From: US GIG

From: US GIG To: Undisclosed recipients:: Subject: JPM View 11.02.2012 Date: Sun, 04 Nov 2012 16:40:36+0000 Attachments: JPM_View_11.02.2012-pdf.zip Inline-Images: image003.png EFTA01181941 Morgan The . Morgan View Looking beyond the stormy weather • Asset allocation — We retain a medium-term value approach. focused on overweight m credit and equities. and based on softening of the fiscal cliff and gentle rebound in global growth into Q1. • Economics — Better FhlIs and US jobs support a coming rebound in growth. but not enough to raise forecasts. We lower Euro area Q1 to fiat. • Fixed Income — Our systematic duration signals call for a small short position. • Equities — A cyclicals overweight may be a better way to express a positive view in equity markets than an outright long. • Credit — The HG CDS-Bond basis has turned positive for the fast time in 14 months. • Currencies — We list cutlery implications of different US election outcomes. • Commodities — Port closures and power cuts are delaying the reopening of refineries on the US East Coast. but this should prove short lived. • Stocks continue the weekly up-and-down moves they started early Sep. This week was an up-week for them. while other assets were largely unchanged Markets (<1313313 in a holding pattern as everyone awaits information on where economies are headed and anut decisions fiscal policy makers will make. We retain the view that this new information and decisions will prove positive for equities and credit over the next few months. and mildly negative for bonds. but can't be confident on whether this rally happens before or after the New Year. • This week's US data flow, punctuated by todays payrolls report. were a bit better than hoped moving ow tracking exercise for Q3 to 2.4%, versus the 2% flat government estimate released last week. These provide us a good trajectory into the current quarter. but no more than is needed to realize our 2% forecast for Q4. At a world level. our Oct. Global manufacturing PM! advanced for a second straight month by 0.4 points. but remains just below 50. As such it is in hoe with our ?`e global growth forecast for Q4. Importantly. we again saw a rise in the order index and a fall m inventory index. All this supports our view that a gentle rebound in growth is coming but does not yet create an upside bias. • Most of us have been following the Hurricane Sandy drama closely this week. and soot of us only too closely. New York and neighboring states are still trying to dig out from under the damage. Estimates of ultimate costs keep edging up. The near-tenor impact will likely be to depress activity for Oct. and early November. but rebuilding should then support growth in coming months. We are thus not changing GDP forecasts. We expect the main near-term impact on markets will be the difficulty in separating signal from Sandy induced noise in US activity data (Here comes the story of the Hum cane. Feroli et al. in GDW). • Market are now focused on the US elections. ignoring those in China. We note that Betting firms give Obama a 2O°1 probability of retaining the Vane House. and higher for the Democrat to retain control of the Senate. Status quo is thus seen as the moss Wetly scenario. even as the popular vote polls suggest this will a very close comet See page 8 for analyst certification and important disclosures. Global Asset Allocation 02 November 2012 Global ASSet Allocation AC Jan Loeys 11-212) 834-5874 lPtlevan Gun Bait NA John Normand µF20)7134.1110 Rtriwinctionwegan cc." IS Mown Smashes Ss Nikolaos Panigirteogl0u (44-2011134-7IP5 ^eels°, PaNiftec90-4bv.:49-wi inn ■ Wawa Seaents qc Seamus Mac Goren (44.20) 71347701 noc9waffiaggragan room ▪ Flotwe, Soc~f tic Matthew Lehmann µ4:0)713415U ▪ S•cceows cie L•0 Evans µ4S03 77C.2537 **via avanstornawn OCA, ▪ mason season Oa YTD returns Through Nov 1 %, equities stern hirer Coke BRIG SdP503 SCont US HO ree =mete& MSICI arCte MSCIEU US KOSS. Email Freed Inc' Eind EM Ireellkors" FX Tete USReeelirtane Gkbal Goa Behr" USead GSCI , y „ so...a Pawn acomberg. See Woe bosun pi 21w dew. aen 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 EFTA01181942