Prof G Markets JPMorgan’s Playbook for a 10-15% Correction (or Worse) — ft. Michael Cembalest
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Nov 21, 2025 
Michael Cembalest, Chairman of Market and Investment Strategy at J.P. Morgan, dives into the turbulent waters of today’s market. He forecasts a 10–15% correction driven by the AI boom and outlines risks for 2026, including geopolitical tensions with China and power constraints on AI growth. Cembalest shares insights on shifting client risk profiles, advocating for a defensive portfolio mix, and highlights the fragility of concentrated market caps. He emphasizes the need for investors to prepare for potential profit-taking sparks and market volatility.
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AI Spending Props GDP Growth
- Tech capex now materially drives U.S. GDP growth and has bailed out headline growth figures recently.
- That makes the macro outlook more dependent on continued AI investment than typical sectors.
Base Case: 10–15% Correction
- JPMorgan's base case expects a 10–15% profit-taking correction in 2026, not a 40% crash.
- That level is manageable within current defensive portfolio tilts and wouldn't force wholesale allocation changes.
Seek Value Where Risk Is Rewarded
- Allocate to sectors where valuations reward risk, like healthcare, which trades cheaply relative to itself.
- Favor areas with better risk-reward rather than chasing overvalued tech multiples.