File 026572
J.P. Morgan Global Asset Allocation Report - Post-Election Market Analysis (File 026572)
J.P. Morgan investment strategy report dated November 9, 2012, analyzing global asset allocation and market responses following the 2012 U.S. presidential election. The report provides recommendations on equities, fixed income, currencies, and commodities.
Summary
This J.P. Morgan Chase investment report from November 2012 assesses global asset allocation strategy following President Obama's re-election. The analysis indicates that while equity markets declined 4% post-election, the fundamental economic and market outlook remains unchanged. The report recommends maintaining medium-term overweight positions in equities and credit, with specific tactical shifts including increased exposure to EM Asia, reduced U.S. equity exposure, and focus on cyclical stocks and home builders. Key concerns include fiscal cliff negotiations and anticipated volatility heading into 2013.
Global Asset Allocation09 November 2012The J.P. Morgan ViewDo 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 areunchanged. These keep us medium-term overweight equities and credit, despitethe likely volatility as the fiscal cliff is negotiated. Within equities, we stayunderweight the US, and move most of the overweight into EM Asia. We havemoved some of our credit overweight from the US to Europe.� Economics –– The data flows continue to confirm that June/July was likely thebottom in global activity growth, and that we are gently lifting from thoselevels, 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 spreadcompression trades.� Equities –– We focus our overweights on EM Asia, Cyclical stocks and USHome 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 longbase metals.� Equity markets are taking the Obama victory quite badly, with US stocksdown some 4% on Wednesday and Thursday. This has pushed up global bondmarkets, and credit spreads are wider, but commodities are largely ignoring thisturmoil. 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 inmarket pricing.� By definition, the Romney scenario is now priced out of the market. The USelections confirm the status quo in Washington, and to us, they do so also forthe broad economic and market outlook, from current levels. Hence, we do notsee much reason to change our investment allocations, and remain medium-termoverweight both credit and equities against cash, government debt, andcommodities. We do so on the basis of value – still high risk premia – fadingrisks on fiscal policy in the US into next year; an expected rebound in globalgrowth; and super easy monetary policy, with more QE coming if growth wereto 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 committedcentral banker, its growth has been least disappointing, and its fiscal risks werefurther into the future. This relative risk has changed, with Chinese economicdata confirming that its economy is rebounding, while the ECB now creating aperiod a relative financial “peace”. The US, in contrast, is at the start of intensenegotiations on how to avoid a fiscal-cliff induced recession next year. Neitherside of the aisle has an interest in being blamed for a recession. But markets willstill be buffeted by a steady news flow on wide gaps between each side’sposition.See page 7 for analyst certification and important disclosures.Global Asset AllocationJan Loeys AC(1-212) 834-5874jan.loeys@jpmorgan.comJPMorgan Chase Bank NAJohn Normand(44-20) 7134-1816john.normand@jpmorgan.comJ.P. Morgan Securities plcNikolaos Panigirtzoglou(44-20) 7134-7815nikolaos.panigirtzoglou@jpmorgan.comJ.P. Morgan Securities plcSeamus Mac Gorain(44-20) 7134-7761seamus.macgorain@jpmorgan.comJ.P. Morgan Securities plcMatthew Lehmann(44-20) 7134-7813matthew.m.lehmann@jpmorgan.comJ.P. Morgan Securities plcLeo Evans(44-20) 7742-2537leonard.a.evans@jpmorgan.comJ.P. Morgan Securities plcYTD returns through Nov 8%, equities are in lighter color.EMBIGEM $ Corp.US High YieldMSCI Europe*S&P500MSCI EM*MSCI AC World*US High GradeEurope Fixed Inc*GoldEM Local Bonds**EM FXUS Fixed IncomeGlobal Gov Bonds**Topix*US cashGSCI TR-5 0 5 10 15 20Source: J.P. Morgan, Bloomberg. See blue box onpage 2 for description.www.morganmarkets.comJan Loeys(1-212) 834-5874jan.loeys@jpmorgan.comGlobal Asset AllocationThe J.P. Morgan View09 November 2012��As a result, we stay underweight US equities and have moved risk from ourUS credit longs into Europe. Our initial US equity underweight was againstEurope and EM Asia. Our recent downgrade of Q1 growth in the Euro areaand better activity data in China made us move the lion’s share of theoverweight versus the US into EM Asia (see Wednesday’s Global MarketOutlook and Strategy).Chinese activity data continue to surprise on the upside. October data forIP, retail sales and fixed investment each came above our expectations. Thiscreates upside risk, but no change yet, to our forecasts which already assume agentle rise in quarterly growth rates from under 7% early this year to justabove 8% in Q1. Better data reduce the need for renewed fiscal and monetarystimulus. The 18th Party Congress started yesterday, will last a week, and willbe followed by the announcement of the next leadership. More