Global Asset Allocation
21 August 2015
The J.P. Morgan View
Correction or the end of the cycle?
 Asset allocation –– A correction, but one that is not over, with reduced
medium-term upside on risk assets.
 Economics –– Odds continue to rise against growth rebound and Fed in Sep.
 Fixed income –– Stay short front-end USTs and hold flatteners.
 Equities –– Downside to EM Asian growth creates near-term risks for EM
equities.
 Credit –– Stay UW EM corporates vs US HG and US treasuries.
 FX ― Selectively long USD vs EMs (SGD, TWD, ZAR) and CAD.
 Commodities –– Crude reaches new lows and is set to fall further.
 Click here for video.
 Risk markets traded down and bonds rallied aggressively this week, likely
on rising fears of a growth slowdown in China. The correction had started
early last week after China’s sudden devaluation of its currency. At the time,
there was enough doubt about China’s motivation behind the move, leaving
open the possibility that the adjustment in the currency was simply part of a
planned liberalization of its currency market. But the steady fall in global
commodity prices and this morning’s weak PMI have now moved attention and
concerns to its economy.
 Investors now face the same question they have had to address many times this
cycle: is the fall simply a correction in a sustained medium-term bull market in
risk assets, or the beginning of the end of the cycle? For the moment, we are
siding with a correction, but in a multi-year rally that is aging and that has
less upside than in recent years. Our view during past such instances has
always been that these were mere corrections, most of which were not tradable.
But as discussed here through this year, the rally is not young anymore and the
debate should be about what will end it, when and how. We identified two risk
factors that could end the economic and risk market cycle: a Fed behind the
curve on inflation that then needs to raise rates rapidly; and an EM leverage
crisis. We had feared that the first could set off the second, and thus focused on
next year as the more likely timing.
 The latest market turmoil was not set off by the Fed, but by worsening growth
concerns about EM, and particularly about China. EM growth has been
disappointing for years now, but so far this merely led to local equity
underperformance (chart p. 2). The problem this time around is that EM
weakness is coming on top of a world economy that in H1 had already slowed to
below trend.
 The main threats to risk markets are now that growth stays well below trend,
setting off deflationary forces, or worse, that market turmoil feeds on itself and
the economy and brings about a recession. For the moment, we are keeping the
odds of a recession quote low, but accept a much higher risk of sustained below
trend growth.
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
Mika Inkinen
(44-20) 7742 6565
mika.j.inkinen@jpmorgan.com
J.P. Morgan Securities plc
Nandini Srivastava
(44-20) 7742-6183
nandini.srivastava@jpmorgan.com
J.P. Morgan Securities plc
Van Le
(1-212) 834-4565
van.trieu.le@jpmorgan.com
J.P. Morgan Securities LLC
Gregory C. Shearer
(1-212) 834-2039
gregory.c.shearer@jpmorgan.com
JPMorgan Chase Bank NA
YTD returns through August 20
Topix*
MSCI Europe*
EM $ Corp.
MSCI AC World*
Global Gov Bonds**
US Fixed Income
US High Grade
EMBIG
S&P500
US cash
US High Yield
Europe Fixed Inc*
EM Local Bonds**
Gold
MSCI EM*
EM FX
GSCI TR
-20-15-10 -5 0 5 10 15 20
See page 7 for analyst certification and important disclosures.
Source: J.P. Morgan, Bloomberg.
Note: %, equities in lighter color. 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 EMCI in $.
www.jpmorganmarkets.com
This document is being provided for the exclusive use of mithesh.m.shetty@jpmorgan.com & clients of J.P. Morgan.
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Global Asset Allocation
The J.P. Morgan View
21 August 2015
 How would markets fare if we stay at 2% global growth? Bonds would
rally as the Fed would likely not hike next month and curves would flatten
bullishly. Credit spreads would widen further. Commodities would continue
to go down. A growth disappointment of this magnitude would likely drive
equities down further, but not as much as the 20-25% drop that we have seen
on average during US recessions. Another 5% down from here would be quite
possible. The dollar would likely gain more versus EM, but without a Fed
hike, would probably stay relatively stable vs Europe and Japan.
