EFTA01797242.pdf

From: Barrett, Paul S Sent: Tuesday, July 28, 2015 1:13 PM To: 'Brad Wechsler; 'Jeffrey Epstein ([email protected])' Cc: Barrett Team; 'Richard Joslin' Subject: RE: Short EUR / Long GBP Brad<=p> • Given that we don'=t yet have an ISDA on file we should consider using a structured note to im=lement the EURGBP trade. Nicole had sent through pricing yesterday. I would=recommend $500K-51MM. Paul<=p> <=pan style="font-size:8.0pt;font-family:"Verdana","sans- ser=1";color:#5FSFSF"> <=spa n> <=pan style="font-size:8.0pt;font-family:"Verdana","sans-ser=f";color:#1F497D">Paul Barrett I Managing Director I Global Investment Opportunities Group I J.P. Morgan Securities LLC I J.P. Morgan Private Bank I Morgan Chase Bank N.A. 320 Park Avenue, 14th Floor, New York, NY 10=22 I T: (212) 622-2770 I F: (212) 310-0108 I [email protected]</=> <mailto:[email protected]> NOT AN=OFFICIAL CONFIRMATION: For informational=purposes only. This report does not represent an official account of=the holdings, balances, or transactions made in your account and is being p=ovided at your request. Please refer to your monthly account statement for the official record of all of your ac=ount activities. For question, please call your J.P. Morgan represent=tive. In discussion of options and other strategies, results and risks ar= based solely on hypothetical examples cited; actual results and risks will=vary depending on specific circumstances. Investors are urged to consider carefully whether option or option-related=products in general, as well as the products or strategies discussed herein=are suitable to their needs. In actual transactions, the client's cou=terparty for OTC derivatives applications is JPMorgan Chase Bank, N.A., and affiliates. For a copy of the "Char=cteristics and Risks of Standardized Options" booklet, please contact=your JPMorgan Advisor. EFTA_R1_00134145 EFTA01797242 This e=ail is confidential and subject to important disclaimers and conditions inc=uding on offers for the purchase or sale of securities, accuracy and completeness of information, viruses, conf=dentiality, legal privilege, and legal entity disclaimers, available at http://www.jpmorgan.com/pages/disclosu=es/email <http://www.=pmorgan.com/pages/disclosures/email> . From: Wolf, Nicol= Sent: Monday, July 27, 2015 3:05 PM To: Brad Wechsler Cc: Barrett Team Subject: Short EUR / Long GBP Hi Brad, Here is our latest piece on short EUR vs. long GBP. l=will follow-up with some structure pricing that we like. Nicole Trade Idea: Sh=rt Euro / Sterling (i.e. Long GBP vs Short Euro) </=pan> Recent comme=ts from several Bank of England (BoE) members suggest the time for rate hik=s in the UK is approaching. As a result, the market is repricing the=timing of the first rate hike from mid-2016 to Q12016. o C:=20;In the current circumstances there is no need to wait to raise rates bec=use of a risk management approach and run the risk of inflation overshootin= target.... In my view, the decision as to when to start such a process of adjustment will likely come into sharper re=ief around the turn of this year." - Mark Carney (BoE Governor), 16 July 2015 Additionally= the U.K. economy is improving rapidly (see charts below). o Retail sales=are growing at of 4.8%yoy, 3mma — the strongest run rate since 2004. o Wage growth=has finally started to pick up with private sector wages up 3.8%yoy, 3mma,=up from sub-2% in late 2014 and the strongest pace since 2008.</=:p> 2 EFTA_R1_00134146 EFTA01797243 o Inflation is=low at 0.0%yoy, largely due to the oil price drag, but is expected to pick=up significantly into year-end as the base effect fades out and growth drag= prices higher. Consensus forecasts are for a 1.6% rate by end 2016 and 1.9% by end 2017. • At the same=time, the ECB is in the beginning of a mandated period of suppressed intere=t rates and quantitative easing which is on plan to last through September=2016, if not extended thereafter. * Given the mo=etary policy divergence between the ECB (extremely loose) and the BoE (prep=ring for tightening), GIO expects GBP to appreciate against the Euro over t=e next 6 months by up to 5%. Risks to the Trad= • Although the=BoE is approaching rate hikes, strong data over the next few months is need=d to corroborate their move. Notably, if CPI prints surprise to the downsid= on August 18th and September 15th, the argument for BoE rate hikes and GBP strength=will weaken. • Some very in=luential BoE members such as Andrew Haldane remain dovish and continue to h=ghlight the risks of moving too soon. To the extent that they can persuade=other members to refrain for a few months, the market may price out rate expectations back to mid-2016. • A substantia= GBP trade-weighted appreciation could depress imported prices and push out=rate hikes. The trade-weighted