important forthe economic outlook will be the Annual Central Economic WorkingConference that will be held in December. We expect it to support continuedmoderate fiscal policy, a neutral monetary policy, and further economicrebalancing towards domestic consumption. It may also lower the 2013growth 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 achange in course at the Fed.The ECB and the Bank of England stood pat at their policy meetings thisweek, but the latter delivered a curveball today, announcing that its netcoupon income from QE would be transferred to the UK Treasury from nextyear on. The near-term effect is a slight monetary easing, as the money willbe used to reduce the amount of gilts in issue, similar to QE itself.Beyond that, this is another small step towards perceptions that monetarypolicy is no longer independent from fiscal policy, like the Bank of Japan’sjoint statement with two government ministers last month. Nobody knows thetipping point at which these perceptions feed into much higher inflationexpectations, just that we’ll know it when we see it.Core euro bond yields are towards the low end of the range, and we expectthem to head higher. But we focus more risk on spread compression trades,via overweights in Euro area peripherals, US MBS, and EM local bonds vsDM.Equities���Equity markets fell sharply post US elections, but we are not changing ourstrategy.From a month ago, we avoided directional longs in our GMOS model equityportfolio due to elevated positions by spec investors (see Charts A10 and A12in today’s Flows & Liquidity). We preferred to focus instead on regional andsectoral trades. We stay with the same strategy focusing ourrecommendations on EM Asia across regions, and Cyclical stocks and USHome builders across sectors.The rebound in the October global manufacturing PMI is what keeps us longCyclical vs. Defensive equity sectors. Is this a high-beta trade? Not2012 global GDP growth forecasts: JPMorgan andConsensus4.54.03.53.02.52.0Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12Source: J.P. Morgan, Consensus Economics. Consensus Economicsforecasts are for regions and countries that we averaged using thesame 5-year rolling USD GDP weights that we use for our own globalgrowth forecast.2013 global GDP growth forecasts: JPMorgan andConsensus3.43.22.92.7JPMSource: J.P. Morgan, Consensus Economics. Consensus Economicsforecasts are for regions and countries that we averaged using thesame 5-year rolling USD GDP weights that we use for our own globalgrowth forecast.More details in ...JPMConsensus2.4Jan-12 Apr-12 Jul-12 Oct-12Global Data Watch, Bruce Kasman and David HensleyGlobal Markets Outlook and Strategy, Jan Loeys, BruceKasman, et al.US Fixed Income Markets, Terry Belton and SriniRamaswamyGlobal Fixed Income Markets, Pavan Wadhwa and FabioBassiEmerging Markets Outlook and Strategy, Joyce ChangKey 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:ConsensusReturns 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 $.2Jan Loeys(1-212) 834-5874jan.loeys@jpmorgan.comGlobal Asset AllocationThe J.P. Morgan View09 November 2012necessarily. Last summer, as equity markets rebounded in June and July,Cyclical sectors actually underperformed. The thin grey line in the top chartshows that Cyclical sectors have recaptured only a quarter of theunderperformance seen between March and August and thus provide a betterentry point. Position indicators suggest that investors are underweightCyclicals and overweight Defensives which is turn means that Defensivesectors are more vulnerable to position unwinding.�We introduced an underweight in US equities in mid October to position forthe US fiscal cliff risk. Obama’s win makes it more likely that this risk willintensify into year-end. Across regions we favor EM Asia and Europe vs. theUS. While the US is facing fiscal cliff risks, Asian equities are benefitingfrom concrete signs that economic activity is rebounding in China. Europeanequities are benefiting from greater improvement in financial conditions,although they are more vulnerable to noise around the Greek and Spanishissues.Credit���US credit spreads edged wider in response to the fall in equity marketsfollowing the US elections. US HG widened 7bp to 160bp, undoing aroundhalf of October’s peak-to-trough moves. Similar moves registered in otherUSD credit markets. At 107bp, the CDX.IG is now back to early-Augustlevels, even as the CDS-Bond basis moved back into negative territory withcorporate bond spreads again moving above CDS.Credit spreads may be repricing the risk of a fiscal-cliff induced recession in2013. For context, we expect the eventual outcome of the negotiations to leadto about 2% of GDP in fiscal contraction, not enough to tip the economy backinto recession in itself, and considerably lower than the 4% drag under the fullenactment of all revenue raising measures and spending cuts currently set tobecome law on Jan 1.From our point of view, the elections confirm the status quo both inWashington and in market conditions – i.e. we should expect more of thesame and it has been a great year for credit. Therefore, we see the currentdip as an opportunity to add risk, and expect spreads to continue to tighteninto year end, albeit