Document Text Content
Global Asset Allocation
09 November 2012
The J.P. Morgan View
Do US elections change anything?
� Asset allocation –– The equity market has priced out the Romney win scenario,
but from these levels, our economic and market outlook and risks are
unchanged. These keep us medium-term overweight equities and credit, despite
the likely volatility as the fiscal cliff is negotiated. Within equities, we stay
underweight the US, and move most of the overweight into EM Asia. We have
moved some of our credit overweight from the US to Europe.
� Economics –– The data flows continue to confirm that June/July was likely the
bottom in global activity growth, and that we are gently lifting from those
levels, even as it will take well into next year before growth returns to trend.
� Fixed Income –– Look for yields to head higher, but focus more risk on spread
compression trades.
� Equities –– We focus our overweights on EM Asia, Cyclical stocks and US
Home builders.
� Credit –– We see the current dip as an opportunity to add risk.
� Currencies –– Be long the dollar during the fiscal cliff negotiations.
� Commodities –– A further set of better Chinese economic data keeps us long
base metals.
� Equity markets are taking the Obama victory quite badly, with US stocks
down some 4% on Wednesday and Thursday. This has pushed up global bond
markets, and credit spreads are wider, but commodities are largely ignoring this
turmoil. We don’t think an Obama victory truly changes the economic outlook,
or risks, but it does eliminate the Romney hope that appeared to have been in
market pricing.
� By definition, the Romney scenario is now priced out of the market. The US
elections confirm the status quo in Washington, and to us, they do so also for
the broad economic and market outlook, from current levels. Hence, we do not
see much reason to change our investment allocations, and remain medium-term
overweight both credit and equities against cash, government debt, and
commodities. We do so on the basis of value – still high risk premia – fading
risks on fiscal policy in the US into next year; an expected rebound in global
growth; and super easy monetary policy, with more QE coming if growth were
to disappoint.
� In recent weeks, we have switched out of our long-standing US risk overweight,
into an underweight, on the argument that the US had the most committed
central banker, its growth has been least disappointing, and its fiscal risks were
further into the future. This relative risk has changed, with Chinese economic
data confirming that its economy is rebounding, while the ECB now creating a
period a relative financial “peace”. The US, in contrast, is at the start of intense
negotiations on how to avoid a fiscal-cliff induced recession next year. Neither
side of the aisle has an interest in being blamed for a recession. But markets will
still be buffeted by a steady news flow on wide gaps between each side’s
position.
See page 7 for analyst certification and important disclosures.
Global Asset Allocation
Jan Loeys AC
(1-212) 834-5874
jan.loeys@jpmorgan.com
JPMorgan Chase Bank NA
John Normand
(44-20) 7134-1816
john.normand@jpmorgan.com
J.P. Morgan Securities plc
Nikolaos Panigirtzoglou
(44-20) 7134-7815
nikolaos.panigirtzoglou@jpmorgan.com
J.P. Morgan Securities plc
Seamus Mac Gorain
(44-20) 7134-7761
seamus.macgorain@jpmorgan.com
J.P. Morgan Securities plc
Matthew Lehmann
(44-20) 7134-7813
matthew.m.lehmann@jpmorgan.com
J.P. Morgan Securities plc
Leo Evans
(44-20) 7742-2537
leonard.a.evans@jpmorgan.com
J.P. Morgan Securities plc
YTD returns through Nov 8
%, equities are in lighter color.
EMBIG
EM $ Corp.
US High Yield
MSCI Europe*
S&P500
MSCI EM*
MSCI AC World*
US High Grade
Europe Fixed Inc*
Gold
EM Local Bonds**
EM FX
US Fixed Income
Global Gov Bonds**
Topix*
US cash
GSCI TR
-5 0 5 10 15 20
Source: J.P. Morgan, Bloomberg. See blue box on
page 2 for description.
www.morganmarkets.com
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Global Asset Allocation
The J.P. Morgan View
09 November 2012
�
�
As a result, we stay underweight US equities and have moved risk from our
US credit longs into Europe. Our initial US equity underweight was against
Europe and EM Asia. Our recent downgrade of Q1 growth in the Euro area
and better activity data in China made us move the lion’s share of the
overweight versus the US into EM Asia (see Wednesday’s Global Market
Outlook and Strategy).
