HALISTER1: RESEARCH ROUNDUP: How JPY Appreciation May Benefit USTs

RESEARCH ROUNDUP: How JPY Appreciation May Benefit USTs

(Bloomberg) -- JPY appreciation has potential to boost demand for USTs to the extent it suggests Japanese stimulus measures are failing and that Fed is handcuffed by threat of USD appreciation; it also enhances appeal of USD assets to Japanese investors, especially if they expect intervention to limit yen’s rise, strategists said in notes and interviews.
  • BMO (Aaron Kohli)
    • UST curve flattened overnight as “yen getting stronger suggests a risk-off tone to the market” and “chatter around a possible Japanese intervention grew louder”
  • CIBC (Richard Gilhooly)
    • “USD/JPY unhinged flashes February 11th risks” when UST “yields gapped to the lows of the year”
    • “Stability since has been reflected in higher risk appetite and also a decent sell-off in US bonds,” until “Yellen and FOMC cited global risks in mid-March,” and “now risk assets and USD/JPY are reflecting those risks”
    • Yen rally “signals unraveling of QQE benefits and BOJ/fiscal policy constraints”
  • CRT (David Ader)
    • “Potential for Japanese intervention to weaken the yen (resulting in investable dollars that would presumably favor the front-end of the Treasury curve) once again got attention on Wednesday –- although actual action wasn’t reported”
    • “This is on the radar now and we’ll acknowledge it’s a challenge to the momentum that we’re relying on for our call of curve steepening and further consolidation”
  • FTN (Jim Vogel)
    • “The big drop in Japan’s equity markets remind how difficult it is for an economy to weather a rich currency,” and “if the Fed moves toward normalization and the dollar rallies, then expect the market to punish U.S. stock prices as well”
    • “The press to find a ‘haven’ currency falls out from a conclusion global growth/trade will suffer a long comeback period”
  • TD (Gennadiy Goldberg)
    • “In the current low-yield environment, a stronger JPY could make it more attractive for Japanese investors to invest in Treasuries in order to garner stronger returns”
    • “The cross currency basis is certainly a negative,” and suggests that “recent Japanese buying of Treasuries has likely been done outright”
    • “There could also be the implicit belief that the BOJ will not allow the JPY to appreciate uncontrollably, limiting currency downside for longer-term investors”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Aaron Kohli (Bank of Montreal)
David Ader (CRT Capital Group LLC)
Gennadiy Goldberg (TD Securities USA LLC)
Jim Vogel (Ftn Financial)
Richard Gilhooly (CIBC World Markets Corp)

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UUID: 7947283

HALISTER: BNP Among Banks Facing $172 Million Loss as Oil Tycoon Fails (1)

BNP Among Banks Facing $172 Million Loss as Oil Tycoon Fails (1)

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
BNP FP (BNP Paribas SA)
BNS CN (Bank of Nova Scotia/The)
BARC LN (Barclays PLC)
INGA NA (ING Groep NV)

People
Alessandro Roccati (Moody's Investors Service)
Diane Flanagan (Bank of Nova Scotia/The)
Ian Suttie
James Tucker (Aero Inventory PLC)
Jonathan Doorley (Sard Verbinnen & Co)

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UUID: 7947283

HALISTER: Universal Health Pays for Billionaire’s Tickets, Gas (Correct)

Universal Health Pays for Billionaire’s Tickets, Gas (Correct)

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
UHS US (Universal Health Services Inc)

People
Alan Miller (Universal Health Realty Income Trust)
Marc Miller (Universal Health Services Inc)

Topics
Who's News - People

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UUID: 7947283

HALISTER: NYSE’s Ivan Brown Said to Win Job Overseeing Options Business

NYSE’s Ivan Brown Said to Win Job Overseeing Options Business

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
ICE US (Intercontinental Exchange Inc)

People
Steven Crutchfield (NYSE Group Inc)
Karina Byrne (NYSE Euronext)

Topics
Market Structure
Who's News - People
Management Changes

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UUID: 7947283

HALISTER: Universal Health Pays for Billionaire’s Tickets, Gas, Club Dues

Universal Health Pays for Billionaire’s Tickets, Gas, Club Dues

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
UHS US (Universal Health Services Inc)

People
Alan Miller (Universal Health Realty Income Trust)
Marc Miller (Universal Health Services Inc)

