📄 Extracted Text (8,427 words)
Crawling, not Leaping, into the New Year
2016 Ten Themes
Larry Adam, CFA, CIMA
Chief Investment Officer and Chief Investment Strategist
Managing Director
Tel: 410-895-4135
Email: [email protected]
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Ten Themes — 2016
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3
4
5
6
7
8
9
10
Deutsche Bank
Wealth Management
Crawling, not Leaping, into the New Year
Global Economy — No Peloton in the Tour de Global Economy
Our Consumption Assumption — Shop 'til You Drop America (and World!)
Monetary Policy Divergence — "Two Roads Diverged in a Wood and I Took the
One Less Traveled"*
Global Inflation — Germination, Examination and Protection
U.S. Dollar — Downshifting its Pace
Global Fixed Income— Combing the Field for Yield
Global Equities —All Eyes on Earnings
EM Equities — Will the EM Giants Awaken?
Equity Sectors — An "Appreciation" for Innovation and Demographics
Crude Oil — A "Glut"ton for Punishment.....is $55 Oil Enough?
:*Source: The Road Not Taken by Robert Frost
1
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Global Economy
No Peloton in the Tour de Global Economy
1
2015: +2.2%
2016: +2.4%
2015: +1.4%
2016: +1.6%
rjLeader of the pack.
tAfter six plus years
of recovery and
expansion, U.S.
enters late stage of
business cycle.
Deutsche Bank
Wealth Management
rqStuck in neutral.
Looking for a way to
breakout.
V-IiUnemployment
above U.S. Widest
margin since
Eurozone created.
2016: +1.2%
2015: +0.8%
2015: +4.2%
2016: +4.5%
rliSpinning its wheels
tifoday's economy is
same size as it was
in 1995, 2001, 2003
and 2008.
$jMixed cycle. Not a
well "oiled" team.
$jBrazil/Russia struggle
with commodity
headwind as China &
India downshifting.
Footnotes: Forecasts as of November 2015. Emerging market growth estimate is
for broad EM not just the BRIC country flags that are pictured.
Source: Deutsche Bank Wealth Management.
2
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Global Economy
"Fab 5" Confirms U.S. Leadership
Europe
U.S.
Withholding Tax Receipts
German Exports
Japan
Core Machinery Orders
China
Electricity Demand
Jobless Claims
Credit Impulse
ISM Production
Commercial & Industrial
Loans
New Vehicle Sales
We expect a stronger consumer, a
fading of the export/fiscal/capex drag
and strength in housing to support U.S.
growth in 2016.
Source: Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
3
Belgium Manufacturing
Survey
Consumer Sentiment
PMI Manufacturing/Services
Cement Output
Average Real Earnings
Housing Prices
Consumer Confidence
Retail/Auto Sales
Inflation
Inflation
We expect moderate to solid growth
supported by monetary policy, easing
fiscal drag, growing consumer demand,
increasing wages and EUR
depreciation.
Japan's economy should be supported
by aggressive monetary policy, a pick
up in export activity as global growth
accelerates and positive consumer
momentum. Aggressive easing is likely
to push inflation higher.
Inflation
Growth is likely to slow from 6.8% in
2015 to 6.0% in 2016. However, reform
implementation and central bank
flexibility should result in better long
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term growth prospects.
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Employment Conditions Improve
Global Economy
Jobless claims hovering near the lowest
level since 2000 and withheld tax
receipts growing near a record high
suggest ongoing improvement in the
labor market.
U.S. Economic Acceleration is Underway
Manufacturing Slowdown
20
30
40
50
60
70
80
Vehicle Sales Strong
Footnotes: Data as of December 30, 2015.
Source: FactSet, Deutsche Bank Wealth Management.
Manufacturing remains the weak segment of the U.S. economy The broad
Manufacturing Index and production are both in contraction territory (a
level below 50).
ISM Production
Jan-96
Dec-99
Nov-03
Lending Improving
Demand for commercial and industrial loans have been positive for 19
consecutive quarters.