Chinese activity data continue to surprise on the upside. October data for
IP, retail sales and fixed investment each came above our expectations. This
creates upside risk, but no change yet, to our forecasts which already assume a
gentle rise in quarterly growth rates from under 7% early this year to just
above 8% in Q1. Better data reduce the need for renewed fiscal and monetary
stimulus. The 18th Party Congress started yesterday, will last a week, and will
be followed by the announcement of the next leadership. More important for
the economic outlook will be the Annual Central Economic Working
Conference that will be held in December. We expect it to support continued
moderate fiscal policy, a neutral monetary policy, and further economic
rebalancing towards domestic consumption. It may also lower the 2013
growth target to 7%. For more details, see Haibin Zhu in today’s GDW.
Fixed Income
�
�
�
�
Bonds rallied strongly, in the slipstream of the tumbling equity market.
President Obama’s re-election perhaps also diminishes expectations of a
change in course at the Fed.
The ECB and the Bank of England stood pat at their policy meetings this
week, but the latter delivered a curveball today, announcing that its net
coupon income from QE would be transferred to the UK Treasury from next
year on. The near-term effect is a slight monetary easing, as the money will
be used to reduce the amount of gilts in issue, similar to QE itself.
Beyond that, this is another small step towards perceptions that monetary
policy is no longer independent from fiscal policy, like the Bank of Japan’s
joint statement with two government ministers last month. Nobody knows the
tipping point at which these perceptions feed into much higher inflation
expectations, just that we’ll know it when we see it.
Core euro bond yields are towards the low end of the range, and we expect
them to head higher. But we focus more risk on spread compression trades,
via overweights in Euro area peripherals, US MBS, and EM local bonds vs
DM.
Equities
�
�
�
Equity markets fell sharply post US elections, but we are not changing our
strategy.
From a month ago, we avoided directional longs in our GMOS model equity
portfolio due to elevated positions by spec investors (see Charts A10 and A12
in today’s Flows & Liquidity). We preferred to focus instead on regional and
sectoral trades. We stay with the same strategy focusing our
recommendations on EM Asia across regions, and Cyclical stocks and US
Home builders across sectors.
The rebound in the October global manufacturing PMI is what keeps us long
Cyclical vs. Defensive equity sectors. Is this a high-beta trade? Not
2012 global GDP growth forecasts: JPMorgan and
Consensus
4.5
4.0
3.5
3.0
2.5
2.0
Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12
Source: J.P. Morgan, Consensus Economics. Consensus Economics
forecasts are for regions and countries that we averaged using the
same 5-year rolling USD GDP weights that we use for our own global
growth forecast.
2013 global GDP growth forecasts: JPMorgan and
Consensus
3.4
3.2
2.9
2.7
JPM
Source: J.P. Morgan, Consensus Economics. Consensus Economics
forecasts are for regions and countries that we averaged using the
same 5-year rolling USD GDP weights that we use for our own global
growth forecast.
More details in ...
JPM
Consensus
2.4
Jan-12 Apr-12 Jul-12 Oct-12
Global Data Watch, Bruce Kasman and David Hensley
Global Markets Outlook and Strategy, Jan Loeys, Bruce
Kasman, et al.
US Fixed Income Markets, Terry Belton and Srini
Ramaswamy
Global Fixed Income Markets, Pavan Wadhwa and Fabio
Bassi
Emerging Markets Outlook and Strategy, Joyce Chang
Key trades and risk: Emerging Market Equity Strategy,
Adrian Mowat et al.
Flows and Liquidity, Nikos Panigirtzoglou et al.
Description of YTD Chart on front page:
Consensus
Returns in USD. *Local currency. **Hedged into USD.
Euro Fixed Income is iBoxx Overall Index. US HG, HY,
EMBIG and EM $ Corp are JPM indices. EM FX is ELMI+
in $.
