• Economics — Weak US retail sales and claims raise downside risks.
• Asset allocation — Risk markets have been in a range for almost a year. This will make investors favor income, yield, and spreads over capital gains.
• Fixed income — Stay long and in flatteners. MBS now offers good value.
• Equities — Downshift in global manufacturing and the search for yield are negative for Industrials and Cyclical sectors more broadly.
• Credit — Record US$22 billion issuance in US HY this week. Stay long given strong demand and strong corporate fundamentals.
• FX — JPY forecast to rally to all-time low of 79 versus USD by year-end.
• Commodities — Stay underweight in Oil and Base Metals, and overweight Agriculture.
Click on chart to enlarge, courtesy of J.P.Morgan.
Sounds reasonable with the given track record?