ISM Index
Oct-07
Sep-11
Footnotes: Data as of December 2015.
Source: Bloomberg Finance LP, Deutsche Bank Wealth Management.
Aug-15
Vehicle sales are at the highest level (-18 million annual
rate) since 2005.
Footnotes: Data as of November 2015.
Source: FactSet, Deutsche Bank Wealth Management.
Footnotes: Data as of 3Q15.
Source: FactSet, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
4
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Making History?
Major U.S. Election Topics
Global Economy
Elections Favorable for Equities
0
1
2
3
4
5
6
7
8
9
44-52 52-60 60-68 68-76 76-80 80-88 88-92 92-00 00-08 08-16
S&P 500 Return 12 months Leading up to Presidential Election Day
— If a Democrat becomes the next U.S. President, it
would be only the second time since the end of
WWII that one party has held the White House for
more than eight years.
— Out of the 20 Presidential elections since 1936, the
S&P 500 has been positive 17 times (85%) in the
12 months leading up to the election.
— On average, the S&P 500 is up 9% in the 12
months leading up to the Presidential election day.
2012
2008
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
1956
1952
1948
1944
1940
1936
-40%
-30%
Recessions
-20%
-10%
0%
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10%
20%
30%
40%
Footnotes: Data is 1944-2016 Presidential terms. Red is republican, blue is
democrat President.
Source: Deutsche BankWealth Management.
Footnotes: Data reflects S&P 500 performance in the 12 months leading up to
the
election cycles from 1936-2012.
Source: FactSet, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
5
# of years of Presidential Term
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Shop 'til You Drop America (and the World!)
Our Consumption Assumption
2
Solid Global Confidence
100
110
120
60
70
80
90
Mar-04 Nov-05
Jul-07 Mar-09 Nov-10
Jul-12 Mar-14 Nov-15
Global Consumer Confidence*
— Global consumer confidence has continued to
improve and is hovering at pre-crisis highs.
— In addition, the Chinese consumer is becoming a
bigger contributor to growth. From 2009 to 2030,
the Chinese middle class is expected to grow from
11% to 72% of the total population.
— Better U.S. spending, increased spending from the
Chinese economy and a better European economy
support the global consumer discretionary sector.
Footnotes: *Global consumer confidence is the average of U.S., Japan, China
and
Europe. Data is most recent available as of November 2015.
Source: Bloomberg Finance LP, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
Management.
Chinese Middle Class Growing
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Poor
Middle Class
2009 2020 2030
Europeans Spending Again
Source:World Bank, Deutsche Bank Global Markets, Deutsche Bank Wealth
-25.0%
-20.0%
-15.0%
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-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
Jun-04 Dec-05 Jun-07 Dec-08 Jun-10 Dec-11 Jun-13 Dec-14
Europe New Passenger Car Registrations (6 Mo Moving Average) (LHS)
Eurostat Retail Sales (YoY) (RHS)
Footnotes: Data is monthly and most recent as of December 2015.
Source: Bloomberg Finance LP, Deutsche Bank Wealth Management.
6
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
Rich
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Shop 'til You Drop America (and the World!)
Our Consumption Assumption
Healthy Consumer Balance Sheet
9.0%
9.5%
10.0%
10.5%
11.0%
11.5%
12.0%
12.5%
13.0%
13.5%
Jun-80
Jun-87
Jun-94
Jun-01
Household Debt Service Ratio
— Americans are healthier from a balance sheet
perspective than they have been on record.
— In addition, gasoline prices have declined —$0.80
from their June 2015 high. It is a general rule of
thumb that for every $0.01 decline in gasoline
prices equates to —$1 billion in extra spending
power annually.
— Lastly, there are signs that wage growth is
materializing with average hourly earnings
accelerating.
Footnotes: Data is as of 3Q15.
Source: Bloomberg Finance LP, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
Jun-08
Jun-15
Gasoline Prices Remain Low
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
U.S. Regular Retail Gasoline
Prices Dollars per Gallon
Oct-90 May-94 Dec-97
Jul-01
Feb-05
Sep-08
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Apr-12
Footnotes: Data is monthly and as of December 31, 2015.
