JP Morgan J.P. Morgan Perspectives What To Watch in The 2024 Elec

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SPA. 10 January 2024
J.P. Morgan Perspectives

What to watch in the 2024 election super bowl
What to watch in the 2024 election super bowl

2024 Global Election Outlook
The great housing correction that wasn’t
Strategic Research Strategic Research Chair of Global Research

Mohammed Hossain AC Amy Ho AC Joyce Chang AC
mohammed.z.hossain@jpmchase.com amy.ho@jpmchase.com joyce.chang@jpmorgan.com
J.P. Morgan Securities LLC J.P. Morgan Securities LLC J.P. Morgan Securities LLC
Strategic Research Long-term Strategy Long-term Strategy

Zahin Mohammed AC Alexander Wise AC Jan Loeys AC
zahin.ov@jpmchase.com alexander.c.wise@jpmchase.com Jan.loeys@jpmorgan.com
J.P. Morgan India Private Limited J.P. Morgan Securities LLC J.P. Morgan Securities LLC
See page 43 for analyst certification and important disclosures.

This document is being provided for the exclusive use of SILVIO VERGALLO at EURIZON CAPITAL SGR
SPA.
Joyce Chang Global Research
(1-212) 834-4203 J.P. Morgan Perspectives
joyce.chang@jpmorgan.com 10 January 2024
Table of Contents
Executive summary ......................................................................................................................... 3
The 2024 election bonanza: Will politics reshape geopolitics? .....................................................4
10 themes to watch in the 2024 US elections..........................................................................12
Monitoring EM elections in 2024..............................................................................................23
Navigating the age of populism and its consequences .............................................................26
Worsening democracy metrics depress equity returns over the long-term................................34
Appendix ..............................................................................................................................38
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Executive summary
2024 is a record-breaking year for elections, with voters in 77 countries, comprising about half of the world’s population
and nearly 60% of world GDP, going to the polls. Elections will take place in a number of the most populous countries in
the world—Bangladesh, India, Indonesia, Mexico, Pakistan, Russia and the US, while the EU will hold parliamentary
elections and the UK has announced early elections to be held before January 2025.
Top 10 themes to watch for in the biggest global election year in history
1. The 2024 election bonanza will tell us much about whether the recent trends of polarization, populism, democratic
deterioration and geoeconomic fragmentation will continue to rise, are just plateauing, or will finally start reversing
towards more traditional consensus politics.
2. We know that each of these four horsemen depresses economic efficiency and growth over the long run, even as these
impacts have yet to be fully realized. There is little evidence that populism has much economic impact in the short term
outside of higher inflation. Over the long term, populist-led countries tend to experience lower growth, trade and financial
openness, and higher debt-to-GDP.
3. The weakening of democracy metrics carries market consequences. Weaker governance creates higher volatility and
lower multiples, and we find that, after a democracy downgrade, equity returns have, on average, been 5% pa lower over a
10yr period than in countries that were upgraded.
4. Many elections will likely be a close call, with some countries recognizing that populists do not deliver and others still in
thralled with them, but overall, we think these four horsemen are unlikely to fade and thus think the 2024 elections
bonanza will eventually turn out as negative for global growth, depressing Growth stocks vs Value. We do not think they
will bring back the old days of zero or negative real yields given steadily rising deficits and debt loads.
5. The US elections carry the most material risks to global economic prospects and markets given the ongoing shifts in the
international order. The prospects for a Biden-Trump runoff in the US elections, as well as the rise of far-right parties in
Europe, could receive as much attention as the countries at war in the coming year.
6. The economy remains the top voter issue in the US, but key factors to monitor include voter turnout, swing state voters
and potential voting divisions across gender, generational and racial lines. The US election is also projected to be the
most expensive to date, with anticipated ad spending of $10.2bn across all platforms.
7. In the event of a shift away from multilateralism, further tariffs and a broadening of the US-China conflict are seen as
dollar positive events. CHF and JPY should also benefit from tariffs, while CNY, EUR, and MXN screen as being vulnerable to
tariffs.
8. Domestic politics are fueling populist politics, but it remains unclear that there will be a resurgence in elected populist
regimes, which reached a peak in 2018-2019. Nevertheless, populist politics are likely here to stay regardless of electoral
outcomes, as structural social shifts have moved populism into the mainstream.
9. For EM, the elections in Taiwan, India, South Africa, Romania and Mexico are the standouts that could have an impact
on domestic macro and market outlooks. EM frontier markets, suffering from balance of payments pressures and loss of
market access, face a heavy election calendar with opposition parties seen as gaining ground.
10. New tech brings new threats to democratic processes, as the greater use of AI and social media could influence
campaigns. The rise of deepfakes through AI could be used to spread misinformation.
J.P. Morgan Perspectives brings together thematic and strategic views across J.P. Morgan’s Global Research franchise. In this report,
we discuss the key elections that are taking place around the globe this year and explore the implications of rising geoeconomic
fragmentation on election outcomes and democracy metrics.
We hope this series will both inform and foster debate on evolving economic, investment and social trends.
– Joyce Chang, Chair of Global Research
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The 2024 election bonanza: Geoeconomic fragmentation gives rise to

greater political fragmentation
Will politics reshape geopolitics? 2024 brings a record number of elections across DM
and EM countries. Looking at history, elections have
 2024 is a record-breaking year for elections, with usually had little impact on underlying macro trends.
elections taking place in 77 countries, including
Markets have typically been volatile in the run-up to an
the US, EU, UK, Mexico, India, Russia and
election, only to rally thereafter once the uncertainty is
Taiwan, although the US elections are arguably
removed. There are reasons to believe that the 2024
the one race with broad global consequences.
cycle might be different, with two wars raging at the
 Conventional wisdom that geopolitical risks same time that geo-fragmentation is taking hold, with
generate more noise than trend could be mounting concerns that the world economy is separating
challenged by the ongoing shift to a multi-polar into blocs. As multilateral cooperation has become more
world and away from multilateralism, contentious, there has been a resurgence of industrial
considering the 17-year decline in democracy and policy and formation of commercial alliances based on
global freedom. political circles of trust. For many elections, there are
 We highlight the formation of new alliances, competing visions for the international order and
regional trading blocs and the rise of “mini- economic policy that could generate greater policy and
laterals.” regulatory uncertainty with the potential to escalate
conflict.
 We distinguish between political and geopolitical
risks, as political risk relates to country-specific Elections will take place in a number of the most
elections and referendums that are domestic in populous countries in the world—Bangladesh, India,
nature, while geopolitical risks involve economic
Indonesia, Mexico, Pakistan, Russia and the US,
and military conflict beyond the nation state.
while the EU will hold parliamentary elections and
 We outline a watch list for tracking elections the UK has announced early elections to be held
across DM and EM countries, including before January 2025—but the US elections are
“freedom and fairness” scores, as 28 of the 71 arguably the only race with broad global
countries tracked in the EIU’s Democracy Index consequences. In the US, uncertainty remains high and
do not meet the essential conditions for a will more likely be a focus in 2H24, with implications
democratic vote. for the fiscal outlook and potential for a ramp-up in trade
 It remains unclear whether there will be a tensions. Taiwan’s upcoming elections are in focus due
resurgence in populist regimes, which peaked in to heightened US-China geopolitical tension and the
2018-2019, but populist politics are likely here to ongoing power conflict between Washington and
stay regardless of electoral outcomes, as Beijing, as highlighted by former US House speaker
structural social shifts have moved populism into Nancy Pelosi’s visit to Taiwan in August 2022, followed
the mainstream. by the Mainland’s military drills around Taiwan. In
Europe, the key point of contention on the political side
 We discuss how advances in artificial intelligence will be the reform of the Stability and Growth Pact,
could affect upcoming elections through the which will set the stage for the fiscal outlook across EU
spread of misinformation and rise of deepfakes. countries for next year, while the next wave of
 We examine the market performance of countries enlargement outcomes will coincide with the process of
that are downgraded in democracy ratings institutional reform. The center in Europe appears to be
compared to markets that have been upgraded. shifting to the right, but we see this mostly as opposition
Weaker governance creates higher volatility and to more immigration rather than polarization or a rise in
lower multiples, and we find that, after a anti-EU sentiment. Figure 1 outlines a summary of key
democracy downgrade, equity returns have, on elections across DM and EM for 2024, along with their
average, been 5% pa lower over a 10yr period freedom and fairness scores.
than in countries that were upgraded.
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Figure 1: Key 2024 elections across DM and EM election range Figure 2: International military conflicts are more than double
from highly free and fair to not free and fair GFC levels
Free and fair elections index ranges from 0 (not free and fair) to 1 (most Number of disputes
free and fair).
Source: Caldara and Iacoviello 2022; Häge 2011; SIPRI Military Expenditure Database;
Uppsala Conflict Data Program; and IMF staff calculations.
We find that the conventional wisdom that geopolitics

generates more volatility than trend is being challenged,
as there is now a feedback loop as economics drives
geopolitics and geopolitics drives economics. Although
there could be winners in this process, with Mexico and
India standing out, the majority of countries stand to lose
Note: Ukraine presidential elections have been excluded, as elections are suspended
during wartime. (see Geopolitical Update: A fragmented and fractured
*Date to be confirmed. 1. Media reports see an increasing possibility that elections could world: Geopolitical resilience remains elusive, Joyce Chang
be called in 2024. 2. Elections for European Parliament will occur across all 27 member et al., 30 Oct 2023). As Figure 3 shows, in mid-2023,
states. 3. Must be held no later than January 24, 2025, and thus likely to happen in 2024.
Source: NDI, IFES, various media sources, J.P. Morgan Strategic Research Mexico became the US’s largest source of imports,
surpassing China. Mexico is also the US’s number one
The new international order: Flexible trading partner, with Canada in second place and China in
third. China has also redirected a growing share of its trade
cooperation and the rise of “mini-lateralism” to EM economies.
The elections are taking place against a backdrop of
accelerating geoeconomic fragmentation, as trading Figure 3: Trade patterns are shifting, and US imports from China
patterns have shifted over the past four years with and Mexico have converged
new alliances and regional blocs emerging. The US-
led, rule-based order continues to fray as the global
economy evolves toward a less cooperative and more
competitive multipolarity. We are still far from a fully
fragmented world, but global alliances are shifting. It has
been five or six decades since the global landscape has
been confronted with active wars in Europe and in the
Middle East, along with elevated military tensions in
Asia. The number of armed conflicts in the world has
been steadily rising over the past 10 years, alongside the
increase in deaths from armed conflicts, fueling the
increase in financial sanctions.
Source: U.S. Census and J.P. Morgan
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Figure 4: China’s exports to EM countries are on the rise The return of systemic rivalry between democracies
US$ bn, sa on one side and China and Russia on the other has
resulted in an ongoing separation of the world’s
economy into new networks and alliances outside of
formal institutions. As noted in the German Marshall
Fund’s report on the Global Swing States, this transition
actually began in earlier in 2012 with the return of
Vladimir Putin to the Russian presidency and the
installation of Xi Jinping as Chairman of the Chinese
Communist Party.1 Figure 5 highlights the growing
proliferation of “nimble new mini-laterals,” as discussed at
length in Foreign Policy.2.
Source: Haver, J.P. Morgan
Figure 5: New alliances in a multi-polar world: The rise of “mini-laterals”

Alliance Countries / Regions Objective Year
Brazil, Russia, India, China, and South Africa + Promoting greater global economic and political influence for major EM
BRICS+ 2024
Egypt, Ethiopia, Iran, Saudi Arabia, and UAE countries. Argentina was extended an invitation but declined to join.
Coordinate responses to common threats, expand military exercises, real-
United States, Japan, South
United States, Japan and South Korea time information sharing on missile threats, and cooperation on supply 2023
Korea Trilateral Partnership
chain resilience and economic security across the Indo-Pacific.
Partnership for Global Mobilize public and private capital for infrastructure projects in the
G7 - Canada, France, Germany, Italy, Japan, the
Infrastructure and Investment developing world and support the United States’ and its allies’ economic 2022
United Kingdom and the United States
(PGII) and national security interests.
Indo-Pacific Partnership for
Provide technology and training to support enhanced, shared maritime
Maritime Domain Awareness United States, Australia, India, and Japan 2022
domain awareness to promote stability and prosperity in the Indo-Pacific.
(IPMDA)
Critical and Emerging Elevate and expand strategic technology partnership and defense
United States and India 2022
Technology (iCET) industrial cooperation between the two countries.
Australia, Canada, Finland, France, Germany,

The Minerals Security India, Italy, Japan, Norway, the Republic of Accelerate the development of diverse and sustainable critical minerals
2022
Partnership (MSP) Korea, Sweden, the United Kingdom, the United supply chains.
States, and the European Union
Australia, Brunei Darussalam, Fiji India, Advance resilience, sustainability, inclusiveness, economic growth,
Indo-Pacific Economic
Indonesia, Japan, the Republic of Korea, fairness, and competitiveness. Four key pillars include: (1) Trade; (2)
Framework for Prosperity 2022
Malaysia, New Zealand, Philippines, Singapore, Supply Chains; (3) Clean Energy, Decarbonization, and Infrastructure; and
(IPEF)
Thailand, and Vietnam (4) Tax and Anti-Corruption.
Australia-United Kingdom- Strengthen each government's security and defense interests in the Indo-
United States Partnership Australia, United Kingdom, United States Pacific. Provide Australia with nuclear powered submarine capability, 2021
(AUKUS) enhancing deterrence and promoting stability in the Indo-Pacific.
China, Africa, Europe & Central Asia, East Asia & Connect Asia with Africa and Europe through a vast infrastructure network
Belt and Road Initiative (BRI) Pacific, Southeast Asia, Latin America & with the aim of improving regional integration, increasing trade and 2013
Caribbean, Middle East stimulating economic growth.
Drive growth, development and competitiveness of the economies of its
The Pacific Alliance Chile, Colombia, Mexico and Peru 2011
members and increase integration with the Asia-Pacific region.
Committed to promoting a free and open Indo-Pacific based on rules-
Quadrilateral Security
United States, Australia, India, and Japan based order to advance security and prosperity and counter threats to 2007
Dialogue (Quad)
both in the Indo-Pacific.
A multilateral association to ensure security and maintain stability across
Shanghai Cooperation China, India, Kazakhstan, Kyrgyzstan, Russia, the vast Eurasian region, join forces to counteract emerging challenges
2001
Organization (SCO) Pakistan, Tajikistan, Uzbekistan, and Iran and threats, and enhance trade, as well as cultural and humanitarian
cooperation.
Source: J.P. Morgan Strategic Research, Reuters, RAND, The White House, US Department of State, USTR, CFR, US DoD, GFDC, Alianza del Pacífico, UN.
1 2
Global Swing States, GMF, 2 May 2023 The Minilateral Era, Foreign Policy, 10 Jan 2023 and The
Nimble New Minilaterals, Foreign Policy, 11 Sept 2023
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Figure 6: Rise of regional trade agreements

Effective
Trade Agreement Partners Description
Date
60% of goods in the bilateral trade will be exempted from tariffs upon
China-Nicaragua FTA China and Nicaragua 1/1/2024 the FTA taking effect, and the tariffs on over 95% will be gradually
reduced to zero.
Creates obligations for both parties to enhance trade facilitation,

