Notes on the Week Ahead

Dr. David Kelly

Listen to the latest insights from Dr. David Kelly, Chief Global Strategist at J.P. Morgan Asset Management to help prepare you for the week ahead.

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#350
Tuesday · 14 min
The Road to $40 Trillion
Money was tight in our early married years. We bought a house we couldn’t afford, purchased a car we couldn’t afford and had all the expenses attendant on the raising of two young boys. However, as we wandered the local mall gazing at all the other things we couldn’t afford, we were always willing to stop into Godiva to get chocolate squares. Godiva was, of course, more expensive than Hershey bars. But no one was going to go broke buying chocolate squares – it just wasn’t a big enough item to feature in our budgetary woes.
#349
August 10 · 13 min
What Lies Beneath: An Updated Outlook on the Economy and Investing
The summer of 2026 has been dominated by the AI boom. Some fear that AI is advancing too quickly for thoughtful regulation. Others worry that end-user revenues will lag too far behind massive capital spending and fast-growing debt. From an economic perspective, AI is pure momentum, generating huge profit gains, adding to investment spending, boosting upper-income consumer spending via a wealth effect and coinciding with very solid gains in productivity.
#348
July 27 · 15 min
The People versus Inflation
No one liked the defendant. That much was clear. But when the jury retired to consider their verdict, they hardly knew where to start. The case was so confusing and the judge’s instructions hardly seemed adequate. “Perhaps”, suggested the foreman, “we should start with a list of questions…”
#347
July 20 · 15 min
A Top Down View of the Earnings Surge
The earnings season has started with a blast. As of Friday morning, 49 of the S&P500 companies had reported second-quarter earnings, with 85% beating expectations and the index on track for a blockbuster 23% year-over-year gain for the quarter. According to FactSet, analysts now expect S&P500 operating earnings to reach $340.74 for 2026 as a whole, up 24% from 2025, following strong back-to-back gains of 10% and 13% in 2024 and 2025 respectively.
#346
July 13 · 15 min
The Fed Communications Debate: Bernanke Versus Warsh
Alan Greenspan, who served as Fed Chairman for almost 20 years, died last month at the age of 100. He was a talented and faithful public servant who guided U.S. monetary policy through the stock market crash of 1987, the boom years of the 1990s and the dot-com bubble. He was thoughtful and witty in his public comments. However, he seemed to regard a lack of clarity as almost a virtue. He inherited a Fed that had always been reticent to communicate and he largely maintained that cloak of secrecy.
#345
July 6 · 12 min
Consumer Sentiment and the Stock Market
Despite very average economic performance, consumer sentiment remains at extraordinarily low levels. While there are many interesting aspects to this phenomenon, one is of particular relevance to investors. As we show on page 32 of the Guide to the Markets, peaks and troughs in consumer sentiment have, for many years, been powerful contra-indicators of stock market performance over the subsequent 12 months. However, does this relationship still hold, if the reason for weak sentiment is beyond the realm of a rational assessment of broad economic conditions?
#344
June 29 · 12 min
The Healing of Housing
In the pantheon of running injuries, there is a well-established hierarchy. A recreational runner, finishing any marathon, or exerting themselves at half that distance, can expect to come down with delayed onset muscle soreness, otherwise known as DOMS. Starting from barely a twinge at the finish line, the pain rises in intensity over the next few days, with your quads telling you firmly that your running days are over. But then it fades and a week later you should be running like a spring lamb again.
#343
June 22 · 10 min
The MOU and Warsh: A Changing Macro Landscape
Last week, as a frothy stock market continued to zigzag across a high plateau, two events occurred with significant implications for the macroeconomic outlook. First, the President signed a Memorandum of Understanding with Iran, potentially bringing the Iran war to a close. Second, Kevin Warsh presided over his first meeting as Fed Chairman, resulting in a slightly more hawkish tilt to monetary policy in the short run and the promise of significant reform in the long run.
#342
June 15 · 13 min
The Inflation Outlook and Fed Policy under New Leadership
Last Wednesday’s CPI report, while not a surprise, still showed a year-over-year inflation rate of 4.2% - higher than in any month since April, 2023. For investors, this raises a number of questions. First, is this the peak for U.S. inflation and, if it is, how fast will inflation fall from here? Second, are we looking at the right inflation rate, anyway, given differences between CPI and PCE deflators, headline and core measures and the new Fed Chairman’s preference for trimmed mean and median readings?
#341
June 1 · 13 min
Investing in a Divergent Economy
Two weeks ago, Sari and I took a vacation - an extended road trip down the East Coast as far as Charleston and then inland back to New York through the Appalachians. On a long driving stretch on the way back, we stopped at a Jersey Mike’s just off the highway for some much needed nourishment. As we were waiting to pay, a talkative man, in the height of good humor, was ordering behind us. I don’t know if he knew anyone working at the store, but he acted as if he did. He said he’d just got a job after five months searching and he was going to celebrate - by buying two big subs - one for that evening and another to put in the fridge for the next night.
