DS9 Document EFTA01180229

From: To: Subject: Date: Attachments: Inline-Images: US GIO Undisclosed recipients:; JPM View 08.17.2012 Fri, 17 Aug 2012 20:09:50 +0000 JPM_View_08.17.20I2-pdf.zip image003.png JP Morgan The J.P. Morgan View H2 growth risk upgraded to neutral • Asset Allocation — Reduced downside risks induce us to add cyclical risk by covering long duration positions in Bund and EM local markets, covering UW's in Cyclic'. and switching our outright long High-grade into a spread keg vs USTs and into HY • Economics — We are upgrading the H2 growth risk bias from negative to balanced on early signs. from the US. China. and Brazil, that demand is recovering. though from depressed kvels. • Fixed Income — Cover long duration positions in Bunds and EM. • Equities — We raise our short-term target for the S&P 500 to 1.475. Given the upgrade on ow global growth risk bias. we also close our OW of Cyclicals vs Defensives • Credit — The bond sell-off has hurt outright bond positions. We move 50% of our outright long US HG position to vs USTs. and move the remaining into US HY outright. The divergence between CDS and the VDC also leads us to go long vol and buy. • Foreign exchange — Keep relative value exposures. such as short AUDNZD. long NOKISEK and short GBP/N0K. • Commodities — Central banks continued to expand their gold maws in Q2 NO VIEW NM WEEK —Team is on vacation. Next issue is Aug 31. • Another week of equities rallying and bonds selling off across the world The initial phase of this move was driven by position squaring. in response to what we called last week tantalizing signs of a growth lift and no news on the twin US and European fiscal crisis But now there are more signs of investors putting on outnght bullish positions • For these growth bullish and pro-risk market moves to continue, we believe we need to get fundamental support. both from better economic activity data and fading fiscal event risks. There is no news on the fiscal front. but further signs that the expected lift in activity from the lows in lune is likely talking place. As a result our economists are upgrading their risk bias around HY. growth from negative to balanced (see today's CDR). This is very far from being outright bullish on economic growth Our headline projections for world growth in the second half of this year still stand only at 2 1/4%, which is a Cull percentage point below what we consider trend. OF potential growth. • But beyond economic data. risk markets will also likely be driven by the continued Sin fiscal crises in the US and Europe. In the US. the presidential campaign is mceptung into a debate on fiscal policy and the role of government in society. Recent polls are ma We believe the gyrations in these polls over the next 1-2 months will be one important factor that will drive the relative performance of equities versus bonds. both in the US and elsewhere. See page 7 for analyst certification and Important disclosures. Gtobal Asset Allocation if August 2052 Global Asset Alienation Jan Loeys Ac ~pan Chase Bank NA John Normand JP Map✓r 5•afarsp'< N replan% Pan 'mouton Ja. levees Sewers ore Seamus Mac Gorain .• pp2AP S.c,-,tes Matthew Lehmann P map, J P Moreau Sewers plc Ylo returns through/W.916 K. meets an wi bier Woe Sse500 EugG 1.1X1 AC Wont USCI Etna Eu SCoin USNOVeil IASCI EU' Foxe Feed Ine US HO Cita Tow De Lae Bock•• Eu Fx GSCITR US Fared Inane Gold Global Ow Bads" US cash Same pap 2w droptcn. EFTA01180229 This email is confidential and subject b important disclaime'% and condinoota otThm for the 'chase or sale of securities. accuracy and completeness of infonnation. virus s. confidentiality. legal privilege. and legal entity disclaimers. available at EFTA01180230