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Global Asset Allocation
28 March 2013
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The J.P. Morgan View
Local forces are dominating
� Asset allocation –– Local risks and opportunities trump global forces in
driving investment opportunities. Cross-market correlations to remain much
lower than in recent years.
� Economics –– US activity data are coming in better than hoped, but we
need another 1-2 months to see how consumers are responding to higher
taxes.
� Fixed Income –– Search for carry to trump Euro area jitters over time.
� Equities –– Japan remains our main country overweight.
� Credit –– We OW covered bonds in the Euro periphery over senior bank
bonds and subordinated vs senior bank bonds in the core.
� Currencies –– Cyprus to have minimal further impact on EUR, but a ECB
rate cut would push it a few cents lower versus the dollar.
� Commodities –– Stay long Brent and short gasoline.
� US stocks continue to gain, with the benchmark S&P500 breaching its
all time high level today in a gentle fashion. Bonds are generally up this
week on dovish comments from both the Fed and the BoJ. Commodities
have gained also, but credit remains the troubled asset class with spreads
wider in most markets, especially in EM external debt.
� Our overall investment theme remains that there is no overarching
global investment theme anymore this year but instead a number of
unrelated local forces that have largely local impact. The generalized
asset reflation we saw last year, with risk premia coming down consistently
across the globe and asset classes, was due to a gradual fading of tail risks
that has since been largely completed. “Risk-on, risk- off is so last year”.
� In addition, we are seeing no momentum either way in global growth,
price or earnings expectations that could put us into a bullish or bearish
growth story. Our 2.4% projection for 2013 world economic growth is
unchanged since November. YTD activity data for the world are tracking
our 2.6% forecast for Q1, comfortably up from the dismal 1.6% in Q4 of last
year. Amidst offsetting up- and downside surprises in the US and Japan
versus Europe, there has been no reason yet to raise the growth profile for
the year as a whole. We hope, but need evidence first.
� Without a global growth or fading-of-tail-risks force, we are left with a set
of local issues and opportunities that are having a local impact, at the
regional, asset class and company level, that should leave the rest of the
world largely unmoved. In this environment, correlations across regions
and risk markets should remain significantly lower than in past years.
Various markets may seem to behave “inconsistently” with others, but we
caution against expecting simple mean reversion, given our view of the
reduced impact of global factors. Active investors should pay more attention
to local fundamentals while long-term investors can expect to achieve
greater gains from cross-market and international diversification.
Global Asset Allocation
Jan Loeys AC
(1-212) 834-5874
jan.loeys@jpmorgan.com
JPMorgan Chase Bank NA
John Normand
(44-20) 7134-1816
john.normand@jpmorgan.com
J.P. Morgan Securities plc
Nikolaos Panigirtzoglou
(44-20) 7134-7815
nikolaos.panigirtzoglou@jpmorgan.com
J.P. Morgan Securities plc
Seamus Mac Gorain
(44-20) 7134-7761
seamus.macgorain@jpmorgan.com
J.P. Morgan Securities plc
Matthew Lehmann
(44-20) 7134-7813
matthew.m.lehmann@jpmorgan.com
J.P. Morgan Securities plc
Leo Evans
(44-20) 7742-2537
leonard.a.evans@jpmorgan.com
J.P. Morgan Securities plc
YTD returns through Mar 27
%, equities are in lighter color.
Topix*
S&P500
MSCI AC World*
MSCI Europe*
US High Yield
GSCI TR
Global Gov Bonds**
Europe Fixed Inc*
EM $ Corp.
US High Grade
EM Local Bonds**
US cash
US Fixed Income
EM FX
MSCI EM*
EMBIG
Gold
-10 0 10 20 30
See page 7 for analyst certification and important disclosures.
