HOUSE_OVERSIGHT_014397

From: Ens, Amanda [

Sent: 11/17/2016 8:55:12 PM To: jeffrey E. [jeevacation@gmail.com]; Richard Kahn nnn Subject: USDJPY testing 110. Buy Japan upside

Attachments: image001.png; image002.png; image003.png; image004.jpg; image00S.jpg; image006.jpg; image007.jpg; image008.png; image009.jpg; image010.jpg; image011.jpg; image0O12.gif; Nikkei to 20000.pdf; Japan - Ready for ignition.pdf; Japan Macro Watch.pdf

Importance: — High

We can also discuss single stock and Topix banks index (TPNBNK) ideas

The Republican sweep means higher USD and yields are a foregone conclusion. We see USDJPY reaching 120 next year and Japanese reflation, bullish for Japanese equities, particularly the banks.

Huge focus on Banks/Financials post Trump election, they're the big winners.

The Banking sector is the main beneficiary of higher rates/less regulation overhang.

Investors are still underweight Japan. Especially in financials, so the move can have legs

Valuation still at depressed levels. Japanese Banks are cheap versus their peers.

Having said that, uncertainty still there so buying calls and call spreads makes sense. Some investors are still skeptical. Instead of building a large cash position, we believe options are a better play in case the market reverses and initiates a risk off move again.

VVVV WV

-BAML expects USDJPY 115-120 by end of 2017. NKY target of 20,000 (12% upside)

-BOJ’s intentions to refrain from further flattening of local yield curve positive for Banks and Insurers.

-DXJ carries a 12% weight in banks whereas NKY is only 1.07% and even TPX is only 8.55%.

-Positioning light. DXJ shares outstanding at 3year lows as foreigners have net sold $52bIn of JP equities ytd. -DXJ skew remains flat. 2m 25d Put /Call skew at 19%tile over the past year.

Japan Investment Strategy, Japan Econ Outlook and Japan Macro Watch attached

DXJ 2m 25d Put/Call over the past year.

r f #00 Ratio : DXJ Mi (1.) Deltq Ivol (25 Put 2 Months LIVE - LIVE Bloomberg)

-Low: --L.L1/1..

HOUSE_OVERSIGHT_014397