JPM US Market Intelligence Afternoon Briefing Sept 15

IDEAS & INSIGHTS – IN BRIEF • MKT UPDATES – Today’s Price Actions, Commodity Positioning, Consumer Weakness • FED TODAY TMRW – Reflagging our analysis from today’s Morning note, including Mkt Intel views on equities reaction tied to Jay Barry’s scenario analysis • JAY BARRY’S FED DAY SCENARIOS – Jay provides us with 5 outcomes and the impact to bonds. • TRADING DESK COMMENTARY – Desk commentary on xxx • US MKT INTEL VIEW – We maintain our Tactically Cautious / Neutral view into the Fed, plus we update the Monetization Menu

AFTERNOON UPDATES (NEWS LINKS) • SPX -0.4%, NDX -0.6%, RTY -0.8%. WTI +407bps at $105.52, NatGas +162bps to $2.94, UK NatGas -249bps to £2.0008, Gold -15bps to $4,293, Silver +68bps to $63.66, 10Y @ 5.002%, and VIX @ 17.20. • US: Stocks closed lower; the move higher in oil (+4.2%) kept pressure on stocks; bond market reactions were largely muted: 2y and 10y added less than 1bp today. Breadth was negative with ~70% of SPX stocks closing in the red. Outperformers were concentrated in energy and semis, while retail, travel/leisure, and rate-sensitive pockets lagged. Commodities were the bigger story: crude extended a multi-day rally (WTI closed at $105.6) amid Saudi cargo cancellation, Libya outrages and Russian refinery cut; the dollar was modestly firmer while gold softened. All eyes on tomorrow’s Fed: see below on our Fed day analysis and rate scenario analysis from Jay Barry. • EU/UK: Major markets closed mostly lower; SX5E lagged. Similar to the US, global rates impulse and high energy prices pressured multiple rate sensitive/consumer related baskets (Consumer Recovery and Luxury were among the worst performing sectors). The better tone around capex/tech today supported a modest recovery in data centers. Defense and Energy

were among the outperformers. We will receive UK CPI/PPI tomorrow. UKX -0.4%, SX5E -0.4%, SXXP -0.3%, DAX -0.2%.

CATALYSTS TOMORROW (FULL WEEK CALENDAR) • US MACRO DATA TOMORROW: Mortgage Applications at 7am ET. NY Fed Services Business Activity, Retail Sales, Import Price and Export Price at 8.30am ET. Business Inventories and NAHB Housing Market Index at 10am ET. FOMC Rate Decision at 2pm ET. TIC Flow at 4pm ET. • US EARNINGS TOMORROW: LEN • GLOBAL MACRO DATA TOMORROW: (UK) CPI/PPI at 2am ET. (Eurozone) IP at 5am ET.

JPM MARKET INTEL EQUITY & MACRO NARRATIVE

TODAY • THOUGHTS ON TODAY’S PRICE ACTIONS – The second consecutive decline this week ahead of tomorrow’s key Fed meeting. So far this week, the rising oil prices, AI safety debate and uncertainties around tmrw’s Fed meeting (while a 25bp hike is priced in, Jay told us that there were five possible scenarios with a wide range of outcomes) were among the key market drivers. What’s next? Among the three drivers, we think the Fed meeting / path for bond yields presents the biggest uncertainties and tomorrow’s Fed meeting could be a clearing event for market to reset rate hike expectations. On AI, we wrote in our Monday note (here) that we are seeing increasing signs of successful AI monetization and early evidence of improving/positive ROI, with recent news flow confirming robust AI demand. Geopolitical risks do remain a key wildcard, but equities reactions to incremental geopolitical headlines could be declining, especially given the still resilient macro environment / household balance sheet. • COMMODITY POSITIONING (full note is here) – “The estimated value of open interest across tracked commodity markets increased by 3% WoW ($57 billion) reaching $2.1 trillion, a new high since we began tracking the data in 2012. Similar to last week, energy was the dominant driver of the boost in overall open interest, fuelled by both a rise in energy prices and by $12 billion WoW of contract-based inflows across commodities sectors, also mainly into energy.” • RESTAURANT WEAKNESS – Comments from JPM Trader Alexandra Murphy: “A lot of questions on Restaurants price action today as JP2RST worst move since liberation day. Macro backdrop still the main driver here – CL1 Comdty continues to grind higher with no sign of an