The Winners and Losers from the Great Reflation - Global Macro Strategy Autumn 2013
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Global Macro Strategy
Autumn 2013
The Winners and Losers
from the
Great Reflation David Zervos
Chief Market Strategist
dzervos@jefferies.com
+1 212 323 7586
Jefferies LLCThe single most important driver for ALL global asset prices is the aggressive
and unprecedented moves in global central bank balance sheets
Total Assets of Major Central Banks ($ Trillion) US “Real” Monetary Base
18 15,000 0.25
16
12,000 0.2
14
12
9,000 0.15
10
8
6,000 0.1
6
4 3,000 0.05
2
0 0
'82 '86 '90 '94 '98 '02 '06 '10
0
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 M2 & Excess Reserves (LHS, $ Billion) M2 & Excess Reserves YoY Change (RHS)
FED ECB BOE BOJ BOC RBA PBOC SNB SRB RBI
Source: NCBs through both Bloomberg and Haver
Source: Bloomberg
Global Macro Strategy 2
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586Since 2008 there has been quite a lot of divergence in central bank
aggressiveness
Total Asset Levels of Major Central Banks Central Bank Total Assets as a % of GDP
450% 100%
90%
400%
80%
Indexed Value s in National Currency, 2008=100%
350%
70%
300%
60%
250% 50%
40%
200%
30%
150%
20%
100% 10%
0%
50% '08 '09 '10 '11 '12 '13
1/08 1/09 1/10 1/11 1/12 1/13
BOE BOJ FED ECB SNB PBOC
BOE BOJ FED ECB SNB BOC
For Both, Source: National Central Banks: balance sheets and GDP figures
Global Macro Strategy 3
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586The story for 2013 has been the BoJ’s commitment to catch up, and the ECB’s
reluctance to stay the course. This has played itself out most aggressively in
EURJPY and the relative performance of the Nikkei vs EStoxx
EURJPY Currency Change of Nikkei and Estoxx (Aug. 2012=100%)
135 190%
180%
130
170%
125
160%
120
150%
115
140%
110
130%
105
120%
100 110%
95 100%
90%
90 8/12 9/12 10/12 11/12 12/12 1/13 2/13 3/13 4/13 5/13 6/13 7/13 8/13 9/13 10/13
8/12 9/12 10/12 11/12 12/12 1/13 2/13 3/13 4/13 5/13 6/13 7/13 8/13 9/13 10/13
Nikkei Euro Stoxx
Source: Bloomberg
Global Macro Strategy 4
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586As we look across developed markets, GDP growth remains tepid and
inflation remains subdued – All developed market central banks will have to
remain highly accommodative for the foreseeable future
World Inflation (YoY %) Real GDPs (Jan 2008 = 100)
6.0 106
5.0 104
4.0
102
3.0
100
2.0
98
1.0
96
0.0
94
-1.0
92
-2.0
-3.0 90
'01 '03 '05 '07 '09 '11 '13 1/08 7/08 1/09 7/09 1/10 7/10 1/11 7/11 1/12 7/12 1/13
US Germany Japan UK France Italy Canada US France Germany Japan Italy
Source: OECD, NCBs, Bloomberg
Global Macro Strategy 5
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586In addition, while risk free short term real rates were headed lower through 2011, the recent moves suggest
policy has become much less accommodative. The same is true if we look at implied real-rates from
inflation protected securities.
Real Rates of Developed Countries 5 Year Implied Real Yields
6.0 4.0
5.0
3.0
4.0
3.0
2.0
2.0
1.0
1.0
0.0
0.0
-1.0
-1.0
-2.0
-3.0
-2.0
-4.0
-5.0 -3.0
'00 '02 '04 '06 '08 '10 '12 7/09 1/10 7/10 1/11 7/11 1/12 7/12 1/13 7/13
US Germany Japan UK US Germany Japan UK
Real Rates, Source: Bloomberg (2yr yields – 2 Year Annualized Headline CPI)
Implied Real, Source: Bloomberg (5yr yields – Breakeven Inflation)
Global Macro Strategy 6
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586The good news is that G3 central bankers are indicating that accommodation is here to stay, and more will
be forthcoming if needed. The bad news is that the market will confuse Fed tapering talk with tightening
talk. And talk is cheap, we should see balance sheet expansion from the ECB and increases from current
target expansion from the BoJ in last 2013, early 2014.
