JPMorgan’s Playbook for a 10-15% Correction (or Worse) — ft. Michael Cembalest
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What is the context and background before the main market discussion begins?
Mm. Our earliest childhood memories can feel so visceral.
I have this memory of my mother standing on the beach, you know, the wind whipping her hair and her jacket, calling into the wind, with my siblings out in the lake and the dam, you know, looming in the distance. But none of these memories were true.
This week on Explain It to Me from Vox. Why can't I remember being a baby?
Today's number, 104,000. That's how many pounds a sperm whale that washed up on a Nantucket beach this week weighed. Oh gosh. This just everybody sit back and buckle up. Okay, so. I've never had an unplanned pregnancy, uh, Ed, because when my sperm finally reaches the egg, the egg swipes left. My sperm really aren't like swimmers, Ed. They're more like a slow jogger being chased by a lame dog. Um mice are not really swimmers. They're more like uh an old man browsing at a Costco who's looking for gluten free peanut butter who just had cataract surgery. Like it's well intentioned, but it's just not gonna reach the goal. I could do this all day. I know. I could I by the way I made up the last one myself, Ed
Listen to me. Markets are bigger than us. What you have here is
a structural change in the wealth distribution. Cash is trash. Stocks look pretty attractive. Something's gonna break. Forget about it.
Ed, do you have a nickname for your for your sperm?
No, I I I'm not quite there yet. I'm not really gonna play ball with you on this one.
Also, let me give you a little tip. Just just while we're barreling towards cancellation, even Claire looks horrified. It's important and it's fun that every time you orgasm you yell out the same thing. It's really important. You have to come up with the same thing. This is the part where you go, well, what do you yell out, Scott? I told you I'm not playing bowl of you. Ed's got his face in his hands.
This is not the image. Joe Kernan. I'm not g I'm not gonna do you the service of asking the question
Surrender Dorothy, that's what I yell out from the Wizard of Oz. That's what I yell out. And my other Wizard of Odd references, I I yell out, I'm melting. That's why the fans tune in. That's why they tune in. Next up, JP Morgan, chief economist for the last time. Uh, how are you Ed? I'm doing well, Scott. How are you doing? I'm good. I've been in LA the last few days and I'm at the Beverly Hills Hotel. Nice. Where they're charging me $1,800 a night so I can have a construction site above my room.
But they they stopped the construction. I mean, just uh off mic here, you gave the front desk a call, you asked them to stop hammering, and they did it. Pretty bowler. Good stuff.
Yeah, no, I I carry a lot of weight here. Yeah. It's uh they're very scared of me.
Number one client. Um, so what what have been the highlights from LA just before we get into this conversation?
I had a dinner last night went with like a small dinner with eight people and I'm totally name-dropping. What the fuck? Um and Larry David, I sat next to Larry David. Wow. How's that? He is literally the same person in real life. It's not a show. It's a camera falling around. He showed up. He's like, nice to meet you guys. It's like, why do they serve h d'oeuvres? He like goes into a bit. He's like, like, he's like, why would I like I hate Uber? Do you hate Uber? Uber let me talk about Uber for he's literally I'm like, oh my god, it's the show. The guy just shows up and starts doing these bits. Uh, but he's very funny. He seems pretty nice. His wife is lovely. I don't know. I enjoyed how did you wind up at a dinner with Larry David?
I'm what you call right now like an intellectual support animal and that is all these rich people think it's interesting to have me over for dinner And talk about my book. Like so I think there's two or three of these people every year where they're like, Okay, let's all get together and And also at the dinner was my role model, Sam Harris, and I was enjoying seeing Sam.
So when you get invited as the intellectual support animal, do you feel a pressure to provide the intellectual support? Yeah, that's why you're there. Is that fun?
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Chapters
8 chapters
1
What is the context and background before the main market discussion begins?
0:01–4:48
2
How does Aswath Demeter’s bearish outlook shape the conversation about a potential correction?
4:48–12:05
3
What insights does Michael Cembalest provide about J.P. Morgan’s view on the AI bubble?
12:05–20:59
4
What are the primary risks Michael identifies for the AI‑driven market correction?
20:59–29:30
5
How does the team evaluate the scenario of AI companies’ revenue versus valuation drops?
29:30–37:55
6
What portfolio allocation strategies are recommended for investors facing a 10‑15% correction?
37:55–47:07
7
How do geopolitical factors like China’s tech strategy and power constraints affect the outlook?
47:07–54:53
8
What is the overall outlook for 2026 and the final takeaways for listeners?
54:53–1:05:16
Speakers
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