Source: J.P. Morgan, Bloomberg. See blue box on
page 2 for description.
www.jpmorganmarkets.com
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Global Asset Allocation
The J.P. Morgan View
28 March 2013
�
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Local issues must be monitored and understood, though, to decide how to
allocate capital and risk. Just to review a few, Japanese policy makers
continue to present a concerted plan to reflate their economy through
monetary, fiscal and structural measures. The strong control of the
government and its high approval rating are steadily raising the chance of
success. We stay overweight Japanese equities and grow wary of the short yen
trade, as capital inflows and rising growth expectations (chart of right) are
ultimately bullish for the currency. Watch next week’s BoJ meeting, led by
newly appointed Governor Kuroda, for new reflationary measures.
The Euro area economy remains in recession, while policy makers are
making little effort to reverse the contraction. We monitor signs of any large
deposit flight post Cyprus over coming weeks and months to judge whether
the bailout may actually be worsening conditions in the Euro. Economic
forecast momentum remains negative (chart of right). These are good reasons
to underweight the Euro area, if not all of Europe, across asset classes, against
the rest of the world.
The US, in contrast, is seeing better spending from both corporates and
consumers than we could have expected post Fiscal Cliff and sequestration.
But given the huge amount of fiscal drag, which is a fact, we want to see
another 1-2 months of data before extrapolating the good news. It did support
US equities in recent weeks, which continue to benefit from US corporates
issuing debt to buy their own shares and others', through M&A. This corporate
rotation from debt to equities is almost exclusively a US flow, which helps
explain US equity outperformance.
Across risk assets, we are similarly seeing huge delinking, with equities
rallying greatly and commodities and credit seeing no gains (chart p. 1), very
much unlike last year. Commodities are delinking as there are no growth
upgrades in EM, and inflation concerns are concentrated on two countries, UK
and Japan. Credit is delinking as most investors are massively overweight
credit versus equities, as evidenced by the disparity in buying flows in 2011-
12. Relevering by US corporate and the Fed debating the end of QE are
signaling that the 3-decade long rally in bonds is likely over. Investors are
starting to dollar-average away from bonds to equities.
Fixed Income
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Bonds rallied again, except for Euro area peripherals, the source of this
week’s market concerns. The imposition of capital controls on Cypriot
deposits is to be sure a watershed moment, but for now not one we expect to
spark significant deposit withdrawals elsewhere. Meanwhile, the most likely
outcome to the Italian impasse appears to be new elections in the autumn.
With seemingly little prospect of a material rise in yields on the safest assets,
we think the search for carry evident across the full gamut of asset markets
will see peripheral spreads narrow over time.
Ten-year JGB yields have rallied to within a few bps of their all-time low,
ahead of next week’s inaugural meeting for the new BoJ leadership. We do
indeed expect aggressive easing, with JGB purchases out to 30 years, but
think this will be trumped by profit taking in JGBs after the fiscal year end.
Our latest Inflation Expectations Survey (F. Diamond, K. Gupta) was out
yesterday. One interesting result is that almost 90% of respondents believe the
BoJ has less than a 50/50 shot of hitting its 2% inflation target in two years, a
reflection of the formidable challenge of sparking inflation expectations after
two decades of falling prices.
2013 Japan GDP growth forecasts: JPMorgan and
Consensus
2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
Jan-12 Apr-12 Jul-12 Oct-12 Jan-13
Source: J.P. Morgan, Consensus Economics. Consensus Economics
forecasts are for regions and countries that we averaged using the
same 5-year rolling USD GDP weights that we use for our own global
growth forecast.
2013 Euro area GDP growth forecasts: JPMorgan
and Consensus
1.0
0.5
-0.5
-1.0
JPM
Source: J.P. Morgan, Consensus Economics. Consensus Economics
forecasts are for regions and countries that we averaged using the
same 5-year rolling USD GDP weights that we use for our own global
growth forecast.
More details in ...
Global Data Watch, Bruce Kasman and David Hensley
Global Markets Outlook and Strategy, Jan Loeys et al.
US Fixed Income Markets, Pavan Wadhwa, Matthew
Jozoff, and Srini Ramaswamy
Global Fixed Income Markets, Fabio Bassi
Consensus
Consensus
0.0
Jan-12 Apr-12 Jul-12 Oct-12 Jan-13
JPM
Emerging Markets Outlook and Strategy, Joyce Chang
Key trades and risk: Emerging Market Equity Strategy,
Adrian Mowat et al.