United States-Taiwan Initiative adopt good regulatory practices, eliminate barriers to trade in
United States and Taiwan 8/7/2023
on 21st-Century Trade services, heighten anti-corruption efforts, and support trade by small
and medium enterprises
Enable Ecuador to export nearly 100% of its products to China

without tariffs. Agreement to boost Ecuador’s non-oil exports by $3-
China-Ecuador FTA China and Ecuador 5/10/2023
4bn over the next 7-10 years, or an additional GDP growth of about
0.5%-pt through 2030.
US Japan Critical Minerals Strengthen and diversify critical minerals supply chains and promote
United States and Japan 3/28/2023
Agreement the adoption of electric vehicle battery technologies, USTR
Over 85% of Australian exports to India are tariff free, rising to 90%
Australia-India Economic
by January 1, 2026, and high tariffs on some agricultural products
Cooperation and Trade Australia and India 12/29/2022
have been reduced. 96% of imports from India are tariff free, rising to
Agreement (ECTA)
100% by 1 January 2026.
UAE-India Comprehensive
Greater access for UAE exports to India through the reduction or
Economic Partnership United Arab Emirates and India 5/1/2022
removal of tariffs on more than 80% of products
Agreement (UAE-India CEPA)
Brunei, Burma (Myanmar), Cambodia,

Indonesia, Laos, Malaysia, Philippines,
Regional Comprehensive Free trade agreement among Asian countries to liberalize trade,
Singapore, Thailand, Vietnam, 1/1/2022
Economic Partnership (RCEP) remove non-tariff trade barriers and increase trade facilitation.
Australia, China, Japan, New Zealand,
and South Korea
Replaces the NAFTA agreement to support mutually beneficial trade

The United States-Mexico-
United States, Mexico, and Canada 7/1/2020 leading to freer markets, fairer trade, and robust economic growth in
Canada Agreement (USMCA)
North America.
Comprehensive and Australia, Brunei Darussalam, Canada,

Progressive Agreement for Chile, Japan, Malaysia, Mexico, Peru, Free trade agreement that reduces and eliminates tariff and non-tariff
12/30/2018
Trans-Pacific Partnership New Zealand, Singapore and Vietnam; barriers and establishes enforceable trade rules.
(CPTPP) UK to join in H2 2024
Source: J.P. Morgan Strategic Research, China SCIO, VOA, Lawfare Institute, China Briefing, USTR, Australia DFAT, MOE UAE, CR
As global economic integration has slowed, introduced policies include a rise in targeted incentives
geopolitical tensions have risen, and there has been a by governments via subsidies and investments that
resurgence in industrial policy by G7 countries with include greater government funding in promoting
restrictions on cross-border movements of capital, innovation research and onshore production. New US
technology, workers and international payments with industrial policies, including the Bipartisan Infrastructure
more restrictions on trade (in particular, trade in Law, Inflation Reduction Act (IRA) and CHIPS and
strategic goods such as critical minerals and Science Act, have the goal of reconfiguring trade and
semiconductors). The resurgence in industrial policy by supply chains to boost domestic industry while working
G7 countries mirrors the type of industrial policy that in tandem with friendly allies or partners. The
China has long employed. The rise in the share of procurement of transition minerals will be critical to
commercial policies that constitute industry policy address the new supercycle for “green metals.” The IRA
increased from 18% in 2009 to 46% in 2019, with the incentivizes the onshoring of green industrial
most dramatic increases occurring since 2019. Trade manufacturing by subsidizing solar manufacturing or
restrictions are on the rise to secure domestic supply, electric vehicles with batteries made in North America.
while governments are introducing import restrictions in European, South Korean and Japanese automakers have
the name of national security concerns. Recently taken issue with the IRA requirement that electric
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vehicle (EV) assembly can only take place in North increased spending as well as reduced tax revenues,
America (see The Long-Term Strategist: Top long-term fiscal deficits surged through both downturns.
risks and what to do about them, Jan Loeys et al., 18 July Expenditures remain 2.3%-pt of GDP above their 2019
2023). level (see Up, up and away: Assessing government debt
sustainability, Joseph Lupton and Alexander Wise, 22
Figure 7: Resurgence of industrial policy… February 2023).
Share of industrial policy in trade policies
Figure 9: Higher DM fiscal debt
% of GDP; both scales (through est. 2022)
Source: Juhász, Lane, Oehlsen and Pérez (2022).

Source: J.P. Morgan, OECD, IMF (US recession bars)
Figure 8: …alongside the rise in sanctioned countries
Number of countries with financial sanctions (indices, 2016-19 = 100) Figure 10: Fiscal revenues and expenditures in DM
% GDP Dashed lines show pre-recession level and extend 3yrs
Source: J.P. Morgan

Source: Bank for International Settlements, Locational Banking Statistics; FinFlows; Global
Financial Sanctions Database; Institute of International Finance, Capital Flows Tracker;
IMF, Coordinated Direct Investment Survey; IMF, Coordinated Portfolio Investment Politics and geopolitics: Not to be confused
Survey; and IMF staff calculations.
Note: Data indicates the number of countries with financial sanctions (dots) and the share Geopolitical risk and political risk are often used
of countries with financial sanctions in the sample (bars).
interchangeably and should not be confused, as
fragmentation of the world is occurring at both the
Beyond geopolitical risks, there are also concerns that
national and international levels. Political risks related
the upcoming election cycle could lead to less fiscal
to elections and referendums are country-specific risks
discipline in both developed and emerging markets.
Debt sustainability will remain a source of market that are largely domestic in nature. Domestic polarization
volatility in the high for long world. Figure 9 shows that is what it says—citizens and voters move away from the
debt as a share of GDP has risen materially across the center into opposing poles that have little communication
developed markets, with public sector debt jumping with each other and mostly aim to oppose whatever the
more than 30%-pts of GDP for 13 of the 21 major other side proposes. Geopolitical risks involve economic
developed economies examined and surged over 45%-pts and military conflict beyond the nation state with
for 9 since the Global Financial Crisis (GFC). The fiscal multinational dimensions that can include war, trade
deficit also soared as discretionary fiscal packages barriers and commodity supply shocks. There are
amounted to a cumulative 4% of GDP between 2008 and commonalities, as both stand in opposition to open,
2010 and 3% of GDP in 2020 alone. Combined with democratic societies and cross-country integration and
automatic stabilizers that operated through both cooperation. Both wax and wane over time and seem
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largely a response to growing inequality and economic the exception of the Yom Kippur war of 1973, none of
dislocation and marginalization and have led to a rise in the other 10 major military conflicts involving Israel
populism over the last few decades. Three interrelated resulted in a lasting impact on oil prices. Looking at
factors have likely contributed to growing income Brent oil prices three months before and after the
inequality in most countries—technological progress inception of each conflict, the team concludes that
(e.g., the rise of automation), globalization, and historically, regional conflicts involving Israel often
deregulation of financial markets. All three trends have prompted a sharp increase in oil prices, even with no
generated winners and losers and have weighed on immediate supply loss, likely due to apprehensions about
middle-class income and jobs. The rise in income potential disruptions. Eventually, oil prices tended to
inequality, alongside the increase in economic gradually stabilize and decline, resulting in Brent
dislocation in the wake of the pandemic, has also led to actually trading at a discount to its fundamentally
popular discontent with globalization. There are no signs derived fair value. In these cases, the near-term supply-
that support for anti-establishment parties will decrease demand balance and the resulting change in oil
in the short run. Populism could remain a political force inventories were more important factors to follow than
for a considerable time, with political risks unlikely to war. In contrast, during conflicts involving a major
fade. regional oil producer, oil traded at a wide $7-14/bbl
premium to its fair value for an extended period.
Political dysfunction or deterioration of governance Currently, oil flows have not yet been affected, with
could lead to destabilizing political acts or omissions. limited risk of future supply losses. Beyond the short-
In recent years, many countries have been downgraded term spikes induced by geopolitics, with oil trading in a
on governance and democracy, with populism on the wide $20/bbl range in 2024, our Commodities Research
rise. For example, Freedom House downgraded the US team expects Brent oil to average $83/bbl in 2024. This
in 2017 and 2020 in its annual Freedom in the World scenario assumes Saudi Arabia pumps an additional 250
report.3 There is risk that this trend of deteriorating kbd and Russia increases exports by 150 kbd, with global
governance continues or even accelerates. We have oil inventories likely to stay flat in 2024 and build 1.2 mbd
previously documented how downgrades in these in 2025 (see 2024 Commodities Outlook, J.P. Morgan
rankings have been associated with subsequent equity Commodities Research, 30 November 2023).
market and currency underperformance over the long
run. We see a significant risk that populism, the US- Figure 11: WTI price three months before and after the initiation
China strategic competition and the drive to develop of military conflicts involving Israel
Index Day 0 = 100
national champions and self-sufficiency in sections
crucial to national security may damage global growth
and profit margins (see The Long-Term Strategist: Top
long-term risks and what to do about them, Jan Loeys et
al., 18 July 2023).
Not all political and geopolitical risks are created

equal, and we distinguish between high impact and
low impact risks. For example, while the EU has a high
number of parliamentary elections and center-right
parties have risen in many countries, our European
Source: Britannica, Bloomberg Finance L.P., J.P. Morgan Commodities Research. Note:
strategists see limited systemic risk from the elections the military conflicts exclude the Gaza War (Operation Cast Lead) in December 2008 and
given the broad reduction of the anti-EU stance and the the Israel-Palestine crisis (Operation Guardian of the Walls) in May 2021 due to larger
institutional and practical obstacles to EMU exit. macro-economic factors influencing prices at that time (Global Financial Crisis in 2008-
2009 and post-COVID recovery in 2021).
Similarly, since 1967, there were 20 major military
confrontations in the Middle East and North Africa, 11
of them involving Israel. Our Commodity Strategy team
points out that, strange as it might seem, since 1967, with
3
The ‘political rights’ rating of the United States was
downgraded in 2017, while the ‘civil liberties’ rating was
downgraded in 2020.
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Figure 12: Rank order of low impact versus high impact political and geopolitical risks
Type What makes politics material? Historical examples
• Outcome could alter fiscal and monetary policy
• High impact: Obama’s election in 2008 (US), Abe’s election
• Outcome could trigger sanctions, tariffs and industrial
in 2012 (Japan), Trump’s election in 2016 (US), Biden’s
Political (primarily policy
election in 2020 (US)
domestic) • Outcome could trigger a secular shift in capital flows
• Low/no impact: Merkel's re-election in 2017 (EMU), many
• Outcome could reinforce or reverse a market’s underlying Euro elections where populist parties fail to enter government
direction
What makes geopolitics material? Historical examples

• Conflict involves a major oil producer • High impact: Yom Kippur War 1973 (Israel), Iranian
Geopolitical (primarily • Conflict damages a systemically important economy Revolution in 1979 (Iran), Iran-Iraq War 1980, US-Iraq Wars
international, involves • Conflict results in foreign retaliation or pre-emptive US in 1991 and 2003, Arab Spring in 2011, Brexit in 2016, US-
economic and/or military military action, or foreign retaliation China trade tensions in 2018, Russia-Ukraine War in 2021
conflict) • Outcome reinforces or reverse a market's underlying • Low/local impact: North Korea since 1990s, Syrian Civil War
direction since 2011, Russian annexation of crimes in 2014
Source: J.P. Morgan Strategic Research
New tech brings new threats to democratic the economy (75%). It was about equal to the percentage
processes who said that about government spending (67%) and
immigration (66%).5
In addition to concerns about a possible resurgence of
populism, the wave of upcoming elections has fueled The Center for American Progress has developed a
debate over whether liberal democracy is losing framework for risk categories related to the governance
ground to authoritarianism and autocracy. According and code of conduct of the elections, ranked low to high,
to the EIU’s Democracy Index, 28 of the 71 countries that may warrant certain threat mitigation.6
that it tracks will not meet the essential conditions for a
democratic vote. 4 Russia and Venezuela are slated to Figure 13: Framework for assessing electoral integrity risk
hold elections, but no changes are expected for the
authoritarian regime in Russia. Meanwhile, the de facto
leader of the Venezuela opposition, who would be a
potent electoral threat to Maduro, is still banned from
running, and there is uncertainty on the longevity of the
political agreement and sanctions relief. However, even
for countries where the outcome of the election appears
assured, they can still provide a barometer for the
strongman’s support.
In the US, Democrats, in particular, see the outcome Source: American Progress
of the 2024 elections as important or extremely
important for the future of US democracy. In a recent As the world prepares for a series of elections,
AP poll that surveyed the importance of the coming advances in artificial intelligence (AI) may very well
presidential election for 12 issues, 67% of those surveyed affect upcoming elections, as the technology could be
said the outcome will be very or extremely important to used to generate deepfake images and spread
the future of democracy in the US, ranking behind only misinformation. 7 The prolific use of AI is raising red
4 6
Protecting Democracy Online in 2024 and Beyond, American
2024 is the biggest election year in history, The Economist,
13 Nov 2023 Progress, 14 Sep 2023.
5 7
Americans agree that the 2024 election will be pivotal for Candidates, take this AI election pledge. Or 2024 might break
democracy, but for different reasons, AP News, 15 Dec 2023 us, Washington Post, 26 Oct 2023
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flags on democratic governance as we enter into a slew

of high profile elections across DM and EM countries.
Social media has amplified populist rhetoric and has
been an influence in election outcomes over the past
decade, but the use of generative AI poses major threats
to safeguarding democratic processes and ensuring free
and fair elections. Attempts of insurrections that have
occurred, such as those of January 6, 2021 in the United
States and January 8, 2023 in Brazil, suggest that digital
platforms, including social media apps, will need to
actively monitor and reduce misinformation to ensure
informational integrity. According to Freedom House, at
least 47 governments deployed commentators to
manipulate online discussions in their favor over the last
year, while at least 16 countries used AI to sow doubt,
smear opponents, or influence public debate.
Authoritarian governments have also used AI to enhance
and refine online censorship, as legal frameworks in at
least 22 countries mandate or incentivize digital
platforms to deploy machine learning to remove
disfavored political, social, and religious speech. The
recent election in Argentina had become a testing ground
for AI in campaigns, giving a preview of what is to come
in 2024. In the US, a bipartisan group of Senators,
including Chris Coons, Marsha Blackburn, Amy
Klobuchar and Thom Tillis, have introduced new
regulation on AI to the US Congress in draft legislation
dubbed the Nurture Originals, Foster Art and Keep
Entertainment Safe Act, or, for short, the No Fakes Act,
that seeks to counteract AI reproductions of human
likenesses (visual and sonic) and penalize platforms that
publish generated content without consent.
11
SPA.
10 themes to watch in the markets given the ongoing shifts in the international
order. While it is too early to contemplate outcomes for
2024 US elections the US elections 10 months out, every election since
2004, except 2012, has seen the White House, Senate or
 Based on current polling, the 2024 presidential House flip control. In investor surveys conducted at our
race looks likely to be a repeat of the 2020 Biden- flagship conferences over the past year, respondents have
Trump faceoff. consistently indicated expectations for an incumbent
presidential victory by a narrow margin and split control
 In our view, the US elections carry the most of the Congress. Nevertheless, if the current polling
material risks impacting global economic persists, it is worthwhile to examine Trump’s policy
prospects and markets given the ongoing shifts in record and the spectrum of possible economic
the international order. implications. Decisions taken by the Trump
 We discuss the top 10 themes to watch in administration included withdrawal from a number of
monitoring the US elections. multilateral agreements, including the Paris Agreement,
the imposition of trade tariffs on China, the loosening of
Geoeconomic fragmentation has given rise to global environmental regulations, immigration restrictions and
geopolitical risks at the same time that domestic the biggest corporate tax cuts on record. However, just as
politics are fueling increased populism and there is discussion of “what if Trump is elected,” there
polarization. The prospects for a Biden-Trump runoff should be an equal discussion of “what if Kamala were
for the US elections as well as the rise of far-right parties to assume the presidency” if Biden were unable to
in Europe could receive as much attention as the complete his term. It has also been suggested that there
countries at war this year. These risks do not yet seem could be a third Trump impeachment if he were
priced, and the investor survey conducted by our US convicted and then reelected.
fixed income strategy team in November 2023 shows
that only 27% see the US presidential election as a very We note that both Republican and Democratic speakers
important risk in 2024 (Figure 15). However, the World we have hosted in recent months have argued that
Economic Forum’s Chief Risk Officers Outlook 2023 there could ultimately be little differences in overall
finds that continuing volatility in geopolitical and macro direction between Trump and Biden despite
geoeconomic relations between major economies is the the highly charged rhetoric from Trump. Biden left in
biggest concern for chief risk officers in both the public place most of Trump’s trade policies, including the trade
and private sectors over a longer-term horizon. tariffs. Neither would prioritize bringing down spending
materially, although Biden has proposed tax increases
Notably, a leading concern for foreign policy experts and Trump has said he would oppose the sunset of his
polled in the Council on Foreign Relations’ annual corporate tax cuts in 2025, when they are set to expire.
Preventive Priorities Survey (PPS) is the possibility of Given the combined age of Biden and Trump at 160
domestic terrorism and acts of political violence in years at the end of this year, there has been considerable
the US related the president election. In prior years, market focus on the role of the Vice President.
only overseas or foreign-sourced risks to US interests Independent analysts at our investor conferences have
were evaluated in the PPS, which has been conducted discussed Kamala Harris’ potential role in the future and
since 2008. The PPS evaluates ongoing and potential some have assessed the probability as high as 65% that
conflicts based on their likelihood of occurring in the Kamala Harris might become president in the next three
coming year and their impact on US interests. In their years (see Washington Policy Perspectives: Risk focus
latest survey, the level of concern expressed about the have moved from recession to unsustainable debt, Joyce
risk of politically motivated violence in the US, Chang et al., 12 Sep 2023). Historically, Vice
especially surrounding the upcoming presidential Presidential candidates have been announced days before
election, was too great to disregard. This was rated a or after the first day of the party’s Convention. The
high-likelihood, high-impact contingency, thus Republican Convention is scheduled to take place in
validating its inclusion in this year’s PPS. Milwaukee, WI from July 15-18, 2024.
In our view, the US elections carry the most material In addition to the presidency, all 435 seats in the House
risks of impacting global economic prospects and of Representatives and 33 Senate seats are up for regular
election on November 5, 2024. One Senate seat is also
12
SPA.
up for special election. The campaigns will gain as this is the date when the greatest number of states hold
momentum starting with the Iowa caucus on January 15. their primaries and caucuses. The figure below outlines
The New Hampshire primary follows on January 23. On key dates in the run-up to the elections.
March 5, Super Tuesday will bring millions to the polls,
Figure 14: Key US election dates
Source: J.P. Morgan Strategic Research, 270toWin
Figure 15: US investors see macro risks as greater than geopolitical risks
Market Drivers: How important of a driver of US fixed income markets do you think each of the following factors will be in 2024?
Source: J.P. Morgan

