EFTA01806410.pdf

From: Richard Kahn Sent: Wednesday, September 21, 2016 12:32 PM To: Jeffrey Epstein Subject: Fwd: MEGA AM: JGBs no longer a capital appreciation asset if l0y pegged near 0% Richard Kahn HBRK Associa=es Inc. 575 Lexington Avenue, 4th Fl=or New York, NY 10022 Phone Fa> Cell Begin forwarded message: From: "Ens, Amanda" Date: September 21, 201= at 8:27:42 AM EDT To: "Rich Kahn Subject: MEGA A=: JGBs no longer a capital appreciation asset if 10y pegged near 0% =b>Reply-To: "Ens, Amanda" =blockquote type="cite"> * &n=sp; The critical change is t=e Bal has told us JGBs bonds are no longer a capital appreciation asset (as=they have been for 10 years) so now the question is how much income do you n=ed to justify owning them — methinks more than zero!! • =They have also t=ken a very strong forward guidance stance by introducing an: "inflation-ove=shooting commitment". The BoJ commits itself to "expanding the mone=ary base until the year-on-year rate of increase in the observed consumer p=ice index (CPI) exceeds the price stability target of 2 percent and stays a=ove the target in a stable manner". • <=span>Previously, the standard $700m Bal ETF buy-basket would be split=53% for N225, 42% for Topix and 5% for JPX400. Now will veer more towards 69% Topix, 28% Nikkei and 2.3% of total purchas=s. =span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-fo=t-family:Symbol">. = With TOPIX now 69% of ETF purchases and Topix / 3=y JGB yield correlation positive, for Topix to rally it means JGBs have to s=ll off. • &=bsp; ** =WTI: API shows U.S. crude in=entories down 7.5 mbbl last week; consensus f=recast for EIA today is build of 3.25 mbbl * <=span>China: The BofAML Chi=a Activity Coincident Tracker (China-ACT) rose to 7.5% yoy in August from a=revised reading of 6.6% in July. There was a broad-based improvement=/a> EFTA_R1_00153961 EFTA01806410 =C2* &nb=p; China A-share companies'=2Q16 earnings remained lackluster - vs. 1Q16, YoY revenue growth decelerate=, Japan: The BoJ has t=Id us JGBs (and global fixed income??) is no longer a capital appreciation s=ory. So now we need to figure out how much income=is required so justify owning bonds.</=pan> from claims in the prior w=ek. This would bring the four-week moving average down to 260,500 from 260,=50. US Existing =span class="text">home sale= should rebound 1% mom to 5.44mn saar in August, following the 3.2% p=unge in July. As a reminder, pending home sales track signed contracts on e=isting home sales, and are thus a useful leading indicator for closed contr=cts by a month or two. Pending sales saw a 1.3% increase in July, supportin= an August pick-up in existing home sales. WTI: API shows U.S= crude inventories down 7.5 mbbl last week; c=nsensus forecast for EIA today is build of 3.25 mbbl=/span> China: The BofAML China A=tivity Coincident Tracker (China-ACT) rose to 7.5% yoy in August from a rev=sed reading of 6.6% in July. There was a broad-based improvement=/span> as six out of seven component indicators rose in=August compared to July. In particular, electricity production growth stren=thened in August amid hot weather, while contraction of real exports narrow=d on favorable calendar effects. However, fiscal revenue growth slowed in A=gust as the effects of tax reduction policies started to emerge. The chance=of monetary easing, such as interest rate and RRR cuts, remains low. 2 EFTA_R1_00153962 EFTA01806411 =b>Greg Kaldor Managing Director=/b> US MEGA (Macro Equi=y & Global Alpha) </=pan> Bank of America Me=rill Lynch B/Berry This message, and any attachments, is for t=e intended recipient(s) only, may contain information that is privileged, c=nfidential and/or proprietary and subject to important terms and conditions=available at http:=/www.bankofamerica.com/emaildisclaimer <http://www.bankofamerica.com/emaildisclaimer> . If you are not the intended rec=pient, please delete this message. <http://rsch-bems-tr.baml.c=m/q/Rl65PicArhRnjFLPxEAxgw—/AAAAAQA—/RgFtZxP8ePkEIAWvhA8cAatlCCgAFH3riVw- 3Z=FSF3JpY2hhcmRrYWhuMT.IAZ21haWwuY29tCVEEAAAAAEeZey.luYWllljoiMDkyMTA4Mjc5MDkyO=I2MToyMDg4MDc 4LUhOQTAilOhdXflob3IgZW1haWwiOiJhZGlpbkBjb2xkc3BhcmsuY29tliwid=VtcGxhdGUiOUkZWZhdWx0X3RIbXBsYKRIli wiY2xpZW50X2IkljoiNS0wOTlxMDgyNzkwOTISM=YxOjIwODgwNzgtSESBMO9> 2088078 <=lockquote type="cite"> =/div> 3 EFTA_R1_00153963 EFTA01806412