Flows and Liquidity, Nikos Panigirtzoglou et al.
Description of YTD Chart on p. 1: Returns in USD. *Local
currency. **Hedged into USD. Euro Fixed Income is
iBoxx Overall Index. US HG, HY, EMBIG and EM $ Corp
are JPM indices. EM FX is ELMI+ in $.
2
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Global Asset Allocation
The J.P. Morgan View
28 March 2013
Equities
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The global rally in equity markets slowed this week, but did not reverse, on
continued concerns about the fallout from a poorly executed Cyprus solution.
The Euro area underperformed again, for a second week in a row. As
discussed last week, we view Cyprus as a local problem that we address by
underweighting Euro area equities in a global portfolio. A potential negative
feedback loop from markets to the economy poses a serious downside risk for
Euro area growth over coming months prolonging the current run of negative
economic surprises from the region.
Japan is the region we like the most. In our mind the Japanese equity trade
has further legs not only due to prospective BoJ balance sheet expansion but
more importantly due to a reform agenda to be unveiled into the summer.
EM equities are suffering from renewed policy tightening in major EM
economies such as Brazil and China. Investors have bitter memories of
previous property tightening measures in China. As within DM, we see a lot
of divergences within EM and prefer to focus on under-owned markets with
good domestic demand story such as Mexico and Malaysia. See “Consensus
Asset Allocation”, Adrian Mowat and team, Mar 26th. Open overweights in
Mexican and Malaysia equities vs MSCI EM.
For long-term investors we just released our quarterly publication "Trade
opportunities for long term investors" Mar 27. We monetize risk premia in
Value stocks via a long in S&P500 Value vs S&P500 ETFs. It appears that a
five year long underperformance of Value stocks has come to an end. We take
profit on trades that monetize skew risk premia in S&P500 due to sharp
contraction over the past quarter. We continue to monetize equity risk premia
via buying high dividend yield equity ETFs against USTs. Our preference is
to buy ETFs which track the S&P US Preferred stock due to its high yield,
around 6%, and its high weight on Financials.
Credit
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The news flow from the Cypriot bailout continued to push spreads wider
and vol higher this week, with European Financials underperforming as
creditor bail-in risks returned to the forefront. iTraxx senior and subordinated
financials indices widened 20bp as investors sought to hedge via CDS rather
than sell bonds. European credit continued to underperformed US credit.
The fact that Cypriot banks debt is only 1.3% of total liabilities was a key
factor in the decision to bail-in depositors. Yet events surrounding the banking
sector restructuring also suggest that keeping senior unsecured
bondholders immune from costly bail-outs is politically untenable. This
removes the implicit ‘cover’ that senior bonds holders have enjoyed and has
increased speculation that implementation of the bail-in proposals under the
EU’s Resolution & Recovery Directive (RRD) will be brought forward to
2015 from the current 2018 time-frame.
As such, our colleagues in European Credit have examined the implications of
changing recovery rate expectations across the bank capital structure.
Assuming that covered bonds remain outside the scope of the proposals, we
expect senior bank bond spreads to widen relative to covered bonds and
prefer being OW covered bonds vs senior bonds in the periphery,
particularly in Spain where covered bonds have first claim over the entire
mortgage book of the bank. From a relative value point of view, we also
suggest owning subordinated bank bonds vs senior bank bonds in the core
as, under the new RRD regime, there is a higher probability than before that
More details in ...
US Credit Markets Outlook and Strategy, Eric Beinstein
et al.
High Yield Credit Markets Weekly, Peter Acciavatti et al.
European Credit Outlook & Strategy, Steven Dulake et
al.
Emerging Markets Cross Product Strategy Weekly, Eric
Beinstein et al.
3
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Global Asset Allocation
The J.P. Morgan View
28 March 2013
senior bank bond holders will lose money and this risk is, in our mind, not yet
in the price (Rethinking the capital structure, R. Henriques et al., Mar 27).
