J.P. Morgan he J.P. Morgan View Is this it in Europe? Economics —US growth upside due to ISM and a likely extension of the payroll tax cut is offset by greater weakenss in Asia. We downgrade China and Japan growth. • Portfolio strategy — The runup to the Dec 9 Sumnmit will likely push risk assets up, and, as before, could then easily lead to some disappointment, as details will be lacking. • Fixed Income — The repeated pattern of high pm•summit hopes followed by disappointment argues for some caution on itra•EMU spreads. Equities — EPS growth outperformance has supported US equities this year. This theme of US equities outperforming is likely to continue into 2012. Credit —A spike in default rates suggests to maintain a low risk profile heading into YE. • Foreign exchange— Stay short EURLIPY and USD/JPY as hedges. • Commodities — Iran tensions creates the risk of an oil supply shock. Buy brent calls and be long brent vs. base metals. • After a week of bad economic and policy news, we got a big reversal this week, with better US activity data and signs of impending compromises on fiscal policy on both sides of the Atlantic. Equities, credit, commodities, EM FX, and euro area bonds all jumped back up, fully undoing the damage of the previous week. The dollar and major bond markets went down. • Notice how the German bond market has joined the risky assets family in recent weeks. Bunds now rally when stocks go up. US Treasuries and the US dollar, as the real safe assets left, sell off when stocks rally. This will remain the case as long as Euro policy makers insist that any government in the Euro area can default, and that quantitative easing by the ECB raises the risk of inflation, even in an economy that is in recession. • How good was this week's news, and will it last? Starting with the US, the failure of last week's Super Committee, despite strong signals that this was a low•probability risk, had made us quite pessimistic about the ma