JPMorgan strategist Mislav Matejka retains a positive stance on equities, arguing that the underlying macro environment remains conducive to risk assets despite intermittent geopolitical flare-ups.
Matejka expects the growth-inflation tradeoff to remain attractive through 2026, supported, in his assessment, by healthy earnings and economic activity alongside contained inflation and moderated bond yields. He characterises bouts of weakness tied to geopolitical headlines as temporary interruptions to the broader rally rather than signals of a sustained 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 explicitly downplays the risk that rising commodity prices or elevated capital spending in areas such as AI, defense and infrastructure will rekindle broad-based inflation. According to Matejka, there are no meaningful signs of an overheating economy at present, and inflation measures are showing signs of softening. On that basis he continues to view price pressures as likely to remain "well behaved."
Long-dated yields have declined in recent weeks, consistent with the bank's expectations, even as Fed funds futures still price in nearly as much policy easing as they did at the start of the year. That pricing persists despite a series of strong economic releases: ISM activity at a three-year high, payrolls at a 10-month high and U.S. industrial production recording its largest gain in almost a year.
"In a nutshell, this is the Goldilocks setup we were hoping for," Matejka wrote, adding that continued economic traction together with a weaker U.S. dollar should facilitate a broadening of market leadership beyond the narrow group that has dominated returns.
Within equities, Matejka expresses a preference for Value stocks, small-cap names and international markets, including emerging markets. He points to a notable recent performance swing: after years of lagging, international equities outperformed U.S. stocks by 12% in 2025 and have extended that advantage by roughly 8% year to date. The strategist regards this rotation as justified given extreme positioning, high concentration among the Mag-7 and significant valuation disparities across markets.
At the same time, he warns that the megacap cohort has lost momentum. If the Mag-7 does not resume leadership, Matejka notes, it could be difficult for U.S. equities overall to regain the upper hand.
The report also references performance data for model portfolios managed with AI-driven selection tools, noting that, year to date, two out of three global portfolios are outperforming their benchmarks and that 88% of holdings are in positive territory. The flagship Tech Titans strategy is cited as having doubled the S&P 500 within 18 months, with examples of strong winners including Super Micro Computer (+185%) and AppLovin (+157%).
Bottom line: Matejka's view is that the 2026 backdrop should remain supportive of equities and that investors can treat geopolitically driven pullbacks as buying opportunities, while favouring value-oriented, smaller-cap and international exposures.