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October 2011 October 2011 FX and Macro Outlook John Shin +1 646 855 9342 FX Strategist MLPF&S [email protected] G10 FX: EUR lower near term to 1.28 in 2012Q1, then 1.40 end-12 EM FX: Mixed forecasts, with CNY higher Macro: US Outlook, FOMC, sovereign debt Follow: European growth picture, oil, further US politics Trading ideas and investment strategies discussed herein may give rise to significant risk and are not suitable for all investors. Investors should have experience in FX markets and the financial resources to absorb any losses arising from applying these ideas or strategies. BofA Merrill Lynch does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. 11086616 Refer to important disclosures on page 35-38. 1 October 2011 Key FX, rates and macro views Shocks…and reactions to shocks Now… slowdown in the US Still… sovereign debt worries in Europe And oil (Commodities) Contrasting central banks and policymakers We look for the Fed to stay on hold until 2014 We also expect the ECB to cut rates – after hiking rates earlier this year Core drivers in previous ECB hikes: headline (ECB) versus core inflation (Fed) We expect EUR-USD to fall short-term below 1.28, then up to 1.40 Europe sovereign debt worries, ECB rate cuts, no near-term QE3 US fiscal policy has different effects over time In general, our USD forecasts are mixed and ambivalent 2 Fed balance sheet worry October 2011 Fed balance sheet and bank reserves tr 3.0 QE2 2.5 Balance Sheet Reserv e Balances 2.0 However, most “money printing” winds up in the form of excess bank reserves “Monetarist” case is intuitive, but not a driver of our short-term and mediumterm inflation views 1.5 1.0 QE2 has been a huge impetus across all markets, FX, equities, rates, commodities 0.5 0.0 2003 Markets are worried about inflation because of massive Fed balance sheet expansion 2004 2005 2006 2007 2008 2009 2010 2011 Fed balance sheet is a particular point of contention for EM FX Source: US Bureau of Labor Statistics and BofA Merrill Lynch Global Research 3 USD-JPY: Crisis Currency October 2011 Stronger correlation to US rates USD-JPY % 130 4.5 125 120 USD-JPY (left) 4.0 2y r US-JP spread (right) 3.5 115 3.0 110 105 2.5 100 2.0 95 1.5 90 1.0 85 0.5 80 75 Jan-07 0.0 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Hard to move away from US interest rates for behavior in USD-JPY We still see rate support for a higher USD-JPY, but over longer time Fed implies rate spreads not yet moving in USDfavorable direction Economy has been doing years of QE and fiscal deficits, showing difficulty in tracing policy impacts directly to currency Source: Bloomberg and BofA Merrill Lynch Global Research 4 Forecast: Oil is U-shaped October 2011 Our oil team looks for supply issues 140 Brent crude oil prices $/bbl 120 100 80 60 40 Still odds oil could briefly break through $140/bbl over near-term Their base case assumes Libya generally offline for next few months, but without other severe disruptions Quarterly forecasts for oil are 102/104 (brent) and 88/94 (WTI) Old rule of thumb: $10/bbl means 0.5pp fall in GDP 20 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Source: BofA Merrill Lynch Global Research; see Global Energy Weekly, 19 August 2011 5 US Employment: Slow comeback October 2011 700 Joblessness: the key issue Years of 200K-like monthly job growth need to fill in excess capacity Apr 1991 - Feb 2001: 24m jobs Breakeven is not zero, it is more around 100K k Dec 2001 - Nov 2007: 7m 500 Unemployment