Epstein Secrets

organ EM equity portfolio inflows Left axis shows EM equity portfolio flows in Sbn. 200 150 100 0 -50 -10a 05 06 07 08 09 10 It Source: IF. Blomberg. EM equity nortfolioflows $bn 60% 50% 40% 30% 20% 10% 0% -10% MSCI Skin ISCI Wald -20% 12 More details in ... US Credit Markets Outlook

than trend shifts. • Last week, we raised our USD/JPY forecasts from a 2013 range of 75.85 to a range of 80-90. We have always been sceptical that the Bank of Japan would be able to drive up Japanese inflation and drive down real yields versus the US to power USD/JPY higher throughout 2013, but there is no deny

e appreciation of the yen, once again pushing the Bank of Japan’s (BOJ’s) 2% inflation target further into the futu

u of Labor Statistics BOE: Bank of England BOJ: Bank of Japan CAGR: compound annual growth rate CDS: credit de

r Es a 4 oe Ses 2 Fea f = 2 22 3 sf SE a te ge < = 2 zs eer 8 = = 3 wn New Zealand Data as of December 31, 2016. Source: Investment Strategy Group, Bloomberg. Czech Republic South Africa 60 | Goldman Sachs | JANUARY 2017 HOUSE_OVERSIGHT_014593 --- PAGE BREAK --- incorporates this view, as we are neutra

CY17 cY18 CY16 CY17 cY18 m@BofAML m= Consensus (Bloomberg, as of 15 Nov 2016) Source: BofA Merrill Lynch f

d 1.9% in CY16 (Chart 13). One explanation is that private consumption is simply being underestimated in demand- side GDP statistics: researchers at the Bank of Japan recently produced experimental supply-side estimates of GDP that were significantly higher than existing expenditure- side statistics. We find the Bo

75 70 65 60 55 50 1/1/2010 5/1/2011 8/4/2012 = 1/1/2014) 5/1/2015 = 9/1/2016 Source: BofA Merrill Lynch Global Research true against the JPY given the Bank of Japan is pegging 10y JGB yields at zero. We are cognizant of the possibility that the willingness of Japanese investors — who have already bought record am

ance-decline line recently signaled for tactical USD strength and would turn outright bullish with a trend line break and new index highs. Chart 79: Bloomberg US dollar index, weekly chart with USD breadth measures MEBDXY Index - Last Price MISMAVG (200) on Close (BBDXY) LI9L47 Resistance: 1255 | A af" — ql a

e: BofA Merrill Lynch Global Fund Manager Survey, Bloomberg. As a reminder, the FMS Cash Rule works as follow

last week’s biggest losers were Korea’s KOSPI and India’s NIFTY, which each returned -0.8% week-over-week. In Japan, the Nikkei fell 0.3%. On Friday, the Bank of Japan (BoJ) left its monetary policy unchanged—it will continue to control the yield curve via its negative benchmark rate and its asset purchasing program

osite —No-change line 35 08 09 10 11 12 Source: Bloomberg, UBS CIO, as of September 2012 Note: Past perfor

Foreign Exchange We remain underweight the Japanese yen. The Japanese economy continues to weaken against its peers, leading to rising pressure for the Bank of Japan to engage in further quantitative easing. We have closed our preference for the Canadian dollar following its recent strength, and therefore close ou

1 1 1 1 1 i i 5 10 15 20 Source: J.P. Morgan, Bloomberg. See blue box on page 2 for description. www.mo

lar to QE itself. Beyond that, this is another small step towards perceptions that monetary policy is no longer independent from fiscal policy, like the Bank of Japan’s joint statement with two government ministers last month. Nobody knows the tipping point at which these perceptions feed into much higher inflation e