EFTA01458537.pdf

2 October 2015 US Equity Insights 30 S&P EPS will be weak, weakest sales/EPS growth yet of the profit recession The DB Profit Indicator is a diffusion style index based on six macro indicators. It dropped to 49.2 in July and then 46.7 in August dragged down by Mfg. ISM, Exports and Oil prices. At -47 it suggests flat to slightly down y/y 3Q EPS. Btm-up 30 EPS is now $29.04, or -4.4% y/y on -3.40/6 say sales. EPS growth likely slows at Financials to flat ex litigation given soft capital markets conditions. Health Care EPS should be up high single-digit. Btm-up Tech EPS growth is now merely 2.8% y/y, on FX headwinds and still very sluggish corp IT spending. But final Tech EPS growth should be mid single digit on good growth at consumer exposed Tech. Btm-up 30 EPS will fall a bit more before urning up on typical "fishhook" beats. We think 3Q EPS will finalize around $29.75, down 2% y/y, with sales down -4%, and margins up slightly. Margin improvement is on a non-GAAP basis, GAAP margins and EPS are poor. Figure 1: Fishhooks: S&P 500 quarterly btm-up EPS (Figure 2: Change in quarterly EPS before and during revisions ;reporting (1011 - now) 33 as 5% Avg(1O11-1O15) 33 100 29 I 28 CZ I. 11,1.1„ 1....„ 11 10l. 101, ‘. 74 27 CI I L ind 4 11 25 -8% - 23 -ris 22 -10% •• el el 0. el el. el el V VVVV VI 0 § § § WEik4a41.4a41 , 4,84t4a § § •EPS boat dwrg waling EPS cut pro- lo reccrtrog Sane ®ES Cedursthe Bs,* Seas a Bandto &wet Figure 3: Change in btm-up 3015 EPS since 6:30/2015 Figure 4: Change in btm-up 2015 EPS since 6130/2015 (current 30 EPS is blended. actual for reported and consensus for the rest) 4% 4% 3.6% Change In t(m-up 2015 EPS since 6302015 2.6% 2% 02% 0.8% 0% lig I -1.11(11 46% -2% -0 0%0 WAS -0.6% -11% -21% 1 11% -0 7% 1114 A -30% 4.2% -1e% 411 -I 4 64 2%4 9% -4% 40% -39% a.0% -11% .1 .8% -130% 42% -142% -10% LE " e a • Ug 'Pig; a a t u 8 ;I 6 in us ses I' 0 uz,gi Sane a Dosaa Sane Sa DIUtlthe Bart Page 2 Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0118497 CONFIDENTIAL SDNY_GM_00264681 EFTA01458537