Foreign Exchange
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Today’s research note, Sacrificing Cyprus, examines several presumptions
which have arisen over the past two weeks due to the Cyprus crisis, and scores
them on a scale of truths, half-truths and falsehoods. There are indeed some
right conclusions to draw from this experience, but also some wrong ones. As
examples, it is true that capital controls have created a two-tier euro, but very
unlikely that Cyprus is exiting EMU. And while it is true that markets deserve
a risk premium for policy uncertainty, the size of the premium should be much
lower than in previous crises due to backstops like the OMT.
For example, during the first Greek crisis in May 2010 EUR undershot by
10% relative to cyclical conditions at that time, and during Greek elections in
May 2012 the currency undershot by 5%. The combination of Italian and
Cypriot events have eliminated the euro’s overvaluation from early 2013,
when the currency spiked to the high $1.30s on a presumption that LTRO
funds would be repaid rapidly, driving European rates higher. The currency is
now close to fair value, so carries no risk premium for contagion. The
message is similar in vol markets: the 1% premium for 3-mo implied versus
realized vol is far less than the 5% premium witnessed during previous crises.
While there is no evidence that the EUR/USD cash or options market carries a
risk premium, it is also true that the required premium should probably be far
less than in previous crises given that a sovereign funding backstop like the
OMT is in place. We are thus reluctant to extrapolate this mini-crisis into a
systemic event which triggers broad deleveraging, or to forecast trend euro
weakness. The currency could trade down a couple of cents around an ECB
rate cut, but assuming that fears around Cyprus contagion pass in a month or
two, the currency should reverse its recent decline by the summertime.
Commodities
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Commodities rallied this week, up almost 2%, led by energy. We went
tactically long Brent in last week’s J.P. Morgan View as we believed that the
correction in oil markets had brought prices too far below our price forecast of
$112/bbl. Since then Brent is up around 1.5%. We stay long and expect
further price appreciation over coming months. We are also short gasoline vs.
Brent. Gasoline cracks (the premium for gasoline over crude prices) spiked
over the first three months of the year due to a combination of low inventories
and refinery closures that came during refinery maintenance season. As
refinery maintenance comes to a close and demand falls seasonally, gasoline
prices should fall relative to Brent.
We went long Soybean time spreads late last year (GMOS, Dec 5) on a view
that much higher Brazilian supplies would find it difficult to leave the country
due to logistical constraints. Since then we have seen a record number of ships
planning to load soybeans in Brazilian ports and this number is still rising.
The average waiting time before loading is also rising, now 38 days compared
to 26 days a month ago. This has caused the front Soybean contract to rally
while longer maturity contracts have been depressed by the much higher than
normal supply inside the country. The spread between the May-13 and Jul-13
contracts has doubled since we put the trade on in December. We stay long as
we think these logistical issues are unlikely to be resolved anytime soon.
FX weekly change in USD
0.8%
0.6%
0.4%
0.2%
0.0%
-0.2%
-0.4%
-0.6%
-0.8%
-1.0%
USD
TWI
Source: J.P. Morgan
More details in ...
FX Markets Weekly, John Normand et al.
Commodity Markets Outlook & Strategy,
Colin Fenton et al.
Oil Markets Monthly, Colin Fenton et al.
Daily Metals Note, Colin Fenton et al.
Agriculture Weekly, Dietz et al.
