'Nervy Week' for Markets, JPMorgan Asset Management's Craig Says

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Bloomberg Sep 4 03:51 · 11.6k Views

JPMorgan Asset Management's Kerry Craig says a "confluence of factors" are driving Wednesday's selloff in Asia, including Nvidia's antitrust probe and some weakness in US economic data. He says investors "are a little bit apprehensive around the direction of both markets and the global economy." Craig also discusses the AI theme in portfolios and the outlook for the Federal Reserve. He speaks on Bloomberg Television.

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Transcript

  • 00:00 What do you make of what's going on so far?
  • 00:02 Well, I mean it's a it's a confluence of factors that are really causing the sell off today.
  • 00:05 It's obviously been the story around
  • 00:07 potential antitrust on the tech side.
  • 00:08 We've obviously seen some weakness and some of the economic data that came out of the US and this
  • 00:12 all leading into what was already a very nervy week for markets given we were looking towards the the landmark report in the US this week and potentially what the the Fed was going to do.
  • 00:20 So
  • 00:21 those sort of growth concerns related to some of the concentration risks we've already seen in the market has just again created this
  • 00:26 spike in volatility, which is not quite as bad as it was back in August.
  • 00:30 But again, just illustrates, I think the markets are a little bit apprehensive around the direction of both markets and and the global economy at this point.
  • 00:36 How do I look at
  • 00:38 the the long AI trade right now specifically?
  • 00:41 But there's still a lot behind it in terms of the secular theme that it represents.
  • 00:44 But it is
  • 00:45 a market that has has been driven very heavily by just a few names.
  • 00:49 I think there's important takeaways in terms of what we're seeing on the earnings side for some of these companies that largely are being delivered in terms of that.
  • 00:55 And that really is sort of helping the the view around the valuations, even though they have gone up a little bit away.
  • 01:00 There's a broader concern around
  • 01:02 there's obviously the need for the supply, but as the demand on the other side.
  • 01:05 And
  • 01:05 really how much you've seen this feed through in terms of the broader market and the
  • 01:09 use of AI and this technology for for the broader market and thinking about the economic consequences.
  • 01:13 So
  • 01:14 it may take a little bit longer for that to really be evident, but we do believe that's going to theme that's going to present itself in the next few years.
  • 01:19 And and does justify thinking about this
  • 01:22 AI theme within
  • 01:24 your portfolio
  • 01:25 or even thinking about it within the markets at the moment, Right.
  • 01:27 I think one of your colleagues said exactly that, that, you know, it's early, we don't know a lot of information just yet, but this doesn't seem to be anything like the, you know, the bubble bursting back
  • 01:36 24 years ago, does it?
  • 01:37 No, you had like virtually no earnings on those companies when back in 2000 when that rolls over, the valuations were, you know, much more extreme on mini metrics and
  • 01:45 a lot of it was on hope rather than what was actually being delivered.
  • 01:48 Whereas now you actually have tangibles coming through.
  • 01:50 And I think that is a
  • 01:50 a reassuring part around what we are seeing in the tech names in the US.
  • 01:53 OK,
  • 01:54 what else is dominating conversations with clients these days apart from obviously this
  • 01:59 obviously the big view around, you know, soft landing recession, the labor market and and we're hitting with the Fed
  • 02:04 whether we get that, that big number that says
  • 02:06 the Fed is more worried about growth than perhaps they're letting on.
  • 02:09 And if you see a bigger rate cut come through in September, obviously the data that's come out of the US this week is still relatively soft.
  • 02:14 And I think that
  • 02:15 there's this effect that if it is a bit softer, if the Fed does say they're going to move by more or even think about penciling and further easing this year, I mean, it does seem a bit of a negative signal to the market around the chances of recession.
  • 02:26 I mean, that's not our view.
  • 02:27 We do think, you know,
  • 02:28 25 basis points makes sense in September from the Fed.
  • 02:31 You know, we could see that expanded after you do get a soft labour market report this week.
  • 02:36 But again, it's that signaling effect of an economy which is still doing very well in the US.
  • 02:40 If you think about just a roundabout trend, inflation that is very much coming back towards their target
  • 02:44 and what does feel like a soft landing and the extension of the economic cycle in the US.