2
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Global Asset Allocation
The J.P. Morgan View
09 November 2012
necessarily. Last summer, as equity markets rebounded in June and July,
Cyclical sectors actually underperformed. The thin grey line in the top chart
shows that Cyclical sectors have recaptured only a quarter of the
underperformance seen between March and August and thus provide a better
entry point. Position indicators suggest that investors are underweight
Cyclicals and overweight Defensives which is turn means that Defensive
sectors are more vulnerable to position unwinding.
�
We introduced an underweight in US equities in mid October to position for
the US fiscal cliff risk. Obama’s win makes it more likely that this risk will
intensify into year-end. Across regions we favor EM Asia and Europe vs. the
US. While the US is facing fiscal cliff risks, Asian equities are benefiting
from concrete signs that economic activity is rebounding in China. European
equities are benefiting from greater improvement in financial conditions,
although they are more vulnerable to noise around the Greek and Spanish
issues.
Credit
�
�
�
US credit spreads edged wider in response to the fall in equity markets
following the US elections. US HG widened 7bp to 160bp, undoing around
half of October’s peak-to-trough moves. Similar moves registered in other
USD credit markets. At 107bp, the CDX.IG is now back to early-August
levels, even as the CDS-Bond basis moved back into negative territory with
corporate bond spreads again moving above CDS.
Credit spreads may be repricing the risk of a fiscal-cliff induced recession in
2013. For context, we expect the eventual outcome of the negotiations to lead
to about 2% of GDP in fiscal contraction, not enough to tip the economy back
into recession in itself, and considerably lower than the 4% drag under the full
enactment of all revenue raising measures and spending cuts currently set to
become law on Jan 1.
From our point of view, the elections confirm the status quo both in
Washington and in market conditions – i.e. we should expect more of the
same and it has been a great year for credit. Therefore, we see the current
dip as an opportunity to add risk, and expect spreads to continue to tighten
into year end, albeit at a slower rate than in recent months. We stay down in
quality and outline in GMOS this week some relative value arguments for
Euro HY vs US HY. On that front, European credit shrugged off the election
outcome, tightening marginally in the HG space and widening very slightly in
the HY space.
Foreign Exchange
�
�
The post-US election drama is unfolding as expected. Four more years with
the same cast is delivering a higher USD versus most currencies but JPY due
to deleveraging ahead of the fiscal cliff, and lower USD/CNY forwards due to
avoidance of US-China trade conflict (see An FX guide to America’s toss-up
election, FX Markets Weekly, Nov 2). The only surprise has been that FX
volatility remains so subdued (VXY unchanged at 7.4%) in a week when the
trade-weighted dollar and equity volatility have rallied. Chalk it up to
positioning, as most indicators suggest that institutions investors entered the
US polls with aggregate USD positions close to flat.
Now, sausage-making season begins. US recession is guaranteed if the fiscal
cliff is enacted on schedule, and neither Congress nor the President welcomes
More details in ...
US Credit Markets Outlook and Strategy, Eric Beinstein
et al.
High Yield Credit Markets Weekly, Peter Acciavatti et al.
European Credit Outlook & Strategy, Steven Dulake et
al.
Emerging Markets Cross Product Strategy Weekly, Eric
Beinstein et al.
3
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Global Asset Allocation
The J.P. Morgan View
09 November 2012
�
�
that outcome. But avoiding the worst case requires a short-term bargain plus a
long-term compromise on a scale not seen in Washington since the Clinton-
Congressional budget showdown of 1995/96. As with sausage making, this
process won’t be pleasant to watch. It would be easier to return in several
weeks when the final product is ready, but for those who cannot avoid, ignore
the likely volatility, and add to defensive trades.
Washington needs at least a month to broker deferral of a decent part of the
fiscal cliff before it can assume the monumental task of comprehensive fiscal
reform next year, and the currencies most vulnerable to an impasse are
expensive. If no grand bargain is reached before the end of the year, full
implementation of the cliff implies enough fiscal tightening to drive the dollar
up 3%-5% versus commodity currencies, given typical patterns during global
growth shocks. Even if these tax increases are reversed later in the year, the
first response would be a higher USD versus all currencies but the yen, given
how long that investors are of cyclical currencies and how short they are the
yen.