Source: Bloomberg Finance LP, Deutsche Bank Wealth Management.
Wages Slowly Picking Up
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
Mar-07
May-09
Jul-11
Sep-13
Average Hourly Earnings (YoY%)
(AVG) Average Hourly Earnings (YoY%)
Footnotes: Data is as of November 2015.
Source: Bloomberg Finance LP, Deutsche Bank Wealth Management.
7
Nov-15
Nov-15
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Our Consumption Assumption
Shop 'til You Drop America (and the World!)
Conscientious Consumer
New Spending Process
Social Media to
Advertise
Smartphone Apps
for Shopping
Processors for the
Transaction
Services to Deliver
Source: marketoonist.com, Deutsche Bank Wealth Management.
Source: Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
8
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Our Consumption Assumption
Shop 'til You Drop America (and the World!)
Key Trends to Continue in 2016
Internet & Catalog Retail
Department Stores
Mobile Spending Skyrocketing
Hotel Restaurants and Leisure
Home Improvement Retail
Apparel
0%
10%
20%
30%
40%
50%
60%
70%
80%
3013 3Q15
70%
26%
13%
5%
8%
1%
Total Discretionary Retail
e-Commerce
Footnotes: Data as of 3015.
Source: Comscore, Deutsche Bank Wealth Management.
Real Spending on Tourism
Automobile Manufacturers
Automotive Retail
Broadcasting
Advertising
-50.0% -25.0% 0.0% 25.0% 50.0% 75.0% 100.0%
2015 Total Return
Real Spending on Travel and Tourism
Footnotes: Data as of December 31, 2015.
Source: Bloomberg Finance LP, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
Footnotes: Data as of 3015.
Source: bea.gov, Deutsche Bank Wealth Management.
9
$600,000
$650,000
$700,000
$750,000
$800,000
$850,000
1098
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Real spending on travel and tourism reached a record
high $839 billion in 3Q15.
m-Commerce
3Q00
1Q03
3Q05
1Q08
3Q10
1Q13
3Q15
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3 Monetary Policy Divergence
"Two Roads Diverged in a Wood, and I Took the One Less Traveled."
Fed Getting off the Bandwagon
2,000
4,000
6,000
8,000
10,000
12,000
0
2006
2008
2010
2012
Still Plenty of Liquidity*
100
150
200
250
50
0
2008
2009
BoE
2010
2011
Fed
2012
BoJ
2013
2014
ECB
2015
Total
2016
Footnotes: Estimate as of December 2015. *Combined QE programs.
Source: Deutsche Bank Global Markets, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
USD bln
USD bln
100
150
200
250
50
0
2014
2016
Fed
BoJ
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ECB
+26%
+24%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
-1%
ECB
BoE
Japan
Fed and BoE Normalizing
U.S. Taking the Lead
Jan-09 Dec-09 Nov-10 Oct-11 Sep-12 Aug-13 Jul-14 Jun-15 May-16
Fed
— The Fed and BoE are moving towards normalizing
interest rate policy while most other developed
central banks will likely remain accommodative.
— The three major DM central bank balance sheets
are expected to rise by 16% in 2016.
— While the Fed balance sheet is expected to be flat
to slightly lower in 2016, the BoJ and ECB are
expected to increase their balance sheets by over
20%.
Footnotes: Data is monthly and as of December 2015. 2016 estimates as of
November
2015.
Source: Bloomberg Finance LP, Deutsche Bank Wealth Management.
10
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Monetary Policy Divergence
"Two Roads Diverged in a Wood, and I Took the one Less Traveled."
Fed Takes off Training Wheels
Expect More Volatility
Tightening
Cycle
3/84-8/84
12/86-9/87
3/88-2/89
2/94-2/95
6/99-5/00
6/04-6/06
Average
# of Day
147
262
332
363
321
729
359
3-4.99% 5.00-9.99% 10% or More
2
0
1
1
0
2
1
1
3
3
3
4
4
3
S&P 500 Pullbacks
— As the Fed has taken the "training wheels" off the
U.S. economy, we expect increased volatility.