 Is this correction tradable? It probably is as it started very recently and in a
month with many investors away. How bad could it get? Technically, the US
equity markets have been due for a correction for some time, but these signals
do suggest 1900-1950 as a buying level. What would prevent risk markets to
correct significantly more, say 10% more, absent a global recession? The
main forces in our mind would be that the alternative of cash still has no yield,
and the impression that many active managers have been building cash that
they plan to use when markets have cheapened enough. Very few investors
believe the risk cycle is over.
 Why is this not yet the end of the cycle? Mostly because we do not think
Chinese weakness is serious enough to bring a global recession, and because
there remain sufficient supports from cheaper oil, lower bond yields, a
positive market sentiment, and monetary easing in EM. The latter does require
stable currencies and, in turn, a delay by the Fed. A continuation of recent
market turmoil and falling commodity prices would probably induce the
FOMC not to hike next month.
 When should one add risk? Our model portfolios have only one small risk
OW left (5% equities), are flat on credit and UW commodities and EM. A
combination of tactical shorts in risk assets, a bottoming of commodity prices,
and soothing Fed language are probably good signals to add risk assets again.
Fixed Income
 Bonds rallied this week as continued declines in oil prices and risky assets
provided support, and the minutes of the FOMC meeting were perceived as
dovish (chart right). The minutes were largely consistent with the postmeeting statement message that the Fed is getting closer to a first hike,
without a commitment on the timing. The continued labor market tightening
and better activity data in recent weeks are supportive of a September hike,
but the minutes also made clear there were concerns around the inflation
outlook, weakness in energy prices, and the appreciating dollar. We continue
to expect a September lift-off, though we recognize the odds are close to even.
By contrast, market pricing suggests around a third chance of a hike in
September, and a full hike by 1Q16. We hold outright shorts in 2Y USTs,
and the 3s/10s UST curve flattener we added last week.
 In the Euro area, the flash composite PMI was stronger than expected, with
the 54.1 reading consistent with GDP growth at a 2% q/q annualized pace. In
addition, there were solid gains in German manufacturing and a further
acceleration in the periphery. Given the positive macroeconomic backdrop,
continued support from ECB QE, and cheap valuations, we continue to hold
longs in 8Y Spain vs. Germany. While Greek politics came into the spotlight
again this week with PM Tsipras’ resignation, we expect the elections to
cement his grip on power, allowing the implementation of measures required
to conclude the first program review successfully (M. Barr, Greece: Thoughts
on new elections, Aug 21).
EM FRI and EM 4Q/4Q growth
The FRI is Cumulative weekly changes in GDP forecasts for
the current Quarter (Q), Q-1, Q+1 and Q+2 made by J.P.
Morgan economists.
9
2
EM Growth (%oya, LHS)
8
EM FRI (RHS)
7
1
0
-1
6
-2
5
-3
4
-4
3
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15
-5
Source: J.P. Morgan.
Weekly change in benchmark bond yields
%
5
2y
5y
10y
30y
0
-5
-10
-15
-20
US
Germany
Source: Bloomberg
UK
Japan
More details in ...
Global Data Watch, Bruce Kasman, David Hensley and
Joe Lupton
Global Markets Outlook and Strategy, Jan Loeys et al.
US Fixed Income Markets, Matt Jozoff, and Alex Roever
Global Fixed Income Markets, Fabio Bassi et al.
Emerging Markets Outlook and Strategy, Luis Oganes
and Holly Huffman
Key trades and risk: Emerging Market Equity Strategy,
Adrian Mowat et al.
Equity Strategy, Mislav Matejka, et al.
Flows & Liquidity, Nikos Panigirtzoglou et al.
2
This document is being provided for the exclusive use of mithesh.m.shetty@jpmorgan.com & clients of J.P. Morgan.
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Global Asset Allocation
The J.P. Morgan View
21 August 2015
Equities
 Global equity markets fell badly this week in what was a continuation of riskoff sentiment. MSCI AC World is down over 6% over the week in dollar
terms. Cyclical sectors lagged their defensive counterparts (chart) and in terms
of styles, small caps underperformed large caps while value underperformed
growth stocks.
