For Information on the following Bloomberg Component from our JP Morgan Delta-One team and
our other custom baskets, please contact D1_NA@jpmorgan.com.
Source: Bloomberg; Data as of 12/7/2022

WEEKLY ECONOMIC DATA / EARNINGS

US CALENDAR
ECONOMICS
• DEC 5 – PMI-Srvcs (revision) and PMI-Composite (revision) at 9.45am. Factory Orders
(0.7% survey vs 0.3% prior), Durable Goods Order (revision) and ISM Srvcs Index at 10am
ET.
• DEC 6 – Trade Balance at 8.30am ET.
• DEC 7 – Mortgage Applications at 7am ET. Nonfarm Productivity and Unit Labor Costs
at 8.30am ET. Consumer Credit at 3pm ET.
• DEC 8 – Initial Jobless Claims at 8.30am ET.
• DEC 9 – PPI (Headline YoY 5.8% survey vs. 6.7% prior; Core YoY 7.1% survey vs 8.0%
prior) at 8.30am ET. Wholesale Inventory and Univ. of Mich. Sentiment (56.8 survey vs.
56.8 prior) and 1Yr/5-10Yr Inflation at 10am ET.

EARNINGS
JPM US Earnings Calendar here
US Analyst Focus List here
• DEC 5 – VERU, GTLB
• DEC 6 – AZO, HQT, MDB, S, TOL
• DEC 7 – ASO, AVYA, THO, OLLI, CPB, HCP, GME
• DEC 8 – AVGO, MTN, CHWY, DOCU, RU, COST, COO
• DEC 9 – ORCL

GLOBAL CALENDAR
• DEC 5 – (Turkey) CPI at 2am ET. (Eurozone) Retail Sales at 5am ET. (Japan) All
household spending at 6.30pm ET.
• DEC 6 – (Germany) Mfg. Orders at 2am ET. (China) Trade Balance.
• DEC 7 – (Germany) Industrial Production at 2am ET. (Eurozone) Employment (revision)
and GDP (revision) at 5am ET. (Japan) GDP (revision) at 6.50pm ET.
• DEC 8 – (China) CPI at 8.30pm ET.
• DEC 9 – N/A

NEAR TERM CATALYSTS – CPI (Dec 13, Jan 12, Feb 14), ISM-Mfg (Jan 4, Feb 1), ISM-Srvcs
(Dec 5, Jan 6, Feb 3), PMI-Mfg (Dec 16, Jan 24, Feb 21), PMI-Srvcs (Dec 16, Jan 24, Feb 21), NFP
(Jan 6, Feb 3), PCE (Dec 23, Jan 27, Feb 24), Retail Sales (Dec 15, Jan 18, Feb 15). FED DATES:
Dec 14, Feb 1. FOMC Minutes (Jan 4).

NEWS LINKS

• Used vehicle demand and prices continue to decline from record highs (CNBC)
• Live updates on Ukraine war: EU eyes new sanctions on Russia; Putin says war could be
‘lengthy’ (CNBC)
• EU sanctions, Russian oil price cap cause tanker bottleneck as crude moves through Turkey
(CNBC)
• Markets are bracing for a ‘Powell recession’ that could be coming soon (CNBC)
• Analysis: East Europeans count their pennies for Christmas as food costs soar (RTRS)
• U.S. banks warn of recession as inflation hurts consumers; shares fall (RTRS)
• U.S. third-quarter productivity raised; labor costs still running high (RTRS)
• Euro zone economic growth revised up with household, business support (RTRS)
• Russian Oil-Price Cap Adds to Fiscal Pressure on Moscow (WSJ)
• Georgia Win Ends Headaches of 50-50 Senate for Democrats (WSJ)
• EU Officials Pursue Additional Sanctions Against Russia Over Ukraine War (WSJ)
• Russia Moves to Bolster Defenses After Airfield Strikes (WSJ)
• Stock Traders Worried About Treasury Curve Signals: Markets Wrap (Bloomberg)

