Strategy and Economics
3 Global Strategy & Economics Roundups
5 Global Economics
Global Resilience
Joachim Fels, Manoj Pradhan, Spyros Andreopoulos
7 Global Equity Strategy
The First Small Step
Gerard Minack
9 US Equity Strategy The End of QE2 Is Near
Adam Parker et al.
11 US Interest Rate Strategy
Near-term Risk for Yields Skewed to Upside
Jim Caron, Subadra Rajappa
13 Europe Equity Strategy
Overweight UK versus Germany
Ronan Carr
15 Asia/GEMs Equity Strategy
Revisions Suggest Rally At Risk
Jonathan Garner, Pankaj Mataney, Pauline Yeung
......

The State Council maintained a hawkish tone but
left room for growth
The State Council has held the first-quarter meeting on April 13 and decided to “implement
prudent monetary policy earnestly, balance the relationship between monetary aggregates and
structure overhaul, as well as that of checking inflation and advancing economic growth” in the
upcoming quarter. In addition, part of Premier Wen’s speech on the State Council was also
published in a report titled “A few issues in the current economic policies” on Xinhua net on the
same day.
........


We recommend shifting allocation to underweight for now...
Commodity returns have substantially outperformed, owing largely to the
loss of Libyan oil production and concerns that unrest in the Middle East
and North Africa (MENA) could lead to losses in another oil producing
country. However, while contagion risk remains elevated, we maintain that
crude oil prices have pushed ahead of where fundamentals currently
suggest and that the near-term downside risk to prices has risen in recent
weeks as oil prices have climbed to exceptionally high levels last seen in
the spring of 2008. Not only are there now nascent signs of demand
destruction in the United States, but also elections in Nigeria, a potential
ceasefire in Libya and record market length on contagion fears. Further,
softening near-term base metals balances suggest that a stock-out in
copper inventories and associated price spikes has now been deferred
beyond 2011, and recent gold price strength has pushed us close to our
near-term price targets. As a result, we now recommend an underweight
allocation to commodities on a 3 to 6-month horizon