 EM equities, in particular the Asia and CEEMEA regions, suffered as
outflows from EM equities persisted. The flow picture remains bleak as EM
equity funds have experienced severe outflows this year similar to the
extremes seen in 2011; these outflows have exacerbated over the last few
weeks (see latest EM Fund Flows Weekly). EM Asian equities were also hurt
driven by recent disappointing economic data. Our economists highlight that
the data flow from the region is creating downside risks to the global forecast.
Given the risks from weak currencies and downside risks to a recovery in
growth and earnings in EM, we revise down our forecast and now expect
MSCI EM to reach 1100 by end-2016, rather than by end-2015 (see EM
Equity Strategy, A. Mowat et. al, Aug 19).
 Elsewhere in the US, this week’s Fed minutes gave a mixed message about
the timing of the first hike (see fixed income above). We continue to expect a
September hike and retain our modest overweight in financials, after taking
part profit last week.
Credit
 Last week, we moved US high yield from overweight to neutral on greater
risks in commodity markets, more uncertainty around China growth and
policy, and a coming Fed hike. As a result, our analysts have lowered their YE
return forecast by 250bp to 4.5% and have raised their year-end yield and
spread targets to 7.25% and 535bp, respectively. These fears were confirmed
this week as China once again was front and center and WTI breached the $40
handle at the end of the week. US HY spreads have underperformed the
broader credit sector for a second consecutive week widening by 23bp.
Because we view these headwinds as persistent, we think it is unlikely that
spreads will tighten near term.
 Additionally, EM corporates have also underperformed by a similar
magnitude. CEMBI Broad is about 24bp wider over the week as the asset
class is challenged by a litany of fundamental and technical factors. On the
fundamental front, weak EM growth, rising leverage, China policy
uncertainty, political uncertainty in Brazil and Turkey (which have a
combined CEMBI Broad weight of 19%), commodities, valuations (with YTD
tights achieved in mid-May), and low bond liquidity are bearish. On the
technical front, EM bond outflows are intensifying with EM bond funds
suffering from the worst week in 18 months (see Trang Nguyen et al., EM
Fund Flows Weekly, Aug 20). Stay UW EM corporates vs US HG and US
treasuries.
Foreign exchange
 Although the trade-weighted dollar remains near a 12-yr high (ticker
JPMQUSD), stability in the aggregate index masks internal divergence
between the world’s most cyclical currencies (emerging markets, commodity
FX) and the funding ones (JPY, EUR, CHF). While the dollar has continued
to advance over the past month versus almost every commodity currency but
NZD and every emerging market currencies but Central Europe, it has
dropped versus JPY (+1%), EUR (+3%), SEK (+1%), GBP (+1%) and CHF
Week to date performance of MSCI AC World by
sectors
Week to date returns, %
Overall
Utils
Telecom
Health Care
Cons Staples
Cons Discr
Financials
Materials
Industrials
IT
Energy
-6
-5
-4
-3
Source: J.P. Morgan, Bloomberg
-2
-1
0
US High Yield Spreads
Basis points
650
600
550
500
450
400
Aug-14
Nov-14
Source: J.P. Morgan
Feb-15
May-15
Aug-15
More details in ...
US Credit Markets Outlook and Strategy, Eric Beinstein
et al.
Cross-market relative value for US High Grade Bond
investors, Eric Beinstein et al.
EM Corporate Weekly Monitor, Yang-Myung Hong et al.
High Yield Credit Markets Weekly, Peter Acciavatti et al.
European Credit Outlook & Strategy, Matthew Bailey et al.
Emerging Markets Cross Product Strategy Weekly, Holly
Huffman et al.
3
This document is being provided for the exclusive use of mithesh.m.shetty@jpmorgan.com & clients of J.P. Morgan.
Global Asset Allocation
The J.P. Morgan View
21 August 2015
 As we have become increasingly bearish copper fundamentals, in the past
weeks investor copper net positioning has also persistently moved shorter,
prompting us to flag the risk of near-term short covering driven rallies (see
chart). A simple filter of CFTC non-commercial positioning data shows that in
the 11 instances since 1995 in which heavy net short copper positions (>= 150
kmt net short) were rapidly lengthened on the CMX (>250 kmt in the
following three weeks), the price change accompanying the change in
positioning averaged 7%. We remain short Dec’16 LME copper but keep
our wide stop ($5,850/t) unchanged in recognition of the magnitude of the
current investor short position (Kaneva, Metals Weekly, Aug 20).