— When looking at the most recent tightening
cycles, they last, on average, one year and see
at least one S&P 500 pullback of 3-5% and
three pullbacks of 5-10%.
— The only tightening cycle that experienced a
more than 10% decline was in 2000.
Footnotes: Chip Bok Editorial Cartoon used with the permission of Chip Bok
and
Creators Syndicate. All rights reserved.
Source: The Cartoonist Group, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
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Footnotes: Time period is considered a tightening cycle when the Fed raises
rates
three or more consecutive times. The tightening cycle is considered over at
the last
rate hike. # of days is calendar days. S&P 500 price only.
Source: Bloomberg Finance LP, Deutsche Bank Wealth Management.
11
0
0
0
0
1
0
0
Average of all
Pullbacks
-5.2%
-6.4%
-6.3%
-6.0%
-9.2%
-5.7%
-6.5%
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4
Global Inflation
Germination, Examination & Protection
Deciphering Inflation
-3
-2
-1
0
1
2
3
4
5
1997
2000
2004
CPI Services Inflation (% YoY)
Core CPI (% YoY)
2008
2012
CPI Goods Inflation (% YoY)
2015
U.S. Labor Costs Picking Up
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
1001
1003
1005
1007
1Q09
1011
1013
Employment Cost Index (YoY %) (LHS)
NFIB Small Business Compensation Plans (RHS)
— While headline and core inflation remain below
the Fed's target range, it is important to note that
the drag on inflation is primarily from the goods
sector.
— In fact, service inflation (which makes up the bulk
of personal spending) is rising at the fastest pace
(+2.9% YoY) since November 2008.
Footnotes: Data as of November 2015.
Source: Bloomberg Finance LP, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
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— Historically, there has been a strong correlation
between the NFIB Small Business Compensation
Plans Index and the Employment Cost Index.
— In November, the Small Business Compensation
Plans rose to the highest level since November
2006.
1015
10
15
20
25
0
5
Footnotes: Time period reflects 1Q01 to 4015. 4Q15 is as of November 2015.
Source: Bloomberg Finance LP, Deutsche Bank Wealth Management.
12
in percentage terms
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Global Inflation
Germination, Examination & Protection
REITs: Occupancy Rates High
86%
87%
88%
89%
90%
91%
92%
93%
94%
With occupancy rates at the highest levels since
the 1990's, REITs should be well supported.
REITs Pricing Power
'86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14
Rental Occupancy Rate, Percent - United States
Rental Occupancy Rates, 5 Units Or More, Percent - United States
Footnotes: Data is quarterly and as of 3015.
Source: FactSet, Deutsche Bank Wealth Management.
Low Inflation Supportive of REITs
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
Since 1972, when CPI is
between 1-3%, REITs rise, on
average, 18% (YoY) and are
positive 87% of the time.
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Less than 0
0-1%
1-3%
3%+
FTSE NAREIT (YoY %) Given Level of CPI (YoY %) (LHS)
% of the Time Positive (RHS)
Footnotes: Time period is December 1972-November 2015. CPI is headline CPI.
Source: FactSet, Bloomberg Finance LP, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
Footnotes: Time period is 4Q72-3015. Quarterly year over year GDP.
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Source: FactSet, Deutsche Bank Wealth Management.
13
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Dec-83
Nov-91
Owners Equivalent Rent
Rental prices, as seen by owners' equivalent
rent, are moving higher which suggests positive
pricing power in real estate.
Oct-99
Sep-07
(AVG) Owners Equivalent Rent
Footnotes: Data as of November 2015.
Source: Bloomberg Finance LP, Deutsche Bank Wealth Management.
REITs and Economic Growth
Since 1972, when GDP (YoY) is
between 2-3%, REITs have
rallied, on average 17.8% (YoY).
They were only negative on one
occasion (2Q90).
