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Extraction Summary
2
People
6
Organizations
4
Locations
2
Events
1
Relationships
3
Quotes
Document Information
Type:
Financial research report / investment strategy note
File Size:
Summary
This document is page 16 of a 'Global Cross Asset Strategy' report published by Bank of America Merrill Lynch on November 30, 2016. It analyzes global economic recovery, specifically focusing on Emerging Markets (EM) in Asia and recommending a 'Long Nikkei' position with a target of 20,000, citing the recent Trump election victory and Bank of Japan policies as factors. The document bears the Bates stamp 'HOUSE_OVERSIGHT_014447', indicating it was part of a document production to the House Oversight Committee, likely related to investigations involving major financial institutions.
People (2)
| Name | Role | Context |
|---|---|---|
| Trump | President-Elect (at the time) |
Mentioned regarding 'new Trump administration' trade tensions and the 'Trump victory' impacting market moves.
|
| Shusuke Yamada | Japanese equity and FX strategist |
Strategist at Bank of America Merrill Lynch arguing for weaker JPY and rebound in Japanese equities.
|
Organizations (6)
| Name | Type | Context |
|---|---|---|
| Bank of America Merrill Lynch |
Creator of the document/report.
|
|
| Haver |
Cited as a source for Chart 28.
|
|
| Bloomberg |
Cited as a source for charts.
|
|
| OPEC |
Mentioned in context of US strategists downgrading oil equity sector ahead of OPEC.
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|
| BOJ |
Bank of Japan, mentioned regarding new policy stance pushing growth.
|
|
| House Oversight Committee |
Implied by the Bates stamp 'HOUSE_OVERSIGHT' indicating this document was part of a congressional document production.
|
Timeline (2 events)
November 30, 2016
Locations (4)
| Location | Context |
|---|---|
|
Market region discussed (EM Asia).
|
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|
Mentioned regarding Nominal GDP recovery and CNH put.
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Focus of investment strategy (Nikkei, Japanese equities).
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Mentioned regarding USD, yield curve, and oil equity position.
|
Relationships (1)
Referred to as 'Our Japanese equity and FX strategist Shusuke Yamada'
Key Quotes (3)
"The question then is whether the strong USD or trade tensions from the new Trump administration can outweigh the more positive macro backdrop."Source
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Quote #1
"Long Nikkei: target 20,000"Source
HOUSE_OVERSIGHT_014447.jpg
Quote #2
"While arguably the JPY had turned beforehand, the Trump victory turbo charged the move."Source
HOUSE_OVERSIGHT_014447.jpg
Quote #3
Full Extracted Text
Complete text extracted from the document (2,438 characters)
Chart 28: The world economy is improving – broad-based recovery –
good for Asia/EMs
[Chart showing line graphs 1/11 to 1/16]
Percentage of Countries with...
MSCI EM, RS
Source: BofA Merrill Lynch Global Research, Haver, Bloomberg
good for Asia/EMs
[Chart showing line graphs 1/11 to 1/16]
Percentage of Countries with...
MSCI EM, RS
Source: BofA Merrill Lynch Global Research, Haver, Bloomberg
Chart 29: EM cyclicals outperform as China’s NOMINAL GDP recovers.
More to go.
[Chart showing line graphs 1/05 to 1/17]
MSCI EM cyclicals/EM defensives price index, LS
China Bloomberg Monthly GDP Estimate YoY +...
Cyclicals = energy, materials, consumer
Source: BofA Merrill Lynch Global Research, Bloomberg. Assumed GDP estimate for October-16 to be
similar to that for September-16.
More to go.
[Chart showing line graphs 1/05 to 1/17]
MSCI EM cyclicals/EM defensives price index, LS
China Bloomberg Monthly GDP Estimate YoY +...
Cyclicals = energy, materials, consumer
Source: BofA Merrill Lynch Global Research, Bloomberg. Assumed GDP estimate for October-16 to be
similar to that for September-16.
The question then is whether the strong USD or trade tensions from the new Trump
administration can outweigh the more positive macro backdrop. We are inclined to back
the view of our strategists and think that it will, so we are sticking with our long EM
Asia position. We are doing so with hedges via a long USD and a CNH put.
administration can outweigh the more positive macro backdrop. We are inclined to back
the view of our strategists and think that it will, so we are sticking with our long EM
Asia position. We are doing so with hedges via a long USD and a CNH put.
Long Nikkei: target 20,000
We had previously paired our long EM position with a long US oil equity position, but
with our US strategists downgrading the sector ahead of OPEC we removed it earlier
this week. We were therefore looking for another pro-growth trade to run alongside our
EM position. Long Japanese equities seemed the logical place to look. While we
acknowledge we have missed the lows and that today’s entry point may not be ideal, we
suspect investors are not particularly long Japan yet since it was still showing as
modestly underweight in the last Fund Manager Survey.
We had previously paired our long EM position with a long US oil equity position, but
with our US strategists downgrading the sector ahead of OPEC we removed it earlier
this week. We were therefore looking for another pro-growth trade to run alongside our
EM position. Long Japanese equities seemed the logical place to look. While we
acknowledge we have missed the lows and that today’s entry point may not be ideal, we
suspect investors are not particularly long Japan yet since it was still showing as
modestly underweight in the last Fund Manager Survey.
Chart 30: Net % AA say they are overweight Japanese equities
Asset Allocation: JP Equities
[Chart showing bar graphs 2007 to 2016]
FMS Net% say OW JP Equities, lhs
JP Performance vs World, rhs
Source: BofA Merrill Lynch Global Fund Manager Survey
Asset Allocation: JP Equities
[Chart showing bar graphs 2007 to 2016]
FMS Net% say OW JP Equities, lhs
JP Performance vs World, rhs
Source: BofA Merrill Lynch Global Fund Manager Survey
Our Japanese equity and FX strategist Shusuke Yamada has been arguing for a while
that we would see both a weaker JPY and a rebound in Japanese equities. While arguably
the JPY had turned beforehand, the Trump victory turbo charged the move. As the chart
shows below Japanese equities do well historically during a period of bear steepening of
the US yield curve. Our economists are also more upbeat on Japan thinking the weaker
USD, the new policy stance of the BOJ and the fiscal stimulus will push growth and
inflation higher next year.
that we would see both a weaker JPY and a rebound in Japanese equities. While arguably
the JPY had turned beforehand, the Trump victory turbo charged the move. As the chart
shows below Japanese equities do well historically during a period of bear steepening of
the US yield curve. Our economists are also more upbeat on Japan thinking the weaker
USD, the new policy stance of the BOJ and the fiscal stimulus will push growth and
inflation higher next year.
16 Global Cross Asset Strategy – Year Ahead | 30 November 2016
Bank of America
Merrill Lynch
Bank of America
Merrill Lynch
HOUSE_OVERSIGHT_014447
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