From: US GIO To: Undisclosed recipients:; Subject: J.P. Morgan Macro Skinny: more signs of stabilization in the global cycle Date: Wed, 03 Oct 2012 22:24:48 +0000 Importance: high Attachments: 2012-10-03_Stabilization_in_the_global_cycle.pdf Inline-Images: image001.jpg; image002.png; image003.png; image004.png; image005.png; image006.png; image007.png; image008.png; image009.png; image010.png; image01 1.png; image012.png Macro Skinny J.P.Morgan October 3, 2012 More signs of stabilization in the global cycle 1/ Back in July, we were looking for more signs of stabilization in two of the macro risk factors we regularly watch. First, we argued that the ECB policy shift had the potential of reversing some of the cyclical damage from the European crisis. Second, we thought the substantial drag on US growth from domestic-related manufacturing (largely from the auto sector) was about to fade( II. As for the third risk factor—China—we argued that the case for a hard landing would weaken substantially once the damage to Chinese manufacturing from the European crisis waned. We have seen important progress: a modest ECB-led improvement in global manufacturing is finally visible on the chart, and independently, domestic US activity is bottoming out as well. These moves are still small, but very important nonetheless. EFTA01181637