JPY EUR GBP CHF CAD AUD
4
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Global Asset Allocation
The J.P. Morgan View
28 March 2013
Interest rates Current Jun-13 Sep-13 Dec-13 Mar-14 YTD Return*
United States Fed funds rate 0.125 0.125 0.125 0.125 0.125
10-year yields 1.85 2.00 2.10 2.25 2.35 -0.5%
Euro area Refi rate 0.75 0.75 0.75 0.75 0.75
10-year yields 1.29 1.55 1.70 1.80 1.90 0.0%
United Kingdom Repo rate 0.50 0.50 0.50 0.50 0.50
10-year yields 1.77 2.40 2.50 2.55 2.60 -0.1%
Japan Overnight call rate 0.05 0.05 0.05 0.05 0.05
10-year yields 0.51 0.65 0.65 0.70 0.80 2.0%
GBI-EM hedged in $ Yield - Global Diversified 5.59 5.70 0.1%
Credit Markets Current Index YTD Return*
US high grade (bp over UST) 159 JPMorgan JULI Porfolio Spread to Treasury -0.1%
Euro high grade (bp over Euro gov) 165 iBoxx Euro Corporate Index 0.6%
USD high yield (bp vs. UST) 496 JPMorgan Global High Yield Index STW 2.9%
Euro high yield (bp over Euro gov) 633 iBoxx Euro HY Index 1.6%
EMBIG (bp vs. UST) 305 EMBI Global -2.3%
EM Corporates (bp vs. UST) 322 JPM EM Corporates (CEMBI) 0.5%
Quarterly Averages
Commodities Current 13Q2 13Q3 13Q4 14Q1 GSCI Index YTD Return*
Brent ($/bbl) 110 108 120 120 122 Energy -0.1%
Gold ($/oz) 1595 1775 1800 1775 1800 Precious Metals -3.8%
Copper ($/metric ton) 7577 8700 9000 9200 9400 Industrial Metals -6.1%
Corn ($/Bu) 6.95 8.00 6.50 6.00 Agriculture 0.0%
Local currency except MSCI EM $
Source: J.P. Morgan
3m
YTD Return*
Foreign Exchange Current Mar-13 Jun-13 Sep-13 Dec-13 Cash CCY vs. USD
EUR/USD 1.28 1.32 1.32 1.34 1.34 EUR -1.9%
USD/JPY 94.1 94 97 97 96 JPY -9.0%
GBP/USD 1.52 1.50 1.47 1.51 1.51 GBP -6.5%
AUD/USD 1.05 1.04 1.05 1.06 1.07 AUD 1.3%
USD/BRL 2.02 1.92 1.90 1.92 1.95 BRL 3.7%
USD/CNY 6.2 6.28 6.25 6.2 6.15 CNY 0.7%
USD/KRW 1113 1070 1060 1040 1020 KRW -3.6%
USD/TRY 1.8 1.8 1.8 1.75 1.75 TRY -0.5%
YTD Return US Europe Japan EM
Equities Current (local ccy) Sector Performance * YTD YTD YTD YTD ($)
S&P 1563 10.2% Energy 10.5% 3.0% 14.8% -5.5%
Nasdaq 3261 8.6% Materials 4.3% -2.1% 17.2% -10.0%
Topix 1037 22.8% Industrials 10.0% 8.3% 17.4% -1.3%
FTSE 100 6388 9.4% Discretionary 11.7% 5.9% 24.6% -2.2%
MSCI Eurozone* 154 1.9% Staples 14.0% 13.8% 26.7% 1.2%