Stay short USD/JPY and buy USD vs high-beta (AUD, NZD, SEK and GBP)
in cash and options for a move of a few percent in coming weeks. In options,
sell a 1-mo NZD/USD call (0.8250 strike, 0.83 RKI), buy a bearish 2-mo
AUD/USD seagull (buy 1.03-1.01 put spread, sell 1.05 call) and buy a bearish
2-mo GBP/USD seagull (buy 1.57-1.55 put spread, sell 1.6250 call). Buy
USD/SEK in cash.
Commodities
�
�
�
Commodities are up some 1% this week, led by precious metals, which
rallied almost 4%. The strong gains in gold are probably due to the US
election result as Obama’s victory means no change to Fed policy and so
continued QE and negative real yields. Gold also tends to gain when there is
high fiscal uncertainty, just as it did last year during the acrimonious debt
ceiling debate which cost the US its AAA rating. We stay long gold.
Chinese economic data came out stronger than expected this week, providing
support for our view that Chinese economic growth has bottomed and will
rebound through next year. China’s slowing activity growth has been a major
drag on commodities over the last few years and the improving economy is
what makes us long base metals.
The expected rebound in Chinese growth does not imply that we will go back
to the double-digit growth rates that we saw before the crisis, and immediately
after. The periods when China’s economy grew at a pace above 8% coincided
with very strong price gains on commodities, as it boosted global demand.
China’s leadership is in the process of reorienting its economy towards
domestic consumption and to reduce reliance on exports and capital
investments. As a result, Chinese growth will likely settle in a 7%-8% range
over the medium term, a growth pace that in the past has not put upwards
pressure on commodity prices.
FX weekly change in USD
1.0%
0.5%
0.0%
-0.5%
-1.0%
USD
TWI
Source: J.P. Morgan
More details in ...
FX Markets Weekly, John Normand et al.
Commodity Markets Outlook & Strategy,
Colin Fenton et al.
Oil Markets Monthly, Colin Fenton et al.
Daily Metals Note, Colin Fenton et al.
Agriculture Weekly, Dietz et al.
JPY EUR GBP CHF CAD AUD
4
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Global Asset Allocation
The J.P. Morgan View
09 November 2012
Interest rates Current Dec-12 Mar-13 Jun-13 Sep-13 YTD Return*
United States Fed funds rate 0.125 0.125 0.125 0.125 0.125
10-year yields 1.63 2.00 2.00 2.00 2.25 2.6%
Euro area Refi rate 0.75 0.75 0.75 0.75 0.75
10-year yields 1.35 2.00 2.15 2.25 2.25 3.9%
United Kingdom Repo rate 0.50 0.50 0.50 0.50 0.50
10-year yields 1.74 2.20 2.30 2.35 2.35 2.9%
Japan Overnight call rate 0.05 0.05 0.05 0.05 0.05
10-year yields 0.73 0.85 0.90 0.95 1.00 2.0%
GBI-EM hedged in $ Yield - Global Diversified 5.64 6.00 7.3%
Credit Markets Current Index YTD Return*
US high grade (bp over UST) 161 JPMorgan JULI Porfolio Spread to Treasury 10.1%
