INSIGHTS FROM JP MORGAN WEALTH MANAGEMENT SUMMIT IN NEW YORK
Following our firm’s continuing efforts to research and analyze opinions of top market participants, I spent two days with portfolio managers and economists from the JP Morgan Asset Management Team at their headquarters in New York. It was a terrific slate of meetings and I came away with a wide variety of thoughts on the markets and the current state of the world-wide economy.
Head economist Dr. David Kelley’s comments on the markets were very insightful. Boiling it down to a few sentences he stated that we are in the 7th year of the 6th largest expansion in the last 90 years. This sounds great but it has been painfully slow and is likely to remain as such. On interest rates he commented that while a raise from the Fed could be tough in the short term, typically stocks are higher at the end of the rate increases. He went on to say that if you want to worry about something then consider the labor supply growth in the U.S. The picture going forward is not good (not enough young people in the U.S.). Internationally he likes Europe and would invest there without hedging the currency risk, an opinion not shared by all of his colleagues.
This last part was very interesting to me. As more economists and portfolio managers presented, the picture on hedging was murky at best. Some like it, some don’t. Others did like it and are getting out. My conclusion from these discussions is that further weakness in the Euro is likely, but a snap and crash like we saw in the last year is fairly out of the question. Looking forward, these insights have definite implications on tactical hedges that I put in place earlier in the year (tactical investing is an attempt to take advantage of a temporary dislocation in the market).
On the Bond side I met with a string of managers of both U.S. and international portfolios. Key takeaways were a bias towards high yield, concern over municipal liquidity and supply, and the need to invest in multiple areas within the bond market.
On the asset allocation front I found it very interesting that JP Morgan Asset Management recently reduced by nearly 2% its long term expectations for a typical 60% stock/40% bond portfolio.
In other areas I was struck by a study that was presented on spending in retirement. The conclusions were outside of conventional thinking and I look forward to delving into this more.
If you are interested in hearing more about my meetings or exploring these topics further then please give me a call. Outside of investing I loved seeing some of their archive collection including the dueling pistols used by Burr and Hamilton, the first U.S. Government $1 note and wooden pine log water pipes from downtown Manhattan.