EFTA01169184.pdf

From: US CIO *C > To: Undisclosed recipients:; Subject: IPM View 0930.2011 Date: Fri, 30 Sep 2011 20:38:02 +0000 Attachments: JPMorgan_View_09-3O-2011-pdf-zip Inlinrlmages: imageOO3-png J.P. Morgan Global Asset Allocalices J.P hicegan Chase Bank NA, J.P. Liman Seas Lld See 30.2011 The J.P- Morgan View Still too many banana peels Jan Leona° • Economies — Further cuts to growth forecasts. this time in Japan and EM Europe. US Q3 is tracking a 13% pace. We retain the view that Europe is sliding into recession. John Normand • Portfolio strategy —Riskier markets are trying to rebound as many active managers are short. We find it too early to go long risk. as there remain too many banana peels in front of us. on which risk assets can slip. Nlkolaos PanIghMoglou • Fixed Income —Falling growth projections rtmainbullish for bonds • Equities — 2012 EurostorafRdisidends provide an attractive return to risk Seamus Mae Goraln • Credit — EU recession forecasts Aunty staying defensive. • Foreign exchange— Be long JPYvsEUR and GBP. On the USD. we prefer to buy it against NOE. Matthew Lehmann • Commodities — Ab close our outright longs in copper. can and wheat but we remain long gold and a basket of EM driven against a basket of US driven cceurnodities. • Risk markets rallied early this week, and bond yields rebounded strongly. as some of the teased event risks in Europe did not materialise. But they then VTR trims through Sop 3 lost ground again later in the week as investors have no confidence that % "Wan at IS Weer NW. undeilying conditions in the world have improved. Gobi We retain a defensive posture, imelerweightuig n•Jq• assets. as l I ) the Euro US Feed Income area is fat from creating the fiscal solidarity and discipline needed to resolve US Not On& its sovereign funding crisis — even as it is now at least talking about these CAMS Gael:MC more openly— and likely requires a renewed crisis before its takes these ElABK3 actions: (2) whatever the outcome of the EMU debt crisis. Western Europe is likely now already sliding into recession: (3) the US is probably not in reces- BA IscalBra" sion yet. but Congress seems too divided to present the main risk of recession Eimer Fool lm o' coming from me massive fiscal tightening. that is on the books for 2011and US each Id) Japan and Asia are now also weakening and will thus not be able to turn US Huh Yield around the US and European economic: DA E Corn Investors are heavily underweight European assets as they see a significant EM DC risk that EMC members ate unable to combine resources to battle then self- SIUISOO Inflicted debt mius The required degree of fiscal integration implies surrender- tISO TR ing much of their cherished national sovereignty and will not be taken in a M IX Won? single yea-or-nay vote. It can only come about through a long set of decisions and actions over the coming year by all the EMU member states Each such Toe decision constitutes a banana peel on which Europe could slip in its journey' MSCIFRCP. for a full resolution to the tuna crisis. The best that can be said about the last MSG EM• few days is that nobody slipped on this week's bag of bananas. But there "045004 0 0 V IS remains quite a few in front of us. bra ID Wain Maca" ton a t "ma ameba mama OD Lea ea Maw scam a Om Omni • Over the next few weeks. we expect few major actions_ although still half a mm wow ma DOG lit4 MIS On a a esker. tit a a ea-ea dozen EU connotes have to ratify the EFSF enlargement The decision on the next Greek package has been pushed out to later in October to give Greece wvnv.morganmerkets.com The certifying analyst is indicated by an '4. See page 7 for analyst certification nd important legal and regulatory disclosures. EFTA01169184 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://wvnvjpmorgan.com/pages/disclosures/email. EFTA01169185