Note: Choices were shown to respondents in a randomized order and are shown here sorted by decreasing weighted average. Not very important = 0, Somewhat important = 1, Very important = 2
13
SPA.
We highlight 10 themes to monitor that may influence Figure 16: Since the mid-1990s, the share of Americans with
voter behavior and the election outcome below. unfavorable views
% who have an unfavorable view of both the Republican and Democratic
parties
1) Concerns on election integrity and
changes to voting procedures
Voters remain concerned about the fairness and
integrity of elections, although nearly two-thirds of
Americans are very or somewhat confident in election
accuracy.8 However, the gap in confidence between
Democrats and Republicans has never been wider at
45%-pts. The latest available poll by Gallup shows that
Republicans’ confidence level stands at 40% vs. 85% for
Democrats, which is the largest gap Gallup has recorded
on this measure since 2004, exceeding the previous high Source: Pew Research Center; Yearly average of survey data from Pew Research Center
of 32%-pts, when former President Trump questioned American Trends Panel (2020-2023) and Pew Research Center phone surveys of U.S.
adults (1994-2019). “Americans Dismal Views of the Nation’s Politics”
the validity of mail-in voting in the 2020 elections.9 Note: Based on those who rated both the Republican and Democratic parties.
According to a recent study released by the Public Over the past two years, nearly every state has made
Religion Research Institute (PRRI), in partnership some change to its voting laws, according to a report
with the Brookings Institution, 75% of Americans by the Voting Rights Lab. More states have expanded
surveyed view the “future of American democracy as voting access, with 20 states making it easier to vote by
at risk in the 2024 presidential election.” Democrats, mail, while 11 states have made the practice more
in particular, see the outcome of the 2024 election as restrictive. At present, 22 states have automatic voter
important or extremely important for the future of US registration. The changes to voting procedures reflect
democracy. In a recent AP poll that surveyed the political party dynamics, as Democratic-led states have
importance of the coming presidential election for 12 expanded voting access by institutionalizing pandemic-
issues, 67% of those surveyed said the outcome will be era policies that permitted voting by mail while
very or extremely important to the future of democracy Republican states have tightened rules in response to
in the US, ranking behind only the economy (75%). It concerns about election integrity.
was about equal to the percentage who said that about Figure 17: States head in different directions on mail voting
government spending (67%) and immigration (66%).10A
survey of investors in charge of almost $10trn worth of
assets found that more than 90% believe threats to US
democracy are rising, and less than 30% are confident
that public companies are ready to manage that risk,
according to the survey conducted by the States United
Democracy Center, in partnership with the Brookings
Institution. In the latest survey conducted by Pew
Research Center, nearly 3 in 10 Americans expressed an
unfavorable opinion of both major political parties—the
highest share in at least three decades, according to a
July 2023 survey. Overall, 28% of Americans have an
unfavorable opinion of both the Republican and
Democratic parties. This is more than quadruple the
share in 1994, when just 6% of Americans viewed both
parties negatively.
Source: Voting Rights Lab
8 10
Confidence in Election Integrity Hides Deep Partisan Divide, Americans agree that the 2024 elections will be pivotal for
Justin McCarthy, Gallup, 4 Nov 2022 democracy, but for different reasons, AP News, 15 Dec 2023
9
Ibid
14
SPA.
2) Voter turnout and implications for Figure 18: Turnout for Presidential Elections 1948-2020
electoral outcomes
The elections of 2018, 2020 and 2022 were three of the
highest-turnout US elections of their respective types
in decades, and we expect high voter turnout for the
2024 elections. Voter turnout is often cited as a key
driver of electoral outcomes, but there is often a
disconnect between reality vs. perception. Low
Democratic turnout has been cited as a factor in Hillary
Clinton’s defeat in the 2016 race, while low Republican
turnout has been cited as the rationale for why the
expected “red wave” did not materialize in the 2022 Source: Turnout data are from United States Election Project. http://www.electproject.org.
midterm elections. Trump’s base of support, estimated
between 30-40% of the Republican electorate, will turn For the 2022 midterm elections, the Pew Research
out in high numbers, according to political analysts, Center found that Republicans improved their
while some analysts expect high voter turnout from performance due to higher voter turnout, contrary to
Democrats who will vote against Trump even if they are some popular narratives, while preferences followed
disappointed by some aspects of Biden’s performance. familiar patterns. Younger voters, Black voters and
those living in urban areas supported Democratic
Examining the analysis of voter turnout, there is no candidates, while older, white and rural votes supported
definitive evidence that turnout is correlated with Republicans. In the 2022 midterms, 54% of men cast
partisan vote choice or that turnout rates predict ballots for GOP candidates, while 44% preferred
election results.11 About 80% of voters cast their ballot Democrats. Republicans also gained support from a
for the party they identify with, and even higher shares of higher share of women compared with previous
the vote in recent presidential elections have reflected elections. 48% of women voters cast ballots for GOP
party identification. The remaining 20% of votes is candidates in 2022, while 51% favored Democrats. In
comprised of independent voters and those who identify 2018, 40% voted for Republicans, while 58% supported
as Democrat and Republican but choose to vote for Democrats. These shifts in margins largely reflect
another. In recent elections, Republicans have had a differential turnout rather than shifting preferences,
higher turnout on Election Day, but Democrats have had according to the July 2023 Pew Research Center survey.
a higher turnout for early voting and mail-in ballots.
White voters have been more consistent voters than
The 2020 presidential election had the highest voter Black, Hispanic and Asian voters, according to the
turnout since the 1900 election, with 155mn people July 2023 Pew Research Center survey. They report
turning out to vote or 66.8% of citizens 18 years and that 43% of White voters eligible to vote participated in
older voting in the election, according to data from all three elections, with significant margin over other
the 2020 Current Population Survey Voting and racial groups. By comparison, Black, Hispanic and Asian
Registration Supplement. Even the 2022 midterm adults lagged far behind, with 27% of Black, 19% of
election turnout at 46% exceeded that of all midterm Hispanic and 21% of Asian age-eligible citizens voting
elections since 1970.12 As with past elections, a higher in all three elections. Hispanic citizens were most likely
share of women (68.4%) than men (65.0%) turned out to to have not voted in any of the most recent three general
vote. Voter turnout also increased as age, educational elections (47% compared with 36% for Black and 31%
attainment and income increased. Voter turnout was for Asian citizens ages 22 and older in 2022).
highest among those ages 65 to 74 at 76%, while the
percentage was lowest among those ages 18 to 24 at Across Black, Hispanic and Asian voters, the
51.4%. majority identify as Democrats, although Republican
candidates have gained some ground in the past four
years among Hispanic voters. Black voters favored
11 12
Does High Voter Turnout Help One Party?, Daron R. Shaw Voter turnout, 2018-2022, PEW Research Center, 12 July
and John R. Petrocik, National Affairs, 2021 2023
15
SPA.
Democratic candidates by the highest margin in the 2022 Figure 20: Trump currently leads in the polling of five of six
midterm elections, voting 93% for Democratic swing states…
Margins are calculated using unrounded figures, %
candidates and 5% for Republican candidates in the US
House of Representatives elections. Hispanic and Asian
voters clearly favored Democratic candidates as well, but
by narrower margins—60% to 39% for Hispanic voters
and 68% to 32% for Asian voters.
Figure 19: White adults voted more consistently than those of

other racial or ethnic backgrounds from 2018 through 2022
% of U.S. citizens ages 18 and olderwho voted in __ elections out of
2018, 2020 and 2022
Source: New York Times / Siena College polls of 3,662 registered voters from October 22
to November 3
Figure 21: …the same swing states where Biden won the 2020
election by a narrow margin
Vote margin, %
Source: Surveys of U.S. adults conducted Nov. 7-16, 2018, and Nov. 16-27, 2022, plus
data from panelist profile surveys. Pew Research Center
*Estimates for Asian adults representative of English speakers only. Low effective sample
size of Asian adults (88) with reliable turnout and vote choice data for 2018, 2020, and
2022. Notes: Based on 7.041 adult citizens who were 18 or older in 2018 and for whom
reliable data on turnout and vote choice are available for the 2018, 2020 and 2022 general
elections. Turnout was verified using official state election records. Vote choice for all
years is from a post-election survey with additional data from panelist profile surveys.
White, Black and Asian adults include only those who are not Hispanic. Hispanic adults
are of any race.
3) The importance of key swing states and

redistricting
National surveys have so far shown that 2024 US
elections will be a very close race, while some
battleground state polls have shown Trump with an Source: National Election Pool/Edison Research, 270towin, J.P. Morgan Strategic Research
edge in the places that will likely determine the
outcome of the election. Based on latest polling data, Swing state voters trust Trump by a large margin on
Biden was trailing Trump in five of the six most key issues such as immigration, the economy, crime
important battleground states one year before the 2024 and US-China relations (Figure 22). Across issues
election by margins of 4-10%-pts. The one swing state such as immigration, the economy, crime and US-China
where Biden was ahead was Wisconsin, but only by 2%- relations, swing state voters Trust trump by double-digit
pts (Figure 20). In 2020, Biden won all six swing states margins. Meanwhile, voters overwhelming trust Biden
on issues such as climate change, followed by abortion.
by narrow margins of 0.2-2.8%-pts, or less than half of
where polls had indicated (Figure 21).
16
SPA.
Figure 22: Swing-state voters trust Trump on economy incumbency, Republicans are actually the ones who have
Net Trump trust advantage on key issues gained ground from redistricting, as they had a net gain
of three to four seats in 2022 due to the new lines alone.
4) Rise of independent voters and third-party

candidates
Polls show an increase in possible willingness to vote
for an independent, third-party candidate, coinciding
with the low-approval and favorability numbers for
Biden and Trump. Gallup polling last month found that
a record 41% of Americans see themselves as politically
independent, outnumbering Republican and Democratic
identifiers (28% apiece). The RealClearPolitics average
of polls testing Biden and Trump against announced
independent candidates Robert F. Kennedy and Cornel
West and likely Green Party candidate Jill Stein shows
Source: Bloomberg News/Morning Consult poll. Note: Poll conducted online of 5,023
registered voters, Oct 5 through Oct 10. Margin of error is +/- 1 percentage point. 17.2% of voters willing to go rogue (Figure 24). However,
we would not exaggerate the impact on overall voting
Since the 2020 elections, a new congressional map is trends. Between 2016 and 2020, the non-major party share
in place for each of the 50 states due to redistricting, of the presidential vote dropped from 5.7% to 1.9%.
which occurs every 10 years following the Census to
maintain equal presentation in the House. At the Figure 23: U.S. Political Party Identification, 1988-2022
In politics, as of today, do you consider yourself a Republican, a
conclusion of the Census, seats in the House are Democrat, or an independent?
reapportioned to reflect changes in state population.
Every state is guaranteed one seat and the largest states
can receive 50 or more seats. Each state is then required
to go through the process of redrawing its electoral map,
following certain federal redistricting requirements. The
2021-2022 congressional redistricting cycle resulted in
six more Democratic-leaning seats than the old maps and
the same number of Republican-leaning seats, according
to Project 538. Project 538 reports that there are 187
Democratic-leaning seats, 208 Republican leaning seats
and 40 highly competitive seats in the new maps. For
most states, the state legislature has primary control of Source: Gallup
the redistricting progress, both for state legislative Figure 24: Rise of independent voters
districts and for congressional districts. However, 15 %
states use special redistricting commissions to draw state
legislative districts, while 10 states use an advisory or
remedial commission. Several maps have been
challenged in courts. The Project 538 analysis points out
that the Democratic-leaning seats actually increased as a
result of redistricting, although Republicans went into
the cycle with control over drawing more districts. This
is attributed to aggressive map-drawing by Democrats in
states such as Illinois as well as court decisions
overturning Republican gerrymanders in states like
Source: J.P. Morgan Strategic Research, RealClear Polling, Quinnipiac, Harvard-Harris,
North Carolina.13 However, after accounting for FOX News, Emerson, I&I/TIPP
13 congressional district in the U.S. Here is where we stand,