Good News Bad News
Fed
“We are relying on near-zero short-term interest rates, together with our forward “[Rates have risen because of] some excessively risky or leveraged positions unwound in
guidance that rates will continue to be exceptionally low--our second tool--to help the last month or two as the Federal Reserve communicated about policy plans. The
maintain a high degree of monetary accommodation for an extended period after asset tightening associated with that is unwelcome but then on the other hand at least there
purchases end, even as the economic recovery strengthens and unemployment is the benefit of perhaps reducing some of those positions in the market."
declines toward more-normal levels. In appropriate combination, these two tools can (Bernanke) July 27, 2013
provide the high level of policy accommodation needed to promote a stronger
economic recovery with price stability. ” “The other factor which was at play was an unwinding of excessively risky and leverage
(Bernanke) July 17, 2013 positions in the markets. And insufficiencies of liquidity in some cases meant those
unwindings led to larger reactions in prices and rates than might otherwise have
“The Committee today reaffirmed its view that a highly accommodative stance of occurred.“
monetary policy will remain appropriate for a considerable time after the asset purchase (Bernanke) September 18, 2013
program ends and the economic recovery strengthens”
FOMC Statement Sept18, 2013
ECB
“In this context, the Commission and the European Investment Bank (EIB) are looking “What has proved to be a positive strategy is to have this steady-hand approach,”
into possible ways to support SME financing, notably in the form of joint risk-sharing (Nowotny) Aug 22, 2013
instruments. These would combine the lending capacity of the EIB and the European
Investment Fund as well as resources from national promotional banks to finance “the effectiveness of loose monetary policy decreases with the duration of the low
special activities in EU priority areas.” interest rate period and the financial stability risks grow, the exit is getting more
July 8, 2013 difficult," (Weidmann) Aug 29,2013
“Given the overall subdued outlook for inflation extending into the medium term, the “there are risks, if interest rates are too low for too long," (Asmussen) Sept 4,2013
ECB’s Governing Council expects the key ECB interest rates to remain at present or
lower levels for an extended period of time” “keeping monetary policy rates too low for too long may encourage excessive risk-
(Draghi) Sept 16, 2013 taking in some markets” (Mersch) Sept 6,2013
BoJ
“At this point, under the current commitment, I can’t deny the possibility that the Bank “[A sales tax hike could cause an issue]. Japan's fiscal condition is in a severe state. If
of Japan will be influenced by external factors such as market expectations and will be trust in the country's finances is lost, we may see a rise in long-term interest rates
forced to respond in such a way,” (Kiuchi) Sept 18, 2013 inconsistent with economic and price moves” (Morimoto) Aug 29,2013
“The Bank will continue with quantitative and qualitative monetary easing, aiming to
achieve the price stability target of 2 percent, as long as it is necessary for maintaining
that target in a stable manner.”
BoJ Meeting Minutes, Sept 4, 2013
Source: ECB, BoJ, and FED
Global Macro Strategy 7
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586And while there are surely long term developed market inflation risks associated with this massive
monetary expansion, markets seem disconnected on inflation expectations – Gold suggests much higher
long term inflation vs 5y5y breakevens which suggest lower long-term inflation risks. Gold is far too
pessimistic while 5y5y looks to be too optimistic. But there is no question, over the long-run, we will have
significant inflation issues in developed markets.
Inflation Adjusted Gold Prices (indexed to 1983) Fed 5y5y Breakeven (%)
4.0
900 16
800 14
3.5
700 12
600 10
3.0
500 8
400 6
2.5
300 4
200 2
2.0
100 0
0 -2
'70 '75 '80 '85 '90 '95 '00 '05 '10 1.5
'00 '02 '04 '06 '08 '10 '12
Inflation Ajusted Gold Prices $ (LHS) US YOY Inflation % (RHS)
Source: Bloomberg
Global Macro Strategy 8
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586Near term, as developed market central banks push the printing press pedal to the metal, force risk taking
and generate increased real growth potential, EMG will become the weak link – remember the last time
Japan went on a devaluation tear by using a combination of accommodative fiscal and monetary polices.
