Early Rally Expectation and Warnings in the Stock Market

Early Economic Growth and Inflation Forecasts

JPMorgan analysts predict that both economic growth and inflation will gain momentum in the first quarter of 2026 under the tax cuts and spending reforms implemented by the administration of U.S. President Donald Trump. The growth expected during this period is anticipated to have a positive impact on the markets. However, it is noted that factors such as rising tariffs and decreasing immigration could potentially slow down the growth rate and reduce inflation in the long term.

Fed's Divergence in Interest Rate Policy

In their assessment for 2026, JPMorgan emphasizes that the divisions among the Federal Reserve (Fed) officials will limit monetary easing practices, forecasting that the Fed will only implement 2-3 rate cuts. While this situation may increase uncertainty in the markets, it encourages investors to turn to fixed-income assets.

Investment Strategies and Diversification Needs

JPMorgan advises investors to focus on various fund and asset classes such as credit products, securitized assets, global bonds, and municipal bonds. Additionally, it is important to pay attention to new opportunities created by the reduction of financial regulations and the expanding artificial intelligence ecosystem.

Global Equity Returns and Portfolio Diversification

As the profit growth gap closes between the U.S. and other countries, structural themes; favorable nominal growth, artificial intelligence applications, fiscal incentives, and shareholder-friendly policies suggest that international equity returns could remain robust. JPMorgan notes that alternative tools play a critical role in portfolio diversification and thematic investments. With the phrase “Diversification is not dead, it’s just different,” it is emphasized that investors should create a more stable portfolio by turning to foreign markets, bonds, and alternative investments.