JPMorgan's Matejka: Earnings Upgrades Support Buying the Dip
nashnova research
JPMorgan strategist Mislav Matejka's team argues that ongoing earnings upgrades make every pullback cheaper on a P/E basis — investors should buy the dip, backed by global manufacturing at a four-year high and equities shrugging off record bond yields.
What is the core logic — earnings rise, so dips get cheaper?
Matejka's team puts it plainly: corporate profits keep climbing, so any stock-price dip compresses the P/E ratio mechanically.
This means → a pullback is not a danger signal but a discount window — rising profits + falling prices = cheaper valuation.
The team's own words: "Any weakness in equities will make them cheaper; we continue to use dips to add exposure."
What keeps the macro backdrop intact?
Manufacturing indicators in both the U.S. and the eurozone sit at four-year highs, suggesting the real economy is firmer than markets assumed.
Even moderate central-bank tightening is not enough to break the positive equity setup, the team argues — unless inflation expectations shift materially.
In plain terms = as long as inflation does not spike out of control, rate hikes lack the force to end this bull run.
How much have global equities gained this year?
The S&P 500 is up roughly 13% year-to-date; the MSCI World is up about 14%; the Stoxx Europe 600 has gained around 9.6%.
The Stoxx 600 is on track for a fourth consecutive annual gain, even as bond yields touch record highs — equity resilience has been striking.
This reflects a market that has found its footing in a "high rates + high earnings" regime; bond-market stress has not cascaded into an equity sell-off.
Where to invest — U.S. or non-U.S. equities?
Matejka's team maintains its call that non-U.S. equities will outperform U.S. stocks, potentially for a second straight year.
This means → in their view, U.S. equities remain strong but offer less value than European and other markets on a relative basis.
Matejka correctly called in June that stocks would hit new highs in the second half — the MSCI World has since gained about 2.4% and now trades near record levels.
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