generally used to envision “excess capacity”/”output gap” 300 100 -100 Payrolls are, in some sense, the “flow” out of the “stock” of unemployment -300 July 1990 - Mar 1991: -1.3m Mar 2001 - Nov 2001: -1.6m -500 -700 Dec 2007 - Jun 2009: -7.4 m -900 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Feeds into inflation and also consumer spending; majority of consumption “hand to mouth” Source: Bureau of Labor Statistics and BofA Merrill Lynch Global Research 6 US recession chance: 40% October 2011 US Consumption still a large share of economy Consumption is still exceptionally high, and provides small scope for growth %/GDP 72 70 Latest Philadelphia Fed readings are one sign of concern 68 66 We argue recession odds are 40%: still not our base case, but a growing possibility 64 62 60 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Source: Bureau of Economic Analysis and BofA Merrill Lynch Global Research 7 Worry about global downturn October 2011 Global manufacturing PMIs 65 60 55 50 US 45 CH UK 40 GE 35 PMIs not always accurate for overall economy, but synchronized nature of downturn is worrisome Markets have always looked at US PMI, but China PMI now gathering substantial attention Such “forward looking” data continue to drive sentiment IT 30 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Source: BofA Merrill Lynch Global Research 8 G10 Growth still favoring… China October 2011 Relative growth is the key story in G10 2010 2011 2012 US 3.0 1.6 1.8 Euro area 1.7 1.6 0.8 UK 1.4 1.1 1.6 Japan 4.0 -0.5 2.7 Canada 3.2 2.5 2.4 Australia 2.7 2.0 4.3 NZ 1.5 1.4 4.5 Switzerland 2.7 1.9 0.5 Norway 2.1 2.5 2.7 Sweden 5.4 4.3 2.1 China 10.3 9.3 9.0 Our US Economics team expects rather weak growth in 2011-12 Even within Europe, growth is very asymmetric, and focused on the core UK still to be hampered by real effects of fiscal consolidation Japan disaster has negative GDP impact in 2011, with positive reversal in 2012 China remains a key EM development for all markets to watch Source: BofA Merrill Lynch Global Research, Bloomberg 9 Inflation: Price pressures October 2011 Inflation and core inflation % y -oy 16 14 12 CPI %y oy 10 Core CPI %y oy 8 Informally, the Fed has an inflation target of around 2.25% (not super precise) Inflation is generally seen as modeled by two things: excess capacity and inflation expectations “Core” is preferred measure as total very noisy, difficult to “chase”, and moved sharply by short-term factors 6 4 2 0 Politically, “core” is becoming harder to defend -2 -4 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 Source: Bureau of Labor Statistics and BofA Merrill Lynch Global Research 10 October 2011 Inflation expectations still moderate TIPS imply contained inflation % 3.5 UMich survey shows little shifts % 5.0 3.0 4.5 2.5 4.0 2.0 3.5 1.5 3.0 1.0 2.5 0.5 2.0 0.0 May -07 Nov -07 May -08 Nov -08 May -09 Nov -09 May -10 Nov -10 May -11 Source: BofA Merrill Lynch Global Research, Bloomberg 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Source: BofA Merrill Lynch Global Research, Bloomberg Inflation expectations are the other crucial factor for inflation Policymakers put more weight on market-derived expectations, however Inflation expectations have been responding to macro outlook 11 Fed: looking at the “Twist” October 2011 Distribution of maturities in Fed’s portfolio 290 $bn Current Fed portfolio has duration of around 75 months So additional policy would well extend the maturity of the portfolio 270 250 230 Still not clear its effectiveness, given current