SELECT JPM RESEARCH – Market Intelligence is not a product of research

MACRO & CROSS-ASSET VIEWS
Flows & Liquidity: Momentum traders have largely unwound previous shorts, Nikolaos Panigirtzoglou
There have been sharp adjustments in CTA positions from extreme shorts to neutral or even
modestly long positions across equity indices, USTs and major currencies vs. the dollar, and
significant unwinds of short positions in industrial commodity futures. In rates, short duration
positions remain elevated outside USTs. CTAs are now neutral on US equities, and modestly long
European, Japanese and EM equities, while on currencies, CTAs have unwound a material chunk of
their long dollar positions. On bonds, nearly three-quarters of the short UST positions have been
unwound by CTAs now.
U.S. Mid- and Small-Cap Banks Crypto Banking Weekly: Effects of FTX Bankruptcy Continue to
Ripple; SBNY and SI Mostly Unaffected; Spotlight: Paxos Trust Co, Steven Alexopoulos, CFA
Ripple effects of FTX bankruptcy spill into broader crypto but groundwork towards greater
regulatory clarity begins. The effect of FTX’s bankruptcy did not deter interest in the crypto
ecosystem with crypto funds seeing net inflows of $42mm, the largest inflows in 14 weeks.
Legislators have started pushing for regulation and the pieces have started moving towards greater
regulatory clarity, something which we believe will lead to a massive increase in the institutional
adoption of the space as well as become the necessary catalyst to bring the power of blockchain to
the masses.

GLOBAL ECONOMICS AND THE RECOVERY FROM COVID-19

2023 US Economic Outlook: Bad moon rising, Michael Feroli
We expect the FOMC to deliver another 100bp of hikes before going on hold next spring:
50bp in December and 25 bp in both February and March. As short-term interest rates are
expected to increase almost 500bp between March ’22 and March ’23 this will add $250 billion to
interest expense, subtracting 15% off of nonfinancial after-tax corporate profits. A likely divided
government and the lack of much goodwill between parties makes prospects for big changes in fiscal
policy unlikely, although it is possible that a mild recession is met with a modest degree of fiscal
stimulus at some point. With falling inflation and an unemployment rate rising toward 5%, we see the
Fed easing 50bp per quarter from 2Q24 to reach 3.5% by year-end.
Euro area: One more ECB hike, despite weaker 2023 growth, Greg Fuzesi
While in the near term persistently high inflation will keep the ECB on the hiking path with
50bp in December and 25bp in February expected, we now add a third hike of 25bp for March,
taking the deposit rate to 2.5%. This means hiking through a recession, although some data are
likely to begin to move higher before the March meeting and inflation would only be starting to turn.
In any case, having moved to a modestly above a neutral rate of around 2%, we then expect the
ECB to pause, with TLTRO repayments and some quantitative tightening doing some of the
tightening.
China: Growth revisions for 4Q22 and 2023, Haibin Zhu
We lower the current quarter growth forecast to 2.4%q/q saar (previously: 5.2%q/q saar) due
to increasing Omicron drag and full-year growth forecast this year is marked down to 2.9%
(previously: 3.1%). Our 2023 full-year growth forecast now stands at 4.0%y/y (previously: 4.5%).
Entering 2023, our baseline scenario assumes a gradually phased-in reopening to start next spring,
which will lead to a spike in infection cases and hence bring downward pressure during the
transitional period before finally returning to a sustainable recovery path.
Taking stock of EM macro risks, Nora Szentivanyi
Surging inflation and elevated fiscal deficits/debt have pushed up EM macro risks relative to
historical norms. While inflation and output gaps should fall back closer to historical norms next
year, lower inflation and persisting fiscal deficits will lead to EM debt ratios rising again next year.
Moreover, the external environment is likely to be more and not less challenging with the Fed poised
to hike further to 5% and the dollar strengthening. Even if overall macro-risk falls, navigating the
tougher global financial conditions will remain challenging.
ASEAN’s manufacturing renewal is for some, not all, Sin Beng Ong
As regional supply chains evolve, accelerated by US diversification away from China, ASEAN
sits as a beneficiary of this trade re-orientation. There are two elements of this diversification, via
a deepening of supply chains in ASEAN, which benefits mainly Vietnam and Malaysia and a re-
orientation of trade through transshipment, with Hong Kong being the most affected. However,
limited data on re-exports precludes a more comprehensive analysis of the beneficiaries of these
transshipment flows.

