From: US GIO

From: US GIO To: Undisclosed recipients:; Subject: Eye on the Market on China, May 31, 2011 Date: Tue, 31 May 2011 16:21:40 +0000 Attachments: 05-31-1 I n EOTM_-_On_China_.pdf Market update. Recent US economic data continue to soften, as consumer spending, income, housing and manufacturing surveys have come in below expectations. It's too soon to tell if this is a temporary swoon like last year. The disconnect between subpar economic data and resilient equity markets is growing. Our views haven't changed since January: a recovery reliant on monetary and fiscal policy bazookas runs the risk of unexpected potholes, and negative feedback loops (higher commodity prices). Corporate profits are a clear bright spot, but require measures to address the negative personal income implications of all-time lows in relative wages. Our portfolios are positioned for a muddle-through kind of year. On China. Last week, I had the opportunity to interview Dr. Henry Kissinger at our Institutional Research Summit on the occasion of his new book entitled "On China", and his 88th birthday. Opinionated, controversial, an unflinching believer in Realpolitik, unparalleled access to politicians around the globe, still an adviser to US Presidents; not much has changed for Dr. Kissinger in 50 years. This week's Eye on the Market summarizes the interview, which focused on China's past, present and future. Michael Cembalest Chief Investment Officer The material contained herein is intended as a general market commentary. Opinions expressed herein are thaw of Michael Cembalest and maydiffer from those of other Morgan employees and affiliates. This information in no way constitutes JP. Morgan research and should not be treated as such. Earthen the views expressed herein mar differ from that contained in J.P. Morgan research reports. The above summacr/prices/quotesatatistics have been obtained from. enores deemed to be reliable. but we do not guarantee their accuracy or completeness, any yield referenced a indicative and. ubject to change. Past perfonnance is not a guarantee oftener results. References to the performance or character of our portfolios generally refer to our Balanced Model Portfolios constructed by J.P. Morgan. It is a prosy for client performance and mar not represent actual transactions or investments in client accounts. The model portfolio can be implemented across brokerage or managed accounts depending on the unique objectives of each client and is serviced through distinct legal entities licensed for specific activities. Bank trust and investment management services are provided by J.P. Morgan Chase Bank N.A. and its affiliates. Securities are offered throughJP. Morgan Securities LLC (JPMS), Member NYSE. FINRA and SIPC. Securities products purchased or sold through JAMS are not insured by the Federal Deposit Insurance Corporation ("FDIC); are not deposits or other obligations oat bank or thrift affiliates and are not guaranteed by its bank or thrift affiliates: and are subject to investment risks, including possible loss of the principal invested. Not all investment ideas referenced are suitable for all investors.. These views may not be. uitable for all investors. Speak with your JP. Morgan Representative concerning your personal situation. This material is not intended as an offer or solicitation for the purchase or sale of anyfinancial instrument. Private Investments may engage in leveraging and other speculative practices that may increase the risk of investment loss, can be highly illiquid, are not required to provide periodic pricing or valuations to investors and may involve complex tax structures and delays in distributing important tax information. VpIcally such investment ideas can only be offered to. uitable investors through a confidential offering memorandum which fully describes all terms, conditions, and risks. IRS Circular 230 Disclosure: JAI:tartan Chase & Co. and its affiliates do not provide tax advice. Accordingly, any discussion of U.& tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion. marketing or recommendation by anyone unaffiliated with -IPA/organ Chase & Co. of any of the matters addressed herein or for the purpose of avoiding V.S. tax-related penalties. Note that J.P Morgan is not a licensed insurance provider. ID 2011 JPMorgan Chase & 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.com/pages/disclosures/email. EFTA00628593