Jun-16
10%
5%
0%
-5%
-10%
-15%
Source: J.P. Morgan
Copper declines
Net managed money group copper positioning on LME and
CME and LME copper 3M rolling forward price, weekly;
Thousands mt (LHS) and US$/mt (RHS)
Net positioning (LHS)
Price (RHS)
2,000
$7,500
1,600
$7,000
1,200
$6,500
800
$6,000
400
$5,500
0
(800)
$4,500
Jul-15
$5,000
May-15
(400)
Mar-15
 The S&P GSCI TR Index has declined 2.7% this week as the Brent frontmonth contract has dipped below its January lows of $46.33/bbl. Yet,
dissimilar to weakness in Q1, the selling pressure that has brought about
prompt contract lows has also pressured the entire futures curve lower as
deferred pricing expectations have fundamentally declined. We expect prices
to fall further over the balance of the quarter as a pause in crude buying during
the global fall refinery maintenance will likely show significant surpluses. We
now see the potential for crude inventories in Cushing to increase even more
to beyond 65 mb during October and, in conjunction with remaining short
Dec’15 RBOB gasoline vs Jan’16 Brent and long Jan’16 ICE gasoil vs
Jan’16 Brent, are watching WTI time spreads for a good entry level to reinitiate our short (Martin, Oil Market Weekly, Aug 21).
Sep-15
15%
Jan-15
Commodities
20%
Nov-14
 Still, the dollar looks more vulnerable on other measures than it has ahead of
any previous FOMC meeting/press conference given that positions look
longer and valuations seem more extreme. For the past few months, the
portfolio has been long USD versus various EM pairs (now SGD, TWD,
ZAR) and petrocurrencies (now CAD). Two weeks ago, we added long
EUR/CHF to hedge the risk of a euro surge if Fed expectations receded as
commodity prices fell. This week, we add to those hedges by selling
USD/JPY, buying EUR/CAD and EUR/AUD and selling calls on
USD/CAD.
%, positive indicates JPM expects the currency to appreciate
vs USD (both vs. forwards)
NZD
CZK
CHF
EUR
HUF
PLN
INR
BRL
ZAR
MXN
TRY
RUB
 Like those previous episodes, there is more than deleveraging in play as
activity data surprise to the downside in EMs and stock markets unravel
globally, thus supporting funding currencies like EUR, JPY and CHF. There is
also the return of every USD bull’s core neurosis—that the Fed will again
delay rate hikes for some undefined period, thus exposing the dollar to a broad
decline since it still yields nothing and it is considered expensive on a range of
models detailed in previous J.P. Morgan research. We’ve all seen this serial
before—three times in less than two years, in September 2013, March 2015
and June 2015. Drawdowns ranged from 1.5% to 4%, but the dollar resumed
its uptrend for three reasons: tightening US labor markets lifting 2-yr rates,
China’s slowdown and rising oil supply. So as long as we’re reasonably
convinced that these dynamics will not reverse, we’re comfortable with the
notion that USD pullbacks will be modest (less than 3%) and brief (perhaps
no more than a month). It also helps that the first Fed hike is not fully priced
until late 2015/early 2016, which means that the risk of a dovish Fed and
flatter dot projections in September might not be that much of a risk after all.
JP Morgan FX forecasts: Total currency return vs.
USD
Sep-14
(+0.25%). The result is yet another narrowing of the USD rally to a subset of
pairs, as has occurred several times since the taper tantrum began over two
years ago.
Jul-14
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Source: CFTC, LME, J.P. Morgan
More details in ...
FX Markets Weekly, John Normand et al.
Oil Markets Monthly, David Martin et al.
Oil Markets Weekly, David Martin et al.
Natural Gas Weekly, Scott Speaker and Shikha
Chaturvedi
Metals Quarterly, Natasha Kaneva et al.
4
This document is being provided for the exclusive use of mithesh.m.shetty@jpmorgan.com & clients of J.P. Morgan.
