EFTA01459017.pdf

tbne: paittoos Thr, bt ;tour" Irrortrinctrt v1119: Hohts Aisablas paspstak.ai Porthaa .15i4s The Phillips curve.. The Phillips curve shows how foot! ar..a inflation and unemployment relate to each other. When unemployment is low, employers have to pay up to ze attract staff, which in turn +2502 pushes up prices. Conversely, • V.:07 7001. .250S high unemployment reduces CA •19 .35 • :0 .1 wages and therefore prices. Inflation and unemployment 20', appear inversely related. Note, • •Zr.:04 42014 20:5.1 ♦ • :al however, that this relies on a s very mechanistic view of the • 2503 economy. The relationship breaks down if the inflationary expectations of workers shift. 10 • 20 I., Sources: U 5. unw`PLI, Theni rate in Thomson Reuters Datastream 0.5 Deutsche Bank Research; 4 10 as of I1/2015; ' yearly average 2 consumer-price index excluding food and energy, yearly average e = expected Evolution of asset classes in the United States United States (unemployment rate) The ongrnpkirnent rats * e•To56,ed 10 ccorrn'ar. hVe.Ot., itY,1 n iO4 10 Shrink ram year. le iel 4.5-4.7%* 140 (December 2016F*) • ()march; AMA ietUa2t1:4•:3! tett 5 :20 1CO If Nowadays, there is perhaps a tendency to exaggerate the w effectiveness of monetary policy [...) The idea that the business cycle can be altogether abolished seems to me as fanciful as the notion that the law of 40 ■ U$ S&P / Case-Shiller Home Price Index supply and demand can be repealed. Si a S&P 500 Index Witham Malin. c.!vACI,:1,1 al t5afing.:1RISCeNV Bead. • US Benchmark 10 Year DS Govt. Index 't5rYicli an Gotta; IR. 1555 2a)4 2tV5 KY,5 :5:07 20Cri ?.:110 2011 2012 2014 201$ United States (federal funds rate) Given the declining unemployment and wage Source: Thomson Reuters Datastream; as of 11/2015 tncreaStr5 a raton to wcan rlarma ;Wariest :nut .1.1.", 3115313)Mit "01 :'x!..:1 0.75-1.00%* Since the beginning of the crisis, the Fed has attempted to (December 2016F 4 ) kick-start the economy by boosting asset prices. This has iboutictoc AVYM le:9CW ;ea t? 11111 '5 been especially effective for equities. as returns on the S&P 500 Index show. Real estate too has made up much of the previously lost ground. Past performance is not indicative of future returns. It is not possible to invest directly in an index. No assurance can be given that any forecast or target will be reached. F = forecast. Forecasts are based on assumptions, estimates, opinions and hypothetical models or analyses that may prove to be incorrect. V.OW I A"4, It &Mr,: I can crane 10:5 =ten. 0 5 CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0119214 CONFIDENTIAL SDNY_GM_00265398 EFTA01459017