MSCI Europe* 1214 6.6% Healthcare 14.7% 14.7% 32.6% 1.9%
MSCI EM $* 1032 -1.8% Financials 11.2% 3.5% 26.3% 1.5%
Brazil Bovespa 56028 -7.5% Information Tech. 4.3% 7.5% 16.4% 0.8%
Hang Seng 22300 -0.5% Telecommunications 9.1% 7.2% 24.6% -5.1%
Shanghai SE 2236 -2.4% Utilities 11.6% -0.3% 12.3% 1.0%
*Levels/returns as of Mar 27, 2013 Overall 10.2% 6.6% 22.8% -1.8%
5
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Global Asset Allocation
The J.P. Morgan View
28 March 2013
Global Economic Outlook Summary
2011 2012 2013 2014 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 3Q12 4Q12 2Q13 4Q13
The Americas
United States 1.8 2.2 1.8 � 2.3 3.1 0.1 � 2.3 � 1.5 2.0 2.5 2.0 1.7 1.9 1.9 1.7
Canada 2.6 1.8 1.4 2.1 0.7 0.6 1.6 1.6 2.0 2.1 1.9 1.2 0.9 1.4 2.0
Latin America 4.2 2.6 3.4 3.8 2.0 3.4 3.0 4.0 4.2 3.7 3.9 4.7 4.7 5.0 4.7
Argentina 8.9 1.9 3.0 1.5 3.2 5.2 3.5 3.0 1.6 1.5 1.5 10.0 10.6 10.0 11.0
Brazil 2.7 0.9 3.0 4.0 1.5 2.2 2.7 3.7 4.4 3.9 4.2 5.2 5.6 6.4 5.9
Chile 5.9 5.6 5.5 4.5 5.0 6.1 6.0 5.1 4.8 4.5 4.5 2.6 2.2 2.2 3.1
Colombia 6.6 4.0 4.5 5.0 -2.9 7.4 4.2 5.5 5.5 5.1 4.5 3.1 2.8 2.0 2.4
Ecuador 8.0 5.0 4.0 4.5 6.3 5.5 5.0 3.0 3.0 4.0 5.0 5.1 4.6 5.4 4.7
Mexico 3.9 3.9 3.6 3.6 1.5 3.1 3.9 4.5 4.6 4.0 3.5 4.6 4.1 4.0 3.4
Peru 6.9 6.3 6.0 6.5 6.9 2.5 5.0 7.0 7.5 6.0 6.5 3.5 2.9 2.3 2.5
Uruguay 5.7 3.5 3.7 4.0 7.8 2.3 4.0 3.0 5.0 5.0 4.0 8.0 8.9 8.4 7.7
Venezuela 4.2 5.6 2.0 3.0 5.2 5.7 -4.0 2.0 2.0 2.0 4.0 19.0 18.7 31.0 35.7
Source: J.P. Morgan
Real GDP
% over a year ago
Real GDP
% over previous period, saar
Consumer prices
% over a year ago
Asia/Pacific 4.7 4.8 4.8 4.8 � 2.9 5.1 5.3 � 5.5 � 5.3 5.4 5.4 2.1 2.2 2.6 3.0
Japan -0.5 2.0 1.3 1.2 -3.7 0.2 3.0 3.2 2.5 2.9 3.4 -0.4 -0.2 0.0 0.5
Australia 2.4 3.6 2.7 3.2 2.6 2.4 2.4 2.7 3.7 2.6 4.3 2.0 2.2 2.8 2.7
New Zealand 1.4 2.5 2.5 2.9 0.7 6.1 2.1 3.5 -2.0 4.4 4.3 0.8 0.9 1.1 2.2
Asia ex Japan 7.4 6.2 6.7 6.7 5.9 7.7 6.7 � 6.9 � 6.9 6.9 7.0 3.2 3.4 3.7 4.2
China 9.3 7.8 8.2 8.0 8.0 9.4 8.0 8.2 8.2 8.2 8.0 1.9 2.1 3.0 3.6
Hong Kong 4.9 1.4 3.8 3.6 3.2 4.9 3.5 3.5 5.0 5.0 2.0 3.1 3.8 3.5 3.7
India 6.2 5.0 5.8 6.5 3.5 4.7 6.4 6.5 5.3 5.6 7.6 9.8 10.1 9.0 8.5
Indonesia 6.5 6.2 5.7 5.3 5.3 6.9 5.0 6.0 6.0 5.5 5.5 4.5 4.4 3.9 4.6
