Here’s a five point market panic checklist from J.P. Morgan Asset Management chief global strategist David Kelly, to help investors keep a clear head.

1. Is the downturn in oil and/or the Chinese economy enough to drag the US economy with it? No, the strength of the US consumer and the strong continued growth in the services sectors are enough to overcome the weakness.
2. Are we near or in a US recession? No, US employment is still gaining. While markets are showing some late-cycle dynamics, the economy is decidedly more mid-cycle. Recession risk remains low. We’ve seen some signs of an industrial slowdown in the US, but this was largely down to the strong US dollar hurting exports. Importantly, manufacturing is a small part of the US economy and investors should focus on the much more economically important and healthier US consumer.  The US economy is like an aging marathon runner – it cannot run as fast as it used to, but that does not mean it is coming to a stop.
3. Will earnings rebound? Yes, as the effects of a stronger dollar and low oil are gradually overcome. Since last year, investors have fretted that sluggish corporate earnings would drag down the markets, but there are solid reasons to expect a rebound. First, the energy sector, where much of the pain was, is busy consolidating and cutting costs. Second, the knock-on effects of a stronger US dollar hitting revenues have started to abate.
4. Are interest rates low? Yes, 0.25% on the US Federal Funds rate and the Bank of England’s unchanged 0.5% bank rate are still historically low. Some investors worry that the December Fed rate hike takes the wind out of the sails for stocks – we disagree. Historical patterns show equities and interest rates rise together with positive correlation when rates are rising from a low base, as they are today.  A sharp rise in long rates could be harmful for stocks, but today’s environment of benign inflation makes that highly unlikely.
5. Are valuations too high? No, they are right around to their long-term averages.