low longer term rates 210 190 170 150 0 -1½ 1½ -2½ 2½-4 4-5½ 5½-7 7-10 10-30 Source: BofA Merrill Lynch Global Research 12 US deficit risks October 2011 Small playing field $bn The US stands alone in worsening Composition of US federal outlays 0 1400 1200 -2 1000 -4 800 -6 600 -8 400 -10 200 -12 0 2005 2006 social and income security 2007 2008 medicare+health defense Source: BofA Merrill Lynch Global Research , Bloomberg 2009 interest 2010 all others US UK Eurozone Germany France 2010 2011 Italy 2012 Source: CBO, BofA Merrill Lynch Global Research, Bloomberg US deficit has soared short term, but key issue is longer-term sustainability However, market reaction to deficits is definitely not straightforward Short-term growth boost (payroll tax cuts), long-term much more problematic 13 Rate behavior not straightforward October 2011 Nominal and Real 10yr Rates We formally expect 10yr rates to rise to 2.30% by the end of the year % 8 7 6 Nominal Deficits not yet entering the picture in terms of impacting the market 5 4 3 2 Economy still the key issue (growth, inflation) 1 0 Real -1 -2 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 USD FX crisis would also be part of an interest rate crisis Source: Bloomberg, Bureau of Labor Statistics and BofA Merrill Lynch Global Research 14 October 2011 EUR-USD has a mixed picture We are expecting V-shape: 1.28 for Q1, 1.40 for end-12 Main question is, which question will market focus on at which time Euro sovereign debt issues are still a key focus However, all the G4 currencies are significantly troubled EUR-CHF has been bearing the brunt, with Swiss intervention the result 15 EUR: link to rates October 2011 Interest rate differentials for EUR EUR-USD 1.55 2y r rate spread, EZ-US 1.6 1.4 1.50 1.2 1.45 1.0 1.40 0.8 1.35 0.6 0.4 1.30 0.2 1.25 0.0 EUR-USD (left) 1.20 Correlations had not been particularly stable for EUR across markets before (or during) the crisis Had been following rate differentials; relative growth stories and QE2 had previously been the story Relative central banks had also been driving the FX story, with a hiking ECB and a Fed on hold -0.2 2y r rate spread, EZ-US (right) 1.15 -0.4 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Source: Bloomberg and BofA Merrill Lynch Global Research 16 EUR: Further negative October 2011 Euro-zone concerns remain elevated Periphery countries are substantially of concern bps 2500 2000 Portugal Italy Greece Spain Ireland Issues of restructuring are still lurking in a currency-negative perspective 1500 Sovereign debt spreads are still well elevated 1000 500 0 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Crucial question is the banking sector links within Europe; “bank stress tests” not very compelling Source: BofA Merrill Lynch Global Research, Bloomberg 17 EUR: Italy too big to bail October 2011 Debt and deficits for Italy 12 120 10 110 8 6 Total deficit/GDP Gov . debt/GDP 100 90 4 80 0 70 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2 High stock of public debt, equal to 120% of GDP in 2010, but above 80ppt of GDP since 1975 and over 100ppt since the early 1990s Low-growth environment (growth averaged 1% in 1990-2000) and prospects (potential growth is now estimated at below 1%) However, no major imbalances either before or during the crisis, e.g. no housing bubble, and little correction in house prices Source: Bloomberg and BofA Merrill Lynch Global Research 18 EM and oil pushing up EUR demand October 2011 Reserve Accumulation still rising, but more slowly USD bn 7000 6000 