Global Asset Allocation
The J.P. Morgan View
21 August 2015
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Forecasts & Strategy
Interest rates
United States
Fed funds rate
10-year yields
Euro area
Refi rate
10-year yields
United Kingdom Repo rate
10-year yields
Japan
Overnight call rate
10-year yields
Emerging markets GBI-EM - Yield
Current
Sep-15
Dec-15
Mar-16
Jun-16
0.125
2.04
0.05
0.56
0.50
1.69
0.05
0.36
6.89
0.500
2.20
0.05
1.00
0.50
2.00
0.06
0.40
0.750
2.50
0.05
1.15
0.50
2.15
0.06
0.45
6.80
1.000
2.60
0.05
1.20
0.75
2.35
0.06
0.50
1.250
2.65
0.05
1.25
0.75
2.50
0.06
0.65
1.03
123
1.49
0.69
3.60
6.70
1250
2.90
121.1
1.06
119
1.56
0.70
3.70
6.79
1220
2.90
120.3
Credit Markets
US high grade (bp over UST)
Euro high grade (asset swap sprd)
USD high yield (bp vs. UST)
Euro high yield (bp over Bunds)
EMBIG Div (bp vs. UST)
EM Corporates (bp vs. UST)
195
106
632
460
401
408
190
100
535
420
300
325
Foreign Exchange
EUR/USD
USD/JPY
GBP/USD
AUD/USD
USD/BRL
USD/CNY
USD/KRW
USD/TRY
JPM USD Index
1.13
123
1.57
0.73
3.48
6.39
1195
2.93
116.9
1.08
124
1.52
0.72
3.47
6.50
1200
2.80
118.2
1.05
121
1.50
0.70
3.55
6.60
1220
2.85
119.7
Quarterly Averages
15Q4
16Q1
Investment themes
Fine balance between risk-bullish and bearish forces
Better growth in H2, no return on cash and no
recession in sight are bullish, but the age of the
cycle, long positions and the coming Fed are
bearish.
Bring Credit to Neutral and keep just a small
OW in equities (5%)
Credit peaks before equities, sees heavier
supply, and is vulnerable to perceptions of
worsening liquidity.
Country exposures
US and UK are further in cycle than EMU or
Japan. OW their FX and UW their
stocks/bonds.
Bad cocktail for EM: UW
EM leverage is building faster than DM
leverage was in 2002-07; comes with slowing
growth, in the face of Fed rate hikes: UW EM
FI, FX, Credit, and Commodities.
Switch hedge weights to EM UW and
Commodities, less on inflation.
Tactical overview
Direction
Country
Cash on
Neutral.
Small OW
Current
15Q3
16Q2
Asset
of EQ.
allocation
Brent ($/bbl)
Gold ($/oz)
45
1159
50
1150
50
1190
48
1170
50
1160
Equities
Small long and EMU
Copper ($/metric ton)
5126
6150
5700
5900
6200
Bonds
short
duration
(2y UST)
NZ vs US
AUD vs
EUR.
Spain in
EMU
Credit
Neutral
EUR vs
USD; US
vs EM
names.
FX
Long USD vs EM
Comd’s
Underweight
Commodities
YTD Equity Sector Performance*
Energy
Materials
Industrials
Discretionary
Staples
Healthcare
Financials
Information Tech.
Telecommunications
Utilities
Overall
*Levels/returns as of Aug 20, 2015
Source: J.P. Morgan
US
-16.6%
-7.9%
-5.2%
7.3%
2.2%
8.8%
0.1%
0.1%
1.9%
-1.7%
0.2%
OW
N
N
N
UW
OW
OW
OW
UW
UW
Europe
-5.8%
-2.5%
7.4%
8.9%
7.7%
11.4%
8.4%
2.2%
11.6%
-0.7%
6.7%
N
N
OW
OW
UW
UW
OW
N
N
UW
Japan
2.9%
3.3%
13.6%
12.8%
30.4%
38.6%
26.6%
12.1%
32.5%
32.1%
16.5%
OW
N
N
UW
UW
UW
OW
N
UW
OW
EM$
-8.9%
-16.2%
-11.7%
-12.0%
-4.8%
-2.6%
-13.9%
-11.6%
-7.9%
-15.4%
-11.4%
UW
N
UW
N
UW
UW
OW
OW
UW
UW
Sector
OW Japan; Financials,
Healthcare
Tech.
Flatteners
US,UK; US
inflation linkers
Bs vs BBs
Financials; 1030s US HG
yield flattener.
