JPMORGAN: We're Not Far From A 'Picture-Perfect World'

This is one of the more bullish takes we've heard lately on the way things are shaping up across global markets, courtesy of the equity derivatives team at JPMorgan (led by Michiro Naito).

In the picture-perfect world: We are all aware that the equity market looks "overheated" and that there are many stumbling blocks ahead, as we argued last week. The uncertainty surrounding the US sequestration and Italian election looms large, not to mention potential oppositions to Abe's TPP drive from within his own party.

What we might have learned in the past week, however, is that as long as economic recovery stays in its track, the equity market, albeit subject to short-term corrections, will likely steam ahead.

So let us assume that sequestration will become less of an issue and US economic growth remains intact. We will also assume that Italy will not abandon Euro and Abe’s economic agenda will receive approval from inside and out.

While this may sound all too picture-perfect, it is by no means unrealistic, in our view. And if we are right, comparing the current levels to the levels seen from 2005 to 2007 may become much more reasonable.

Sequestration, Italian elections, and Abenomics.

Coincidentally, notably pessimistic PIMCO bond manager Bill Gross just doubled his U.S. GDP forecast today.