USD bn 7000 EM50 FX reserves adjusted for revaluation effects and interest accrual Currency denomination of emerging market foreign reserves % 80 USD 70 EUR 60 6000 EM50 FX reserves 50 5000 5000 4000 4000 3000 3000 40 30 20 10 2000 Feb-07 Feb-08 Feb-09 Feb-10 2000 Feb-11 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: BofA Merrill Lynch Global Research Reserve accumulation should decelerate Such reserves have been key to drive flow diversification into EUR predominantly, also GBP High oil prices imply exporters selling their USD to rebalance into euro 19 EUR: Long-term negative October 2011 Unit labor costs have risen significantly in peripheral Europe Index Index Unit Labour Costs Periphery has become substantially uncompetitive in terms of labor costs 150 150 140 140 Spain Portugal Greece Ireland Italy Germany 130 130 120 120 110 110 100 100 90 90 2000 2001 2002 2003 2004 2005 Source: BofA Merrill Lynch Global Research, Bloomberg 2006 2007 2008 2009 With individual currencies, we believe a depreciation could return countries to competitiveness more quickly Every country is currently on the same monetary policy setting, which means they can only be more competitive through some combination of deflationary environment and EUR depreciation 20 EM vs. DM: The key difference October 2011 CPI inflation: EM (higher) vs. DM (lower) (YoY % change) Inflation fundamentals for EM 9.0 8.0 • Higher commodity exposure 7.0 6.0 • Smaller output gaps 5.0 • Policy tied to US 4.0 3.0 • Hot capital inflows 2.0 1.0 0.0 -1.0 2008 2009 2010 2011 2012 Source: Haver Analytics, BofA Merrill Lynch Global Research 21 October 2011 China uptrend against USD We are expecting 6.30 for end-2011; 6.20 for end-2012 China is now a crucial factor in macro and currency space Most importantly, macro pressures arguing for a higher RMB China’s macro picture very different from US: strong growth and inflation Allowing higher RMB is both “mechanically” and economically key policy 22 China: Soft landing, price pressures October 2011 Inflation pressures moving with food Core macro outlook China 2010 2011 2012 Real GDP (% yoy) 10.3 9.3 9.0 CPI (% yoy) 3.3 4.5 3.6 20 Policy Rate (end) 5.81 6.56 7.06 10 GovBal (%/GDP) -2.1 -2.3 -2.2 0 %YoY 25 15 5 -5 CurActBal (%/GDP) 5.2 4.2 3.5 2005 2006 2007 CPI 2008 2009 2010 CPI:non-food CPI: Food 2011 China’s GDP growth headed to the “new normal” of 9.0% There is genuine concern around inflation, although current prices pushed by food impacts Continued tightening to fight price pressures, including recent rate hike Source: BofA Merrill Lynch Global Research 23 China: Recent move higher October 2011 Some recent strengthening More consistent movement against the USD USD-CNY 8.5 On a macro basis, however, the impact could be muted based on past reactions for trade 8.0 7.5 The stronger currency works to lower inflation pressures, both directly and through policy implications 7.0 6.5 6.0 2005 2006 2007 2008 2009 2010 2011 Source: Bloomberg and BofA Merrill Lynch Global Research 24 Japan: Catastrophe October 2011 2010 2011 2012 2011 Q1 Real GDP(%qoqAR) 4.0 -0.5 2.7 -3.6 -1.3 4.4 4.2 CPI (% yoy) -1.0 -0.5 0.4 -0.8 -0.3 -0.3 -0.5 Policy Rate (end) 0.05 0.05 0.05 0.05 0.05 0.05 0.05 FscGovBal(%/GDP) -9.1 -11.0 -9.9 CurActBal(%/GDP) 3.5 2.1 2.7 Japan 2011 Q2 2011 Q3 2011 Q4 Source: BofA Merrill Lynch Global Research Economic numbers reflect the macro disruption post-earthquake Reconstruction likely to have more direct impact in H2 Deflationary forces remain in the macro outlook Supply chain issues: Could see some companies miss earnings forecasts in Q3 25 JPY: intervention tension October 2011 JPY, Nikkei and intervention Nikkei Index 25,000 Intervention attempts have increased over the past year USD-JPY 150 140 20,000 130 120 15,000 110 100 10,000 90 80 5,000 70 94 95 96 97 98 99 00 JPY-selling Intervention 01 02 03 04 05 Nikkei 225 Index 06 07 08 09 10 11 Unilateral efforts, however, are not very effective Also causing distress in terms of FX politics around the world Intervention generally accepted only in “disorderly” market conditions (when we saw coordinated action) USD-JPY Spot Rate (right) Source: BofA Merrill Lynch Global Research 26 UK: Inflation issues near term October 2011 United Kingdom 2010 2011 2012 2011 Q1 2011 Q2 2011 Q3 2011 Q4 Real GDP(%qoq) 1.4 1.1 1.6 0.5 0.2 0.4 0.3 CPI (% yoy) 3.3 4.4 2.4 4.1 4.4 4.7 4.6 Policy Rate (end) 0.50 0.50 1.00 0.50 0.50 0.50 0.50 FscGovBal(%/GDP) -9.7 -8.1 -6.6 CurActBal(%/GDP) -3.2 -1.8 -1.3 Source: BofA Merrill Lynch Global Research GDP had contracted by nearly a whopping 5% in 2009, by far the weakest since WWII Growth is mixed, with QE and low GBP offset by fiscal tightening Inflation has been high, but on energy, VAT and import prices 27 GBP: Mixed outlook October 2011 We expect mixed outlook against USD for GBP GBP-USD 2.1 Our economics team expects BOE on hold this year EUR-GBP (rev erse) 0.50 2.0 0.60 1.9 1.8 0.70 1.7 0.80 1.6 1.5 1.4 GBP-USD (LHS) EUR-GBP (rev erse, RHS) 1.3 0.90 1.00 We expect GBP-USD to be lower near term (1.51/1.49 targets for Q4/Q1) Longer term, combination of EURUSD higher to 1.40 and EUR-GBP lower to .85 implies GBP-USD end2012 target of 1.65 Ultimately, fiscal tightening in UK contrasts with Europe and US favorably for currency 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Bloomberg and BofA Merrill Lynch Global Research 28 Australia: Asia beneficiary October 2011 2010 2011 2012 2011 Q1 Real GDP(%qoq) 2.7 2.0 4.3 -1.2 1.6 1.1 1.2 CPI (% yoy) 2.8 3.5 3.0 3.3 3.6 3.6 3.4 Policy Rate (end) 4.75 4.75 5.75 4.75 4.75 4.75 4.75 FscGovBal(%/GDP) -4.4 -3.3 -1.7 CurActBal(%/GDP) -2.6 -2.5 -3.5 Australia 2011 Q2 2011 Q3 2011 Q4 Source: BofA Merrill Lynch Global Research Australia growth prospects hit this year on weather disasters Imbalances are not as major an issue as they previously were amid currency strength Ties into China growth cycle, compared to the US, have been positive 29 AUD: high despite low risk appetite October 2011 AUD gained with risk, and had also held up well AUD-USD S&P 500 1.2 1600 1.1 1500 AUD-USD (LHS) 1400 S&P 500 (RHS) 1.0 1300 1200 0.9 1100 0.8 1000 900 0.7 Currency strength more tolerated by policy makers to fight inflation AUD is a classic “commodity currency”, which implies also downside if oil/commodity prices drop later this year Key risks also lie in China data and expectations for RBA We expect 0.95 for end of year 800 0.6 700 0.5 Jan-07 600 Jan-08 Jan-09 Jan-10 Jan-11 Source: BofA Merrill Lynch Global Research 30 Canada: resilient October 2011 2010 2011 2012 2011 Q1 Real GDP(%qoqAR) 3.2 2.5 2.4 3.6 -0.4 3.2 4.3 CPI (% yoy) 1.8 3.1 2.7 2.6 3.4 3.1 3.4 Policy Rate (end) 1.00 1.00 2.00 1.00 1.00 1.00 1.00 FscGovBal(%/GDP) -2.5 -1.6 -0.9 CurActBal(%/GDP) -3.1 -2.8 -1.6 Canada 2011 Q2 2011 Q3 2011 Q4 Source: BofA Merrill Lynch Global Research Canada growth has been more resilient Our economics team expects on hold until 2012 Unlike US, Canada did not have massive QE, deflation, or banking issues 31 CAD: following oil October 2011 Oil and CAD USD-CAD $/bbl 1.35 30 1.30 