#340
May 25 · 17 min
Five Scenarios for the Federal Debt
The Financial Accounts of the United States is a quarterly Federal Reserve publication containing a great many large numbers but very little commentary, presumably because the authors feel the numbers speak for themselves. And the numbers do speak rather loudly.
#339
May 4 · 14 min
Quarter Days and the Economic Outlook
In 19th century English novels, so-called “quarter days” often provided a chronological backdrop to the plot. A relic of medieval times, the quarter days were Lady Day (March 25th), Midsummer Day (June 24th), Michaelmas (September 29th) and Christmas Day (December 25th). These were the dates upon which rents were paid, leases expired and employment contracts took effect. Quarter days were often when the landlords of Austen expected their income, the impoverished families of Dickens had to cough up their rents and the farmworkers of Hardy would move on to their next place of employment. In short, they were days of accounting and reckoning.
#338
April 20 · 12 min
AI, Inflation and Interest Rates
On Tuesday, the Senate Banking Committee will hold hearings to consider the nomination of Kevin Warsh to be the next Fed chair. His confirmation will likely be delayed until the Justice Department’s investigation into Jerome Powell is fully resolved. Despite this, Mr. Warsh’s answers to the committee’s questions could shed light on the future direction of monetary policy.
#337
April 13 · 12 min
The Latest News and the Economic Outlook
Evening newspapers, like vinyl records and rotary phones, are fading relics, all victims of the smartphones into which humanity is gradually burying its consciousness. But once, they were a vibrant part of daily life. Growing up in Dublin in the 1970s and 1980s, there were two evening papers, the Evening Herald and the Evening Press. Sold at every street corner, they would distract commuters from the damp and discomfort of the tight-quartered, smoke-filled upstairs of double-decker buses.
#336
March 30 · 10 min
The Receding Tariff Tide
A year ago this week, the President announced what he described as “reciprocal tariffs” on goods imported from all major U.S. trading partners. These tariffs, which were much broader and higher than expected, led to an immediate and sharp decline in stock prices.
#335
March 24 · 13 min
The Investment Implications of Shrinking the Fed’s Balance Sheet
In a speech last April, Fed Chair Nominee, Kevin Warsh, lamented the mission creep of the Federal Reserve as well as the Fed’s expanded balance sheet. Many academics agree with Warsh – the Fed has often tried to address problems that are not within its remit and with tools not suited to their purpose. Some of these endeavors have inflated the balance sheet which, rather like a Swiss army knife, is a tool used for many tasks, none of which it does particularly well.
#334
March 16 · 10 min
How Will It End?
One of the benefits of my marathon training is that, most weekends, I get to jog over the Newton and Wellesley hills with my running buddy, John, who happens to be a financial advisor. Over the course of three hours we solve the problems of the world, reviewing them with dour pessimism at the start of our run and assessing them with breezy optimism later on, as the running endorphins kick in.
#333
March 9 · 9 min
An Updated Outlook for the U.S. Economy
Three weeks ago, I wrote an article entitled Detangling Solution for the Economic Outlook in which I outlined a baseline forecast for 2026 and into 2027, amidst many distortions and entanglements in economic data and trends. So much has happened since then, including a raft of new economic numbers, the Supreme Court’s decision on IEEPA tariffs, and, most seriously, the start of an all-out war in the Middle East, that it makes sense to go through the exercise again, or, as the marketers of hair products might say, “rinse and repeat”.
#332
February 23 · 10 min
The Investment Implications of the Tariff Decision
On Friday, the Supreme Court released a long-awaited decision, ruling that the President’s imposition of tariffs, using the 1977 International Emergency Economic Powers Act, otherwise known as IEEPA, was illegal. The President held a press conference that afternoon and issued a proclamation announcing a general 10% tariff on imported goods, using a different statute and promised to invoke a third set of statutes to replace the overturned tariffs on a more permanent basis. On Saturday, he announced that the 10% tariff rate was being raised to 15%.
#331
February 17 · 10 min
Detangling Solution for the Economic Outlook
Between taking a shower when I get up in the morning and another when I get home from running, I am a significant consumer of detangling solution. In my youth, an unruly shock of hair required liberal doses of the substance just to bring some order to my muppet-like locks. Today, sadly, the forest has thinned out, making detangling solution somewhat less necessary. However, with less to do up top, it would be nice if it could gently seep into my scalp, detangling some of the confusion beneath.

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