EFTA00901739.pdf

From: GIO Group JP Morgan leeleffilella To: Undisclosed recipients:; Subject: JPMorgan - Eye on the Market 2011 Outlook Date: Mon, 03 Jan 2011 13:15:28 +0000 Attachments: 2011_Outlook_PB_The_Printing_Press.pdf Eye on the Market 2011 Outlook Please contact your JP Morgan representativefor a bound color version of the Outlook The Printing Press. As we head into 2011, global profits are rising, U.S. household incomes and debt burdens are improving, the Asian production boom continues, global services are starting to rebound, and Germany is seeing its largest manufacturing and consumer revival since reunification. So far, so good. But to generate this outcome, most Central Banks and Treasuries around the world have been running in overdrive since January 2008 to create or redistribute money. A resulting measure of global imbalances has never been higher. Do these imbalances matter given positive economic momentum in the US, Germany and China; low P/E multiples on both developed and emerging equity markets; and mountains of household, corporate and Sovereign Wealth Fund cash capable of driving asset prices higher? We think they do, since the risks of unintended consequences are higher when the magnitude of imbalances (and experimentation) is this high as well. We have invested client portfolios in the belief that the world will not suffer a major relapse, with significant holdings in public and private equity, credit, hedge funds, commodities and real estate. We expect 2011 to be like 2010: volatile, and with modest returns on a balanced portfolio of financial assets. That these returns are made more attractive by the world's Printing Press policy**, which renders cash savings useless as a store of value, is a mixed blessing at best. This publication reviews our market, investment and portfolio stance as 2011 begins. Michael Cembalest Chief Investment Officer ** As per the Fed Chainnan himself; see page 10 The material contained herein it intended at a general market commentafry. Opinions expressed herein are More ofMichael embalm, andmaydifferfrom shave of other JR Morgan employees and affiliates. This inf0rmation in no way con/sinters JR Morgan research andshould not he treated assvek runteer, the VICHY expressed herein may differliom Mat containedin JC Morgan research reports. The above summaotricestquota:mtinics hair been obiainedyrom WHIM deemed so he reliable. but we do nos guarantee their accuracy or completeness Past performance is not a guarantee glum. remtes investment products are not insured by she U.S. Federal Deposit Insurance Corporation: are not guarnmeed by the bank or thrift affiliates: and may how value. Not allinvestment ideas referenced are suitablefor all investor,. These recommendations marnos be suitablefor all imestors Speak wide your JP Morgan represemasiw concerning your personal situation. This materialis not intended as an offer or solicitationPr the purchase or. ale of~financial instrument. Private Investments often engage in leveraging and other speculative investment practices that may increase she risk at hatamens lass. can be highly illiquid. are nos required to provide periodic pricing or nduasion information so investors and may involve complex tax structures and delays in distributing important tar information. Twicalle such inmaten ideas can only be offered to suitable investors through a confidential offering memorandum whichfi lly describes &l terms. conditions, and risks. In the UnitedKingdom, this material is approved by JC Morgan international Bank Limited OPM1B) Kith the registered office located at 125 London Wall EC2V SAJ. registered in EnglandNo. 0.1838766 and is aushorized and regulated by the Financial Services Authority. In addition. this materialmay he distributed by JPAlotgan fl aw Bank. N.A. (JPMCB) Pads branch which is regulated by the French banking authorities Autoria• de Conwale Pntdentiel and Autori& des Marthes Financiers: JP Morgan tSuisso SA. regulated by the Swiss FinancialMarket Supervison' Aushorisr JPMCB Bahrain branch. regulated by the Central Bank of Bahrain: JPMCB Dubai Insernallonal Financial Centre branch. regulated by the Dubai Financial Services Authority: JPMCB Hong Kong branch, regulated by she Hong Kong Monetary Authority: JPAR'll Singapore branch. regulated by the Monetary Authority ofSingapore. Conright 2011 JP Mogan Chase di Co. This email is confidential and subject to important disclaimers and conditions including on offers for the purchase or sale of securities, accuracy and completeness of information, viruses, confidentiality, legal privilege, and legal entity disclaimers, available at http://wwwjpmorgan.corn/pages/disclosures/email. EFTA00901739