All about redistricting: Who draws the lines?, Justin Levitt,
Loyola Law School and States are redrawing every Politico, 1 Sep 2022
17
SPA.
5) Key voter issues—Economy and abortion as a key voting issue. Women have registered and voted
at higher rates than men in every presidential election
Voters consistently rate the US economy as their top
since 1980. As of 2022, there were 7.4mn more women
issue going into the 2024 election, but there has never
than the number of men registered to vote, according to
been such a significant gap between the actual health
the Center for American Women and Politics.14 A higher
of the economy and public perception. Employers
proportion of women have voted since the mid-1990s,
added 216,000 jobs in December, the unemployment rate
and the gender gap is largest among voters between the
remained steady at 3.7% and inflation has plummeted
ages of 18-44, while male voters turn out at higher rates
from 9.1% in June 2022 to 3.1%, yet people remain
than women for older voters aged 65 and up. In the
dejected about the economy compared to pre-COVID
month after the Supreme Court struck down Roe versus
levels (Figure 25). In an AP-NORC poll, many
Wade, the number of women registering to vote in the
Americans said that household expenses are outpacing
November 2022 midterm elections increased by 35% in
earnings and that they worry about their financial futures,
10 states that share voter registration data, including
with 8 in 10 saying their overall household debt is higher
Kansas, Pennsylvania, Ohio, Oklahoma, Florida, North
or about the same as it was a year ago, half currently
Carolina, Idaho, Alabama, New Mexico and Maine.15
have credit card debt and about 1 in 4 have medical debt.
Just 15% say household savings have increased over the
Female voter backlash is cited as limiting Republican
last year. Relatively few Americans say they’re very or
gains in the midterm elections following the June
extremely confident that they could pay an unexpected
2022 Supreme Court’s decision to eliminate the right
medical expense (26%) or have enough money for
to abortion at the nationwide level. While nearly two
retirement (18%). About three-quarters of Americans
dozen GOP-dominated states have imposed restrictions
describe the nation’s economy as poor. A New York
on abortion, support for reproductive freedom has
Times/Sienna survey of swing state voters asked young
prevailed in every state-level referendum, including in
adults whether economic or social issues would be more
the most conservative states such as Kansas, Ohio and
important in determining their vote in 2024, and 62%
Kentucky. 7 states have directly voted on abortion since
chose economic issues, the largest share of any age
the 2022 Supreme court decision, and 23 states enable
cohort, while only 29% opted for social issues. 62% of
citizens to put constitutional amendments on the ballot,
them trust Trump to do a better job managing the
while others only allow a state legislature to put them
economy, compared to just 34% of them who think that
before the voters.
Biden would.
In the latest Reuters/Ipsos poll conducted in
Figure 25: Index of Consumer Sentiment and news heard of
recent changes in business conditions December 2023, 70% of those surveyed indicated that
protecting abortion access would be an important
issue in determining their vote, while half of those
surveyed indicated that they would support
legislation legalizing abortion nationwide, including
one-third of Republicans. It remains to be seen whether
women will break with the Republican party over this
issue compared to economic and other priorities.16
The 2022 Supreme Court decision has polarized

Democratic and Republican views of the US Supreme
Court. For the first time in 30 years, views on the
Supreme Court are more negative than positive, a July
Source: University of Michigan 2023 survey found. A narrow majority (54%) have an
unfavorable view of the high court, while fewer than half
The 2024 election could see record turnout from women (44%) express a favorable one. The court’s favorable
voters, with abortion rights and reproductive freedom rating has declined 26%-pts since 2020, primarily due to
14 16
Gender Differences in Voter Turnout, Rutgers, 2022 How abortion could impact the 2024 US elections, Joseph
15
More Women Register to Vote After Supreme Court Ax, Reuters, 14 Dec 2023
Abortion Decision, VOA, 6 Nov 2022
18
SPA.
a decline among Democrats and Democratic-leaning on shelter, food, and other services through the end of
independents, just 24% of whom express a favorable July 2023, while Chicago estimates it will have spent
opinion of the court. $255.7mn between August 2022 and the end of 2023.17
The Pew Research Center estimates that the six states
Figure 26: Favorable views of Supreme Court at lowest point in with the largest unauthorized immigrant populations in
more than three decades of public opinion polling 2021 were California (1.9mn), Texas (1.6mn), Florida
% who says they have q(n)__ opinion of the Supreme Court
(900k), New York (600k), New Jersey (450k) and
Illinois (400k).
Figure 27: Annual Southwest land border encounters since 1990

Number of encounters by fiscal year, from Oct to Sep. In millions.
Source: Survey of U.S. adults conducted July 10-16, 2023. Notes: No answer responses
not shown. Survey data from Pew Research Center’s American Trends Panel (august
2019-July 2023) and Center phone surveys (1987-January 2019).
6) Rise of nativism alongside rise of

immigration now in focus
Immigration will be a major wedge issue in 2024, as Source: U.S. Customs and Borders Protection. Note only encounters made by U.S. Border
Patrol at the Southwestern land border are counted.
the border crisis and migrant surge is overwhelming
already-stretched resources. Federal authorities
Figure 28: States with the most unauthorized immigrants
reported a seven-day average of more than 9,600 US unauthorized immigrant population by state, 2021.
migrants at the southern border in December, which is
among the highest amounts ever recorded as the US
wrestles with an unprecedented surge. In 2023, for the
second year in a row, the US Customs and Borders
Protection (CBP) agency recorded over 2mn illegal
crossings at the US-Mexican border (Figure 27). This
figure is likely much higher, as these statistics are often
undercounted for unauthorized immigrants. The latest
estimate of the total number of unauthorized immigrants
living in the US from the Pew Research Center was
around 10.5mn in 2021, but the latest data from US CBP
suggests that the total number living in the US has now
surpassed the peak of 12.2mn that was recorded in 2007.
Republican governors have responded to the high

number of migrant crossings at the US-Mexico border by
Source: Pew Research Center. Estimates based on augmented US Census Bureau Data.
busing migrants to blue states and cities such as New
York City, New Jersey and Chicago, IL, which are all
struggling with the financial cost to absorb and integrate
new migrants. New York City spent an estimated $1.7bn
17
New York and other U.S. cities struggle with high costs of
migrant arrivals, Muzaffar Chishti et al., Migration Policy
Institute, 27 Sep 2023
19
SPA.
7) The rise of Gen Z as a voting force 8) Projections for record political ad

Gen Z is estimated to account for nearly 20% of votes spending
in the 2024 election, and they reflect the growing The 2024 election cycle is projected to be the most
racial and ethnic diversity of the US electorate. In expensive to date, with estimates of anticipated ad
2024, Gen Z will make up over 40mn potential voters, spending ranging from $10bn to $16bn across all
including 8mn who will have newly reached voting age platforms, or at least 30% higher than the spend on
since 2022.18 The 2022 elections were the first midterm advertising in the 2019-2020 election cycle. According
contest in which Gen Z made up the entire 18-24 cohort to the ad tracking firm AdImpact, ad spending will be
of potential voters, and they turned out to vote in historic 13% higher than the 2019-2020 cycle’s record of
numbers. While turnout for the 2020 elections was $9.02bn, projecting $2.7bn to be spent on ads in the
lowest among Gen Z voters ages 18 to 24 at 51.4%, presidential race.19 They expect spending on the
trends have shifted over the past two years. Gen Z Presidential general election to be concentrated in seven
boasted the highest voter turnout as measured by key states—Pennsylvania, Arizona, Georgia, Michigan,
generation for the 2022 midterm elections. According to North Carolina, Nevada, and Wisconsin. AdImpact
the US Census’ Current Population Survey Voting and further projected $2.1bn in ad spending on Senate races,
Registration Supplement, 28.4% of 18–24-year-olds cast $1.7bn in ad spending on House contests, $361mn in ad
a ballot in 2022 compared to 23% of millennials, 23.5% spending for gubernatorial elections, and $3.3bn spent on
of Gen X and 27.9% of baby boomers who voted when ads in various down-ballot races and other initiatives.
each generation first made up the whole of that age Group M, one of the world’s largest paid advertising
group. Together with the youngest millennials, people agencies, asserts that political ad revenue could reach
ages 18-34 are poised to be a potential force in the next $15.9bn in 2024 or $17.1bn including direct mail.20
presidential election. Strong youth support for
Democratic candidates has been a defining feature of Campaign funding is distinct from political ad
recent elections, including the 2020 presidential race. spending. Every presidential candidate is required to
register with the Federal Election Commission (FEC) and
The CIRCLE Pre-2024 Election Youth Survey file regular financial reports detailing their fundraising
provides key insights on Gen Z priorities in the and campaign spending. The most recent campaign
election cycle. A majority, or 57%, say they’re finance reports filed by key candidates running in the
“extremely likely” to vote in 2024, and another 15% say 2024 presidential election are the October 2023 quarterly
they’re “fairly likely” to cast a ballot in the election, reports, which cover all funds raised and spent through
Among youth who are extremely likely to vote, 51% September 30, 2023. Trump had three times as much
back the Democratic candidate, 30% the Republican, and cash at $37.5mn compared to any of his rivals, according
16% undecided, though groups like Black youth and to his public filing with the Federal Election
youth without college experience, who are getting less Commission.21 Biden, the Democratic National
information about the election and support to participate, Committee and their joint fundraising committees filed
are less likely to say they will cast a ballot. Youth overall that they had raised $71mn combined as of September
prefer a Democratic candidate by a double-digit margin, 30, 2023.22
but nearly a third are undecided and some groups of
youth favor a GOP nominee. Issues like climate change
and gun violence remain at the center of youth
engagement with politics and elections, but the cost of
living is, by a wide margin, young people’s top concern.
18 21
41 Million Members of Gen Z Will Be Eligible to Vote in Trump dominates 2024 GOP cash race, Axios, 18 Oct 2023
2024, CIRCLE, 18 Oct 2023 22
Biden, DNC raise $71 million in third quarter, Politico, 15
19
2024 Political Spending Projections Report, AdImpact, 2024 Oct 2023
20
U.S. political ad market projected to reach record $16 billion
in 2024, Axios, 8 Dec 2023
20
SPA.
9) Greater use of AI and social media 10) Foreign policy implications of Biden vs.
influence Trump
Advances in artificial intelligence (AI) and social US presidential elections rarely focus on foreign
media could sway public opinion in the upcoming policy, but the election outcome could have outsized
election. AI technology could be used to generate implications for foreign policy. The foreign policy of a
deepfake images and spread misinformation, while the second Trump administration could mark a return to a
effective use of TikTok is seen as having the ability to more transactional focus based on immediate events to
influence Gen Z voters, who turned out at a higher rate generate political benefits, regardless of past precedents.
than other generations to vote in recent elections. During the campaign, Trump has stated that he would
reduce defense aid to Europe and revise NATO, place
Democratic-leaning independents are much more further restrictions on trade with China, propose a 10%
likely than Republicans and Republican leaners to tariff across the board to place a “ring around the US
support the government taking steps to restrict false economy” and propose deploying US Special Forces
information online (70% vs. 39%). There was virtually against Mexican cartels. Trump has said he plans to
no difference between the parties in 2018, but the share reinstate an executive order he issued in the final months
of Democrats who support government intervention has of his first term, which was never fully implemented, that
grown from 40% in 2018 to 70% in 2023, while the would allow him to more easily dismiss civil servants. In
share of Republicans who hold this view has not changed a little-reported document published on Agenda47 earlier
much. There is a similar gap between the shares of this year, Trump said he would establish a “Truth and
Democrats and Republicans who say technology Reconciliation Commission,” which would, among other
companies should restrict false information online. functions, publish documents related to “Deep State”
abuses of power. He would also create a separate
Figure 29: Democrats have become more supportive than “auditing” body meant to monitor intelligence gathering
Republicans of government restriction of false information online in real time.23 We highlight key foreign policy decisions
% of U.S. adults who say…
initiated during the Trump administration in Figure 31.
Looking at the international views of Biden, they are
largely positive. The Pew Research Center survey
conducted in July 2023 shows that a median of 54%
express confidence in Biden, while 39% say they lack
confidence in him.24 Overwhelmingly, respondents
believe the US interferes in the affairs of other countries
– a median of 82% say it does this a great deal or fair
amount – but most also believe the US contributes to
peace and stability around the world. Turning to
international views on Trump, at the end of Trump’s
term, the approval rating for the US stood at 30%.
compared to 48% during his first year as president,
according to Gallup surveys.25 In the latest NYT/Siena
College poll, the EU, Canada and UK have the least
favorable views of Trump.
Source: Pew Research Center. Survey of U.S. adults conducted June 5-11, 2023.
23 25
The Trumpist Manifesto, ECFR, 4 Dec 2023 and Trump’s Global Opinion Of U.S. Bounces Back After Historic Lows
foreign policy: rethink NATO, troops to Mexico, boost tariffs, Under Trump, Forbes, 21 Apr 2022
Gram Slattery, Reuters, 18 Dec 2023
24
International Views of Biden and U.S. Largely Positive, Pew
Research Center, 27 Jun 2023
21
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Figure 30: How the world views US leaders and political parties
Net favorability* rating of the following political figures and parties
among adults in each country
Source: NYTimes/Siena College polls of 3,662 registered voters from Oct 22 to Nov 3
Figure 31: Timeline of Trump’s key foreign policy decisions
Source: CFR, J.P. Morgan Strategic Research
22
SPA.
Monitoring EM elections in 2024 sanctions removal, Venezuela’s presidential election will