Euro high grade (bp over Euro gov) 176 iBoxx Euro Corporate Index 9.5%
USD high yield (bp vs. UST) 582 JPMorgan Global High Yield Index STW 13.1%
Euro high yield (bp over Euro gov) 726 iBoxx Euro HY Index 21.0%
EMBIG (bp vs. UST) 294 EMBI Global 16.4%
EM Corporates (bp vs. UST) 337 JPM EM Corporates (CEMBI) 15.4%
Quarterly Averages
Commodities Current 12Q4 13Q1 13Q2 13Q3 GSCI Index YTD Return*
Brent ($/bbl) 110 105 112 105 120 Energy -3.7%
Gold ($/oz) 1733 1725 1750 1775 Precious Metals 8.7%
Copper ($/metric ton) 7629 8300 8500 8700 Industrial Metals -2.5%
Corn ($/Bu) 7.45 8.75 8.50 8.25 Agriculture 15.2%
3m cash YTD Return*
Foreign Exchange Current Dec-12 Mar-13 Jun-13 Sep-13 index in USD
EUR/USD 1.28 1.30 1.30 1.32 1.34 EUR -0.8%
USD/JPY 80.5 78 79 79 79 JPY 3.4%
GBP/USD 1.60 1..61 1.60 1.62 1.63 GBP 4.1%
USD/BRL 2.03 2.02 2.02 2.00 1.98 BRL -2.6%
USD/CNY 6.24 6.32 6.32 6.30 6.25 CNY 2.5%
USD/KRW 1091 1125 1125 1110 1100 KRW 8.1%
USD/TRY 1.79 1.80 1.75 1.75 1.70 TRY 13.3%
YTD Return US Europe Japan EM
Equities Current (local ccy) Sector Allocation * YTD YTD YTD YTD ($)
S&P 1390 15.6% Energy 6.1% -0.5% -7.5% 3.4%
Nasdaq 3014 21.2% Materials 11.7% 10.3% -5.0% 3.5%
Topix 731 4.4% Industrials 12.6% 15.7% 1.2% 10.5%
FTSE 100 5770 8.6% Discretionary 21.0% 23.9% 4.5% 10.8%
MSCI Eurozone* 143 15.8% Staples 11.4% 13.1% 13.8% 19.5%
MSCI Europe* 1104 13.2% Healthcare 18.4% 15.5% 15.0% 30.9%
MSCI EM $* 995 12.2% Financials 25.6% 24.2% 23.0% 16.8%
Brazil Bovespa 58383 2.6% Information Tech. 15.6% 16.1% -5.2% 19.3%
Hang Seng 22111 22.7% Telecommunications 21.9% -3.4% -1.3% 12.2%
Shanghai SE 2117 -4.2% Utilities 4.7% 8.2% -20.4% 5.2%
*Levels/returns as of Nov 08, 2012 Overall 15.6% 13.2% 4.4% 12.2%
Local currency except MSCI EM $
Source: J.P. Morgan
5
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Global Asset Allocation
The J.P. Morgan View
09 November 2012
Global Economic Outlook Summary
2011 2012 2013 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q11 2Q12 4Q12 2Q13
The Americas
United States 1.8 2.2 1.7 2.0 1.3 2.0 2.0 1.0 1.5 2.5 3.3 1.9 1.9 1.7
Canada 2.6 2.2 2.1 1.8 1.9 1.9 2.0 2.1 2.1 2.2 2.7 1.6 2.4 2.0
Latin America 4.2 2.9 3.9 2.8 2.4 3.9 � 4.5 3.4 3.7 4.0 7.2 6.0 6.0 6.8
Argentina 8.9 2.7 3.6 2.4 -3.2 5.0 10.0 2.0 2.5 2.0 9.6 9.9 10.0 11.0
Brazil 2.7 1.4 4.1 0.5 1.6 4.8 4.6 3.8 4.0 4.3 6.7 5.0 5.5 5.6
Chile 6.0 5.4 4.5 5.1 7.1 3.0 4.0 4.0 5.0 5.0 4.0 3.1 2.5 3.1
Colombia 5.9 4.3 4.5 0.9 6.7 2.8 3.8 4.2 5.5 5.5 3.9 3.4 3.1 3.2
Ecuador 8.0 5.0 4.0 4.2 4.8 3.0 5.5 5.0 3.0 3.0 5.5 5.1 5.1 5.4
Mexico 3.9 3.9 3.6 4.9 3.5 2.1 � 3.5 4.0 3.2 3.3 3.5 3.9 4.4 4.1
Peru 6.9 6.0 7.0 8.3 6.0 5.5 6.0 8.0 8.0 7.0 4.5 4.1 3.0 2.8
Uruguay 5.7 3.5 4.0 11.8 2.1 9.0 -9.0 12.0 7.0 9.0 8.3 8.0 7.6 7.2
Venezuela 4.2 5.0 0.0 10.1 0.6 3.5 0.0 -4.0 0.0 3.0 28.5 22.3 18.5 30.2
Source: J.P. Morgan