Korea 3.6 � 2.0 2.8 3.9 0.2 1.5 � 3.1 4.0 4.5 4.5 4.0 1.6 1.7 1.8 2.6
Malaysia 5.1 5.6 5.1 � 5.4 5.2 7.9 5.0 � 4.5 4.5 � 5.0 � 6.3 1.4 1.3 2.3 2.6
Philippines 3.9 6.6 5.3 5.3 7.0 6.1 4.5 4.9 5.3 5.3 5.3 3.5 3.0 3.1 3.4
Singapore 5.2 1.3 2.2 � 3.6 � -4.6 3.3 4.5 � 2.0 � 3.6 � 4.1 6.1 4.2 4.0 3.5 � 3.8
Taiwan 4.1 1.3 4.2 3.9 3.9 7.3 4.0 4.0 4.2 4.3 3.4 2.9 1.8 1.3 2.3
Thailand 0.1 6.4 5.4 4.5 6.1 15.0 4.5 4.5 5.0 5.0 4.5 2.9 3.2 4.2 4.0
Africa/Middle East
Israel 4.6 3.1 3.1 3.3 2.7 2.4 3.2 2.8 3.6 3.6 3.2 1.8 1.6 1.9 2.2
South Africa 3.5 2.5 2.6 3.6 1.2 2.1 2.7 2.8 3.4 3.6 3.8 5.1 5.6 6.2 5.7
Europe 2.0 � 0.1 � 0.1 1.7 0.5 -1.6 -0.3 0.3 1.2 1.5 1.8 3.2 3.0 2.5 2.4
Euro area 1.5 -0.5 -0.6 1.2 -0.3 -2.3 -0.5 -0.5 0.5 1.0 1.5 2.5 2.3 1.6 1.5
Germany 3.1 0.9 0.6 2.1 0.9 -2.3 1.5 1.0 1.8 2.0 2.5 2.1 2.0 1.6 1.6
France 1.7 0.0 -0.7 1.0 0.6 � -1.1 � -1.3 -1.3 0.0 0.5 1.5 2.3 1.7 1.1 1.2
Italy 0.5 -2.4 -1.6 0.7 -0.8 -3.7 -1.5 -1.5 0.0 0.5 1.0 3.4 2.6 1.7 1.8
Spain 0.4 -1.4 -1.7 0.5 -1.3 -3.1 -1.8 -1.8 -0.8 -0.8 0.0 1.9 3.2 2.6 2.6
United Kingdom 0.9 � 0.2 � 0.8 1.9 3.9 � -1.0 � 0.5 1.0 1.5 2.0 2.0 2.4 2.7 2.8 2.9
Emerging Europe 4.8 2.4 2.3 3.4 1.3 1.5 0.2 3.1 3.9 3.1 3.0 6.1 5.7 5.5 4.8
Bulgaria 1.8 0.8 1.2 1.7 … … … … … … … … … … …
Czech Republic 1.9 -1.3 -0.2 1.9 -1.8 -0.7 -0.1 0.5 1.0 1.0 2.0 3.3 2.8 2.2 2.4
Hungary 1.6 -1.7 -0.7 1.4 -1.4 -3.4 -0.3 0.3 1.2 1.5 1.5 6.1 5.4 2.9 2.8
Poland 4.3 2.0 1.3 2.6 1.2 0.8 1.1 1.6 2.3 2.8 2.8 3.9 2.9 1.0 1.8
Romania 2.2 0.3 1.9 2.3 -1.0 0.3 0.8 3.9 5.9 2.8 1.6 4.1 4.8 6.3 5.1
Russia 4.3 3.4 2.5 3.6 2.2 2.5 0.0 4.0 4.8 3.5 3.5 6.0 6.5 6.8 5.5
Turkey 8.5 2.6 3.7 4.5 … … … … … … … 9.0 6.8 6.7 6.3
Global 3.1 2.4 2.4 3.1 2.1 1.6 2.6 2.7 3.0 � 3.3 3.3 2.5 2.5 2.6 2.6
Developed markets 1.4 1.2 0.9 1.8 0.9 -0.6 � 1.4 � 1.1 1.6 2.0 2.1 1.7 1.7 1.6 1.6
Emerging markets 6.1 4.7 5.1 5.4 4.2 5.7 4.8 � 5.5 � 5.7 5.5 5.6 4.0 4.1 4.3 4.4
6
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Global Asset Allocation
The J.P. Morgan View
28 March 2013
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Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Global Asset Allocation
The J.P. Morgan View
28 March 2013
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