As investors anticipate a broadening in equity market participation under President Donald Trump’s second term, JPMorgan strategists caution that the macroeconomic backdrop is significantly different from 2017.

1. Different Growth Dynamics in 2025
? In 2017, global synchronized growth boosted emerging markets (EMs), the eurozone, and Japan, leading them to outperform the S&P 500 in dollar terms.? The key driver back then was China’s 2016 stimulus, which fueled global economic expansion.? Today’s landscape is different:

The eurozone is no longer outgrowing the U.S., limiting its relative performance.
China’s economic recovery remains uncertain, with lingering real estate and debt concerns.

? Market Impact:

A weaker global growth outlook may keep U.S. equities in the lead.
Investors should monitor regional growth trends before making international allocation decisions.

2. U.S. Dollar’s Trajectory May Differ from 2017
? In Trump’s first term, growth convergence between the U.S. and other economies weakened the dollar, benefiting commodities, EM stocks, and international equities.? JPMorgan strategists question whether the USD will follow the same pattern this time.? Trade risks & higher U.S. interest rates could support a stronger dollar in 2025.
? Market Impact:

A stronger dollar could pressure commodities & emerging markets.
Currency-sensitive U.S. sectors (e.g., technology & multinational companies) could face headwinds.

? Track forex trends & global market shifts:

Forex Daily API – Get daily currency market insights.

3. Trade Uncertainty & Tariff Risks
? Unlike 2017, trade tensions are already present in Trump’s second term.? 2018 tariffs disrupted markets, causing a stronger dollar & sector shifts.? Now, potential tariffs on China & Europe could lead to:

Supply chain disruptions
Higher inflation risks
Sectoral rotation in equity markets

? Market Impact:

Industrials & domestic-focused sectors may outperform amid protectionist policies.
Export-heavy industries (e.g., tech & consumer goods) could face headwinds.

? Track tariff impacts with historical data:

SEC Filings API – Monitor trade policy discussions in company filings.

4. Higher Bond Yields Could Reshape Market Leadership
? In 2017, bond yields started at 1.8%, allowing room for the reflation trade to drive equities higher.? Today, yields are significantly higher, with larger fiscal deficits adding to inflation risks.? JPMorgan warns that renewed yield spikes could weigh on stocks.
? Market Impact:

High-growth stocks (Tech) could be vulnerable to rising yields.
Value & dividend stocks may hold up better in a high-rate environment.

5. U.S. Tech Leadership in Question
? JPMorgan sees “fading U.S. exceptionalism” in Tech, downgrading Growth stocks from Overweight to Neutral.? Key Concerns:

The Magnificent 7’s valuations are stretched.
Historically, incumbents don’t always benefit from tech disruption—new players may take the lead.
Shift from Semiconductors to Software may offer better risk-reward in 2025.

? Market Impact:

Investors may rotate away from mega-cap Tech into more diversified plays.
Equal-weighted S&P 500 (instead of market-cap weighted) could outperform if leadership broadens.

Final Thoughts
? While Trump’s first term saw broad equity participation, 2025’s macro backdrop is different.? Investors should watch trade risks, interest rates, and USD trends before making allocation decisions.
? Key Takeaways:? Stronger dollar → Headwinds for EMs & commodities? Trade risks → Uncertainty for exporters? Higher bond yields → Pressure on growth stocks? Tech leadership may shift → Look beyond the Magnificent 7