The J.P. Morgan View: Waiting for the stress test; Economics: Global GDP growth is slowing towards trend. Economic uncertainty is unlikely to be resolved before early autumn. Asset allocation: Overweight Emerging vs Developed markets, Credit vs Equities and Services vs. Manufacturing. Fixed Income: Robust domestic growth to trump global uncertainty, and push yields higher in Canada and Australia. Equities: OW banks, UW small caps, OW EM, UW Industrials.Credit: Overweight long maturity taxable municipal bonds versus similar US corporates. FX: The short squeeze on the euro has further to run. Add to the euro long by buying EUR/JPY. Commodities: Gold is suffering as investor concerns about deflation increase. Turn neutral.
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