Katie Magee: «The US Remains a Core Destination for Investors»
Katie Magee, US Equity Specialist at J.P. Morgan Asset Management, discusses inflation, market rotations, and the role of AI in portfolios.
Ms. Magee, US markets have delivered strong returns in recent years. What is your outlook for 2025?
Indeed, the past few years have been exceptionally strong—economic growth was solid and markets showed resilience. However, the recent tariff dispute has introduced new uncertainty. Despite heightened volatility, our overall outlook for 2025 remains constructive. Valuations have returned to levels seen at the beginning of the year.
We’ve slightly revised our inflation expectations upward and trimmed earnings forecasts modestly. Overall, we anticipate a moderate level of market fluctuations. That said, reliable forecasting is currently difficult given the number of moving parts.
Will inflation remain a concern?
Inflation has come down considerably from its peak, but we believe it could remain persistent in the US – particularly due to ongoing trade tensions. Several companies have already indicated they will need to pass rising input costs on to consumers.
«We’re seeing notable opportunities in the consumer sector.»
Is there a risk of inflation accelerating again?
It’s hard to predict, but if tariffs continue to rise, many companies will be forced either to raise prices or sacrifice margins—neither of which is sustainable for every business.
Some investors are reallocating capital from the US to Europe. Are we witnessing a strategic shift?
Many of our clients took profits at the turn of the year – especially in US equities – and are now diversifying into Europe. From a risk management perspective, that makes sense. However, we still see solid growth among US companies, which is why most clients are maintaining their US exposure.
So no structural capital flight from the US? So, there’s no evidence of structural capital flight from the US?
Correct. We’re not seeing evidence of a structural rotation out of the US market. We expect the majority of our clients to continue viewing the US as a core component of their portfolios.
Which sectors currently appear most attractive?
We pursue a broad range of strategies, but we’re seeing notable opportunities in the consumer sector – particularly in dining, travel, and retail. Consumers are increasingly focused on value for money. On the other hand, traditional consumer staples are currently less appealing to us.
«We deliberately approach the AI-themes from multiple angles.»
The financial sector is also offering compelling opportunities, from large banks to insurers and asset managers. Recently, our portfolios have been slightly underweight in traditional tech stocks. While we remain confident in the long-term potential of artificial intelligence, many AI-driven names have already delivered outsized gains over the past two to three years. We now see more attractive entry points elsewhere.
How are you integrating long-term themes like AI and the energy transition into your strategies?
Our stock selection is grounded in rigorous bottom-up analysis. We aim to deeply understand company business models—always in the context of broader structural trends shaping the industry landscape.
Could you give an example?
A good example is the application of AI in semiconductor manufacturing – a sector where we are very active. But we also focus on less obvious segments, such as heating and climate control companies investing in electrification and energy efficiency. And of course, we closely monitor which software firms are effectively commercializing AI. We deliberately approach these themes from multiple angles.
Katie Magee is a US Equity Specialist at J.P. Morgan Asset Management in London.