be in focus. Ghana’s presidential election is poised to be
tightly contested given a backdrop of domestic and
 Elections in Taiwan, India, South Africa, external debt restructuring, while elections in Senegal
Romania and Mexico are the standouts that should be more straightforward. The election outcome is
could have an impact on domestic macro and less clear in Pakistan, as a caretaker government is
market outlooks. tasked with organizing a credible election process while
 It remains to be seen whether Ukraine and adhering to IMF reform conditions and navigating
Venezuela will hold elections as scheduled. sizeable external repayments.
 Frontier markets suffering from balance of Figure 32: EM’s 2024 election calendar
payments pressures and without market access
Country Election type Date
face a heavy election calendar, with opposition
Bangladesh Presidential & Legislative Jan-24*
parties seen as gaining ground.
Taiwan Presidential & Legislative 13-Jan-24
This section of our research note is extracted from the El Salvador Presidential & Legislative 04-Feb-24
publications EM economic outlook 2024: Sense and Pakistan Parliamentary election 08-Feb-24
Sensibility published on Nov 22 by Aziz et al., and Indonesia Presidential & Legislative 14-Feb-24
Emerging Markets Outlook and Strategy for 2024
Senegal Presidential election 25-Feb-24
published on Nov 21 by Oganes, Goulden et al.
Turkey Local elections 31-Mar-24
2024 will see some important elections for large Ukraine Presidential election 31-Mar-24
emerging market countries (see Figure 30). Elections Korea Legislative election 10-Apr-24
in India, South Africa, Romania and Mexico are the India Parliamentary election May-24*
standouts and could have an impact on domestic macro
South Africa Presidential & Parliamentary May-24*
and market outlooks. In Mexico, the prospect of
Panama Presidential & Legislative 05-May-24
continuity (at the political party level) would keep
potential populist policies and fiscal concerns in focus, Dominican
Presidential & Legislative 19-May-24
even though markets may breathe a sigh of relief if Republic
polling remains clear cut in favor of the incumbent party Mexico Presidential & Legislative 02-Jun-24
in the lead up to elections. Romania is facing both EU Countries European parliament 6-9 Jun-24
domestic and European parliamentary elections, which Country Election type Date
could have fiscal implications, while South Africa’s
Croatia Parliamentary election 22-Jul-24
national election is set to be a referendum on the ruling
ANC party. Should the ANC require a coalition with Sri Lanka Presidential & Legislative Sep-24*
some opposition parties to remain in power, it would Romania Local elections Sep-24*
have domestic macro and market implications. While Brazil Municipal 1st round 06-Oct-24
general elections are still a few months away in India, the Mozambique Presidential & Legislative 09-Oct-24
few state elections later this month will serve as a key Georgia Presidential & Parliamentary 26-Oct-24
litmus test for the ruling coalition government.
Brazil Municipal 2nd round 27-Oct-24
There are a lot more elections in frontier market Uruguay Presidential & Legislative 27-Oct-24
economies, some with elevated balance of payments Moldova Presidential Nov-24*
pressures (Pakistan, El Salvador), while others have Romania Presidential (1st & 2nd round) Oct-Nov-24*
active debt restructuring processes and IMF Uruguay Presidential 2nd round 24-Nov-24
programmes (Senegal, Ukraine and Ghana). President
Romania Parliamentary (1st & 2nd round) Nov-Dec-24*
Bukele remains the clear favorite in El Salvador, while
the election outcome in the Dominican Republic will Venezuela Presidential Dec-24*
likely be closer. In both cases, we expect broad-based Ghana Presidential & Legislative 07-Dec-24
policy continuity, with the Dominican Republic Tunisia Presidential & Legislative 2024*
continuing its business-friendly policies and El Source: National Democratic Institute, IFES, National election commissions, J.P. Morgan.
Salvador’s fiscal situation remaining a concern. Post *Exact date unconfirmed
23
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Our EM equity strategy team has also examined the Korea: A general legislation election will take place in
implications of the US election on the EM 2024 April 2024 for a four-year term for law makers. The
elections, including co-movement of EM and US election results should frame the legislative policy
equities, whether US fiscal dynamics could be environment of second half of President Yoon’s term, as
mimicked in EM, and USD directionality as a driver the ruling party currently possesses a relatively minor
for EM stocks. They have long held the view that the share of the National Assembly. The election outcome is
outlook for EM equities cannot be dissociated from hard to predict given the uncertainties on the election
political regimes. Most EM economies are poised to agenda and candidacies. That said, our base case is for a
narrow fiscal deficits into next year even as aggregate continuity in macroeconomic policy stances after the
growth is forecast to slow slightly. Our EM economists election.
forecast the aggregate fiscal deficit as % of GDP for
emerging markets to decline to -4.0% in 2024 from -4.2% Taiwan: Taiwan’s upcoming presidential election will
this year. However, EM markets holding that should be held on January 13, 2024. Mr. Lai Ching-Te, who will
present twin deficits >2% of GDP by of the end of 2024 run as the candidate for the ruling, traditionally pro-
include: South Africa and Turkey in CEEMEA and independence Democratic Progressive Party (DPP), has
Brazil, Chile, and Colombia in LatAm (EM Lighthouse: led in early opinion polls. Mr. Hou Yu-Ih will be the
US Equity Gravitational Forces on EM, Pedro Martins candidate for the main opposition party Kuomintang
Junior, 13 Dec 2024). (KMT), which traditionally holds a benign cross-strait
policy tone. In addition, Mr. Ko Wen-Je will run for the
Elections by country Taiwan People’s Party (TPP). Meanwhile, the KMT and
TPP have agreed to team up and run a united campaign,
India: The general elections to elect a new government
which would pose a formidable challenge to the DPP.
in India will be held in April-May 2024. This will be a
The Taiwan presidential election outlook will have
key macro event for markets in that the outcome will
significant implications on cross-strait and US-China
have an important bearing on policy direction. The ruling
relations for the coming years.
National Democratic Alliance (NDA), led by the
Bharatiya Janata Party (BJP), with Narendra Modi as
Romania: Romania faces super-elections in 2024, with
Prime Minister, will vie for a third term. The first-past-
European, local, general and presidential elections. The
the-post election will be conducted for 543 parliamentary
cost of those is already visible in higher pension
seats and an alliance with the majority will form the
expenditures, likely to be offset with tax hikes post
government. In the last general election in 2019, the BJP
elections. Polls show a continuation of the same
secured the highest 303 seats, followed by the Indian
parliamentary majority, so economic policies should
National Congress (INC) with 52 seats. As a precursor to
keep the EU orientation.
the general elections, polls in five states are being
conducted in November 2023 whose results should be
South Africa: In South Africa national elections are set
declared in the first week of December.
to take place sometime between May and August 2024.
For the first time, the ruling ANC risks support dipping
Indonesia: Indonesia will hold both parliamentary and
below the 50% mark, down from 57% achieved in 2019.
presidential elections next year to elect the president,
While a significant share of registered voters currently is
vice president and members of national and regional
undecided, recent polling generally puts ANC support
legislative bodies. The newly elected members of the
between 43% and 52%. In the event of a coalition
MPR will be sworn in on 1 October 2024, while the
between the ANC and smaller parties, the policy outlook
elected President and Vice President will be sworn in on
would not change materially. However, policy
20 October 2024. The first round of presidential elections
uncertainty would significantly rise in the event of a tie-
will be held on February 14, and if no presidential ticket
up with opposition party EFF.
pair gets more than 50%, there will be a second round
election to be held on June 26. Based on 4 simulation
Mexico: In Mexico, federal elections will take place on
surveys on the upcoming presidential election, the pair of
June 2nd with a full reshuffle of the Congress, plus nine
Prabowo (Minister of Defense under Jokowi) and Gibran
state elections and the all-important Presidential contest.
(Mayor of Solo, Jokowi’s son) are leading in the polls
Preliminary polls give incumbent Morena a wide double-
among the 3 candidate pairs.
digit lead over opposition coalition FAM and the social
democracy party MC. We expect Morena’s Claudia
24
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Sheinbaum to win (there is no reelection in Mexico) and pressures could pave the way for the main opposition
keep Morena in power for another six-year term. Polls party (led by former president John Mahama) to regain
suggest both chambers will reflect a more balanced power. However, we think it will be a tight contest
Congress that would prevent constitutional changes from between him and the current vice president, Mahamudu
populist Morena. Given the success of the AMLO Bawumia, who is the candidate for the ruling New
administration on the back of strong electoral spending, Patriotic Party (NPP). We see room for some fiscal
we see Sheinbaum maintaining the same approach and slippage as was the case during the 2020 elections, but
thus keeping fiscal challenges. even in the event of a change in government, we do not
see any significant change in policy, particularly as the
El Salvador: 2024 general elections in El Salvador will country will remain under an IMF programme.
be held on 4th February. The election is expected to be
among the least contested in the region in that current Senegal: Initial agitations about Senegal’s 2024
President Bukele’s popularity should grant him a presidential election have been partly quelled after the
comfortable win and lead to policy continuity, including incumbent President Macky Sall announced he will not
fiscal. seek re-election after serving two terms. Senegal’s
economic fundamentals should continue to give the
Dominican Republic: Dominican Republic’s 2024 economy a boost for the next few years irrespective of
general elections will take place on 19th May. While it is the government of the day. The current Prime Minister
likely to be won by the incumbent President Luis (PM), Amadou Ba of the incumbent Alliance for the
Abinader of the Modern Revolutionary Party (PRM), a Republic party is the front-runner ahead of the February
large joint opposition block could upset this result. In 2024 elections, while former PM, Idrissa Seck, runner-up
either case, business-friendly policy continuity is at the 2019 elections is the main opposition.
expected.
Pakistan: Elections are slated to be held in mid-

February 2024, following the Election Commission’s
decision to delay polls by three months to complete the
re-delineation of constituency boundaries. According to
opinion polls, former PM Imran Khan and the PTI party
still have a significant lead over the incumbent party
(PML-N), but his path to winning the elections and
forming the next government is very challenging,
considering the court indictments against Khan and mass
departures in the PTI party. The caretaker government’s
political will to maintain fiscal consolidation could be
tested, but economic conditions are gradually improving.
Venezuela: A political agreement between

representatives of Venezuela’s opposition and Maduro
could pave the way for Venezuela’s presidential
elections to take place in 2H24. The agreement’s
electoral roadmap underpins that broad sanctions relief
be granted by the US and also includes setting a process
to lift bans on candidates. However, as the de facto
leader of the opposition, who would be a potent electoral
threat to Maduro, is still banned from running, there is
uncertainty on the longevity of the political agreement
and sanctions relief.
Ghana: 2024 elections will come against the backdrop

of increased social pressures, high inflation, and a
possible conclusion to the country’s debt revamp. These
25
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Navigating the age of populism Populism’s dance: Slide to the left, right, and
crisscross
and its consequences Since the Global Financial Crisis (GFC), the rise of
populism has been pronounced across both DM and
 After escalating post-GFC, populism has declined EM countries. Pre-GFC, populism was seen as largely a
after peaking in 2018-2019; however, a heavy Latin America phenomenon, but the GFC (2008-2009),
2024 electoral cycle raises the possibility of a Eurozone crisis (2009-2013), and Brexit vote and
resurgence. withdrawal (2016-2020) contributed to a rise in populism
across DM countries.
 In our view, populism has gone mainstream, with
populist politics here to stay regardless of 2024 2018-2019 marked an all-time high for populists in
election outcomes due to structural social shifts. power. During that period, 16 countries were ruled by
 The persistently high inequality within countries, populist governments in places such as Italy (Lega/M5S
government), Turkey (Erdogan), Venezuela (Maduro),
driven by rapid technological advancements,
India (Modi), Mexico (AMLO), and the US (Trump),
globalization, and financial markets deregulation,
amongst others. Since then, there has been a steady net
contributed to populism’s rise, but social media
decline, as several countries, such as the UK and US,
has helped amplify its messages.
retreated from their embrace of populism, but an
 Nativism has returned, with anti-immigration upcoming heavy 2024 election calendar raises the
populist leaders rising in Europe, while in the US, possibility of a partial reversal in the recent downward
trend (Figure 33). The outcomes of recent 2023
immigration will be a major wedge issue in the
elections, where countries like Argentina, which voted in
2024 election.
a populist right leader, and Slovakia, where a populist
 There is little evidence that populism has much left could serve as a precursor to the forthcoming 2024
economic impact in the short term outside of election cycle. Yet, the recent defeat of Poland’s populist
higher inflation. Over the long term, populists-led right party after eight years of rule shows there may still
countries tend to experience lower growth, trade be some hope yet against a populist resurgence.
and financial openness and higher debt-to-GDP.
Figure 33: Populists in power have come off all-time highs since
2018-2019
 In our view, the biggest tail risk remains the US Share of 60 countries in sample
election, where polls are suggesting a repeat of
the 2020 Biden-Trump faceoff. The US election
merits cautious positioning and/or outright
hedging more so than any other election, in our
view, due to its global implications.
 Our FX strategy colleagues see tariffs and a

broadening of US-China conflict to be dollar
positive events. CHF and JPY should also benefit
from tariffs, while CNY, EUR, and MXN screen
as being vulnerable to tariffs.
 Our US equity derivative colleagues expect VIX Source: Funke, Schularick, Trebesch (Kiel Institute Working Paper June 2022),
to generally trade higher in 2024 than in 2023, J.P. Morgan Strategic Research. Note: Share of populist governments in all governments
in sample of (up to) 60 independent countries covering more than 95% of world GDP (in
while US election uncertainty is an additional 1955 and 2015), 1900-2020. The authors consider any country-year in which a populist
potential catalyst for market volatility, which is was the effective ruler (i.e., president, prime minister, or equivalent). Data after 2020 are
strictly J.P. Morgan estimates.
good for being long dispersion.
However, regardless of 2024 election outcomes,
populism politics are likely here to stay due to
26
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structural social changes that moved populism into become increasingly dominant and is now also widely
the mainstream. Political scientist Cas Mudde lays out used by populism researchers and economists.28
several structural social changes that have led to According to a study by Manuel Funke, Moritz
populism becoming more entrenched into politics, with Schularick, and Christopher Trebesch, there are several
the first due to growing inequality and individuals advantages to this definition—it can be applied across
becoming more politically aware and informed, which time and regions, it does not depend on institutional
created a more dissatisfied and vocal population. The features (e.g., presidential vs. parliamentary systems),
second is that neoliberal economics, such as and it can be applied to both emerging and advanced
globalization, and international organizations, such as the economies along with populists on the left and the right.
EU, have made mainstream parties less effective and
more similar, while a transformed media landscape (e.g., Our definition of populism aligns with the workhorse
social media) has provided more access and coverage for definition of populism as outlined by Funke,
populist politicians. Lastly, he argues that populist Schularick and Trebesch, who define a leader as
leaders have become more attractive options due to populist if he or she divides society into just two
better leaders, organizations and propaganda.26 As groups—“the people” vs. “the elites”—and then
populism moves into the mainstream, they have made claims to be the sole representative of the true people.
electoral gains, especially in Europe, with populists Corrupt elites can be individuals, their political parties,
having recently boosted the number of parliamentary and/or a country’s institutions, prioritizes national
seats in Finland and the Netherlands. interests and citizens over international ones and
immigrants, and tends to frame political relationships in
Over the past decade, markets have become much highly antagonistic terms (see The Long-Term Strategist:
more cautious of populist victories given the Top long-term risks and what to do about them, Jan
transformative policy changes often promised, such Loeys et al., 18 July 2023). Not all populism is of the
as significant shifts in fiscal, monetary and trade same ideological tendency, and the relative strength of
policy, which have led to unsustainable macro policies institutions in each country matters. We discussed the
and/or the erosion of institutions. In this note, we rise of populism as a paradigm shift at length in J.P.
explore the causes of the rise in populism, the economic Morgan Perspectives: Paradigm Shifts; What Lies
consequences and provide an overview of trends to Ahead, Jan Loeys et al., 5 Apr 2019.
watch going into the 2024 election cycle. The most
visible populist challenges confront the EU In our view, the rise of inequality has been a major
parliamentary elections in June and the US contributor to the rise in populism and has become a
presidential/congressional elections in November as well key driver for assessing the implications for elections,
as in several major EM countries (Mexico, India, and as inequalities within countries are more likely to be
Indonesia). However, the US elections merit hedging experienced in citizens’ daily lives. The growth focus
more so than any other election, in our view, due to its of political institutions of the past (the so-called
global implications. “Washington Consensus”) has been challenged by
persistently high income inequality and wealth
Defining populism and its root causes distribution which, in turn, has led to a growing sense of
economic insecurity amongst large segments of the
Academic literature in recent years has converged on
population and the embrace of populist leaders across
a consensus definition of populism—one that can b e
DM and EM economies. Moreover, the rising wealth gap
defined as a political style centered on the supposed
between the private and public sectors in rich countries
struggle of “people vs. the elites.” 27 This definition has
26 Dustmann, Eichengreen, Otten, Sapir, Tabellini, Zoega, Boeri,

Populism in the Twenty-First Century: An Illiberal
Democratic Response to Undemocratic Liberalism, Cas Mudde Mishra, Papageorgiou, Spilimbergo, and Rodrik). See Populist
27 Leaders and the Economy, Kiel Institute, Manuel Funke,
This definition is associated with political scientist, Cas
Moritz Schularick, and Christopher Trebesch, June 2022
Mudde, and is now used by most leading populism researchers
28
(e.g., Moffitt; M¨uller; Hawkins and Rovira Kaltwasser) and Ibid
economists (e.g., Algan, Guriev, Papaiannou, Passari,
27
SPA.
has important implications for states’ capacities to tackle billionaires has risen from 1% to over 3.5% in 2021. In a
inequality and climate change in the future. study on the relationship between inheritances and
wealth inequality, researchers found that inheritances can
Across developed and emerging economies, income account for more than 60% of US wealth inequality.
inequality within countries has reached
unprecedented levels in the postwar period. Inequality
Over the past four decades, world nations have
has grown at different speeds globally, but the trend is
become significantly richer, but their governments
undeniable. The World Inequality Database finds that
have become significantly poorer. This trend was
over the past four decades, global income inequality
magnified by the Covid-19 pandemic, during which
between countries has declined, but income inequality
governments borrowed the equivalent of 10-20% of
has risen dramatically within countries (Figure 19). The
GDP. The current weak wealth position of governments
top 10% of the global population currently takes 52% of
has important implications for governments’ ability to
global income, whereas the bottom 50% earns 8.5% of it.
tackle inequality in the future, such as the decline in
Income inequality within the US is even more stark, with
intergenerational mobility and greater polarization in
nearly 50% of the nation’s income going to the top 10%
income distribution as well as other obstacles such as
and 20% to the richest 1%, while the bottom half
climate change.
receives just 10%. Although Europe remains the least
unequal region in the world, the richest 10% of
Europeans earn twice as much as the poorest 50% of the Figure 35: Rise of private wealth and decline of public wealth in
population. rich countries
1970-2022
Figure 34: Global income inequality declined between countries,
but income inequality has risen dramatically within countries
1980-2022; Between vs. within country inequality
Source: World Inequality Report 2022

