JP Morgan Takes a Look at 2020 Markets

Oh, if only we could take a look back at the market that was to come today. If we'd known in 2010 what we know with 2020 dawning, the world would be a very different place. The Bitcoin run-up, for example, would not have taken until 2017, and GPU chip maker stocks would have exploded back in about 2011 or so. Yet the nature of time forbids such flights of fancy, and recently, JP Morgan (NYSE: JPM) co-president Daniel Pinto offered up a look at the market to come in 2020.

The Future Is Tech. Sustainable Tech. And Finance.

When someone like Daniel Pinto says that they can't go to a client meeting without running into a particular issue, you know it has to figure in heavily to any analysis of the near-term future. And that's exactly what Pinto had to say about the notion of environmental, social and governance (ESG) projects. We took a look at the notion of “impact investing” back in November, and as Pinto relates it, ESG and impact investing are likely to be big parts of 2020's market trends. Pinto looks for this trend to move higher—“exponentially higher”, he termed it—over the next decade.

That was just the start of Pinto's projections forward. Pinto took a look at the oncoming phenomenon of big tech firms like Facebook (NASDAQ: FB), Google (NASDAQ: GOOGL), and even Uber (NYSE: UBER) entering the financial field. The basic principles there are sound enough—take firms that already reach huge markets of individuals and add a new service they might not have had available at all—and as such, Pinto expects competition coming therein.

We had a look at the notion of a Google checking account back in November, and though we realized that Google isn't interested in being a bank, it likely is interested in providing some banking-related services, especially to the so-called “unbanked” or “underbanked.”  Pinto even pointed out that Facebook's controversial Libra cryptocurrency isn't likely as dead as some might think, and even JP Morgan itself is working on a similar project known as JPM Coin. Yet as we noted in earlier coverage of Libra, regulators are already considering it a direct competitor to actual currency.

The Macro Picture Doesn't Look Bad Either

Pinto also examined the broader picture both for JP Morgan and for the world economy as a whole. Pinto noted optimism about the ongoing US-China trade war, noting that the consumer sector is doing well. The economic returns we followed in the holiday shopping season proved that much out; our assertion that Super Saturday would be the best day holiday retail saw this year proved sound as well.

Naturally, Pinto couldn't opine on the 2020s without examining his own firm. With JP Morgan now the biggest Wall Street firm in terms of revenue, the notion of the company getting bigger was advanced. Pinto is cautious about any further growth for the company, noting that lending money is now extremely expensive and doesn't offer the return that it did thanks to regulatory changes. Additionally, the fractured nature of the markets, and the world, means that conflicts emerge more often, and sometimes JP Morgan and the like have to refuse certain business just to prevent conflicts from taking place.

It's All Up in the Air Right Now

Like all attempts to predict the future, the best most anyone can do is to make guesses based on current conditions. Whether it's extrapolating current patterns—like we did when we took a look at Nike (NYSE: NKE), who was entering 2020 ahead of much of its competition—or trying to aggregate forward movement based on several separate factors, we're still just attempting to guess the future based on what we know. For instance, we project that stocks around companies that provide goods and services at the consumer level will shine in 2020, based on earlier-seen trends of consumer spending and a tight labor market going forward.

We also spotted value in real estate investment trusts (REITs), as well as certain individual stocks that are holding unusual positions within the market itself. Perhaps one of the greatest trends going into 2020 is sheer, raw optimism; Oppenheimer Asset Management analyst John Stoltzfus still projects an S&P 500 of 3500 at some point in 2020.

Optimism seems to be the leading theme going into 2020, whether it's irrationally exuberant or merely cautious. It doesn't matter if you're Daniel Pinto or a regular investor; you're likely looking for 2020 to be a positive year when you come out on the other side. Looking at what we know so far about 2020, a certain amount of optimism may not be out of line.