EFTA00677829.pdf

From: Tazia Smith cO To: jeevacation@gmail.com Cc: Paul Morris , Subject: your short yen position presently +$24k (spot ref 104.30) [Cl Date: Thu, 19 Dec 2013 15:39:08 +0000 Inline-Images: unnamed; unnamed(1) Vahe Stepanian Classification: Confidential Good Morning Jeffrey - Posting you that your 101 strike USDJPY zero-cost triple one touch position is presently --$24k bid. Post Fed and then yen sell-off, DB FX Research reiterates expectations of USDJPY at 115 at end-2014. The commentary below is actually on expectations for asset flows from forthcoming investment tax exemptions in Japan beginning in January. I thought you might find the quick comment of interest. We'd reiterate a view that matches yours: bearish yen, bullish Japanese equities (buy on dips). You saw a basket of single-names we highlighted in our email yesterday. Best Regards, Tazia — Forwarded by Tazia Smith/db/dbcom on 12/19/2013 10:20 AM ---- From: 'Taisuke Tanaka. Deutsche Securities Inc." To: Tazia Smith/db/dbcom@DBAMERICAS. Date: 12/18(201312:36 AM Subject: DEutsche JApan View on FX - DB. yen-bear. talks on NISA Deutsche Securities Inc. - Fixed Income Research DEutsche JApan View on FX - DB, yen-bear, talks on NISA 18 December 2013 (1 page/ 117 kb) Download the complete report Reason we have not stressed NISA's yen depreciation impact The Japanese version of the Individual Savings Account system, known as NISA, will come into force in January. Tax exemptions will be granted to new investments of up to )ilm per year for a maximum of five years, thus allowing for as much as 445m per person. Market participants have frequently expressed an expectation that this money will flow to the stock markets and foreign securities, buoying share prices and sending the yen downward. However, we have not put much emphasis on this point despite our consistent bearishness on the yen. Let us consider a simple calculation. Banks and securities brokers have competed fiercely to attract NISA accounts, and applications for 3.58m accounts had been received as of 1 October. The government expects this to grow to 15m accounts and V25trn (i1.67m per person) in the seven years to 2020. Let us assume that relatively active investors open 5m accounts worth V4tm (compared to maximum possible )15tra) next year. EFTA00677829 Recent individual investor flows suggest that they prefer domestic stocks to foreign securities. If 25% of the NISA funds are allotted to foreign securities such as investment trusts, it will come to V1trn. This includes switching from other foreign securities. If half is new money, the total would be V500bn or a monthly average of over V40bn. It would be inappropriate to highlight a yen- weakening impact for this scale of investment. Of course, if the environment continues to encourage risk-taking activity even without NISA, investors may invest more heavily and keenly in the NISA program. However, most Japanese investors including individuals have been net sellers of foreign securities and domestic stocks even amid the sharp drop in the yen and equity rally under the "Abe market" spurred by the economic policies of Prime Minister Shinzo Abe. We cannot imagine a 180-degree turnabout in investor behavior on the basis of NISA. Our belief that the yen will decline in value is based on the strength of the US economy, the BoJ's "easing of a new dimension", overseas yen carry trades, and Japanese buying of foreign currencies on dips. Regardless of NISA, we reiterate our USD/JPY forecast of V115 at end-2014 and V120 at end-2015. Still, we do not want to be misunderstood. Setting aside the overheated speculation in the markets, we do not doubt that NISA will support a depreciation in the yen and rise in equity markets going forward. Taisuke Tanaka Click/ copy this link into a browser to access the report: If you have any difficulty accessing the report. please forward this email with the word 'PDF' in the subject line to GMResearch.Subscriptionsiff,db.com. After 90 days you can access the report on our web site: htlp:llgm.db.com. You have received this mail because you have subscribed to DEutsche JApan View on FX For changes to your current research subscription. visit bunranaidb comksm or email S•MRacnarrh Suhumtionss 'db com. Please refer to the a licable le al disclaimers in the full report. yr Tazia Smith Director I Key Client Partners - US Deutsche Bank Securities Inc Deutsche Asset 8 Wealth Management 345 Park Avenue. 26th Floor Email This communication may contain confidential and/or privileged information. If you are not the intended recipient (or have received this communication in error) please notify the sender immediately and destroy this communication. Any unauthorized copying, disclosure or distribution of the material in this communication is strictly forbidden. Deutsche Bank does not render legal or tax advice, and the information contained in this communication should not be regarded as such. EFTA00677830