Source: World Inequality Database
Three interrelated factors have contributed to

Global wealth inequalities are even more pronounced
growing inequality—technological progress (e.g., the
than income inequalities and contribute to future
rise of automation), globalization, and financial
income inequality through capital income and
markets deregulation. All three trends have generated
inheritance. The poorest half of the global population
winners and losers and have weighed on middle-class
barely owns any wealth at all at just 2% of the total,
incomes and jobs, especially those who, because of their
while the richest 10% of the global population own 76%
age, lack of skills, or education, were not able to adjust.
of all wealth.29 According to the World Inequality Report
In emerging economies, additional drivers of income
(WIR), wealth inequalities increased at the very top of
inequality include accessibility of quality education and
the distribution, as the wealth of the richest individuals
extensive labor market informalities. Corruption, and a
has grown at 6-9% per year since 1995, whereas average
failure to recapture growth after the commodities super-
wealth has grown at 3.2% per year. During the same
cycle have left many countries susceptible to anti-system
period, the share of global wealth possessed by
29
World Inequality Report 2022
28
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messages, resulting in greater polarization, with Figure 36: Current and former post-GFC era populist regimes
populism moving from the margin into the mainstream, holding 2024 elections
particularly in EM economies where global trade remains
the main engine of growth. The more personalistic rule
among countries with fragile institutions has also raised
uncertainty and macro volatility fueling bouts of
boom/bust cycles, which has been most apparent in Latin
America (see J.P. Morgan Perspectives: Paradigm
Shifts; What Lies Ahead, Jan Loeys et al., 5 Apr 2019).
While technological advancement and automation

have been blamed for job displacements, populist
leaders have also used immigration as a focal point in
populist rhetoric, with many blaming immigration for
the erosion of traditional jobs and also national
Source: J.P. Morgan Strategic Research and Funke, Schularick, Trebesch (Kiel Institute
identity. The number of anti-immigrant far-right populist Working Paper June 2022). *Note: Lega Nord follows a traditional right-wing populist
leaders have increased in Europe and now rule in Italy strategy and MS5 uses a mix of right-wing and left-wing populist discourse with a tendency
to the left but given dominance of right-wing rhetoric/policies during coalition’s 1.5 years in
and Hungary. Immigration will be a major issue in the
office, government as a whole coded as right-wing populist. **Venezuela’s populist regime
upcoming US elections in November 2024. In the latest is not new in the post-GFC era but added to table due to possibility of a 2024 election.
AP-NORC poll on the public’s priorities, concerns about
immigration climbed to 35% from 27% last year, with a In the UK, a cost-of-living crisis, food shortages and
majority of Republicans (55%) saying the government increased poverty have led voters to increasingly
needs to focus on immigration in 2024 versus 22% of blame Brexit for their economic woes. This
Democrats. These figures are up from 45% and 14%, dissatisfaction for Brexit, along with the prevailing
respectively, to December 2022. Moreover, swing-state circumstances, makes the prospect of UK voters to re-
voters overwhelmingly trust Trump more so than Biden embrace right-wing populists increasingly unlikely. The
on immigration.30 top three concerns for UK voters include the economy,
health and immigration, according to latest YouGov
Key electoral contests to monitor for the surveys. While Britain’s Office for National Statistics
resurgence of populism pointed to the COVID-19 pandemic, global supply chain
disruptions and Russia’s invasion of Ukraine as the main
In our view, the biggest tail risk remains the US drivers of inflation and subsequent cost-of-living crisis, a
election, where polls are currently indicating a repeat majority of voters blame Brexit for these same issues as
of the 2020 Biden-Trump faceoff. Another former post- well as record immigration. Nearly two-thirds of
GFC populist regime that is slated for an election later respondents in a recent poll said Brexit has been a factor
this year is the UK, while in EM, elections are set to take in sky-high inflation and the cost of living crisis, with
place in India, Indonesia, and Mexico. A political only 7% saying it has kept down prices. Another 53% of
agreement between representatives of Venezuela’s respondents said that leaving the EU had reduced the
opposition and Maduro could also pave the way for ability of the UK to control immigration.
Venezuela’s presidential elections to take place in 2H24
(Figure 36). Additionally, far-right parties are eyeing to Elections in India, Indonesia, and Mexico will matter
gain seats in the June 6-9 EU parliament elections, where more domestically, as results are unlikely to hold
a supranational vote will take place across all 27 member much global sway. Venezuela elections, if they happen,
states. However, the US election merits hedging more so could pave the way for additional US sanctions relief
than any other election due to its global implications, in which would be welcomed by market participants. Our
our view. EM colleagues hold the view that the removal of the
30
Trump Is Winning Over Swing-State Voters Wary of
Biden’s Economic Plan, Bloomberg, 19 Oct 2023
29
SPA.
secondary market bond trading restriction is likely to be prevent any US president from unilaterally withdrawing
a lasting change, even though restoration of the primary the US from NATO without congressional approval in
market and a path to restructuring are likely to only the latest passage of the National Defense Authorization
occur if 2H24 elections occur in a sufficiently credible Act.
fashion (see Venezuela: Harder tone, harder choices,
Katherine Marney & Gorka Lalaguna, 8 Dec 2023). Our FX strategy colleagues offer a framework for
thinking through several channels heading into US
Even if there is a resulting populist tilt, the European elections that will impact FX via trade policy/tariffs,
Parliament has little authority compared with US-China relations, fiscal policy, and currency policy.
national-level legislatures, as its lawmakers cannot Risk premia for FX through 2024 should be concentrated
unilaterally pass legislation and must instead agree to around risks of new tariffs, and they estimate 4-6% USD
pass measures with the Council of the EU.31 While appreciation if universal 10% tariffs were to be introduced.
many voters could use the EU parliament elections as an Broadening of US-China strategic competition is also
opportunity to express their disappointment for mainstream dollar-positive through growth channels. Tariff risk could
politics by opting for a populist alternative, arguably the support CHF and JPY, conditional on local factors and
most important responsibility of the European Parliament any perceived risks of tariffs contributing further to
is actually approving the European Council’s choice for global inflation, while CNY should still net weaken in
president of the European Commission, a seat currently the event additional tariffs are imposed, but the ex-ante
held by Ursula von der Leyen. setup is different now vs 2018. In addition to CNY, the
team’s objective vulnerability ranking cites EUR, MXN,
We see the US elections as being more consequential and select EM Asia as having relatively elevated risks if
and meriting hedging more so than any other additional tariffs come into view (see US Elections &
election, as a Trump victory could have broader FX: Mapping transmission from potential policies to
macro implications, including through a series of USD, Patrick R Locke, et al., 27 Nov 2023).
executive orders that would dismantle or reverse
many of Biden’s policies. Trump’s proposal for the Our US equity derivatives colleagues expect the VIX
imposition of a universal 10% tariff across the board to generally trade higher in 2024 than in 2023, while
would reignite trade wars with both friends and foes being long dispersion should benefit from a US
alike. His proposal to deploy US special forces into election year adding more uncertainty to the market.
Mexico and even possibly launching military strikes into The extent of the VIX’s increase depends on the timing
the country to battle Mexican cartels would disrupt and severity of an eventual recession, which remains a
economic relations with the US’s top trade partner. live risk, and the timing of a potential volatility surge
Trump’s plans to roll back the Biden administration’s that could alleviate the structural short-dated volatility
efforts to encourage EV adoption and reverse proposed selling flows. Our US equity derivatives colleagues
new pollution limits that would require at least 54% of believe elections could add policy volatility, with
new vehicles sold in the US to be electric by 2030 could potential implications for countries’ fiscal policy,
undermine US automakers’ push into the EV space by business climate, and geopolitical stances. This could
delivering the competitive edge to foreign manufacturers also buoy equity volatility – e.g., they note that over the
despite more than $120bn in announced EV investments past 50 years, S&P 500 realized volatility was ~2 points
since the introduction of the Inflation Reduction Act. higher in US election years than in non-election years.
Trump has also said he would ramp up oil drilling on Risk markets are currently priced for low risk, with the
public lands and offer tax breaks to oil, gas, and coal VIX trading ~13, below its long-term average of 18, and
producers. He has also repeatedly threatened to curb credit, term and equity risk premia are also below their
remaining military, economic and humanitarian support long-term means. Hence, investors looking to position
to Ukraine, along with withdrawing from NATO, themselves for election uncertainty and the return of
although Congress recently passed a measure aimed to populism should position for higher risk premia and
31
Elections to Watch in 2024: Dozens of countries will vote
this year. In many of them, democracy is at a tipping point,
Allison Meakem, Foreign Policy, 2 Jan
30
SPA.
higher market volatility. Specifically, in equities, the economy where GDP per capita is 10% lower after 15
team sees dispersion being a good trade during the 2024 years compared to a plausible non-populist
US presidential election as it takes advantage of the counterfactual. Funke, Schularick, and Trebesch found
heightened implied volatility before the election and the that countries tend to underperform after a populist
low realized volatility on the index when the election comes to power, both compared to their long-run growth
results rolled out (see 2024 Equity Derivatives Outlook: path and relative to global growth ranging from -0.5%-
Volatility Forecasts and Trade Ideas, Marko Kolanovic pts to -1.0%-pts (Figure 38), while negative effects
et al., 8 Dec 2023). become visible and increase over time exceeding 10%-pt
after 15 years (Figure 39).
Figure 37: VIX and dispersion performance during 2016 and 2020
US presidential elections Figure 38: On average, countries tend to underperform after a
populist comes to power in both the medium and long term
Average annualized growth gap in annual real GDP per capita after
populists come to power
Source: JPM US Equity Derivatives Strategy

Source: Funke, Schularick, Trebesch (Kiel Institute Working Paper June 2022).
Long-term economic consequences of the rise Figure 39: Real GDP paths decline significantly after populist
in populism governments enter into office relative to non-populist baseline
Countries governed by populists tend to undergo Projected gap
serious financial and macroeconomic consequences,
such as higher inflation and debt-to-GDP, due to
transformational policy changes. Populists also tend to
embrace higher tariff rates, which may translate to reduced
international economic integration via trade. In a study of
populist leaders from 1900 to 2020, economists Manuel
Funke, Moritz Schularick, and Christopher Trebesch have
found that populist leaders tend to create a drag on growth
of about 1% pa after a short honeymoon period. They
argued that even though there have been instances where
some economies under populist leaders witnessed solid
growth (e.g., Poland under PiS, Hungary under Orbán),
on balance, their study suggests there are only very few
populist regimes that could be associated with a sustainable Source: Funke, Schularick, Trebesch (Kiel Institute Working Paper June 2022). Note:
Graph uses location projections approach that compute impulse responses tracing the
long-term growth path. In this section, we summarize dynamic path of GDP per capita after a populist comes to power. All regressions include
their findings on how populism impacts the economy. country fixed effects and five lags of the of real GDP per capita growth, global growth,
inflation, banking and sovereign debt crisis controls, and an institutional/democracy quality
index given by the first principal component of the V-Dem indices on judicial
Their study has shown that countries with populist independence, election fairness and media freedoms as well as the Polity IV democracy
leaders tend to see substantial declines in the score. Data for 60 countries since 1945 for the core sample of populist episodes.
31
SPA.
They found that the growth gap persisted even after after taking office a promise of deep spending cuts and a
controlling for the quality of institutions, democracy, sharp devaluation of the Argentine peso. He has
inflation, trade openness, and a variety of banking, forewarned that economic activity will decline and
currency, and other economic crises that may have inflation will rise in the short term (see Argentina:
brought the leader to power. In other words, the President Milei sets expectations clear: A draconian
decline in growth was a result of decisions made by fiscal adjustment is required to avoid hyperinflation, 10
leaders employing populist strategies and not due to Dec 2023 and Argentina: Urgent package unveiled: The
preexisting economic problems or democratic declines. first set of economic measures under Milei, D. Pereira, et
When looking at the cumulative change of real GDP per al.,13 Dec 2023).
capita after the start of a populist leadership episode,
compared with the path after a non-populist government Populists also tend to be economic nationalists,
changeover, the study finds that real GDP per capita has whether from the left or right, which have often
declined significantly relative to the non-populist translated into more restrictive shifts in trade policy.
baseline after a short honeymoon period (i.e., after the In their study of the effect of populism on economic
first three years). This honeymoon period has been integration, Funke, Schularick, and Trebesch used a
especially apparent under a left populist regime, while synthetic control method that allowed them to quantify
the decline in real GDP has been almost immediate under the effect of populism on economic performance relative
a right populist regime as seen in Figure 39. This to a synthetic doppelganger economy (i.e., the synthetic
populist boom and bust was a frequent feature of the doppelganger economy continued to evolve in the same
populist cycles of Latin America in the 1960s-1990s, way that the populist economy would have without the
which were often characterized by transformative election of a populist government). They found that
macroeconomic policies leading to high inflation and under populist regimes, there tends to be a rise in
severe balance of payments crises and eventually protectionist measures via higher tariff rates and a
political and economic crisis.32 This populist cycle is decline in trade (via share of exports and imports in
currently playing out in Argentina, where recently GDP) and financial openness (as measured by using the
elected right-wing populist President Milei promised a KOF Financial Globalization index) under populist
shock adjustment to the economy and delivered two days regimes (Figure 36).
Figure 40: Under populist regimes, international economic integration via trade and financial openness tends to suffer
Trade and financial openness after populists take power (+/- 15 years)
Source: Funke, Schularick, Trebesch (Kiel Institute Working Paper June 2022).
32 Populism, Rudiger Dornbusch and Sebastian Edwards, January

Social conflict and populist policies in Latin America,
Jeffrey D. Sachs, March 1989 and The Macroeconomics of 1991
32
SPA.
Debt burdens and inflation also tend to increase

under populist rule given that short-term growth is
often prioritized over long-term sustainability. Funke,
Schularick, and Trebesch found that debt levels have
been 10%-pts higher during a populist episode compared
to the synthetic doppelganger (Figure 41). On the
monetary side, there is some evidence for rising inflation
under populists, but with inflation rates rising more in
the short run.
Figure 41: Populists tend to have more of a short-term impact on

inflation and more longer-term impact on debt to GDP levels
Source: Funke, Schularick, Trebesch (Kiel Institute Working Paper June 2022)
33
SPA.
Worsening democracy metrics reaffirmed the value of multilateral engagement.