Japan’s Fiscal Expansion Post the 1995 Yen Lows Dollar/Yen & Japan’s Monetary-Base
150 37 160 6,000
140 36
5,500
140
130 35
5,000
120 34
120
110 33
4,500
100 32
100
4,000
90 31
80 30
'92 '93 '94 '95 '96 '97 '98 80 3,500
USDJPY (LHS) '90 '92 '94 '96 '98
1988-1994 'Avg Annual Gov't Spending/GDP' (RHS)
1995-2001 Avg 'Annual Gov't Spending/GDP' (RHS) USDJPY (LHS) Japan Montary Base (RHS, NSA ¥10 Bln)
For Both, Source: National Central Banks: balance sheets and GDP figures
Global Macro Strategy 9
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586It did not end well for EMG. And take a look at the relative value of SPX to
MXEF - EMG looks VERY expensive!!
SPX/MXEF Ratio (1988=1)
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
'88 '93 '98 '03 '08 '13
Source: Bloomberg, MXEF is a free float weighted emerging market equity index.
Global Macro Strategy 10
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586Who will be the winners and losers in the Great Reflation?
There Are Two Types of Assets
Non-Printable Printable
• Equity Capital • Cash
• Real Estate • Low-Yielding Fixed Income Instruments
• Commodities
• Distressed Fixed-Income Assets
In a world where the central banks drive real risk free rates lower, and the portfolio balance channel forces risk taking, two things can
happen. The risk taking generates positive real returns on capital, real growth and real job creation; or, the risk taking does not
generate positive real returns on capital, real growth and real job creation. For those who believe in a future real business cycle, there
will be positive returns. Those folks should own equity capital, real estate, and distress. For those who believe the business cycle is
dead, there will be negative returns. Those folks should own commodities such as precious metals. No one should own printable assets
- anyone who does so will be financially repressed.
Winners Losers
• Nikkei • Cash
• S&P • Low Coupon Bonds
• DAX • Emerging Market Assets
• Real Estate
• Distressed fixed-income assets
Global Macro Strategy 11
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586While Fed taper timing and volatility in Japan will make for choppy trading conditions, our baseline view remains the same.
Central banks will be slow to raise rates, inflation risks will manifest themselves over the long run and real assets will reflate.
Our favorite levered trades are long SPX and NKY PLUS a long position in 2016 Eurodollar futures - EDH6-EDZ6. This is a
combination of green and blue Eurodollars hence we refer to the trade as Spoo and Chartruese/NKY and Chartreuse. For every
100m in Spoo or NKY, you hedge with a long position in Eurodollars of 100k/01.
Spoos & Chartreuse Trade Strategy (YTD) NKY & Chartreuse Trade Strategy (YTD)
20% 40%
18%
35%
16%
30%
14%
25%
12%
20%
10%
15%
8%
10%
6%
5%
4%
0%
2%
0% -5%
1/13 2/13 3/13 4/13 5/13 6/13 7/13 8/13 9/13 10/13 1/13 2/13 3/13 4/13 5/13 6/13 7/13 8/13 9/13 10/13
For Both, Source: Bloomberg, Jefferies - Chartreuse Spans the contracts EDH6 to EDZ6; they were the Blue Eurodollar
contracts from Jan 1, 2013
Global Macro Strategy 12
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586US equities are not overvalued.
US Equity Market Cap/GDP Real Value of US Equities (in 2013 dollars)
200%
16,000 2,400
180%
14,000 2,100
160%
12,000 1,800
140%
10,000 1,500
120%
100% 8,000 1,200
80%
6,000 900
60%
4,000 600
40%
2,000 300
20%
0% 0 0
'27 '37 '47 '57 '67 '77 '87 '97 '07 '27 '37 '47 '57 '67 '77 '87 '97 '07
Current Value = 129% DOW (LHS) SPX (RHS)
Source: Bloomberg, Fed, Jefferies.
Global Macro Strategy 13
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586The US is definitely not Japan.