at a slower rate than in recent months. We stay down inquality and outline in GMOS this week some relative value arguments forEuro HY vs US HY. On that front, European credit shrugged off the electionoutcome, tightening marginally in the HG space and widening very slightly inthe HY space.Foreign Exchange��The post-US election drama is unfolding as expected. Four more years withthe same cast is delivering a higher USD versus most currencies but JPY dueto deleveraging ahead of the fiscal cliff, and lower USD/CNY forwards due toavoidance of US-China trade conflict (see An FX guide to America’s toss-upelection, FX Markets Weekly, Nov 2). The only surprise has been that FXvolatility remains so subdued (VXY unchanged at 7.4%) in a week when thetrade-weighted dollar and equity volatility have rallied. Chalk it up topositioning, as most indicators suggest that institutions investors entered theUS polls with aggregate USD positions close to flat.Now, sausage-making season begins. US recession is guaranteed if the fiscalcliff is enacted on schedule, and neither Congress nor the President welcomesMore details in ...US Credit Markets Outlook and Strategy, Eric Beinsteinet al.High Yield Credit Markets Weekly, Peter Acciavatti et al.European Credit Outlook & Strategy, Steven Dulake etal.Emerging Markets Cross Product Strategy Weekly, EricBeinstein et al.3Jan Loeys(1-212) 834-5874jan.loeys@jpmorgan.comGlobal Asset AllocationThe J.P. Morgan View09 November 2012��that outcome. But avoiding the worst case requires a short-term bargain plus along-term compromise on a scale not seen in Washington since the Clinton-Congressional budget showdown of 1995/96. As with sausage making, thisprocess won’t be pleasant to watch. It would be easier to return in severalweeks when the final product is ready, but for those who cannot avoid, ignorethe likely volatility, and add to defensive trades.Washington needs at least a month to broker deferral of a decent part of thefiscal cliff before it can assume the monumental task of comprehensive fiscalreform next year, and the currencies most vulnerable to an impasse areexpensive. If no grand bargain is reached before the end of the year, fullimplementation of the cliff implies enough fiscal tightening to drive the dollarup 3%-5% versus commodity currencies, given typical patterns during globalgrowth shocks. Even if these tax increases are reversed later in the year, thefirst response would be a higher USD versus all currencies but the yen, givenhow long that investors are of cyclical currencies and how short they are theyen.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-moAUD/USD seagull (buy 1.03-1.01 put spread, sell 1.05 call) and buy a bearish2-mo GBP/USD seagull (buy 1.57-1.55 put spread, sell 1.6250 call). BuyUSD/SEK in cash.Commodities���Commodities are up some 1% this week, led by precious metals, whichrallied almost 4%. The strong gains in gold are probably due to the USelection result as Obama’s victory means no change to Fed policy and socontinued QE and negative real yields. Gold also tends to gain when there ishigh fiscal uncertainty, just as it did last year during the acrimonious debtceiling debate which cost the US its AAA rating. We stay long gold.Chinese economic data came out stronger than expected this week, providingsupport for our view that Chinese economic growth has bottomed and willrebound through next year. China’s slowing activity growth has been a majordrag on commodities over the last few years and the improving economy iswhat makes us long base metals.The expected rebound in Chinese growth does not imply that we will go backto the double-digit growth rates that we saw before the crisis, and immediatelyafter. The periods when China’s economy grew at a pace above 8% coincidedwith very strong price gains on commodities, as it boosted global demand.China’s leadership is in the process of reorienting its economy towardsdomestic consumption and to reduce reliance on exports and capitalinvestments. As a result, Chinese growth will likely settle in a 7%-8% rangeover the medium term, a growth pace that in the past has not put upwardspressure on commodity prices.FX weekly change in USD1.0%0.5%0.0%-0.5%-1.0%USDTWISource: J.P. MorganMore 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 AUD4Jan Loeys(1-212) 834-5874jan.loeys@jpmorgan.comGlobal Asset AllocationThe J.P. Morgan View09 November 2012Interest 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 0.12510-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 0.7510-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 0.5010-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 0.0510-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 AveragesCommodities 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 USDEUR/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 EMEquities 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. Morgan5Jan Loeys(1-212) 834-5874jan.loeys@jpmorgan.comGlobal Asset AllocationThe J.P. Morgan View09 November 2012Global Economic Outlook Summary2011 2012 2013 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q11 2Q12 4Q12 2Q13The AmericasUnited 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 1.7Canada 