Halister News

--STEVEN CRABILL

Economic Release Details: {INFUTOTY Index ECOD} --ASHUTOSH JOSHI

(Bloomberg) -- A rise in GBP risk premiums via implied volatility given the mix of political and policy uncertainty may see an inherent vol floor emerging, Bloomberg strategist Tanvir Sandhu writes.

• This may be best expressed via long-vega and short-gamma profile to avoid theta losses given low realized vol, with 1m10y realized vol at 2.8bp/day
• GBP rates gamma remains close to all- time lows given subdued realized vol; even with the fragile political backdrop and forthcoming Brexit negotiations, it’s in line with global cross-asset low vol dynamics with persistent AUM chasing carry via short-vol strategies
• The tail risks of both a soft Brexit and a messy Brexit with no deal have increased but yields will likely remain range-bound for now, pulling down gamma, with rates caught between political instability, inflation risk via weaker GBP FX and potential softening Brexit/austerity, see more here
• NOTE: Tanvir Sandhu is an interest-rate and derivatives strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice

To contact the reporter on this story: Tanvir Sandhu in London at tsandhu17@bloomberg.net To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net Anil Varma

(Bloomberg) -- General Electric says Jeff Immelt to remain Chairman through Dec. 31. Link to Statement:Link

(Bloomberg) -- Recently deteriorated political environment brought volatility to asset prices and increased uncertainties on the timing and pace of Brazil GDP recovery, Santander Economist Mauricio Molan writes in report.

• To back his view that demand drivers don’t warrant such pessimist, Molan cites four important drivers for consumption that he says are not receiving adequate attention from market analysts:
  • Inertial benefit of the recent expansion in real income
  • Impact of the unfreezing of a portion of workers’ fund known as FGTS, a decision that "could represent a non-negligible stimulus for household income in 2Q17”
  • Lower debt service due to the monetary policy easing cycle, with benefits to household disposable income in 2017 and 2018
  • Likelihood of the savings rate declining by 1ppt from already exaggerated levels, even amid political uncertainty
    • "It would require a deep plunge in consumer confidence (to mid-2016 levels) to prevent the savings rate from declining from its very high levels in the coming quarters,” what’s not expected
• Conservative analysis show that consumption could increase as much as 0.9% in 2017 according to Santander’s set of hypotheses
  • “Therefore, we see room for our projection of +0.3% for consumption growth this year to absorb a negative shock from a deterioration of consumer confidence – as long as it does not collapse towards the historical lows seen in mid-2016”

To contact the reporter on this story: Leonardo Lara in Sao Paulo at llara1@bloomberg.net To contact the editors responsible for this story: Daniela Milanese at dmilanese@bloomberg.net Giulia Camillo

(Bloomberg) -- Brazil President Michel Temer should face formal charges from the Prosecutor-General’s Office from evidence of the JBS scandal, but lower house is very likely to bar a trial by the Federal Supreme Court, according to a report signed by Christopher Garman, Joao Augusto de Castro Neves, Filipe Gruppelli Carvalho and Djania Savoldi

• Lower house needs to approve the investigation request by a two- thirds margin and "given Temer’s base of support, and the growing backlash among politicians over these investigations, he is very likely to survive that vote," Eurasia says
• Still sees pension reform vote being delayed and only a stripped-down version being eventually approved
  • Expects political noise over next month or two, but sees conditions for Temer to advance his reform agenda outside of pension bill, which includes labor reform and "microeconomic reforms critical to attract private investments in heavily regulated sectors of the economy”
• NOTE: Temer Rides Out Brazil Crisis for Now as Allies Seek Status Quo

To contact the reporter on this story: Leonardo Lara in Sao Paulo at llara1@bloomberg.net To contact the editors responsible for this story: Daniela Milanese at dmilanese@bloomberg.net Giulia Camillo