Via Credit Suisse:
(1) Global growth does not slow down as much as some of the lead indicators in the US have temporarily highlighted. (Realisation: Q4E);
(2) China announces a recapitalisation scheme for the UDICs (Urban Development Investment Corporations) and slightly eases the administrative tightening that it undertook in Q1 and Q2. (Realisation: Possible Q4E);
(3) US fiscal tightening for 2011 is tempered in the run-up to the mid-term election (are we beginning to see this with the renewal of $34bn of unemployment relief);
(4) Much more corporate M&A and buybacks, reflecting the gap between the FCF yields and the corporate bond yield. (We think this could happen any time);
(5) The MPC (in the UK) or the Fed (in the US) say that they are willing to restart QE earlier than the market expects. Thus the threshold of a policy response is less than expected. We would note that there was some surprise in the market that in its latest published minutes the MPC actually discussed QE.