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JP Morgan recently published their 5 macro risks and 4 possible ways to reward from the current environment:

• Sharp decline in the stock market and consumer confidence could cause a “fear induced” recession.
• Contagion from the European periphery to larger European economies could result in a severe sovereign debt crisis.
• Higher oil prices due to turmoil in the Middle East.
• An over-easy Fed may pose a longer-term threat to bond investors.
• Credit conditions for individuals and small businesses remain challenging.

Investment Themes
• Following a sharp correction and continued strength in earnings, stocks now look cheap by conventional valuation measures.
• Large-cap and growth stocks look cheapest.
• High-yield bonds look cheaper than Treasuries, but a diversified approach to fixed income investing seems appropriate given economic uncertainty.
• Residential real estate continues to look attractive as a long-term investment.

Source: JP Morgan

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