JP Morgan’s AI model Quant Sentiment on Federal Reserve monetary policy at multi-year low

In summary from J.P. Morgan’s proprietary AI quant model latest:

  • Corporate sentiment is weak overall given financial conditions, aggregate sentiment QSI score for the S&P 500 at the 32.7th percentile
  • The QSI on Federal Reserve monetary policy is at a multi-year low at the 12.2 percentile, similar to levels last seen in 2008
  • cost of capital QSI came down at the 5th percentile
  • credit risk was at the 13th percentile

JPM make special note on taxation and buybacks:

  • Sentiment on taxation is near lows at the 2.5th percentile, “in sharp contrast to very positive sentiment leading up to and passage of Tax Act in 2017.”
  • “This is important given lower effective tax rates and interest expense were steady tailwinds for margins for almost three decades,”
  • Over the past 12 months corporate sentiment for taxation and buybacks “has reversed sharply and is at multi-year lows.”
  • Sentiment on buybacks “continues to fade and likely remains challenge … given already rich valuation, less incentive for debt funded share repurchases, high interest on balance sheet cash and new buyback tax.”

The JPM Quant Sentiment Indicators are based on a proprietary artificial intelligence/natural language processing engine “that objectively measures management sentiment for key macro drivers based on public company filings and transcripts for S&P 500 companies.”

S&P500 doesn’t seem too fussed by all the sadness?

This article was written by Eamonn Sheridan at Source