GLOBAL MARKET IMPLICATIONS

2022: The year value returned to FX markets, Antonin T Delair and Meera Chandan
A key change heading into 2023 is our bias to pay more attention to FX value signals,
especially in G10 where the value divide between USD and JPY is extreme. This contrasts with
carry on which we were more constructive on at the start of 2022 but where the outlook looks more
challenged going into 2023. Furthermore, USD performance with risk markets has become more
binary and correlations have become more negative this year despite highly rich USD valuations.
EM's debt vulnerabilities in a world of higher rates, Jonny Goulden & Katherine Marney, et al.
EM country debt levels are declining for many in 2022 given high inflation, although China
pushes EM government debt/GDP to all-time highs. For 2023, inflation is forecast to fall and fiscal
balances are forecast to show only marginal improvement, so the net impact is a forecast that EM
government debt/GDP will rise both for EM overall and ex-China in 2023. EM debt will remain in
focus as a source of vulnerability in an environment of tighter global financial conditions. High EM
debt levels met tightening global financial conditions this year, which, along with idiosyncratic
shocks, have led to debt distress.
Emerging Market Corporates: From very depressed to below trend, modest recovery in 2023 supply
to $304bn with negative net financing, Yang-Myung Hong
We launch our 2023 EM corporate external bond supply forecast at $304bn, up $100bn versus
the YTD pace but still significantly below the $500bn+ trend in recent years. We do not expect
the environment to change that much for the rest of 2022 and the earlier part of 2023, but we do see
room for more new issue activity from the middle of next year. US rates are widely expected to peak
in early 2023, which may set a more favorable backdrop for the primary market over the course of
the year on better rate visibility and diminished concerns over large fund outflows.
Thank you, but no thank you: Euro area banks pay back only €296bn of TLTRO III borrowing:
Limited release of collateral support flatter swap spread curve; keep Dec22 Schatz/Bund 6s swap
spread curve flattener, Fabio Bassi
Our preliminary estimate for the December payback (9th December 2022) is now €100-
200bn. The benefit from a large repayment into a release of collateral has been highlighted by
President Lagarde as a potential additional benefit of the decision to change the conditions.
However, we have been biased on that having a positive but quite limited impact at least in the short
term. Banks in general have been in relative term quite parsimonious in posting high quality
collateral, therefore it is unlikely to see a large release over the short term.

SECTOR LEVEL VIEWS

BNPL: JPM Survey and Takeaways - Oct '22 , Reginald L. Smith, CFA
BNPL penetration is relatively low; just 35% of those surveyed used BNPL within the past 6
months, consistent with our Jan ’22 Online Checkout survey. BNPL was the preferred payment
method for only a low single-digit percentage of responders, with a slightly stronger preference when
making larger-value transactions (>$200) than lower-value transactions. PayPal (PYPL) remains the
preferred BNPL brand.
European Food & General Retail: Living your most expensive (festive) life: Weekly consumer pulse
check into peak trading season, #1, Georgina Johanan, ACA
The festive season represents c.40% of the listed grocers’ PBT and c.30% for many General
Retailers, and this year sees a two-way pull between post COVID normalization and a well-
documented budget pressure due to increased cost of living. In General Retail, the results
support our still cautious stance, with particularly unhelpful read for MKS (JPM N, sit c.11% below FY
24 BBG cons. PBT). In Food, we are most cautious on Sainsbury, and see a relative trade via B&M
to play the down trading theme.
Asian Tech Strategy: China Tech restocking under way, with hope for demand rebound; upgrading
China-focused Tech stocks, Gokul Hariharan
We have upgraded several China-focused Asian Tech stocks since we believe that inventory
destocking in several China Tech sub-sectors is already done, with early signs of restocking
appearing in China Android smartphones and TVs. We have upgraded ASMPT, Novatek and
Largan to OW, and raised our PT for Mediatek. We also like WIN semi, AAC Tech (recently
upgraded to OW) as companies heavily leveraged to the China tech rebound.

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in. Coming soon to Fusion!

