EFTA01459737.pdf

Perspective from Larry V. Adam, CIO and Chief Investment Strategist, Wealth Management-Americas 5 5 0 I I k klr With the ongoing volatility in risky assets and global Next week we will receive a number of economic data bond yields flashing warning signs by falling sharply in points that will give us better insight into the condition recent weeks, the chorus of recession talk has grown of the U.S. economy. Looking at the labor market, we even louder. While the U.S. Citigroup Economic will receive both the NFIB Small Business Optimism Surprise Index has fallen to an eight month low and Index and JOLTS report (Tuesday). While the NFIB the U.S. ISM Manufacturing Index has been in Index will also give us a good indication of the contraction territory for the past four consecutive sentiment among small business owners, we will look months, it is understandable the market jitters are closely at the hiring plans component of the report. In surfacing. However, our "fab five" economic addition, the report also outlines owners views on indicators, which we view as a real time gauge of the raising wages and their plans to increase capital true health of the U.S. economy paints a more spending. With respect to JOLTS, job openings are optimistic picture and suggests U.S. economic growth expected to remain near a cyclical high, pointing to is on solid footing. Our "fab five" indicators include: additional strength in the labor market. From a 1. Jobless claims — claims have moved modestly consumer perspective, both consumer sentiment and higher but still remain below 300K, a level that has retail sales will be released Friday. Despite the equity historically been supportive of ongoing market volatility, consumer sentiment is expected to improvement in the labor market. rise to 93.0. Retail sales are also expected to rise 2. Withholding tax receipts — tax receipts remain near (+0.1% MoM), which would be the third month in the record highs suggesting more people are working past four of retail sales gains. and should support consumer spending. Outside of economic data, the key focus will be on 3. Motor vehicle sales —vehicle sales are a good Janet Yellen's semi-annual testimony before gauge on the true health of the consumer because congress (Wednesday & Thursday). Given the a consumer would not make a big ticket purchase softening in U.S. data and volatility in financial if they were concerned about their job or wage markets, her thoughts on the health of the U.S. prospects. Monthly vehicle sales are hovering near economy and opinion on the ongoing weakness in the highest level since 2005. other major regions will be important. Additionally, we 4. ISM production — Despite weakness in the overall look to see if the Fed Chairwoman provides any Index, production rose for the second consecutive further indication to the timing and pace of Fed rate month and is back in expansion territory. hikes. Currently, the futures market is not pricing in a 5. Commercial and industrial loans — Demand for Fed rate hike until 2017 at the earliest, while Fed commercial and industrial loans has been strong projections continue to show four rate hikes in 2015. for 20 consecutive quarters. :),1 2:115I' minus ',Vic Next week, -10% of the S&P 500 market cap will release earnings. Some key companies include, Twenty-First Century Fox (Monday); Coca-Cola, Walt Disney and Viacom (Tuesday), and Time Warner (Wednesday). Larry Adam, CIO and Chief Investment Strategist, Wealth Management - Americas Deutsche Bank Wealth Management CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0 120388 CONFIDENTIAL SDNY_GM_00266572 EFTA01459737