From: [email protected] To: Undisclosed recipients:;; Subject: JPM View 01/11/2013 Sent: 1/11/2013 11:38:48 PM Attachments: JPM_The J.P. Morgan View_2013-01-11_1025113.pdf Global Asset Allocation ________________________________ The J.P. Morgan View: Go East. Click here <http://emaillink.jpmorgan.com/t/AQ/AAGO5g/AAMcAQ/OFFmSw/EGA/ABYQPQ/AQ/16gv> for the full Note and disclaimers. * Asset allocation –– The growth gap between East and West is widening, and has allowed us to join the Obama Pivot towards Asia. We stay long Japan and EM Asia in equities on stronger signs of an economic rebound in the East, while we again cut growth numbers for the US and Europe. * Economics –– Weaker activity data force us to lower Q4 for the US from 1.5% to 0.8% and the Euro area from -1.5% to -1.8%. But strong trade and industrial data in Asia, as well as more fiscal easing in Japan, have induced us to raise Japanese growth for the 3rd time in a row, and to signal upside risk on China. * Fixed Income –– Go long duration in the US as we see yields mean reverting and we are not quite high in the 6-month range. * Equities –– Strong retail buying is adding fuel to equity markets. * Credit –– Idiosyncrasies driving relative performance signals a welcome move-away from the one-factor-drives-all world of late. * Currencies –– Staying short JPY. Be also short USD but against AUD, RUB and KRW. * Commodities –– Our main trades are long industrial metals, US natural gas, and Brent time spreads vs. short agriculture. * Another good week for risk markets with equities and credit rallying further, but this week without a selloff in bonds. Much of the rally in equities is likely the aftermath of the last minute escape from Fiscal Cliff 1 on December 31. But since then, we have also seen a sudden surge in equity fund inflows, which seem incongruous with lukewarm incoming data and thus may well come f