HOUSE_OVERSIGHT_014405.jpg
Extraction Summary
1
People
9
Organizations
5
Locations
3
Events
5
Relationships
3
Quotes
Document Information
Type:
Investment strategy report
File Size:
Summary
This document is a Bank of America Merrill Lynch investment strategy report dated November 18, 2016. It analyzes the geopolitical and economic risks for Japan following the election of Donald Trump, discussing potential impacts on trade (TPP), international relations (US, Russia, China, Europe), and defense spending. The document contains no information related to Jeffrey Epstein, his associates, or any related activities.
People (1)
| Name | Role | Context |
|---|---|---|
| Donald Trump | US President |
Mentioned in the context of his presidency's implications for Japan's diplomatic, geopolitical, and economic environm...
|
Organizations (9)
| Name | Type | Context |
|---|---|---|
| Bank of America Merrill Lynch |
The publisher of the report.
|
|
| BofA Merrill Lynch Global Research |
Listed as a source for Chart 1.
|
|
| BofA Merrill Lynch Global Quantitative Strategy |
Listed as a source for Chart 2.
|
|
| Bloomberg |
Listed as a source for Chart 1.
|
|
| Haver |
Listed as a source for Chart 1.
|
|
| MSCI |
Listed as a source for Chart 2 and used for the 'MSCI Japan cyclical/defensive' index in Chart 1.
|
|
| IBES |
Listed as a source for Chart 2.
|
|
| Japan's Self Defense Forces |
Mentioned as a potential recipient of increased defense spending.
|
|
| HOUSE_OVERSIGHT |
Appears as a Bates stamp in the document footer, likely referring to a legislative body such as the U.S. House Commit...
|
Timeline (3 events)
Future (as of Nov 2016)
Potential signing of the Japan-EU EPA (Economic Partner Agreement).
Japan, Europe
Post-November 2016
The presidency of Donald Trump in the US, identified as the biggest risk to the report's scenario for Japan.
US
circa 2016
The decline in likelihood of an agreement on the TPP (Trans-Pacific Partnership).
Global
Locations (5)
| Location | Context |
|---|---|
|
The primary country of focus for the investment strategy analysis.
|
|
|
The document analyzes the impact of the US presidency and economic cycle on Japan.
|
|
|
Mentioned in the context of potential changes in US-Russia and Japan-Russia relations.
|
|
|
Mentioned in the context of potential changes in US-China and Japan-China relations.
|
|
|
Mentioned as a region Japan might move closer to, potentially signing the Japan-EU EPA.
|
Relationships (5)
The document discusses the risk of a 'downward spiral in Japan-US relations' and the negative impact of US protectionism on Japanese stocks.
A 'potential improvement in US-Russia' relations is discussed as a possibility under the new US President.
The document suggests that an improvement in US-Russia relations could imply a 'relative worsening in Japan-Russia' relations.
The document suggests a 'relative worsening in Japan-China' relations in parallel with Japan-Russia relations.
Key Quotes (3)
"The biggest risk to our scenario is the implications for Japan's diplomatic and geopolitical environment of the Donald Trump presidency in the US."Source
HOUSE_OVERSIGHT_014405.jpg
Quote #1
"If the Trump presidency tips the US towards isolationism, we expect Japan's spending on defense to increase."Source
HOUSE_OVERSIGHT_014405.jpg
Quote #2
"If this results in higher spending on Japan's Self Defense Forces (rather than compensating for US spending on Japan-based US military), Japan's defense-related stocks would be beneficiaries, and it could reshape the arms industry in Japan."Source
HOUSE_OVERSIGHT_014405.jpg
Quote #3
Full Extracted Text
Complete text extracted from the document (2,454 characters)
Risks: Geopolitics, diplomacy and US economic cycle
The biggest risk to our scenario is the implications for Japan's diplomatic and geopolitical environment of the Donald Trump presidency in the US. The likelihood of agreement on the TPP (Trans-Pacific Partnership) has already declined and been priced into the market, but any downward spiral in Japan-US relations would likely be further negative for Japan equities near-term. A rise in protectionism would be negative for stocks with high US export exposure. Meanwhile if the US economy slows or enters recession and the protectionist response weakens USD, it would be negative for Japanese cyclicals, particularly exporters, due to stronger JPY and potential trade conflicts. Moreover, a potential improvement in US-Russia (US-China) relations under the new US President most likely implies a relative worsening in Japan-Russia (Japan-China) relations. On the other hand, we expect Japan to move closer to Europe under such a scenario, raising the incentive to sign the Japan-EU EPA (Economic Partner Agreement), positive for related stocks. If the Trump presidency tips the US towards isolationism, we expect Japan's spending on defense to increase. If this results in higher spending on Japan's Self Defense Forces (rather than compensating for US spending on Japan-based US military), Japan's defense-related stocks would be beneficiaries, and it could reshape the arms industry in Japan.
