JP Morgan: European Stocks And US Stocks Are Expected To Break Through The Support Position.

< p > many factors exert pressure on market sentiment, and the tail risk caused by geopolitics (Ukraine situation) is obvious.

The following factors are analyzed: < /p >

< p > 1. the market leading force is reversing.

US stocks: high price kinetic energy stocks, such as the best performing stocks in the past 12 months, have reversed in the past few weeks, while low price kinetic energy stocks have rebounded.

We do not think changes in the dominant force imply a sharp decline in the stock market.

We find that since 2009, the US stock price kinetic energy has fallen 6 times (an average decrease of 10% over the decline), but has not had a negative impact on the overall market. The only fall is in the same low as the S & P 500 index. And most experience shows that bear market will appear after the price kinetic energy downturn for several months.

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< p > > a href= "//www.sjfzxm.com/news/index_cj.asp" > European shares < /a >: the recent European stock market experienced a liquidation period, showing the reversal of capital flows in emerging and developed markets.

Because of its poor performance in the past 12 months, stocks are mainly high risk stocks relative to emerging markets. In addition, the recovery of the euro zone has made stocks that used to perform better have been heavily sold in the recent reversal.

We believe that the risk of European stock market decline is also low, the reason is the same as that of the US stock market.

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< p > 2. bond yield fell, < a href= "//www.sjfzxm.com/news/index_cj.asp" > yield curve < /a > gentle.

From historical experience, the stock market performance closely follows the bond yield and is consistent with its performance.

We do not believe that the decline in bond yields is now a sign of weakness in the stock market.

First, in the past 10 years and 30 years, the bond yield curve of the United States is an excellent indicator for predicting the decline of the stock market. Every time the stock is weak or before the recession, the 10 and 30 year bond yields all show a smooth curve or turn, but the current yield curve is steep. Secondly, influenced by the second quarter economic stimulus and deflation slowdown, the future bond yields are expected to rise.

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< p > 3. copper price goes down.

The decline in commodity prices, especially copper prices, is often seen as a warning of the deviation of health between the US and the global economy.

But from the empirical analysis, we find that the low copper price is not a reliable signal for the stock market to stagnant.

Second, other economic indicators support the healthy global economic cycle, such as the 5 year interest rate is at the best level, the global PMI exceeds 50, and the consumer confidence index is rising.

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P > 4. high stock price.

At present, European shares and < a href= "//www.sjfzxm.com/news/index_cj.asp" > US stocks < /a > P / E have reached a record high of 5 years respectively. Many investors believe that the future earnings of stocks are limited, but we think this will be offset by the strong earnings of shareholders.

IBES forecasts that in the first quarter, earnings per share for US stocks will grow by 0% over the same period, while the real growth rate will be 4%.

In addition, the marginal revenue curve of American enterprises shows a peak shape before the market downturn, and the marginal revenue curve of the near future still increases.

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