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 2.0Latin 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 6.8Argentina 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 11.0Brazil 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 5.6Chile 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 3.1Colombia 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 3.2Ecuador 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 5.4Mexico 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 4.1Peru 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 2.8Uruguay 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 7.2Venezuela 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 30.2Source: J.P. MorganReal GDP% over a year agoReal GDP% over previous period, saarConsumer prices% over a year agoAsia/PacificJapan -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 -0.2Australia 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 2.7New 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 1.5Asia 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 3.3Hong 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 3.4India 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 9.0Indonesia 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 2.2Korea 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 3.0Malaysia 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 1.2Philippines 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 2.3Singapore 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 1.8Thailand 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 3.0Africa/Middle EastIsrael 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 1.5South 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 5.8EuropeEuro 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 1.9Germany 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 1.8France 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 1.3Italy 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 2.3Spain 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 2.9United 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 2.5Emerging 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 2.4Hungary 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 4.7Poland 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 2.5Romania 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 6.4Russia 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 � 7.4Turkey 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 2.8Developed 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 1.6Emerging 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 �6Jan Loeys(1-212) 834-5874jan.loeys@jpmorgan.comGlobal Asset AllocationThe J.P. Morgan View09 November 2012DisclosuresAnalyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple researchanalysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the documentindividually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the viewsexpressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part ofany of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or viewsexpressed by the research analyst(s) in this report.Analysts' Compensation: The research analysts responsible for the preparation of this report receive compensation based upon variousfactors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues.Other DisclosuresJ.P. 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This document must not be acted on or relied on by personswho are not relevant persons. Any investment or investment activity to which this document relates is only available to relevant persons and will beengaged in only with relevant persons. In other EEA countries, the report has been issued to persons regarded as professional investors (or equivalent) intheir home jurisdiction. Australia: This material is issued and distributed by JPMSAL in Australia to "wholesale clients" only. JPMSAL does not issue ordistribute this material to "retail clients". The recipient of this material must not distribute it to any third party or outside Australia without the prior writtenconsent of JPMSAL. For the purposes of this paragraph the terms "wholesale client" and "retail client" have the meanings given to them in section 761G ofthe Corporations Act 2001. Germany: This material is distributed in Germany by J.P. 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Morgan) do not warrant its completeness or accuracy except with respect to any disclosures relative toJPMS and/or its affiliates and the analyst's involvement with the issuer that is the subject of the research. All pricing is as of the close of market for thesecurities discussed, unless otherwise stated. Opinions and estimates constitute our judgment as of the date of this material and are subject to changewithout notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of anyfinancial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are notintended as recommendations of particular securities, financial instruments or strategies to particular clients. The recipient of this report must make its ownindependent decisions regarding any securities or financial instruments mentioned herein. 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