Real GDP
% over a year ago
Real GDP
% over previous period, saar
Consumer prices
% over a year ago
Asia/Pacific
Japan -0.7 1.7 0.1 5.3 0.7 -3.5 -2.0 1.0 1.6 1.3 -0.3 0.2 0.0 -0.2
Australia 2.1 3.5 2.5 5.6 2.6 1.5 1.8 3.8 2.5 1.8 3.1 1.2 1.7 2.7
New Zealand 1.3 2.6 2.9 4.1 2.3 1.5 3.5 3.7 3.3 2.0 1.8 1.0 1.4 1.5
Asia ex Japan 7.4 6.1 6.4 7.2 5.8 5.7 6.2 � 6.3 6.5 6.8 4.9 3.9 3.4 3.9 �
China 9.3 7.6 8.0 6.6 7.1 7.7 8.2 8.0 8.2 8.2 4.6 2.9 2.2 3.3
Hong Kong 5.0 1.2 3.2 2.4 -0.4 2.0 2.5 3.5 3.5 5.0 5.7 4.2 3.4 3.4
India 6.5 5.6 6.0 6.1 5.3 5.2 5.0 5.8 6.0 6.8 8.4 10.1 9.8 9.0
Indonesia 6.5 5.7 3.5 4.7 � 6.0 � 4.9 � 3.0 3.0 4.0 4.0 4.1 4.5 3.9 2.2
Korea 3.6 2.3 3.2 3.5 1.1 0.6 3.5 3.0 4.0 4.5 4.0 2.4 1.9 3.0
Malaysia 5.1 5.0 � 3.7 � 5.8 5.9 2.5 3.5 � 3.5 � 3.0 3.5 3.2 1.7 1.1 1.2
Philippines 3.8 5.3 3.5 12.6 0.9 1.2 1.2 4.5 4.5 4.5 4.7 2.9 2.3 2.3
Singapore 4.9 1.5 � 2.5 � 9.5 � -0.7 -3.9 � 3.2 � 4.9 � 1.6 � 4.1 � 5.5 5.3 4.5 � 4.0 �
Taiwan 4.0 1.2 3.4 1.6 2.2 3.5 3.8 3.5 3.5 3.8 1.4 1.7 2.1 1.8
Thailand 0.1 5.8 2.7 50.8 13.9 2.0 1.5 1.5 2.0 2.0 4.0 2.5 3.3 3.0
Africa/Middle East
Israel 4.6 3.0 3.1 3.1 3.4 2.0 2.8 4.9 6.1 6.1 2.5 1.6 1.3 1.5
South Africa 3.1 2.2 2.7 2.7 3.2 1.6 -1.3 5.4 3.3 3.6 6.1 5.7 5.6 5.8
Europe
Euro area 1.5 -0.4 0.1 0.0 -0.7 0.0 -1.5 0.0 0.8 1.3 2.9 2.5 2.5 1.9
Germany 3.1 1.0 1.1 � 2.0 1.1 1.0 -1.0 � 1.0 2.0 2.5 2.6 2.1 2.1 1.8
France 1.7 0.1 -0.1 0.1 -0.1 0.0 � -1.5 -0.5 0.5 1.0 2.6 2.3 1.9 1.3
Italy 0.6 � -2.3 -0.5 � -3.2 � -3.3 -1.5 � -2.0 � -0.5 1.0 � 1.3 � 3.7 3.6 3.2 2.3
Spain 0.4 -1.3 -1.7 � -1.3 -1.7 -1.2 -2.5 -3.0 � 0.0 � 0.0 � 2.7 1.9 3.4 2.9
United Kingdom 0.9 0.0 1.8 -1.2 -1.5 4.1 0.5 1.5 2.0 2.5 4.6 2.8 2.6 2.5
Emerging Europe 4.8 2.6 2.6 � 2.4 1.3 0.4 � 1.8 � 2.7 � 2.4 � 3.7 � 6.4 5.0 6.0 � 6.3 �
Bulgaria 1.7 1.0 1.5 … … … … … … … … … … …
Czech Republic 1.7 -1.1 0.9 -3.1 -0.8 -1.2 -1.3 2.1 1.0 4.3 2.4 3.4 2.9 2.4
Hungary 1.6 -1.2 0.5 -3.5 -0.9 -1.0 -1.0 1.0 1.5 1.8 4.1 5.5 5.8 4.7
Poland 4.3 2.3 1.6 � 2.4 1.6 0.5 0.5 � 1.3 � 2.3 � 3.0 � 4.6 4.0 3.1 2.5
Romania 2.5 0.0 0.8 0.5 1.9 -2.4 -1.2 1.2 -0.4 3.2 3.4 1.9 4.7 6.4
Russia 4.3 3.6 3.0 3.7 1.5 1.0 � 3.0 3.5 3.0 4.0 6.7 3.8 6.8 � 7.4
Turkey 8.5 2.8 3.7 … … … … … … … 9.2 9.4 7.3 � 7.5 �
Global 3.0 2.4 2.5 3.0 1.8 2.0 1.9 2.4 2.7 3.2 3.8 2.8 2.8 2.8
Developed markets 1.3 1.2 1.0 1.7 0.4 0.6 0.2 0.9 1.4 1.9 2.7 1.8 1.9 1.6
Emerging markets 6.1 4.7 5.1 5.4 4.3 4.5 � 5.0 � 5.1 5.2 5.6 5.7 4.6 4.4 5.0 �
6
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Global Asset Allocation
The J.P. Morgan View
09 November 2012
Disclosures
Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research
analysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document
individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views
expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of
any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views
