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JPM Weekly Mkt Recap 8-6-12

JPM Weekly Mkt Recap 8-6-12

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08/06/2012

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MARKET
INSIGHTS
Weekly Market Recap
August 6, 2012
Headlines
• House approved 1-year extension of all Bush Tax Cuts.
Economic News
• The ISM Mfg. index was weaker than expected.• Light vehicle sales came in at 14.1 million saar.• The unemployment rate rose to 8.3%.• Nonfarm Payrolls: +163K; Private Payrolls: +172K.• Next Week: Consumer Credit, International Trade.
Thought of the Week
While this week’s FOMC and ECB announcementsdisappointed investors, global central banks can stillachieve their macro economic goals. As shown in thisweek’s chart, while EM central banks have been easingpolicy in recent months, they still have plenty of roomfor further rate cuts should economic growth weaken.By contrast, the ECB doesn't have significant room tolower interest rates in general but throughunconventional measures can lower interest rates onsovereign debt, which could improve economic growthin Europe. The Federal Reserve is out of effectiveammunition to boost economic growth, but the goodnews in the US is the economy should be able tocontinue growing without further monetary stimulus.For investors, it is important not to let concern about alack of policy action overrule reasonable opinionsconcerning economic prospects.
Question of the week:
High yield bonds are currently yielding approximately6.8%; what was the highest yield seen over the pastyear?
Prior week's question:
How much did U.S. prime money market exposure toeurozone banks fall in June 2012?
Answer to prior week's question:
U.S. prime money market fund exposures to eurozonebanks fell by 33% in June 2012.
Please see important disclosure on next page.
773741796788Russell 2000 2,6932,6052,9582,968Nasdaq 1,2601,2581,3861,391S&P 500 11,89612,21813,07613,096Dow Jones 30
8/3/1112/30/117/27/128/3/12Index Levels FridayClosePriorWeekYearEndYearAgo
7.378.366.986.77High Yield 3.072.452.022.0810 Year Municipal 2.601.871.561.5810 Year Treasury 0.330.240.250.242 Year Treasury 0.250.250.250.25Fed Funds Target
Bond Rates
8.497.361.601.21Asia ex-Japan -1.410.71-0.16-0.21Japan 5.6710.212.042.09Europe ex-UK 7.016.612.152.91United Kingdom 5.257.011.531.58MSCI - EAFE 11.9911.990.400.40S&P 500
USDLocalUSDLocalMarket Returns 1 week YTD
3.253.253.253.25Prime Rate 4.454.073.743.7530 Year Mortgage 0.380.640.470.446 Month CD
8/3/1112/30/117/27/128/3/12Consumer Rates FridayClosePriorWeekYearEndYearAgo
3.713.263.493.51Gasoline 91.9398.8390.1391.40Crude Oil 1669.251531.001618.251602.00Gold
Commodities
76.8976.9478.6378.60¥ per $ 1.641.551.571.56$ per £ 1.431.301.241.23$ per €
Currency
1.201.4223.3216.79Russell 2000 113.961.6318.1615.07Russell 1000 Growth 90.842.6013.9511.51Russell 1000 Value 115.062.2415.5112.88S&P 500
Wgt AvgMkt Cap(Bill)DividendYieldP/ETrailingP/EForwardIndexCharacteristics
S&P 500 Sector Returns
-1012
   S   &   P   5   0   0   H   e   a    l   t    h   C   a   r   e   U   t    i    l    i   t    i   e   s   M   a   t   e   r    i   a    l   s   C   o   n   s   u   m   e   r   D    i   s   c   r .   E   n   e   r   g   y   I   n    d   u   s   t   r    i   a    l   s   C   o   n   s   u   m   e   r   S   t   a   p    l   e   s   F    i   n   a   n   c    i   a    l   s   T   e    l   e   c   o   m   T   e   c    h   n   o    l   o   g   y   1 .   6   0 .   6   0 .   5   0 .   5   0 .   3   0 .   3   0 .   1   0 .   0  -   0 .   5  -   0 .   9   0 .   4
06121824
   S   &   P   5   0   0   E   n   e   r   g   y   M   a   t   e   r    i   a    l   s   U   t    i    l    i   t    i   e   s   I   n    d   u   s   t   r    i   a    l   s   C   o   n   s   u   m   e   r   S   t   a   p    l   e   s   H   e   a    l   t    h   C   a   r   e   C   o   n   s   u   m   e   r   D    i   s   c   r .   F    i   n   a   n   c    i   a    l   s   T   e   c    h   n   o    l   o   g   y   T   e    l   e   c   o   m   2   3 .   1   1   5 .   9   1   5 .   3   1   4 .   5   1   2 .   5   1   1 .   9   8 .   8   7 .   3   5 .   9   2 .   9   1   2 .   0
   1   w   e   e    k   Y   T   D
Style Returns
-1.2-0.9-0.6S -0.20.00.1M 0.30.40.3L GBV
   1   w   e   e    k
7.17.37.4S 9.09.19.1M 12.512.010.7L GBV
   Y   T   D
Note: All returns represent total return including dividends.
Chart of the Week
In 2011 Policymakers Were Tightening, in 2012 They’re Loosening
Developed and emerging market nominal policy rates, daily, %
4.5%5.%5.5%6.%6.5%0.5%0.6%0.7%0.8%0.9%Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12
DevelopedMarkets(LHS)EmergingMarkets(RHS)

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