J.P. Morgan The J.P. Morgan View Q&A on Greek exit risk • Asset Allocation — With little policy support before June 17 Greek elections, there is little supporting current risk prices. Cover remaining longs in risk. • Economics — Data are tracking Q2 forecasts, but the recent fall in equities offsets the impact of lower oil prices. This pushes growth risk to the downside. • Fixed Income — Stay flat duration, and hold EMU hedges. • Equities —Take profit on Dax OW in Europe as risk of shorting bans is rising. • Credit — We move underweight credit, and cover our remaining longs in the GMOS portfolio. Near-term, we look for relative value in CDS vs. equity. • Foreign exchange —We use a 1.22 EUFt/USD fair value forlune on 50/50 odds of pro vs anti EMU results in the June 17 Greek elections. • Commodities —This week's start-up of the Seaway pipeline between the US Midwest and Gulf Coast should help narrow the Brent-WTI Spread. Risk markets all lurched down as one this week, and safe government bonds and the dollar all rose as one, as markets positioned for Lehman-like conta- gion risk emanating from Greek election risks. Unfortunately, the June 17 date of these elections is still a month away, and Euro policy makers do not want to give the shop away even before the elections, for fear of strengthening the hands of those who are calling for a hard renegotiation with the Troika. That means little upside news over the month and markets being driven by posi- tioning on different post election scenarios. With this outlook, and equities now flat on the all-important 6-month lookback, we need to neutralise remain- ing equity and credit longs. Economic news remains broadly neutral and are tracking our Q2 forecasts. Q1 GDP for both Japan and the Euro area came in better than expected at 0% and 4.1%, respectively. Forward looking indicators, including the last set of PMIs, and recent falls in global equity prices, give us no reason to raise the rest of the