The biggest risk to our scenario is the implications for Japan's diplomatic and geopolitical environment of the Donald Trump presidency in the US. The likelihood of agreement on the TPP (Trans-Pacific Partnership) has already declined and been priced into the market, but any downward spiral in Japan-US relations would likely be further negative for Japan equities near-term. A rise in protectionism would be negative for stocks with high US export exposure. Meanwhile if the US economy slows or enters recession and the protectionist response weakens USD, it would be negative for Japanese cyclicals, particularly exporters, due to stronger JPY and potential trade conflicts. Moreover, a potential improvement in US-Russia (US-China) relations under the new US President most likely implies a relative worsening in Japan-Russia (Japan-China) relations. On the other hand, we expect Japan to move closer to Europe under such a scenario, raising the incentive to sign the Japan-EU EPA (Economic Partner Agreement), positive for related stocks. If the Trump presidency tips the US towards isolationism, we expect Japan's spending on defense to increase. If this results in higher spending on Japan's Self Defense Forces (rather than compensating for US spending on Japan-based US military), Japan's defense-related stocks would be beneficiaries, and it could reshape the arms industry in Japan.
Chart 1: Sector rotation and inventory cycle
130.0
125.0
120.0
115.0
110.0
105.0
100.0
95.0
90.0
85.0
80.0
40
30
20
10
0
-10
-20
-30
Jan-09
Jan-11
Jan-13
Jan-15
Cyclical
Fundamental
Defensive
Cyclical
Fundamental
Defensive
Cyclical
Industrial production - inventory (3m mva yoy%)
MSCI Japan cyclical/defensive
130.0
125.0
120.0
115.0
110.0
105.0
100.0
95.0
90.0
85.0
80.0
40
30
20
10
0
-10
-20
-30
Jan-09
Jan-11
Jan-13
Jan-15
Cyclical
Fundamental
Defensive
Cyclical
Fundamental
Defensive
Cyclical
Industrial production - inventory (3m mva yoy%)
MSCI Japan cyclical/defensive
Source: BofA Merrill Lynch Global Research, Bloomberg, Haver
Cyclical = Industrials, consumer discretionary, IT, materials
Defensive = Healthcare, telecom, consumer staples, utilities
Calculated cyclical and defensive % change using monthly index return and index weight
Cyclical = Industrials, consumer discretionary, IT, materials
Defensive = Healthcare, telecom, consumer staples, utilities
Calculated cyclical and defensive % change using monthly index return and index weight
Chart 2: Japan - High Beta PB vs. Low Beta PB
2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
High Beta PB / Low Beta PB
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
High Beta PB / Low Beta PB
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Source: BofA Merrill Lynch Global Quantitative Strategy, MSCI, IBES
Global Quant Panorama: Surf for longer 14 November 2016
Global Quant Panorama: Surf for longer 14 November 2016
2
Japan Investment Strategy | 18 November 2016
Japan Investment Strategy | 18 November 2016
Bank of America
Merrill Lynch
Merrill Lynch
HOUSE_OVERSIGHT_014405
Discussion 0
No comments yet
Be the first to share your thoughts on this epstein document