From: [email protected] To: Undisclosed recipients:; Subject: J.P. Morgan Eye on the Market, April 9, 2012 Sent: 4/9/2012 2:11:03 PM Attachments: 04-09-2012 - EOTM - The Day of the Triffids.pdf Eye on the Market, April 9, 2012 (attached pdf is easier to read this week) Topics: Q&A on the USA, with a watchful eye on the risk of giant man-eating plants; Spain Our view for 2012 was that economic and equity market conditions in the US and Asia ex-Japan would be better than in Europe. So far, that view is on track. Spain in particular is in difficult shape (see page 5); its banks and government may have to borrow 1.5 trillion Euros over the next 12 months while in recession. Both the ECB and EU will need to keep the spigot open to prevent Spain from becoming a bigger problem. This week, some Q&A on the US recovery, flows into bonds and stocks, profits and P/E multiples, municipal bonds, and the long-term US fiscal situation. The Fed appears to be saying that no additional monetary easing is needed unless the economy worsens further. Are there any signs that the US recovery is becoming self-reinforcing? Durable goods consumption, equipment & software spending, vehicle sales, bank loans to companies, manufacturing payrolls (even after Friday’s disappointing report) and housing stats (building permits, multifamily housing starts) have improved over the last few months. While delinquency rates are in better shape (credit card delinquencies are back to 2007 levels), household credit growth is still weak. However, homebuilders are seeing stronger demand, and nationwide remodeling continues to rise. We see opportunities in retailing and building products companies that may benefit from a continuation in these trends. Has the data really been that good? I heard better US economic data has a lot to do with the weather. Parts of the US experienced the warmest March in recorded history. Measured from December to February, the winter was the 4th w