However, the possibility of progress does not make it
depress equity returns over the inevitable, as more countries are remaining ‘Partly Free’
long term instead of continuing their march to ‘Free’ status. Figure
41 shows the ebb and flow of democratization as tracked
by Freedom House for the past 50 years.
 Many countries, including the US, have recently
been downgraded in democracy ratings, such as Figure 42: Ebb and Flow of Democratization
Freedom House’s Freedom of the World report
and the Economist Intelligence Unit’s Democracy
Index.
 Japan and most countries in DM Europe have
not been downgraded.
 Our Long-Term Strategy team finds that equity
returns have been ~ 5% pa lower over a 10yr
period after countries were downgraded in
democracy ratings compared to markets that
have been upgraded and ~2.5% pa lower for
countries where there was no rating change.
Source: Freedom House, J.P. Morgan.
 The lower returns of downgraded countries
consist of both weaker earnings growth and a The Economist Intelligence Unit (EIU) Democracy
weaker currency rather than lower PE multiples. Index finds that only 8% of the world’s population
reside in a “full democracy,” compared with 8.9% in
This summary revisits our Long-term Strategist report on 2015, before the US was demoted from a “full
Democracy metrics and equity markets, Alexander Wise democracy” to a “flawed democracy” in 2016. More
and Jan Loeys, 21 October 2021. See the longer report than one-third of the world’s population live under
for more details on the data, methodology and analysis. authoritarian rule (36.9%), with a large share of them
being in China and Russia, while 45.3% live in a
Democracy and global freedom metrics on democracy of some sort.
the decline since the Global Financial Crisis Figure 43: EIU’s 2022 Democracy Index
The decline in democracy and global freedom has Number of % of % of world
been a trend for 17 consecutive years, according to Regime Type
countries countries population
Freedom House and other independent surveys, and
remains a concern in the upcoming cycle. There are Full democracies 24 14.4 8.0
some signs that the decline in democracy may be at a Flawed
turning point, as the gap between the number of 48 28.7 37.3
democracies
countries that registered overall improvements in
Hybrid regimes 36 21.6 17.9
political rights and civil liberties (34) and those that
registered overall declines (35) for 2022 was the Authoritarian
59 35.3 36.9
narrowest it has ever been. The gains were driven by regimes
more competitive elections as pandemic-related Source: EIU.
restrictions that affected freedom of assembly and
freedom of movement were rolled back. There was also
fresh evidence of the limits of authoritarian power, as
key regimes faltered in their attempts to exert influence
at international organizations and their internal
governance flaws led to dramatic policy setbacks.
Authoritarian influence at the United Nations and other
international organizations faltered as democracies
34
SPA.
Countries downgraded for democratic changes Stress testing upgrades, downgrades and no
tend to underperform those that are upgraded changes in democracy rating
While the effect of democracy upon stock market To begin, we examined stock market USD returns in
returns is theoretically ambiguous, the weight of the the years after a country experienced a democratic
evidence from empirical studies of the economic and upgrade or downgrade in the Freedom House data. In
financial effects of democracy suggests that a typical event study, one examines the period
democratic improvements are supportive of both immediately after an event. In many cases, democratic
economic growth33 and stock market returns.34 That conditions may have been deteriorating or improving in
said, the EM space is littered with various types of the years before the Freedom House ratings changed.
political regimes, and it’s not immediately obvious that Therefore, we think it is appropriate to examine returns
one produces higher growth than another. There are a data up to two calendar years prior to the official rating
number of EM economies, mostly in EM Asia, that have change in order to include this period in which changes
enjoyed robust and persistent growth under non- may be occurring which will culminate in a rating
democratic systems; the most obvious being China. Yet, change.
there are also plenty of growth disasters under autocratic
rule, including North Korea and Myanmar. On one side, We report summary statistics for three samples of
stable democracies may give rise to effective governance, returns. The first sample includes all 10-year periods in
promoting a dynamic and competitive economic which a country experienced a net upgrade in its
environment in which businesses prosper. On the other democratic rating in the first three years. The second
side, a system of governance that does not prioritize and sample includes all 10-year periods in which a country
promote the interests of the people may instead become experienced a net downgrade in its democratic rating in
captured by special interests, such as those of corporates. the first three years. The third sample includes all 10-
These could induce legislators and regulators to raise year periods in which there was no net change in a
barriers to entry and soften consumer protection and country’s democratic rating. For the first two samples,
antitrust enforcement, allowing large corporates to raise we required that the democratic change occurred in the
profit margins, boosting share prices even as these first three years to ensure that we excluded periods in
measures weaken overall economic growth. which there was a late democratic change, without time
for the consequences to be fully reflected in 10-year
We consider the implications of these democratic returns. Our results are very similar if we instead had
changes for a long-term strategic investor and focus required a democratic rating change in either the first
on the nature of the relationship in a way that is most year, or the first two years, of a 10-year period. Our
informative for a long-term investor. To document the results were also comparable when considering 5- or 15-
relationship between democracy ratings and returns, we year return windows instead of 10-year windows.
implemented an event study design in which we
examined stock market returns in countries in the periods The mean and median returns after an upgrade were
after they experience an upgrade or downgrade in 11.6% and 12.3% pa, respectively, while the mean
democracy ratings. We found statistically significant and median returns after a downgrade were 6.4%
evidence that, on average, countries that are upgraded and 6.6% pa, respectively. The mean and median
tend to exhibit higher long-term equity returns in annual returns after no change were 9.2% and 9.0% pa,
subsequent years than countries that are downgraded, respectively – between the upgrade and downgrade
both in absolute terms and relative to the rest of the figures. The t-statistic for a test of whether the means of
world. We document these return differences in both the upgrade and downgrade samples were equal is 3.07,
local-currency and USD terms. Robustness analysis implying that the hypothesis may be rejected at the 1%
using different empirical specifications and different data level of significance. Relative to the distribution of
sources affirms the conclusions drawn in this exercise. returns after a country experiences an upgrade, the
33 Indicators and Markets Returns (2016) V-Dem Working Paper

See, e.g., Acemoglu, Naidu, Restrepo and Robinson,
Democracy Does Cause Growth (2019) 127(1) Journal of 2016:04; Lehkonen and Heimonen, Democracy, political risks
Political Economy 47-100. and stock market performance (2015) 59 Journal of
34
See, e.g., Axelrod and Leitner, Correlation of Democracy International Money and Finance 77-99; Lei and Wisniewski,
Democracy and Stock Market Returns (2018).
35
SPA.
distribution of returns when a country experienced a Figure 45: Annualized 10-year changes in PE multiples after an
downgrade had a more negative skew and is leptokurtic, upgrade and a downgrade
%, 1972- 2020, annual.
implying that there is more severe downside risk.
Overall, we find that the magnitude and number of rating Upgrade No change Downgrade
changes did not matter. For example, countries with Mean 0.4% 0.7% 0.8%
greater than one point democracy downgrades did not Median -0.2% 0.9% 0.4%
clearly perform worse than countries with one-point Standard deviation 5.5% 6.2% 6.8%
downgrades, and vice versa after upgrades. Kurtosis 0.29 2.43 12.65
Skewness -0.08 -0.16 2.49
Figure 44: Summary of results – Annualized median 10-year Range 26% 56% 48%
returns
%, 1972- 2020, annual. LCU = local currency unit. Relative USD returns
Minimum -14% -27% -12%
is returns relative to the rest of the world over the same period of time. Maximum 12% 30% 35%
Count 67 806 50
Source: J.P. Morgan, Freedom House, MSCI
We find that the differences between upgraded and

downgraded countries in price returns were driven
by differences in earnings growth. In Figure 46, we
report the changes in earnings per share in the same three
samples from above. The mean and median annualized
changes in earnings per share after an upgrade were
9.3% and 9.8% pa, respectively, while the mean and
median annualized changes in earnings per share after a
downgrade were 4.5% and 5.3% pa, respectively. These
results dovetail with other research mentioned earlier,
such as Acemoglu et al. (2019), which indicated that
worsening democracy metrics have a negative impact on
economic growth.
Source: J.P. Morgan, Freedom House, MSCI.
Figure 46: Annualized 10-year changes in earnings per share
after an upgrade and a downgrade
The lower returns of downgraded countries consist of %, 1972- 2020, annual
both weaker earnings growth and a weaker currency
Upgrade No change Downgrade
rather than lower PE multiples. In our analysis, we
consider a decomposition of the USD equity price Mean 9.3% 5.5% 4.5%
returns into price-to-earnings multiples and earnings per Median 9.8% 5.7% 5.3%
Standard deviation 7.4% 8.5% 12.9%
share. In Figure 41, we report PE multiple changes in the
Kurtosis -0.58 2.96 2.19
same three samples from above. For interpretative
Skewness 0.03 0.17 -0.76
purposes, take the mean annualized change of 0.4% after
Range 31% 81% 70%
an upgrade. If the initial multiple were 15, this would
Minimum -4% -33% -33%
imply that the multiple would increase to approximately Maximum 27% 48% 37%
15.61 after 10 years. The changes reported are both small Count 67 806 50
in magnitude and statistically indistinguishable after Source: J.P. Morgan, Freedom House, MSCI
upgrades and downgrades, indicating that our results are
not driven by multiples.
Market implications
Our results indicate that changes in democracy
ratings have been a valuable signal of future long-
term asset returns. It is apparent that the equity markets
of countries that are downgraded tend to underperform
those that are upgraded. There is also robust evidence
that downgraded countries persistently underperform
36
SPA.
countries that experience no democratic change. In USD

returns, we find that stock markets in countries that are
downgraded tend to underperform stock markets in
countries that are upgraded in the subsequent years by
~5% pa over a 10-year period and tend to underperform
stock markets in countries with an unchanged rating by
~2.5% pa over a 10-year period. These observations
reflect the fact that downgraded countries tend to
exhibit lower local-currency stock market returns
due to weaker earnings growth and experience larger
currency depreciations.
A natural caveat is that strategic investors should use

democracy metrics only as an added signal to the
other signals they use to make long-term country
allocations. However, in our previous research, we
found there are relatively few effective leading long-term
signals. From a strategic point of view, using relative
multiples (buying low, selling high) has not been
effective. Longer term, potential real GDP growth
differences correlate well with relative equity returns, but
only between DM and EM. But these differences must be
forecast to project future relative returns. The variables
that explain relative country equity returns, such as
contemporaneous EPS growth and P/E changes,
themselves have to be forecast – an equally demanding
endeavor.
37
SPA.
Appendix Global Markets Strategy

