JPMorgan strategist Mislav Matejka remains constructive on equities, arguing that the broader macroeconomic environment continues to favor stocks even as periodic geopolitical tensions trigger bouts of volatility.
Matejka expects the balance between economic growth and inflation to remain supportive through 2026, underpinned by resilient corporate earnings and economic activity alongside relatively stable bond yields and contained inflation pressures. He views market selloffs linked to geopolitical developments as temporary setbacks rather than signals of a broader trend reversal.
“The strong equity rally can lead to derisking episodes, when technicals become stretched, and particularly if some adverse geopolitical news comes out… but we believe that these will not be long lasting, and should be seen as buying opportunities,” Matejka said.
He also pushed back against concerns that higher commodity prices or increased investment spending in sectors such as artificial intelligence, defense and infrastructure could reignite inflationary pressures.
According to Matejka, there is little evidence of economic overheating at present, noting that inflation trends are actually easing. As a result, he expects price dynamics to remain “well behaved.”
Long-term bond yields have fallen in recent weeks, broadly in line with JPMorgan’s expectations, while Fed funds futures continue to price in significant monetary easing — nearly matching expectations seen at the beginning of the year despite strong economic indicators.
Recent data releases showed the ISM index reaching a three-year high, payroll growth climbing to a 10-month peak and U.S. industrial production recording its strongest increase in nearly a year.
“In a nutshell, this is the Goldilocks setup we were hoping for,” Matejka wrote, adding that sustained economic momentum combined with a softer U.S. dollar could help broaden market leadership.
Within equities, Matejka favors Value stocks, small-cap companies and international markets, including emerging economies. After years of lagging performance, international equities outperformed U.S. stocks by 12% in 2025 and have gained an additional 8% so far this year. He believes this rotation is justified given crowded positioning, high concentration in the so-called Mag-7 and significant valuation disparities.
Despite solid earnings growth, the megacap technology group has recently lost momentum, and Matejka cautioned that without renewed leadership from the Mag-7, it may be difficult for the broader U.S. equity market to sustain outperformance.