EFTA01146786.pdf

From: US GIO <us.giogpmorgan.com> To: Undisclosed recipients:; Subject: JPM View 08.31.2012 Date: Fri, 31 Aug 2012 18:47:51 +0000 Attachments: JPM_View_08.31.2012-pdtzip Inline-Images: image003.png EFTA01146786  It Morgan Global Asset Allocation 31 August 2012 The Morgan View Adding risk in the US Asset allocation — Cow( lam ENIFX flmded in euros and instead go outright Global Asset Allocation long US equities as US has least event risk in September. upside risk on the Jan Loeys Ac economy aid a more supportive central bank. (1.212)934.5374 ▪ Economics — Upside risks on US. due to better consumption. are offset by rPareegas Chant Sant PA downside risks on China and Japan to keep our global growth forecasts and risk balance unchanged John Normand iss.20,713cuto0 ▪ Fixed Income — Portugal 2-yr yields include some 3% in EMU exit premium. pan rontarclatgenorgan con making a clear case for new ECB SMP buying. J P Morgan Socuroos PK Pergola°, Panigirtzoglou - Equities — Overweight US industries that benefit from sustained housing (44-20) MA-711S recovery. Magas Sccureres Pk Credit — US HY and CMBS should benefit front any mow to QE3. and are less exposed to event risk in Europe. Stances Mac Gorain (44.20)71344761 Currencies — Shorts on EURiUSD are about 75% covered. maws foxy:waitrons, can Mongol SettirsteS Plc - Commodities — Stay OW energy vs. base metals. Matthew Lehmann 144-2017134-7113 Nlarkets have been largely in a holding pattern over the past fortnight. though giving back a touch of the risk rally of the previous fortnight. Equities ▪ 110110.1•1 S00110011 plc are a percent or so lower. credit spreads a few bp wider and government bond yields some 10bp lower. With little news. investors are waiting for the potential Lao Evans wan 77424337 policy fireworks over the next few weeks to decide which way to tilt their holdings. ▪ haws, Season pIe • Two weeks ago, we upgraded our global growth outlook from a negative VID returns through AL risk bias to a more balanced one. There has not been a lot of news since then. % maks at in Whet ,t but the releases we did receive appear to be confining that a bottoming process has taken place in world growth. We currently have the world economy SSG e:gliating at a rh. pace in Q3, slightly up from Q2. We have seen no reason to UP%) change our 2012 and 2013 global projections for the past month now. Across EY Cap regions, better consumer spending is creating some upside for Q3, but only LISMOYeld modestly so given the recent rise in gas prices. European data are largely itSGI *twee tracking our forecast for continued contraction of the economy. In Asia. weaker YSd EltoW data are creating downside risks to both Japan and China. USN* Grade amps Nod Int • Economic data not getting worse is no source of comfort, as the current growth MSGIEW pace is same 1% below potential and risks driving the world into global deflation if not depression_ Hence, our eyes remains on what policy makers EU tan cane can do to prevent this. The US Federal Reserve is probably closest to having Gold exhausted its armory. but is also seen as the policy maker most willing to do GSCI TR whatever it takes to reverse conditions. Hence, the preference of many investors US Feed Incoye to hold US equities relative to the rest of the world. Mr Bernanke today EU TX confirmed his commitments again at Jackson Hole. but is making us wait to the Topa' next FOMC meeting for details. He will then likely extend rate guidance for GOSS Gcv Balt" another year. with close to even odds of another bout of balance sheet US MO atellS1011 4 0 5 10 13 soarJP.lbigak taXergeci SOO Oa won See page 7 for analyst certification and important disclosures. Pa 2 tr aeScrpia This email is confidential and subject to important disclaimers and conditions includin on offers for the rehase or sale of securities, accuracy and cOmpleleneti of information, viruses, confidentiality. legal privilege. and legal entity disclaimers. available at EFTA01146787