The J.P. Morgan View – Global Asset Allocation: Staying the
J.P. Morgan Research course into 2024, JPM Global Markets Strategy, 20 December
2023
Strategic Research
Geopolitical Update: A fragmented and fractured world:
Global FX Strategy
Geopolitical resilience remains elusive, Joyce Chang et al., 30 US Elections & FX: Mapping transmission from potential
October 2023 policies to USD, Patrick R Locke, et al., 27 November 2023
Economic Research
Up, up and away: Assessing government debt sustainability, Reference Materials
Joseph Lupton and Alexander Wise, 22 February 2023 2024 is the biggest election year in history, The Economist, 13
November 2023
Emerging Markets Economic Research
2024: The public’s priorities and expectations, AP – NORC, 1
Taiwan 2024 election primer: Why is it important?, Grace Ng, January 2024
Haibin Zhu & Tingting Ge, 3 January 2024 41 Million Members of Gen Z Will Be Eligible to Vote in 2024,
Mexico: The 2024 Electoral Watch - An eventful start, Gabriel Alberto Medina and Sara Suzuki, CIRCLE: Tufts – Tisch
Lozano, 5 December 2023 College, 18 October 2023
A Hidden Advantage for Biden: Low Interest in Minor Parties,
Ten questions about China in 2024, Haibin Zhu et al., 3
Ed Kilgore, Intelligencer, New York Magazine, 20 August 2020
January 2024
Agenda47: President Trump’s Plan to Dismantle the Deep
Mexico 2024 outlook: Reckoning time, Gabriel Lozano and State and Return Power to the American People, Trump 2024,
Steven Palacio, 30 November 2023 21 March 2023
Venezuela: Harder tone, harder choices, Katherine Marney and Alliances in a Shifting Global Order: Rethinking Transatlantic
Gorka Lalaguna, 8 December 2023 Engagement with Global Swing States, Heather Conley et al.,
GMF, 2 May 2023
South Africa: Tough policy choices in an election year, Sonja
Keller and Sthembiso Nkalanga, 21 November 2023 Americans agree that the 2024 election will be pivotal for
democracy, but for different reasons, Gary Fields and Linley
Ghana: Debt restructuring and then elections, Gbolahan Taiwo, Sanders, AP News, 15 December 2023
21 November 2023
Americans’ Dismal Views of the Nation’s Politics, Pew
Venezuela: Back in the game?, Katherine Marney, 21 Research Center 19 September 2023
November 2023
America's Choice 2024, Ebony Davis, CNN, 3 January 2024
PODCAST: SA 2024 Election series – discussion with the UDM
Brexit has completely failed for UK, say clear majority of
& ActionSA, Sonja Keller, Inga Galeni, Funeka Maseko &
Britons – poll, Toby Helm, The Guardian, 30 December 2023
David Aserkoff, 13 November 2023
Candidates, take this AI election pledge. Or 2024 might break
Asia Corporate Research us, Geoffrey Fowler, Washington Post, 26 October 2023
Chief Risk Officers Outlook, World Economic Forum, July 2023
South and Southeast Asia Corporates: Sunnier Down South,
Soo Chong Lim et al., 4 January 2024 Confidence in Election Integrity Hides Deep Partisan Divide,
Justin McCarthy, Gallup, 4 November 2022
Commodities Research Congress approves bill barring any president from unilaterally
withdrawing from NATO, Laura Kelly, The Hill, 14 December
2024 Commodities Outlook, Natasha Kaneva et al., 30
2023
November 2023
Does High Voter Turnout Help One Party?, Daron R. Shaw and
John R. Petrocik, National Affairs, 2021
38
SPA.
Election Week 2020: Young People Increase Turnout, Lead The Macroeconomics of Populism in Latin America, Rudiger
Biden to Victory, CIRCLE; Tufts – Tisch College, 25 November Dornbusch and Sebastian Edwards, National Bureau of
2020 Economic Research, January 1991
Elections to Watch in 2024: Dozens of countries will vote this The Minilateral Era, Husain Haqqani and Narayanappa
year. In many of them, democracy is at a tipping point, Allison Janardhan, Foreign Policy, 10 January 2023
Meakem, Foreign Policy, 2 January 2024
The Nimble New Minilaterals, C. Raja Mohan, Foreign Policy,
Favorable views of Supreme Court fall to historic low, Katy Lin 11 September 2023
and Carroll Doherty, PEW Research Center, 21 July 2023
The Radical Pessimism of Cornel West, Zak Cheney-Rice,
Freedom on the Net 2023: The Repressive Power of Artificial Intelligencer, New York Magazine, 7 November 2023
Intelligence, Allie Funk, Adrian Shahbaz & Kian Vesteinsson,
The Trumpist Manifesto: The Republican struggle for a second-
Freedom House, 2023
term foreign policy, Majda Ruge and Jeremy Shapiro,
Gender Differences in Voter Turnout, Rutgers - Eagleton European Council on Foreign Relations, 4 December 2023
Institute of Politics, 2022
Threats to American Democracy Ahead of an Unprecedented
How abortion could impact the 2024 US elections, Joseph Ax, Presidential Election, PRRI, 25 October 2023
Reuters, 14 December 2023
Trump is attacking electric vehicles. Automakers already bet
Inheritances and wealth inequality: a machine learning their future on them, Nathaniel Meyersohn, CNN, 29
approach, Pedro Salas Rojo and Juan Gabriel Rodríguez, The September 2023
Journal of Economic Inequality, March 2022
Trump Is Winning Over Swing-State Voters Wary of Biden’s
Mail Voting: States Trending in Opposite Directions Ahead of Economic Plan, Nancy Cook and Gregory Korte, Bloomberg,
2022 Midterms, Liz Avore, Voting Rights Lab, 17 October 2022 19 October 2023
Marking 50 Years in the Struggle for Democracy, Yana Trump's foreign policy: rethink NATO, troops to Mexico, boost
Gorokhovskaia, Adrian Shahbaz & Amy Slipowitz, Freedom tariffs, Gram Slattery, Reuters, 18 December 2023
House, March 2023
U.S. Party Preferences Evenly Split in 2022 After Shift to GOP,
More Women Register to Vote After Supreme Court Abortion Jeffrey M. Jones, GALLUP, 12 January 2023
Decision, Dora Mekouar, VOA News, 6 November 2022
Voter turnout, 2018-2022, PEW Research Center, 12 July 2023
New Survey: Institutional Investors Believe American
Voting and Registration in the Election of November 2020,
Democracy Is Increasingly At Risk, States United Democracy
United States Census Bureau, April 2021
Center, 23 August 2023
Voting Statistics, US Elections Project, 2022
Populist Leaders and the Economy, Manuel Funke, Moritz
Schularick and Christoph Trebesch, Kiel Institute for the World World Inequality Report 2022, Lucas Chancel, Thomas Piketty,
Economy, June 2022 Emmanuel Saez & Gabriel Zucman, World Inequality Lab,
2022
Protecting Democracy Online in 2024 and Beyond, Megan
Shahi, American Progress, 14 September 2023 Youth and the 2024 Election: Likely to Vote and Ready to Drive
Action on Key Political Issues, Peter de Guzman and Alberto
Republican-proposed attacks on Mexican cartels could lead to
Medina, CIRCLE; Tufts – Tisch College, 29 November 2023
American casualties, Jonathan Landay, Idrees Ali and Gram
Slattery, Reuters, 22 September 2023
RFK Jr.’s Inside Job How a conspiracy-spewing literal Kennedy
posing as a populist outsider jolted the Democratic Party,
Rebecca Traister, Intelligencer, New York Magazine, 30 June
2023
Rising cost of living in the UK, Brigid Francis-Devine et al.,
House of Commons Library: Research Briefing, UK Parliament,
24 November 2023
Social conflict and populist policies in Latin America, Jeffrey D.
Sachs, NBER Working Paper No. 2897, March 1989
39
SPA.
Strategic Research J.P. Morgan Perspectives: Cyber Epidemic, Joyce Chang et al., 10
August 2021
J.P. Morgan Perspectives: The return of Commodities, Joyce
J.P. Morgan Perspectives: AI and Cybersecurity: New Tech, New
Chang et al., 19 July 2021
Threats, Amy Ho et al., 27 November 2023
J.P. Morgan Perspectives: ESG investing 2021: Going faster,
J.P. Morgan Perspectives: Global housing: The great supply and
deeper, broader, Joyce Chang et al., 13 May 2021
demand imbalance, Joyce Chang et al., 16 November 2023
J.P. Morgan Perspectives: The widening gender gap: COVID-19
J.P. Morgan Perspectives: Navigating China’s financial markets, takes a toll, Joyce Chang et al., 5 March 2021
Joyce Chang et al., 6 September 2023
J.P. Morgan Perspectives: Digital transformation and the rise of
J.P. Morgan Perspectives: Food Security and Climate Change: fintech: Blockchain, Bitcoin and digital finance 2021, Joyce Chang
The Makings of a Perfect Storm, Joyce Chang et al., 10 August et al., 18 February 2021
2023
J.P. Morgan Perspectives: Build Back Better to Boost ESG, Joyce
J.P. Morgan Perspectives: The great supply chain disruption: Chang et al., 16 December 2020
ASEAN’s rise, India’s potential, USMCA and Chino-Latino flows,
Joyce Chang et al., 23 June 2023 J.P. Morgan Perspectives: Can EM Save 60/40?, Joyce Chang et
al., 2 December 2020
J.P. Morgan Perspectives: ESG and Supply Chain Risks: Putting
the Spotlight on the “S” and “G” in ESG, Joyce Chang et al., 2 May J.P. Morgan Perspectives: Not Business as Usual: The Rise of
2023 Stakeholderism, Joyce Chang et al., 5 October 2020
J.P. Morgan Perspectives: The state of global gender balance in J.P. Morgan Perspectives: The Credit Crisis that Wasn’t: The
2023, Joyce Chang et al., 7 March 2023 Returns Crisis that Looms, Joyce Chang et al., 21 September 2020
J.P. Morgan Perspectives: Japan’s Big Exit: Ten Questions about J.P. Morgan Perspectives: Pandemic Accelerates Paradigm Shifts,
Japan’s Regime Change, Joyce Chang et al., 31 January 2023 Joyce Chang et al., 8 July 2020
J.P. Morgan Perspectives: ESG in the USA: The Disunited States, J.P. Morgan Perspectives: ESG and COVID-19: Friends or Foes?,
Joyce Chang et al., 22 November 2022 Joyce Chang et al., 18 May 2020
J.P. Morgan Perspectives: Cyber: The new frontline of geopolitics, J.P. Morgan Perspectives: Achieving Gender Balance 2020: Why
Joyce Chang et al., 21 November 2022 the Disparity?, Joyce Chang et al., 6 March 2020
J.P. Morgan Perspectives: Food Insecurity: A New Normal, Joyce J.P. Morgan Perspectives: Blockchain, digital currency and
Chang et al., 20 September 2022 cryptocurrency: Moving into the mainstream?, Joyce Chang et al.,
21 February 2020
J.P. Morgan Perspectives: Goodbye to Negative Yields, Joyce
Chang et al., 15 June 2022 The State of ESG in 2020, Joyce Chang, 5 February 2020
J.P. Morgan Perspectives: China’s Financial Markets: Long-term J.P. Morgan Perspectives: What if US yields go to zero?, Joyce
opportunities meet near-term challenges, Joyce Chang et al., 7 Chang et al., 23 January 2020
June 2022 J.P. Morgan Perspectives: Climate Changes ESG Investing, Part
J.P. Morgan Perspectives: Mind the gap: The pandemic’s scar on II, Joyce Chang et al., 10 December 2019
gender parity, Joyce Chang et al., 2 March 2022 J.P. Morgan Perspectives: The rise of the corporates: Is a triple-B
J.P. Morgan Perspectives: ESG Outlook: Advancing Climate cliff on the horizon?, Joyce Chang et al., 1 October 2019
Innovation – The Road to 2050, Joyce Chang et al., 22 Feb. 2022 J.P. Morgan Perspectives: China’s index inclusion: A milestone for EM
J.P. Morgan Perspectives: ESG 2022: Energy crunch challenges as an asset class, Joyce Chang et al., 12 September 2019
Net Zero transition, Joyce Chang et al., 16 December 2021 J.P. Morgan Perspectives: The rise of the corporates: Buybacks at
J.P. Morgan Perspectives: Post-Pandemic Regime Change: The an inflection point?, Joyce Chang et al., 17 July 2019
Great Acceleration, Joyce Chang et al., 14 December 2021 J.P. Morgan Perspectives: ESG Investing 2019: Climate changes
J.P. Morgan Perspectives: Red Flags on Asia Housing, Joyce everything, Joyce Chang et al., 30 May 2019
Chang et al., 18 November 2021 J.P. Morgan Perspectives: Leaving LIBOR: The Long Road
J.P. Morgan Perspectives: Is the housing market due for a Ahead, Joyce Chang et al., 30 April 2019
correction?, Joyce Chang et al., 21 September 2021 J.P. Morgan Perspectives: Paradigm Shifts: What Lies Ahead,
Joyce Chang et al., 5 April 2019
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J.P. Morgan Perspectives: Achieving Gender Balance 2019: The Long-term Strategist: Long- vs short-term risk, Alexander
Progress, Opportunities and Challenges, Joyce Chang et al., 1 Wise and Jan Loeys, 1 February 2023
March 2019
The Long-term Strategist: Industrial policy, deglobalization and
J.P. Morgan Perspectives: Made in China 2025: A New World strategic asset allocation, Alexander Wise and Jan Loeys, 27
Order?, Joyce Chang et al., 31 January 2019 January 2023
J.P. Morgan Perspectives: Geopolitics and Markets: Risks on the The Long-term Strategist: Long-term forecasts: Update January
Rise, Joyce Chang et al., 1 November 2018 2023, Alexander Wise and Jan Loeys, 6 January 2023
J.P. Morgan Perspectives: 20 Years After the Asia Financial The Long-term Strategist: Forecasting long-term US equity returns
Crisis: How Is EM Faring?, Joyce Chang et al., 4 October 2018 with a neural network, Alexander Wise and Jan Loeys, 20
November 2022
J.P. Morgan Perspectives: Ten Years After the Global Financial
Crisis: A Changed World, Joyce Chang et al., 10 September 2018 The Long-term Strategist: Where are we in Regime Change?
Macro volatility, deglobalization, and secular rise in yields, Jan
J.P. Morgan Perspectives: Investing in gender balance:
Loeys and Alex Wise, 8 November 2022
Opportunities and challenges, Joyce Chang et al., 25 May 2018
The Long-term Strategist: Long-run economic growth forecasts,
J.P. Morgan Perspectives: ESG Investing Goes Mainstream,
Jan Loeys and Alex Wise, 10 October 2022
Joyce Chang et al., 9 May 2018
The Long-term Strategist: Bigger questions, shorter answers, Jan
J.P. Morgan Perspectives: Decrypting Cryptocurrencies:
Loeys and Alex Wise, 21 June 2022
Technology, Applications and Challenges, Jan Loeys et al., 9
February 2018 The Long-term Strategist: What to do with 60/40?, Jan Loeys and
Alex Wise, 16 June 2022
Click here for more Strategic Research
The Long-term Strategist: How good are long-term forecasts?,
Alex Wise and Jan Loeys, 14 June 2022
Long-term Strategy
The Long-term Strategist: Long-term forces point to higher US
The Long-term Strategist: What have I learned so far on strategic bond yields, Alex Wise and Jan Loeys, 4 April 2022
investing?, Jan Loeys, 5 December 2023
The Long-term Strategist: A demographic reversal to start pushing
The Long-term Strategist: Lowering our long-run US bond yield real interest rates up, Jan Loeys and Alex Wise, 2 March 2022
forecast, Alexander Wise and Jan Loeys, 28 November 2023
The Long-term Strategist: Eight clips on strategic questions, Jan
The Long-term Strategist: Ten more strategic questions, Jan Loeys, Shiny Kundu and Alex Wise, 17 February 2022
Loeys and Alexander Wise, 9 November 2023
The Long-term Strategist: Is thematic investing worth it?, Jan
The Long-term Strategist: US-China de-risking, long-term inflation Loeys, Shiny Kundu and Alex Wise, 18 January 2022
and interest rates, Alexander Wise and Jan Loeys, 23 October
2023 The Long-Term Strategist: Long-Term FX Forecasts, Alex Wise
and Jan Loeys, 14 December 2021
The Long-term Strategist: Building Strategic Asset Allocation
The Long-term Strategist: Democracy metrics and equity markets,
2023, Jan Loeys and Alexander Wise, 10 October 2023
Alex Wise and Jan Loeys, 21 October 2021
The Long-term Strategist: Strategic investing questions, by the
The Long-term Strategist: Inflation, markets and the end of the Great
dozen, Jan Loeys and Alexander Wise, 26 September 2023 Moderation, Jan Loeys and Shiny Kundu, 27 September 2021
The Long-term Strategist: The debate on the long-term outlook for The Long-Term Strategist: Commodity-linked assets as a long-run
real interest rates, Alexander Wise and Jan Loeys, 2 August 2023 inflation hedge, Jan Loeys and Shiny Kundu, 28 July 2021
The Long-term Strategist: Top long-term risks and what to do The Long-term Strategist: Will US market exceptionalism last?,
about them, Jan Loeys, 18 July 2023 Jan Loeys and Shiny Kundu, 24 June 2021
The Long-term Strategist: The de-dollarization risk scenario, The Long-term Strategist: Short As on long-term Qs, Jan Loeys
Alexander Wise and Jan Loeys, 16 June 2023 and Shiny Kundu, 19 April 2021
The Long-term Strategist: Real yields along the US curve: Long- The Long-term Strategist: Our Strategic Portfolio, Jan Loeys and
term forecasts, Alexander Wise and Jan Loeys, 13 March 2023 Shiny Kundu, 5 March 2021
The Long-term Strategist: Real bond yields in DM: Long-term The Long-term Strategist: Empirical models of long-term US equity
projections, Alexander Wise and Jan Loeys, 21 February 2023 returns, Shiny Kundu and Jan Loeys, 1 March 2021
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The Long-term Strategist: Can EM solve the 60/40 problem?, Jan

Loeys and Shiny Kundu, 2 December 2020
The Long-term Strategist: Business concentration, Jan Loeys and
Shiny Kundu, 30 September 2020
The Long-term Strategist: The international 60/40 problem and US
Hybrids, Jan Loeys and Shiny Kundu, 29 September 2020
The Long-term Strategist: Fallen Angel and Buybacks: Strategy
Update 2020, Jan Loeys and Shiny Kundu, 28 September 2020
The Long-term Strategist: 60/40 in a zero-yield world, Jan Loeys,
30 June 2020
The Long-term Strategist: De-globalization Update 2020, Jan
Loeys and Shiny Kundu, 23 April 2020
The Long-term Strategist: Some Longer-term Consequences of
Covid-19 Crisis, Jan Loeys and Shiny Kundu, 9 April 2020
The Long-term Strategist: Zero US yields, almost there, Jan Loeys
and Shiny Kundu, 11 March 2020
The Long-term Strategist: Why long term?, Jan Loeys and Shiny
Kundu, 25 February 2020
The Long-term Strategist: Bonds time diversify much better than
you think, Jan Loeys and Shiny Kundu, 14 February 2020
The Long-term Strategist: Financial repression, risk aversion and
zero yields, Jan Loeys and Shiny Kundu, 24 January 2020
The Long-term Strategist: Why invest on Climate Change?,
Jan Loeys, Shiny Kundu and Mika Inkinen, 10 December 2019
The Long-term Strategist: Do BBs still offer better returns?,
Jan Loeys and Shiny Kundu, 3 October 2019
The Long-term Strategist: Buybacks and the investor, Jan Loeys
and Shiny Kundu, 18 July 2019
The Long-term Strategist: What if the US joins the Zero Yield
world?, Jan Loeys and Shiny Kundu, 12 July 2019
The Long-term Strategist: Climate change investing, Jan Loeys
and Shiny Kundu, 30 May 2019
The Long-term Strategist: De-globalization, Jan Loeys, Shiny
Kundu, and Joseph Lupton, 5 April 2019
The Long-term Strategist: Small Caps: A Strategic Overweight,
Jan Loeys, Shiny Kundu and Eduardo Lecubarri, 15 February
2019
Click here for more Long-term Strategy Research
42
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JP Morgan J.P. Morgan Perspectives What To Watch in The 2024 Elec

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Global Research SGR

J.P. Morgan Perspectives

What to watch in the 2024 election super bowl

J.P. Morgan Perspectives

Strategic Research Strategic Research Chair of Global Research

Strategic Research Long-term Strategy Long-term Strategy

See page 43 for analyst certification and important disclosures.

The 2024 election bonanza: Geoeconomic fragmentation gives rise to

We find that the conventional wisdom that geopolitics

Figure 5: New alliances in a multi-polar world: The rise of “mini-laterals”

Australia, Canada, Finland, France, Germany,

Figure 6: Rise of regional trade agreements

Creates obligations for both parties to enhance trade facilitation,

Enable Ecuador to export nearly 100% of its products to China

Brunei, Burma (Myanmar), Cambodia,

Replaces the NAFTA agreement to support mutually beneficial trade

Comprehensive and Australia, Brunei Darussalam, Canada,

Source: Juhász, Lane, Oehlsen and Pérez (2022).

Source: J.P. Morgan

Not all political and geopolitical risks are created

What makes geopolitics material? Historical examples

Source: J.P. Morgan Strategic Research

flags on democratic governance as we enter into a slew

Figure 14: Key US election dates

Source: J.P. Morgan Strategic Research, 270toWin

Source: J.P. Morgan

Figure 19: White adults voted more consistently than those of

3) The importance of key swing states and

4) Rise of independent voters and third-party

13 congressional district in the U.S. Here is where we stand,

The 2022 Supreme Court decision has polarized

Figure 27: Annual Southwest land border encounters since 1990

6) Rise of nativism alongside rise of

Republican governors have responded to the high

7) The rise of Gen Z as a voting force 8) Projections for record political ad

Figure 31: Timeline of Trump’s key foreign policy decisions

Source: CFR, J.P. Morgan Strategic Research

Monitoring EM elections in 2024 sanctions removal, Venezuela’s presidential election will

Pakistan: Elections are slated to be held in mid-

Venezuela: A political agreement between

Ghana: 2024 elections will come against the backdrop

 Our FX strategy colleagues see tariffs and a

26 Dustmann, Eichengreen, Otten, Sapir, Tabellini, Zoega, Boeri,

Source: World Inequality Report 2022

Three interrelated factors have contributed to

While technological advancement and automation

Source: JPM US Equity Derivatives Strategy

32 Populism, Rudiger Dornbusch and Sebastian Edwards, January

Debt burdens and inflation also tend to increase

Figure 41: Populists tend to have more of a short-term impact on

Worsening democracy metrics reaffirmed the value of multilateral engagement.

33 Indicators and Markets Returns (2016) V-Dem Working Paper

We find that the differences between upgraded and

countries that experience no democratic change. In USD

A natural caveat is that strategic investors should use

Appendix Global Markets Strategy

The Long-term Strategist: Can EM solve the 60/40 problem?, Jan

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