| --- |
| title: "House Oversight: Estate Documents (Nov 12) (HOUSE_OVERSIGHT_014768)" |
| source: "House Oversight: Estate Documents (Nov 12)" |
| sourceUrl: "https://www.justice.gov/epstein" |
| date: "2026-01-01" |
| category: "House Oversight" |
| eftaNumber: "HOUSE_OVERSIGHT_014768" |
| ocrPages: 1 |
| ocrChars: 3795 |
| ocrElapsed: 0.0 |
| parseTier: "external-legacy" |
| engine: "engine undisclosed (ep-nov-12.greg.technology mirror)" |
| externalSource: "greg-ep-nov-12" |
| externalLicense: "not granted" |
| externalCredit: "ep-nov-12.greg.technology" |
| externalUrl: "https://ep-nov-12.greg.technology" |
| --- |
| |
| The role of fundamentals |
| From a purely mechanical perspective, we could stop the analysis here and choose those |
| currencies with better risk-reward prospects according to the metrics so far described. |
| However, in order to analyze carry trades with relatively short investment horizon, we |
| need to complement our analysis with our views on future exchange rates dynamics. |
| We expect US rates to continue moving higher and the USD to strengthen across the |
| board due to easier US fiscal policy and significant uncertainty regarding foreign policy. |
| In EM, we think LatAm is the region that will suffer the most in the new global scenario, |
| followed by Asia. We find EEMEA relatively more resilient to US driven shocks. We want |
| to avoid countries with high financing needs (i.e., high fiscal and current account |
| deficits). We also prefer trades with neutral commodity exposure. Since carry trades |
| tend to underperform when US rates are moving higher and the USD strengthens, we |
| want at least to avoid USD funded carry trades, crowded carry trades and currency |
| crosses highly exposed to the USD factor. Hedging the USD factor leaves us with the |
| pure carry exposure, which by being a price factor, is also related to standard measures |
| of risk, as well as idiosyncratic factors. |
| Best carry trade: Cherry picking among rotten cherries |
| Given our views, and focusing on those trades where ex-ante high carry is consistent |
| with ex-ante expected returns, we choose our best carry trades across EM and DM. |
| Since DM currencies offer very low carry vs the USD, there are not many attractive carry |
| opportunities in DM in a strong USD environment, so much so that the most attractive |
| carry proposition is simply to go long USD/JPY. Since this trade is mostly predicated on |
| a strong USD view and is being developed in other sections of this report we refer the |
| reader to those sections (please see: USD/JPY will the main beneficiary of Trump win, |
| FX: GOP sweep emboldens core USD/JPY view, Long EUR/JPYAsia: short JPY/KRW). |
| Therefore, we focus mostly on EM or EM/DM carry trades. |
| EEMEA: short EUR/RUB |
| We like selling EUR/RUB (spot 69.28, target 66.15, stop 71.02). We see EEMEA as |
| relatively more resilient to higher US rates, though with some heterogeneity within the |
| region. On the one hand, high current account deficit countries like Turkey or South |
| Africa should continue suffering from a re-pricing of risk. On the other hand, CEE |
| countries are expected to some more resilience. One currency we find particularly |
| attractive is the Russian ruble, which still offers an attractive risk-adjusted carry, |
| controlling for standard measures of risk such as implied volatility and maximum |
| drawdown. The outcome of the US election should remove some risk premium from |
| Russian assets as the geopolitical backdrop improves. Economic activity is expected to |
| pick up in 2017. A hawkish central bank, coupled with a favorable external position and |
| an energy-driven current account surplus will likely limit its exposure to a reversal in |
| capital flows. |
| On the geopolitical side, we expect Russian foreign policy to become more conciliatory |
| Chart 66: Oil prices are a major risk factor |
| 1.5 |
| 150 |
| Chart 67: Russia tends to be more market-friendly with lower oil |
| - Oil price, S/bbl |
| - 10y MA |
| Georgia |
| Ukraine |
| crisis |
| 1.0 |
| 100 - |
| - 100 |
| 50 - |
| 0.5 - |
| - 50 |
| Privatization, |
| Gaidar reforms |
| war |
| Start of |
| Yukos |
| Perestroika |
| case |
| Afganistan waterme |
| -RUB/(EUR,CAD,COP) Jan 4'13 = 100 |
| -RUB/EUR Jan 4'13 = 100 |
| 0.0 + |
| -Brent oil (RHS) |
| Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 |
| Source: BofA Merrill Lynch Global Research, Bloomberg |
| 0 |
| 0 |
| Sep. |
| Jan-84 |
| Source: BofA Merrill Lynch Global Research, Bloomberg |
| US-Russia |
| "Reset" |
| 11211 |
| Jan- |
| 38 |
| Global Rates, FX & EM 2017 Year Ahead | 16 November 2016 |
| Bankof America |
| Merrill Lynch |
| HOUSE_OVERSIGHT_014768 |
|
|