Topics
Who's News - People

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UUID: 7947283

HALISTER: Ex-Barclays Trader Told SFO His Bosses Knew About Libor Fix (1)

Ex-Barclays Trader Told SFO His Bosses Knew About Libor Fix (1)

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
BARC LN (Barclays PLC)

People
Mike Bagguley (Barclays PLC)
Eric Bommensath (Barclays PLC)
Harry Harrison (Barclays PLC)
Ryan Reich (Wcg Master Fund Ltd)
Stylianos Contogoulas (Merrill Lynch International)

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UUID: 7947283

HALISTER: Deutsche Bank, Credit Suisse Chairmen Reject Criticism in Slump

Deutsche Bank, Credit Suisse Chairmen Reject Criticism in Slump

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
CSGN VX (Credit Suisse Group AG)
DBK GR (Deutsche Bank AG)

People
Paul Achleitner (Deutsche Bank AG)
Urs Rohner (Credit Suisse Group AG)
John Cryan (Deutsche Bank AG)
Sheikh Hamad Al Thani (Qatari Diar UK Ltd)
Tidjane Thiam (Credit Suisse Group AG)

Topics
Who's News - People
Management Changes

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HALISTER1: WHAT TO WATCH: Brexit Voter Turnout Centerstage Post-Dutch Vote