50 1.25 70 1.20 1.15 90 1.10 110 1.05 130 1.00 0.95 CAD has been benefiting from oil prices, and we are looking for oil prices to drop Currency strength is also becoming more uncomfortable for Canadian economy CAD had benefited from broad riskpositive environment We expect 1.07 for end of year USD-CAD (left) 150 Oil (right, rev erse) 0.90 170 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Source: BofA Merrill Lynch Global Research 32 G10 currency forecasts October 2011 Quarterly Forecasts- G10 currencies Spot G3 EUR-USD USD-JPY EUR-JPY Dollar Bloc USD-CAD AUD-USD NZD-USD Europe EUR-GBP GBP-USD EUR-CHF USD-CHF EUR-SEK USD-SEK EUR-NOK USD-NOK Dec '11 Mar '12 Jun '12 Sep '12 Dec '12 1.35 76 103 1.30 75 98 1.28 77 99 1.30 80 104 1.35 83 112 1.40 86 120 1.03 0.98 0.78 1.07 0.95 0.75 1.07 0.94 0.75 1.05 0.96 0.77 1.03 0.94 0.76 1.01 0.93 0.75 0.87 1.55 1.22 0.90 9.24 6.85 7.83 5.80 0.86 1.51 1.22 0.94 9.20 7.08 7.80 6.00 0.86 1.49 1.24 0.97 9.10 7.11 7.70 6.02 0.85 1.53 1.26 0.97 9.00 6.92 7.60 5.85 0.83 1.63 1.28 0.95 9.00 6.67 7.60 5.63 0.85 1.65 1.30 0.93 9.00 6.43 7.60 5.43 Note: Forecast as of 28 September 2011. Spot exchange rate as of 26 September 2011. The left of the currency pair is the denominator of the exchange rate. Source: BofA Merrill Lynch Global Research 33 EM currency forecasts October 2011 Quarterly Forecasts- EM currencies Spot Latin America USD-BRL USD-MXN USD-CLP USD-COP USD-ARS USD-VEF USD-PEN Emerging Europe EUR-PLN EUR-HUF EUR-CZK USD-UAH USD-RUB USD-ZAR USD-TRY EUR-RON USD-EGP USD-ILS USD-AED USD-KWD USD-SAR USD-QAR Asian Bloc USD-KRW USD-TWD USD-SGD USD-THB USD-HKD USD-CNY USD-IDR USD-PHP USD-MYR USD-INR Dec '11 Mar '12 Jun '12 Sep '12 Dec '12 1.85 13.71 512 1,909 4.20 4.29 2.77 1.75 12.80 480 1,850 4.35 4.30 2.70 1.77 13.05 485 1,850 4.60 4.30 2.65 1.80 13.10 490 1,850 4.80 4.30 2.65 1.82 13.15 495 1,850 5.00 4.30 2.60 1.85 13.20 500 1,850 5.20 4.30 2.60 4.43 291 24.64 8.00 32.40 8.11 1.86 4.30 5.96 3.74 3.67 0.28 3.75 3.64 4.20 285 24.50 8.00 30.00 7.30 1.85 4.30 6.00 3.60 3.75 0.29 3.75 3.64 3.95 270 23.75 8.00 29.00 7.25 1.65 4.30 6.30 3.35 3.75 0.29 3.75 3.64 3.95 270 23.70 8.00 29.00 7.35 1.65 4.30 6.50 3.30 3.75 0.29 3.75 3.64 3.95 270 23.65 8.00 29.00 7.50 1.65 4.30 6.75 3.25 3.75 0.29 3.75 3.64 3.95 270 23.65 8.00 29.00 7.60 1.65 4.30 7.00 3.20 3.75 0.29 3.75 3.64 1,193 30.59 1.30 31.15 7.80 6.40 9,125 43.80 3.18 49.46 1,160 30.00 1.25 30.50 7.82 6.30 8500 43.00 3.20 48.50 1,120 31.00 1.24 30.00 7.75 6.30 8400 42.00 3.00 47.50 1,050 30.50 1.22 30.00 7.76 6.25 8500 41.00 2.90 46.00 1,000 30.00 1.22 30.50 7.76 6.20 8500 42.00 2.90 46.00 980 29.00 1.23 30.80 7.78 6.20 8400 42.00 3.00 45.00 Note: Forecast as of 28 September 2011. Spot exchange rate as of 26 September 2011. The left of the currency pair is the denominator of the exchange rate. Source: BofA Merrill Lynch Global Research 34 October 2011 Important Disclosures Due to the nature of strategic analysis, the issuers or securities recommended or discussed in this report are not continuously followed. Accordingly, investors must regard this report as providing stand-alone analysis and should not expect continuing analysis or additional reports relating to such issuers and/or securities. BofA Merrill Lynch Research personnel (including the analyst(s) responsible for this report) receive compensation based upon, among other factors, the overall profitability of Bank of America Corporation, including profits derived from investment banking revenues. 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