Abundant Liquidity Extends the Cycle—But Raises Tail Risks

J.P. Morgan Asset Management’s 2026 Investment Outlook argues that unprecedented fiscal and monetary stimulus is sustaining global expansion, even as inflation and asset-bubble risks build 

• “Peacetime” deficits and rate cuts across the US, Europe and Asia are broadening growth into 2026, with Germany’s fiscal pivot and Japan’s pro-growth stance reinforcing momentum.

• Risks centre on renewed inflation pressures, Fed independence concerns and elevated equity valuations—particularly in concentrated US tech.

• Portfolio guidance: diversify beyond US tech, lean into selective Europe, Japan and China exposure, embrace private markets, and add inflation hedges.

Is this liquidity cycle a durable expansion—or a precursor to volatility? The full outlook details positioning.