GBP appreciated 8% in Q1 2015 leading some B=E doves to express concerns. Source: JP Morgan an= Bloomberg, July 2015 This material is int=nded as a general market commentary, and not intended to be a forecast of f=ture events, a guarantee of future results or investment advice. The opinio=s expressed are those of GIO based on current market conditions and may differ from those of other l.P. Morgan=employees and affiliates, which are subject to change without notice. =This information in no way constitutes J.P. Morgan Research and should not=be treated as such. The views expressed may differ from those contained in J.P. Morgan research reports. The invest=ent products and services described herein may not be suitable for all clie=ts, you should speak to your financial representative before engaging in an= investment product or strategy. 3 EFTA_R1_00134147 EFTA01797244 Outlooks and past=performance are not reliable indicators of future results. Bank products and se=vices, are offered by JPMorgan Chase Bank, N.A. and its affiliates. Securit=es are offered by J.P. Morgan Securities LLC, member NYSE, FINRA and SIPC. INVESTMENT PRODUCTS:=NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE c=p> &nb=p; NOT AN OFFICIAL CONFIRMATION: For informational pu=poses only. This report does not represent an official account of the=holdings, balances, or transactions made in your account and is being provi=ed at your request. Please refer to your monthly account statement for the official record of all of your accou=t activities. For question, please call your J.P. Morgan representati=e. In discussion of options and other strategies, results and risks ar= based solely on hypothetical examples cited; actual results and risks will=vary depending on specific circumstances. Investors are urged to consider carefully whether option or option-related=products in general, as well as the products or strategies discussed herein=are suitable to their needs. In actual transactions, the client's cou=terparty for OTC derivatives applications is JPMorgan Chase Bank, N.A., and affiliates. For a copy of the "Char=cteristics and Risks of Standardized Options" booklet, please contact=your JPMorgan Advisor. This e=ail is confidential and subject to important disclaimers and conditions inc=uding on offers for the purchase or sale of securities, accuracy and completeness of information, viruses, conf=dentiality, legal privilege, and legal entity disclaimers, available at http://www.jpmorgan.com/pages/disclosu=es/email <http://www.=pmorgan.com/pages/disclosures/email> . The mater=al on this page was prepared by an Associated Person with responsibilities=for the marketing and sale of swaps and OTC financial derivatives. All ques=ions related to swaps and OTC financial derivatives referenced in these materials must be directed to Nicole Wolf &nbs=; These ind=cative prices are provided for information purposes only, do not represent=a commitment from JPMorgan to transact at those prices, or at any price, in=the future, and are intended solely for your use. These indicative prices were 4 EFTA_R1_00134148 EFTA01797245 created as of a specific t=me and market condition and do not represent (i) the actual terms at which=new transactions could be entered into, (ii) the actual terms at which exis=ing transactions could be liquidated or unwound, or (iii) the calculation or estimate of an amount that would be=payable following the early termination of transactions pursuant to any mas=er trading agreement to which we are parties. JPMorgan expressly disc=aims any responsibility for (i) the accuracy of the models or estimates used in deriving the prices, =(ii) any errors or omissions in computing or disseminating the prices, and&=bsp; (iii) any uses to which the prices are put. The indicative price= do not take into account any specific ISDA credit terms, client credit ratings or credit reserves or charges that migh= be relevant to a dealer negotiating a firm pricing level. Note that=the transaction that is the subject of these indicative prices does not hav=1PMorganChase credit approval. This document is not intended as investment or other advice or as a recommendati=n that you, any of your affiliates or any other person participate in any t=ansaction. It does not generally constitute an offer to buy or sell,=or a solicitation of an offer to buy or sell any security or financial instrument. This email is confidential and subject to important disclaimers and conditio=s including on offers for the purchase or sale of securities, accuracy and=completeness of information, viruses, confidentiality, legal privilege, and=legal entity disclaimers, available at http://www.jpmorgan.com/pages/disclosures/email <http://www.jpmorgan.com/p=ges/disclosures/email> <=span> 5 EFTA_R1_00134149 EFTA01797246