US Price Levels (1990=100) Japan Price Levels (1980=100)
210 240
200
220
190
180
200
170
160 180
150
160
140
130
140
120
110 120
100
100
90 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12
CPI (1990=100) 3% Annual Inflation CPI (1980=100) 2.5% Annual Inflation
Source: Bloomberg, Fed, Jefferies.
Global Macro Strategy 14
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586The future FOMC make-up adds complications.
Current Make-up /
2014 2015 2016
2013
Bernanke Yellen Yellen Yellen
Yellen Tarullo Tarullo Tarullo
Raskin Stein Stein Stein
Board Members Powell Vacancy Vacancy Vacancy
Stein Vacancy Vacancy Vacancy
Tarullo Vacancy Vacancy Vacancy
Vacancy Vacancy Vacancy Vacancy
Bullard, STL Fisher, DAL Evans, CHI Vacancy, CLE
Federal Reserve
Evans, CHI Kocherlakota, MIN Lacker, RIC Rosengren, BOS
Bank Presidents,
George, KC Pianalto/, CLE Lockhart, ATL Bullard, STL
FOMC Voting
Rosengren, BOS Plosser, PHI Williams, SF George, KC
Members
Dudely, NYC Dudley, NYC Dudley, NYC Dudley, NYC
Source: Federal Reserve.
Global Macro Strategy 15
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586QE policies have been asymmetrically distributed.
US Gini Coefficient
0.47
0.45
0.43
0.41
0.39
0.37
0.35
0.33
'47 '50 '53 '56 '59 '62 '65 '68 '71 '74 '77 '80 '83 '86 '89 '92 '95 '98 '01 '04 '07 '10
Tightening Fed Monetary Policy (noted from 1954 and after) US Gini Coefficient
Source: Bloomberg, US Census.
Global Macro Strategy 16
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586Income has stayed the same for the upper class, but has fallen for the middle
and lower-tier earners.
US Real Income Increases since 1967, by Income Cohort
100%
80%
60%
40%
20%
0%
'68 '72 '76 '80 '84 '88 '92 '96 '00 '04 '08 '12
Tightening Fed Monetary Policy (noted from 1954 and after) Cohort of Bottom 40% Earners: Mean Income
Cohort of Top 40% Earners: Mean Income Cohort of middle 20% of Earners: Mean Income
Source: US Census.
Global Macro Strategy 17
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586The wealth distribution has also widened sharply.
US Household Wealth Growth Since 1990 by Cohort
120%
100%
80%
60%
40%
20%
0%
-20%
'90 '93 '96 '99 '02 '05 '08 '11
25-50 Percentile 50-75 Percentile 75-90 Percentile 90-100 Percentile
Source: US Census.
Global Macro Strategy 18
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586Big house, low rate - small house, high rate.
Average Original Loan Size ($K) by Net Coupon(%) (Fannie & Freddie 30-yr, Conforming and Non-Conforming)
350
300
250
200
150
100
50
0
2.50 3.00 3.50 4.00 4.50 5.00 5.25 5.50 5.75 6.00 6.25 6.50 6.75 7.00 7.50
Source: Five Bridges Advisors.
Global Macro Strategy 19
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586Recently the jumbo-mortgage rate has dipped below the conventional
mortgage rate.
US 30-yr Mortgage Rates
8.5 0.20
8.0 0.00
7.5 -0.20
7.0 -0.40
6.5 -0.60
6.0 -0.80
5.5 -1.00
5.0 -1.20
4.5 -1.40
4.0 -1.60
3.5 -1.80
3.0 -2.00
'08 '10 '12
Spread (Conventional-Jumbo, RHS, %) 30-Year Jumbo Rate (%, LHS) 30-Year Fixed Rate (%, LHS)
Source: MBA and Bankrate.com.
Global Macro Strategy 20
Jefferies LLC
David Zervos – Chief Market Strategist – dzervos@jefferies.com - +1 212 323 7586Disclosures
THIS MESSAGE CONTAINS INSUFFICIENT INFORMATION TO MAKE AN INVESTMENT DECISION.
Please contact your Jefferies representative for copies of the most recent research reports on individual companies.
