1. Early stages of an interest rate hike cycle are often accompanied by a stronger dollar and a flattening yield curve (i.e., short-term interest rates rise rapidly, but long-term interest rates rise more slowly). This combination is relatively more favorable for long-term growth stocks and large-cap tech stocks (because long-term interest rates do not rise rapidly).
2. Therefore, JPMorgan Chase continues to favor large-cap tech companies and believes that in a higher-yield, stronger-dollar environment, the US stock market may outperform other developed markets in the short term.
3. If market concerns about AI continue to intensify, funds may shift to non-AI assets. The report specifically mentions Brazil and Latin America, suggesting they could be good investment options outside of AI. (JPMorgan Chase Report, September 21)