Eloise Goulder | Head of Data Assets & Alpha Group | +44-203-493-0748 | eloise.goulder@jpmorgan.com

DA&A Website JPM Markets Conference Call Podcasts DataQuery Fusion

Market Intelligence

High frequency data-driven market insights and trade ideas leveraging macro, fundamental and political inputs

Andrew Tyler | Head of US Market Intelligence | +1-212-622-8067 | andrew.m.tyler@jpmorgan.com

Krupa Patel | Head of International Market Intelligence | +44-203-493-1704 | krupa.patel@jpmorgan.com
Junho Jung | International Market Intelligence | +44-207-742-6849 | junho.jung@jpmorgan.com
Ellen Wang | US Market Intelligence | +1-212-270-0533 | ellen.z.wang@jpmorgan.com
Data Intelligence

Proprietary data and signals from our industry-leading Markets business, including equity signals, retail
sentiment and volatility marks

Marius Vaiciulis | Head of Data Intelligence | +44-207-742-0541 | marius.vaiciulis@jpmorgan.com

Krupa Patel | Data Intelligence | +44-203-493-1704 | krupa.patel@jpmorgan.com
Edwina Lowe | Data Intelligence | +44-203-774-3138 | edwina.lowe@jpmorgan.com
Preet Malde | Data Intelligence | +44-207-134-8901 | preet.malde@jpmorgan.com
Positioning Intelligence

Proprietary positioning and flows-based data and analysis, leveraging the J. P. Morgan Prime book, Retail
investor and ETF flows. Data sets including positioning, flows, crowding, leverage, performance and alpha, and
grouped by sector, industry, factor and strategy

John Schlegel | Head of Positioning Intelligence | +1-212-622-6512 | john.j.schlegel@jpmchase.com

Jigar Vakharia | Positioning Intelligence | +44-207-134-0275 | jigar.r.vakharia@jpmorgan.com
Austin Kotler | Positioning Intelligence | +1-212-464-2956 | austin.l.kotler@jpmorgan.com
Daniel Landau | Positioning Intelligence | +44-203-493-1092 | daniel.landau@jpmorgan.com
Our data toolkit

By leveraging proprietary data and signals from our industry-leading Markets business, we utilize a combination
of tools to inform our insights and trade ideas including equity market timing indicators, positioning, flows and
sentiment. These toolkits are available to our institutional clients via written content, automated daily
emails, FTP and API from the J.P. Morgan DataQuery platform.

More details on our flagship datasets Signal from the Noise, Tactical Positioning Monitor, Through the
Retail Lens and Strategic Index Fundamental Toolkit are shown below. Contact us here if you would like
access to the datasets or to learn more.

Signal from the Noise

Signal from the Noise reflects market timing signals for the US equity market (S&P 500) based on fundamental
and (externally derived) positioning data. For the framework to be bullish on the S&P500, either the Positioning
or Fundamental signals need to be flashing ‘Strong Buy’ (and likewise for a low conviction bullish view). The
‘Strong Buy’ strategy demonstrated an 8.6% annual return and 1.7x Sharpe ratio (69% per trade hit ratio) from
2010 to 2021.
Tactical Positioning Monitor

Tactical Positioning Monitor (TPM) reflects the level of broader positioning data. For the framework to be
bullish on the S&P500, short-term positioning data points either need to be very light (-1.5z), or rising (+1.5z)
but with markets below peaks. The strategy demonstrated an 8.9% annual return and 1.0x Sharpe ratio (69%
per trade hit ratio) from 2015 to 2021.

Through the Retail Lens

Through the Retail Lens focuses on US retail trading activity and social media sentiment. The product
combines proprietary and high frequency retail flow data from our QDS Research colleague Peng Cheng, with
sentiment analysis of retail social media activity, at a market, sector, thematic basket and single stock level.

Strategic Indices: Fundamental Toolkit (SIFT)

SIFT (Strategic Indices: Fundamental Toolkit) is a proprietary toolkit of 21,000 aggregate global equity
indices with an extensive cross section of 46 different metrics across each index from the 1960s – created by
our colleagues in the J.P. Morgan Equities Structuring team. With its comprehensive metrics and long history,
the database can be used for a variety of investment analyses for the market, sectors & factors.
QUEST (Quantitatively Selected Theme)

QUEST (Quantitatively Selected Themes) is a proprietary NLP-based JPM toolbox used for identifying &
screening for topical and structural investment themes in the market – created by our colleagues in the J.P.
Morgan Equities Structuring team, in partnership with the J.P. Morgan Chief Markets Strategist Marko Kolanovic
and team. The database is comprehensive and customizable, and allows clients to screen for themes at a
granular level across a wide universe of stocks.

Access all of this and more through J.P. Morgan’s DataQuery application; also coming soon
to J.P. Morgan’s Fusion platform.
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