WHAT TO WATCH: Brexit Voter Turnout Centerstage Post-Dutch Vote

(Bloomberg) -- Opinion polls show as many as 1 in 3 voters are undecided about whether they will vote to leave or stay in the EU at the June referendum, spurring debate about what a low turnout would mean for the result and for the pound.
  • NOTE: Implied-realized GBP/USD vol spread on the 3-month tenor rose to a record on Thursday, as voters in the Netherlands used a referendum on a treaty between the European Union and Ukraine to rebuke Dutch and EU leaders
  • Developments that could impact sterling in coming months are surveys on voting intentions, the selection of the official “in” and “out” campaign groups, the refugee crisis and political developments in the EU
  • WHAT’S THE LATEST?
  • PM David Cameron says he hopes the Dutch result won’t affect the U.K. referendum, in a speech targeted at encouraging younger people to vote
    • He said last month the result is on a knife edge and could be decided on who bothers to vote; political campaign organizer Lynton Crosby says those in the “leave” camp are still more likely to actually cast a vote
  • Most recent polls show the two camps are virtually neck and next; telephone polls, deemed to be more accurate, at the end of March showed the remain camp’s lead had narrowed
  • The turnout at the Dutch referendum was just 32%; if the turnout were anywhere near that low in the U.K. vote, it would raise the possibility of a U.K. exit Nomura analyst Philip Rush writes in client note
  • Meanwhile, JPMorgan’s Allan Monks says this risk may be overdone as interest in the Brexit debate looks high relative to past referendums and elections, according March 4 note
    • Uncertainty over jobs and economic stability, versus attitudes toward migration and security are the two factors that will impact the result, Monks adds
  • Cameron’s GBP9.3m plan to send a leaflet “to set out the facts” on the referendum to every U.K. household was attacked as “propaganda" by Justice Secretary Michael Gove, one of the leading campaigners for a U.K. exit
  • The BOE said last month uncertainty over the U.K. referendum may hold back investment and growth, though MPC member Kristin Forbes said there’s not yet enough data to estimate impact
  • The U.K. current-account deficit surged to 7% of GDP in 4Q, before the referendum date was known, and adds to concern a vote to leave could see a sharp slowdown in investor inflows
  • Standard Chartered analyst Eimar Daly says uncertainty is leading to reduced foreign inflows, with M&A deal announcement values down sharply since December 2015
  • WHAT’S NEXT?
  • The Electoral Commission’s deadline to determine the official ‘‘leave” and “remain” campaigns is April 14, and referendum period starts the day after; the decision gives the lead campaign groups higher spending limits
  • JPMorgan says a successful implementation of an EU deal with Turkey to stem migration flow would lower the likelihood of “Brexit”
  • UBS Wealth Management analyst Ricardo Garcia says if the EU- Turkey deal leads to lower migrant inflows, that will be more important in voter minds than last month’s terror attacks in Brussels
    • Once the campaign starts formally and Cameron campaigns more pro-actively, it will be important to see if the undecideds make up their minds and which campaign they back; expect most to favor staying in the EU, Garcia adds
  • WHAT’S THE LIKELY REFERENDUM OUTCOME?
  • Polls show the “remain” and “leave” campaigns fairly balanced; undecideds range from 16% and 28% in surveys since end-Feb.
  • RBC says betting markets are a better gauge of implied probabilities; in recent days, these have shown a jump in the probability of a vote to leave toward its peak of ~40%
  • Betting odds website oddscheker.com shows 69% support for U.K. staying in EU
  • UBS WM sees a ~30% chance of Brexit; Citigroup puts the likelihood at 30%-40%; IHS sees 35%-40% chance of an exit
  • WHAT HAPPENS IF THE REMAIN CAMP WINS?
  • The vote may spur persistent political and economic uncertainties that may not end even if U.K. votes to stay, Citigroup says
  • Even if the U.K. votes to remain in the EU, divisions resulting from the referendum could lead to early elections, according to Morgan Stanley analysts
    • The bank’s economists say even if the “remain” camp wins, slower growth and weaker inflation would push the first BOE rate increase back to early 2017
  • Meanwhile, ING analysts say if the U.K. votes against “Brexit,” the BOE could lift rates as soon as November
  • BNY Mellon analysts note GBP strength after the Scottish referendum faded just hours after the result; Morgan Stanley says sterling could recover slightly but won’t retrace all of its losses since mid-2015
  • Julius Baer analysts see asymmetrical downside risks for sterling, believing a long-lasting relief rally is unlikely in case of a vote to stay
  • WHAT HAPPENS ON A BREXIT?
  • EU provisions suggest negotiations can take up to two years but some commentators say that period could be extended, if needed
  • In the worst case, the economy would be 3.9% smaller by 2030 compared with staying in the bloc and GBP21.1b of business investment would be lost, Oxford Economics says, adding that best case sees a loss of 0.1% in GDP
  • Analyst estimates for GBP declines from Barclays to HSBC range from 10% to 20%
  • British manufacturers, retailers and universities may see their credit ratings slide if the U.K. votes to leave: Moody’s
  • Fund managers Aberdeen, Henderson face the largest operational risks in a “Brexit,” scenario, according to UBS equity analysts; U.K. retail sector may de-rate, the bank says
  • A vote for an exit will spawn the deepest European HY market slump since the Greek debt crisis, analysts and investors say
  • A U.K. exit would have wide-ranging negative economic consequences beyond the country; would most likely include a euro-area recession, something that doesn’t yet appear to be priced in G-10 FX vol curves, Credit Suisse economists say
  • Any market turmoil after a vote to leave could also stop Fed rate increases, UBS Wealth Management global CIO Mark Haefele says in interview
  • HOW TO TRADE IT?
  • Investors should brace for a more than 4% drop in sterling in the referendum run-up, according to Validus, the most accurate GBP forecaster in 1Q
  • Nomura stays short GBP vs USD with a 1.40 digital put expiring just before the referendum; doesn’t look to add to exposure unless there’s a squeeze higher to 1.44-1.45
  • An escalation of the Greece situation, alongside the U.K. referendum, could drive peripheral spreads wider, weigh on EUR and increase the currency’s volatility, Barclays analysts write
  • HSBC says long CHF is the best hedge against the risk of Brexit
  • TD Securities, ING favor Dec 16/Dec 17 short-sterling steepeners, with TD saying market pricing of a BOE rate increase is too extreme
  • If the U.K. were to vote to leave, gilts wouldn’t be on the top of investors’ list of British assets to sell, Newton’s Howard Cunningham says in interview; he favors linkers, which could find support whatever the outcome
    • Aviva Investors agrees, saying the outlook for gilts isn’t clear as U.K. govt debt could benefit from domestic haven flows, even as they suffer from international outflows
  • “Brexit” risks and increased ECB purchases support long- end EUR rates; recommend buying EUR 10s30s conditional bull- flatteners with 1-mo. expiry, SocGen says
  • Barclays recommends U.K. stocks with dollar exposure, FTSE 100 companies and consumer staples
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Allan Monks (JP Morgan Chase)
David Cameron (United Kingdom of Great Britain and Northern Ireland)
Eimear Daly (Standard Chartered PLC)
Howard Cunningham (Newton Investment Management Ltd)
Kristin Forbes (Bank of England)

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UUID: 7947283