J.P.Morgan The J.P. Morgan View Stay in mid-risk assets Global Asset Allocation 03 August 2012 • Asset Allocation — Investors flows and the environment of low growth, super easy money and no fiscal blowups yet continue to support the strategy of mid- risk assets, EM and corporate bonds and defensive stocks. • Economics — Weak PM1s and demand indicators are pointing to a risk scenario of an extended bottom in growth and a delay in our expected lift in growth, but not to an acceleration in the downshift in growth. Global Asset Allocation Jan Loeys AC (1-212)834-5874 jan.lcieysigrpmorgan.corn JPMorgan Chase Sank NA John Normand (44-20) 7134-1816 • Fixed Income — Weakening growth and scramble for yield support duration ovcrwcights. john.normandgpmorgan corn J.P. hlorgan Secunties plc Nikolaos Panigirtzoglou Equities — An underweight in Cyclical vs. Defensives is not necessarily (44-20) 7134-7815 inconsistent with a long equity directional stance. • Credit — Carry is king in a weak growth, cheap money, low-volatility world. nikolaos.panicortzoglouftmorgan.com J.P. Morgan Securities plc OW EM credit and US high-yield. Seamus Mac Gorain (44-20) 7134-7761 Foreign exchange — We add two mean reversion trades, short GBP/NOK and AUD/NZD. seamus.macgorain@rpenorgan corn J.P. Morgan Secunties plc Matthew Lehmann Commodities — We maintain our OW in energy vs. base metals and our long (44-20) 7134-7813 in gold. We also open a small OW in agriculture. mathew.m.lehmannajpmorgan.com J.P. Morgan Securities plc Equities are again net up on the week, and fixed income overall is slightly up, both beating zero-yielding cash and commodities, and continuing to play by Leo Evans the asset reflation tune we have been harking on for some time. Cash and (44-20) 7702-2537 commodities remain at the bottom of the YTD return parade (chart on right). [email protected] J.P. Morgan Securities plc Investor flows, and our strategy continue to