This material has been produced by one of the following Jefferies Group LLC ("Jefferies") group companies:
India: Jefferies India Private Limited, which is licensed by the Securities and Exchange Board of India as a Merchant Banker (INM000011443) and a Stock Broker with Bombay Stock Exchange Limited
(INB011438539) and National Stock Exchange of India Limited (INB231438533) in the Capital Market Segment; located at 42/43, 2 North Avenue, Maker Maxity, Bandra-Kurla Complex, Bandra (East)
Mumbai 400 051, India; Tel +91 22 4356 6000.
Japan: Jefferies (Japan) Limited, Tokyo Branch, which is a securities company registered by the Financial Services Agency of Japan and is a member of the Japan Securities Dealers Association; located at Hibiya
Marine Bldg, 3F, 1-5-1 Yuraku-cho, Chiyoda-ku, Tokyo 100-0006; telephone +813 5251 6100; facsimile +813 5251 6101.
Singapore: Jefferies Singapore Limited, which is licensed by the Monetary Authority of Singapore; located at 80 Raffles Place #15-20, UOB Plaza 2, Singapore 048624, telephone: +65 6551 3950.
Hong Kong: Jefferies Hong Kong Limited, which is licensed by the Securities and Futures Commission of Hong Kong with CE number ATS546; located at Suite 2201, 22nd Floor, Cheung Kong Center, 2
Queen's Road Central, Hong Kong.
United Kingdom: Jefferies International Limited, which is authorized and regulated by the Financial Services Authority; registered in England and Wales No. 1978621; registered office: Vintners Place, 68 Upper
Thames Street, London EC4V 3BJ; telephone +44 (0)20 7029 8000; facsimile +44 (0)20 7029 8010.
United States: Jefferies LLC headquartered at 520 Madison Avenue, New York, NY 10022.
--------------------------------------------------------------------------------
This material is a marketing communication and is not and should not be construed as investment research or a research report prepared by a research analyst. Any views portrayed in this material may differ
from those of the Research Department. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and is not subject to any
prohibition on dealing ahead of the dissemination of investment research. Jefferies has employed appropriate expertise, and is of the belief that the material is clear, fair and not misleading. The information
set forth herein was obtained from sources believed to be reliable, but has not been independently verified by Jefferies. Therefore, except for any obligation under applicable rules we do not guarantee its
accuracy.
This material is being furnished for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to purchase any security, future or other financial instrument or product. It
is not intended to form the basis of an investment decision and has not been verified. Jefferies makes no recommendation or representation as to, and accepts no responsibility or liability for, the accuracy or
completeness of the information contained herein. The information and any opinions contained here are as of the date of this material and, if applicable, the time indicated, and Jefferies does not undertake
any obligation to update the information. All market prices, data and other information are not warranted as to the completeness or accuracy and are subject to change without notice. Past performance is
not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income
derived from, certain investments. The price and value of any investments referred to herein and the income from them may fluctuate. Any simulations, projections, valuations and statistical analyses
contained herein have been provided to assist the recipient in the evaluation of the matters described herein; such simulations, projections, valuations and analyses may be based on subjective assessments
and assumptions and may utilise one among alternative methodologies that produce differing results; accordingly, such simulations, projections, valuations and statistical analyses (historical or otherwise) are
not to be viewed as facts and should not be relied upon as an accurate representation of future events. Any market views or opinions expressed herein are those of the individual sender, except where such
views or opinions are expressly attributed to Jefferies or a named individual. Market views and opinions are current opinions only; Jefferies and the individual sender accept no responsibility to update such
views and opinions or to notify the recipient when they have changed.
Jefferies and its affiliates, officers, directors and employees may from time to time hold long or short positions in, buy or sell (on a principal basis or otherwise), or act as market maker in, securities, derivatives,
futures or other financial instruments or products related to matters discussed herein and may make trading decisions that are different from or contrary to any of those which may be discussed. Jefferies is
not an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction, and is not providing any advice as to any such matter to the recipient. The recipient of this material should take their
own independent advice with respect to such matters. You should be aware of the risks of trading equities, fixed income, foreign exchange or derivative instruments or in non-liquid or emerging market
investments. Derivatives generally involve leverage and are therefore more volatile than their underlying cash investments. Your capital may be at risk. Products and services mentioned herein may not have
regard to your specific investment objectives, financial situation or particular needs.