expressed by the research analyst(s) in this report.
Analysts' Compensation: The research analysts responsible for the preparation of this report receive compensation based upon various
factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues.
Other Disclosures
J.P. Morgan ("JPM") is the global brand name for J.P. Morgan Securities LLC ("JPMS") and its affiliates worldwide. J.P. Morgan Cazenove is a marketing
name for the U.K. investment banking businesses and EMEA cash equities and equity research businesses of JPMorgan Chase & Co. and its subsidiaries.
Options related research: If the information contained herein regards options related research, such information is available only to persons who have
received the proper option risk disclosure documents. For a copy of the Option Clearing Corporation's Characteristics and Risks of Standardized Options,
please contact your J.P. Morgan Representative or visit the OCC's website at http://www.optionsclearing.com/publications/risks/riskstoc.pdf
Legal Entities Disclosures
U.S.: JPMS is a member of NYSE, FINRA, SIPC and the NFA. JPMorgan Chase Bank, N.A. is a member of FDIC and is authorized and regulated in the
UK by the Financial Services Authority. U.K.: J.P. Morgan Securities plc (JPMS plc) is a member of the London Stock Exchange and is authorized and
regulated by the Financial Services Authority. Registered in England & Wales No. 2711006. Registered Office 25 Bank Street, London, E14 5JP. South
Africa: J.P. Morgan Equities Limited is a member of the Johannesburg Securities Exchange and is regulated by the FSB. Hong Kong: J.P. Morgan
Securities (Asia Pacific) Limited (CE number AAJ321) is regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission in
Hong Kong. Korea: J.P. Morgan Securities (Far East) Ltd, Seoul Branch, is regulated by the Korea Financial Supervisory Service. Australia: J.P. Morgan
Australia Limited (ABN 52 002 888 011/AFS Licence No: 238188) is regulated by ASIC and J.P. Morgan Securities Australia Limited (ABN 61 003 245
234/AFS Licence No: 238066) is a Market Participant with the ASX and regulated by ASIC. Taiwan: J.P.Morgan Securities (Taiwan) Limited is a
participant of the Taiwan Stock Exchange (company-type) and regulated by the Taiwan Securities and Futures Bureau. India: J.P. Morgan India Private
Limited, having its registered office at J.P. Morgan Tower, Off. C.S.T. Road, Kalina, Santacruz East, Mumbai - 400098, is a member of the National Stock
Exchange of India Limited (SEBI Registration Number - INB 230675231/INF 230675231/INE 230675231) and Bombay Stock Exchange Limited (SEBI
Registration Number - INB 010675237/INF 010675237) and is regulated by Securities and Exchange Board of India. Thailand: JPMorgan Securities
(Thailand) Limited is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange