Jacob Manoukian, JPMorgan’s U.S. head of investment strategy, asserts that investors should maintain their confidence in the American market, dismissing the narrative to ‘sell America’ that arose earlier this year amidst economic uncertainty.
Amidst the backdrop of market volatility driven by tariff policies and concerns over economic fundamentals, including federal and government debts, many investors had contemplated relocating their assets outside the U.S. in search of safer alternatives such as gold, the Euro, or the yen.
However, just months later, markets have stabilized, with the S&P 500 experiencing a 7% increase since the beginning of the year.
Manoukian emphasizes that apprehensions regarding the U.S. potentially losing its dominant economic position can largely be disregarded. In a recent exclusive interview with Fortune, he reflected on the peak of what he referred to as the “tariff tantrum” or “tariff panic,” where negative sentiments prevailed regarding the country’s economic trajectory.
Critics expressed concerns over the expanding deficit, unfriendly tariffs affecting the business environment, and an unpredictable policymaking landscape. They contended that investors were overly reliant on U.S. assets and advocated for a rebalancing of investments.
Manoukian firmly disagrees with this perspective, stating, “There’s cyclical reasons to think that the U.S. dollar can continue to depreciate against major trading partners, but we completely disagree with the idea that the U.S. is somehow losing its position as the center of the financial universe.”
He elaborated on the resilience of the U.S. system, which he characterized as a longstanding network of institutions, laws, cultural values, and an innovative cycle that fosters capital market returns and safeguards shareholder interests.
Manoukian pointed out that despite historical challenges to the U.S. system, it has continuously evolved, becoming stronger over time, contrasting it with other global economic systems.
Addressing concerns about the political climate, he noted, “Whether you’re worried about what the current White House is doing or a snap back in the next election cycle to the opposite end of the political spectrum, there’s a reason why we can feel comfortable telling our clients that politics don’t matter as much to market returns.” This enduring stability, according to Manoukian, stems from structural elements that transcend short-term political shifts.
Moreover, Manoukian acknowledged the heightened focus on the U.S. national debt, currently standing at $36.2 trillion. This issue gained significant attention due to fears over President Donald Trump’s proposed ‘One Big Beautiful Bill,’ which could exacerbate the national debt, a sentiment echoed by notable figures such as Elon Musk, who critiqued the bill’s potential to undermine previous fiscal efficiency efforts.
Each day, Manoukian fields inquiries about federal debt and deficits from clients who are understandably concerned. However, he urges them to adopt a perspective akin to that of a credit underwriter when evaluating the U.S. economy.
He highlights that the U.S. remains the largest economy globally, characterized by a vibrant innovation ecosystem relative to other OECD countries, a low tax collection rate as a percentage of GDP, the status of the world’s reserve currency, and a manageable external debt share as it borrows in its own currency.
Manoukian’s optimism about market growth is shared by analysts at Goldman Sachs, who forecast the S&P 500 approaching 7000 next year, marking an 11% increase based on anticipated normalization of Federal Reserve rates.
While the market anticipates cuts in the current Fed rate from 4.25 to 4.5%, President Donald Trump advocates for more aggressive measures, suggesting a drop to below 1%, which would represent more than a 70% decline.
Despite varying opinions on the necessity of these cuts, Manoukian emphasizes the importance of maintaining an independent Federal Reserve, which he believes is crucial for the U.S. economic framework.
He explained that the Treasury and the White House aim to stimulate borrowing from the private sector and households to reduce the government’s reliance on borrowing to foster economic growth, necessitating lower long-term interest rates.
The market sentiment supports the notion that a credible and independent Federal Reserve is beneficial for long-term borrowing costs. This perspective aligns with Manoukian’s broader thesis about the unique structural advantages of the U.S. economic system.
He reflects on past instances when the Fed’s independence was challenged, citing the historical case involving President Nixon and Arthur Burns, which led to a strengthened Fed that became less susceptible to White House influences.
Furthermore, Manoukian noted that the Fed’s board structure, where the governor’s terms do not sync with political cycles, underscores its degree of independence, fostering institutional credibility that contributes positively to market conditions.
Overall, despite the challenges highlighted, Manoukian maintains that the U.S. remains resilient and consistent in its role as a financial leader, urging investors to stay the course rather than succumb to calls to abandon American assets.
image source from：fortune