Short
Commodity FX,
ZAR, CAD,
CLP
Bearish
steepener gas;
Gasoil vs
Brent; Brent vs
Gasoline
Source: J.P. Morgan
5
This document is being provided for the exclusive use of mithesh.m.shetty@jpmorgan.com & clients of J.P. Morgan.
Global Asset Allocation
The J.P. Morgan View
21 August 2015
Jan Loeys
(1-212) 834-5874
jan.loeys@jpmorgan.com
Global Economic Outlook Summary
Real GDP
Real GDP
% over a year ago
% over previous period, saar
2014
2015
2016
United States
Canada
Latin America
Argentina
Brazil
Chile
Colombia
Ecuador
Mexico
Peru
Uruguay
Venezuela
2.4
2.4
0.9
0.5
0.1
1.9
4.6
3.8
2.1
2.4
3.3
-4.0
2.2
1.0
-0.3
1.4
-2.0
2.3
3.0
0.5
2.2
2.7
2.5
-8.0
2.4
2.0
1.4
2.6
-0.1
3.1
2.3
0.0
3.1
3.6
2.5
0.0
0.6
-0.6
-1.5 
0.8
-0.6
4.5 
3.3
-2.0
1.7 
1.1
2.3
-30.0
2.3
-1.0
-0.8 
4.5
-5.1
0.0 
2.0
-1.0
2.0
1.6
2.8
1.0
Asia/Pacific
Japan
Australia
New Zealand
EM Asia
China
India
Ex China/India
Hong Kong
Indonesia
Korea
Malaysia
Philippines
Singapore
Taiwan
Thailand
4.7
-0.1
2.7
3.3
6.4
7.4
7.3
3.8
2.5
5.0
3.3
6.0
6.1
2.9
3.7
0.9
4.5
0.8
2.5
2.7
5.9
7.0
7.5
2.9
2.5
4.4
2.6
4.0
4.1
1.9
1.3
2.6
4.8
1.4
3.0
2.4
6.1
6.9
8.0
3.5
3.0
4.0
3.5
3.3
5.4
2.3
2.4
3.8
5.1 
4.5 
3.8
0.6
5.5
5.5
10.9
3.2
2.8
4.3
3.3
4.7
1.2
4.1
2.3
1.4
3.8
-1.6
1.3
3.6
5.7
7.5
7.6
0.9
1.6
4.2
1.2
4.5
2.0
-4.0
-6.6
1.5
Western Europe
Euro area
Germany
France
Italy
Spain
Norway
Sweden
United Kingdom
EMEA EM
Czech Republic
Hungary
Israel
Poland
Romania
Russia
South Africa
Turkey
1.3
0.9
1.6
0.2
-0.4
1.4
2.3
2.4
3.0
1.8
2.0
3.6
2.6 
3.4
2.8
0.6
1.5
2.9
1.6
1.3
1.6
1.1
0.6
3.1
1.2
2.8
2.7
0.0 
4.5
3.0
2.6 
3.6
3.9
-3.7
1.7
3.1
2.2
2.2
2.7
1.9
1.3
3.0
1.6 
2.7
2.4
2.2
3.4
2.7
3.0
3.5
3.5
1.0
1.8
3.5
1.5
1.5
1.4
2.7
1.2
3.8
1.4 
1.6
1.5
-1.8
10.5
2.4
2.0
4.1
5.6
-9.4
1.3
5.3
Global
Developed markets
Emerging markets
Global — PPP weighted
2.7
1.7
4.4
3.2
2.4
1.7
3.5
2.9
3.0
2.2
4.4
3.6
1.9
1.5 
2.7 
2.4




1Q15
2Q15
Consumer prices
% over a year ago
3Q15
4Q15
1Q16
2Q16
2Q15
4Q15
2.0
1.5
0.0
2.0
-2.5
4.2
2.5
-1.5
2.6
3.8
1.0
-4.5
2.5
2.1
1.1
-2.0
0.1
1.8
4.8
-1.5
2.5
5.4
6.0
2.0
2.5
2.6