This material may contain information obtained from third parties, including ratings from credit ratings agencies such as Standard & Poor's. Reproduction and distribution of third party content in any form is
prohibited except with the prior written permission of the related third party. Third party content providers do not guarantee the accuracy, completeness, timeliness or availability of any information,
including ratings, and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such content. Third party content providers
give no express or implied warranties, including, but not limited to, any warranties of merchantability or fitness for a particular purpose or use. Third party content providers shall not be liable for any direct,
indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including lost income or profits and opportunity costs) in connection with
any use of their content, including ratings. Credit ratings are statements of opinions and are not statements of fact or recommendations to purchase, hold or sell securities. They do not address the suitability
of securities or the suitability of securities for investment purposes, and should not be relied on as investment advice.
Global Macro Strategy
Jefferies LLCDisclosures
OPTIONS ARE NOT SUITABLE FOR ALL INVESTORS.
Please ensure that you have read and understand the current options risk disclosure document before entering into any option transaction. The options disclosure document can be accessed at the following
web address: http://optionsclearing.com/publications/risks/riskchap1.jsp.
For additional information, please contact Mike George, Head of Equity Derivative Trading at 212 284-3499 or Jason Roelke, Head of New York Flow Sales at 212 284-2454.
In the United Kingdom and European Economic Area this material is issued and/or approved for distribution by Jefferies International Limited and is intended for use only by persons who have, or have been
assessed as having, suitable professional experience and expertise, or by persons to whom it can be otherwise lawfully distributed. In the member states of the European Economic Area this material is
for distribution only to persons who are "qualified investors" within the meaning of article 2(1)(e) of The Prospectus Directive. For Canadian investors, this material is intended for use only by
professional or institutional investors. None of the investments or investment services mentioned or described herein is available to other persons or to anyone in Canada who is not a "Designated
Institution" as defined by the Securities Act (Ontario). For investors in the Republic of Singapore, this material is intended for use only by accredited, expert or institutional investors as defined by the
Securities and Futures Act and is distributed by Jefferies Singapore Limited which is regulated by the Monetary Authority of Singapore. In Japan this material is issued and/or approved for distribution
by Jefferies (Japan) Limited to institutional investors only. In Hong Kong, this material is issued and/or approved for distribution by Jefferies Hong Kong Limited and is intended for use only by
professional investors as defined in the Hong Kong Securities and Futures Ordinance and its subsidiary legislation. In India this material is issued and/or approved for distribution by Jefferies India
Private Limited. In Australia this information is issued solely by Jefferies International Limited and is directed solely at wholesale clients within the meaning of the Corporations Act 2001 of Australia (the
"Act") in connection with their consideration of any investment or investment service that is the subject of this material. Any offer or issue that is the subject of this material does not require, and this
material is not, a disclosure document or product disclosure statement within the meaning of the Act. Jefferies International Limited is authorized and regulated by the Financial Services Authority
under the laws of the United Kingdom, which differ from Australian laws. Jefferies International Limited has obtained relief under Australian Securities and Investments Commission Class Order
03/1099, which conditionally exempts it from holding an Australian financial services licensce under the Act in respect of the provision of certain financial services to wholesale clients.
Recipients of this material in any other jurisdictions should inform themselves about and observe any applicable legal requirements in relation to the receipt of this material. Products and services mentioned
herein may not be eligible for sale or available to residents of certain countries or certain categories of investors. The information contained herein does not constitute an offer or solicitation to buy or
sell any security, currency, investment fund or other product, service or information to anyone in any jurisdiction in which an offer or solicitation is not authorized or cannot legally be made or to any
person to whom it is unlawful to make an offer or solicitation.
Reproduction or redistribution of this material without the written permission of Jefferies is expressly forbidden.
David Zervos
Chief Market Strategist
dzervos@jefferies.com
+1 212 323 7586
Ryan Siegal
Analyst, FI Strategy
rsiegal@jefferies.com
+1 212 323 7649
Global Macro Strategy
Jefferies LLCYou can also read
