JPMorgan Chase

Task 2

Analyze the current market environment and suggest an attractive investment opportunity to your client.

Developing a trade idea suitable for the current market environment

Here is the background information on your task

Your client has asked you for an analysis of the market environment and outlook, looking to identify potential winners and losers and a trade idea they can present to their board.

They have asked for your assistance in analyzing opportunities in different asset classes and deriving an attractive trade.

These topics are kept broad for you to decide what is most appropriate. 

News events / industry development you can choose to analyze (choose one asset class to elaborate):

  • The US / China trade tensions and its potential impacts on different asset classes in different markets
  • The recent policy changes of US Fed and European central banks and its impact on different asset classes in different markets
  • The development of 5G technology – choose one sector to elaborate (e.g. semiconductors, telecom, mobile, hardware tech, network equipment, etc.)
  • Autos – the development and usage of EV globally – choose one related sector or market to elaborate (e.g. Auto parts)
  • China consumption upgrade cycle – choose one sector to elaborate (e.g. healthcare, education, dairy, liquor, etc.)
  • COVID-19 outbreak and its impact on different sectors – choose one sector to elaborate (e.g. healthcare, consumer staples, education, information technology, communication services, real estate, etc.)

Asset Classes you can choose to recommend a trade idea:

  • Equities
  • Credit
  • Rates
  • FX
  • Commodities

Here is your task

Please summarize the following points in either a Word, PDF or PowerPoint format. 

1. Market Analysis

Select an industry development (suggested topics above) and analyze its key impacts on the market.

2. Opportunity Analysis
 
Choose any of 5 Asset Classes: Equities, Credit, Rates, FX, or Commodities and elaborate on how it will benefit/suffer particularly from the changed market conditions.
 
3. Trade Idea
 
Present your client with a specific trade idea based on your analysis above.
 
You are required to choose 1 out of the 5 Asset Classes available for the trade recommendation. In your answer, we suggest explaining why you chose that specific asset class over the others, why you expected to gain or lose, your time horizon and target P&L. Elaborate on the theory and your hypothesis.
 
We recommend you spend 45-60 minutes on this task and your submission should be approximately 1 page.
 
We have included some suggested headers to help you get started in the resources section below.

Resources to help you with the task

This is not an exhaustive list but here are examples of additional resources that can be used: 

  • Reuters
  • Bloomberg
  • Financial Times
  • Wall Street Journal
  • The Economist
  • Zero Hedge
  • Seeking Alpha