2.1
3.0
1.8
3.5
1.0
0.5
2.9
3.6
4.0
0.0
2.5
2.4
2.0
4.5
0.3
3.7
1.0
1.0
3.9
3.0
0.0
0.0
0.0
0.9
6.0
21.0
8.5
4.2
4.5
4.3
2.9
3.3
8.2
111.8
0.7
1.8
1.3
2.2
6.4 
4.9
20.0
22.0
9.4
6.2 
3.9
3.8
4.8
3.8
4.4
3.6
2.8
3.4
3.5
3.1
8.0
7.8
189.3
171.0
5.1
2.0
3.2
3.2
6.2 
7.3
7.8
3.2 
3.2
3.5
3.8
0.0 
4.0
3.0
2.8
3.0
5.1
1.8
3.3
4.0
6.4
7.3
8.0
3.7
3.2
4.2 
4.5
1.0 
4.0
3.0
3.2
3.0
4.6
1.6
2.8
1.8
5.8
6.1
8.5
4.0 
2.2
4.2
3.8
4.0 
8.0
2.5
3.2
4.5
4.9
1.3
3.0
1.2
6.2
7.0
8.0
3.7
2.8
4.2
3.5
4.0
5.0
2.5
3.0
4.5
1.5 
0.5 
1.0
0.1
2.0
1.4
5.2
1.8
3.0
7.1
0.5
2.2
1.2
-0.4
-0.7
-1.1 
1.8
0.1
1.9
1.3
2.3
2.2
5.3
1.4
2.2
2.4
1.7
1.2
1.1
0.2
0.5
-0.3
2.5
0.2
2.6
2.6
3.2
3.0
5.7
2.4
4.1
3.4
2.4
1.9
1.8
1.2
1.9
1.8
2.6
1.3
2.6
2.6
3.0
2.7
5.7
2.4
3.4
3.7
2.2
1.8
1.8
1.2
1.6
2.4
1.6
1.3
1.8
0.0
0.7
4.1
0.7 
4.0
2.8
-1.8 
3.6
2.0
0.3 
3.6
0.5
-6.7
0.0
2.8
1.9
1.8
2.0
1.5
1.0
3.0
0.5
2.5
3.0
2.0
2.7
3.0
3.0
3.5
5.3
1.0
1.5
2.4
2.1
2.0
2.5
1.8
1.3
2.8
1.3
2.6
2.5
2.5
2.7
3.0
3.2
3.5
3.4
1.5
1.8
4.1
2.3
2.3
3.0
2.0
1.5
3.0
1.8
2.6
2.5
2.2
4.0
2.5
3.2
3.5
4.1
1.0
2.0
3.0
2.4
2.5
3.0
2.3
1.5
3.0
2.0
2.6
2.0
2.3
4.0
2.5
3.0
3.5
2.0
1.5
2.0
3.2
0.2
0.2
0.4
0.3
0.1
-0.3
2.2
-0.2
0.0
8.7
0.7
0.3
-0.4
-0.9
0.1
15.9
4.6
7.0
0.5
0.5
0.4
0.3
0.4
0.4
2.4
0.7
0.3
7.8
0.7
1.3
0.4
0.0
-1.1
13.4
5.4
7.2
0.9
0.7
0.8
0.7
0.8
0.4
2.6
1.3
1.4
4.5
0.9
1.9
1.1
1.0
-1.4
6.5
5.5 
5.0
1.2
1.0
1.4
1.2
1.1
0.6
2.6
1.4
1.9
4.7
1.6
2.5
1.2
1.5
1.1
6.1
5.8
5.8
2.0 
1.4
2.9
2.5 
2.8
2.0
4.1
3.4
3.1
2.3
4.5
3.7
3.1
2.3
4.3
3.6
3.2
2.3
4.6
3.7
1.6
0.2
4.0
2.3
1.9
0.6
4.1
2.5
2.2
1.3
3.7
2.7
2.4
1.7
3.6
2.8





2Q16
4Q16
2.2
2.2
4.5
20.0
5.3
3.6
3.1
4.0
3.8
2.9
7.5
98.6
Source: J.P. Morgan
6
This document is being provided for the exclusive use of mithesh.m.shetty@jpmorgan.com & clients of J.P. Morgan.
Jan Loeys
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jan.loeys@jpmorgan.com
Global Asset Allocation
The J.P. Morgan View
21 August 2015
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The J.P. Morgan View
21 August 2015
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