Aug-15
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Global Inflation
Germination, Examination & Protection
The A, B and Cs of Mall REITs*
100
105
110
115
70
75
80
85
90
95
Jan Feb Mar Apr May
Jun
A Average
26%
difference
Under-Owned by Investors
REIT Weighting
Category
Mid-Cap Growth
Small Growth
Mid-Cap Blend
Small Blend
Jul Aug Sep Oct Nov Dec
B/C Average
Selectivity Important
Footnotes: Data as of December 31, 2015. *See A, B, C explanation on final
page.
Source: FactSet, Deutsche Bank Wealth Management.
-30%
-10%
10%
30%
50%
2015 Total Return
Small Value
Large Growth
Mid-Cap Value
Large Value
Large Blend
Mutual Funds
1.2%
1.9%
4.7%
5.9%
6.6%
0.6%
5.3%
1.5%
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1.4%
Benchmark
1.6%
2.7%
6.8%
8.6%
14.6%
1.4%
12.5%
4.1%
2.8%
Estimated
Underweight
$1 billion
$1 billion
$5 billion
$6 billion
$8 billion
$10 billion
$16 billion
$23 billion
$25 billion
— Selectivity is important when investing in REITs. For
example, A class mall REITS outperformed B/C class by
—26% in 2015. In addition, self storage rose —40% while
the broad REIT Index was up only —3% in 2015.
— The Raymond James REIT team produced the above
estimates showing how underweight broader equity
mutual fund managers are to REITs relative to their
respective benchmarks.
— The $95 billion estimate equates to over 10% of the REIT
Index market capitalization.
Footnotes: Data as of December 31, 2015. FTSE/NAREIT Equity Indices.
Source: FactSet, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
Footnotes: Time period As of June 30, 2015.
Source: Deutsche Bank Wealth Management, Dow Jones, Raymond James, S&P.
14
Self Storage
Residential
Apartments
Shopping Centers
Retail
Regional Malls
REITS
S&P 500
Industrial/Office
Diversified
Healthcare
Lodging Resorts
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Downshifting its Pace
5 U.S. Dollar
Dollar Cycle to Moderate?
100
110
120
130
140
150
160
170
1
226
451
1978-1985
676
901
1995-2002
+67%
6-Year USD
Uptrend
7-Year USD
Downtrend
+38%
+43%
9-Year USD
Downtrend
—5-Year
USD
Uptrend*
6-Year
USD
Downtrend
1126
1351
2011 - Present
— At this juncture, the dollar bull market is the
strongest in history.
— While the bull market should continue, the pace of
its rally should moderate.
— The dollar will enter the sixth year of the current
bull cycle in 2016.
1576
7-Year USD
Uptrend
Historical Dollar Cycles
Footnotes: Nominal Dollar Index. Data as of December 24, 2015.
Source: FactSet, Deutsche Bank Wealth Management.
Footnotes: Data as of December 24, 2015.
Source: FactSet, Deutsche Bank Wealth Management.
Deutsche Bank
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Wealth Management
15
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Downshifting its Pace
U.S. Dollar
Dollar in Tightening Cycle
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
0
20
40
60
12/1/1976
3/29/1988
Start of Cycle
12/1/1976
8/7/1980
3/27/1984
12/16/1986
3/29/1988
2/4/1994
6/30/1999
6/30/2004
Average
Median
+lam
-2.2%
-1.1%
2.0%
-5.3%
0.0%
-0.9%
-2.0%
0.5%
-1.1%
-1.0%
80
100 120 140 160 180 200 220 240
8/7/1980
2/4/1994
+3am
-1.2%
2.0%
5.8%
-7.1%
5.6%
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-2.4%
-4.3%
-2.4%
-0.5%
-1.8%
3/27/1984
6/30/1999
+6am
-1.7%
4.6%
10.4%
-8.6%
7.1%
-4.5%
-3.3%
-9.1%
-0.6%
-2.5%
12/16/1986
6/30/2004
+9am
-2.0%
10.5%
13.1%
-9.3%
1.8%
-7.3%
-0.9%
-7.5%
-0.2%
-1.4%
+12am
-4.9%
19.7%
14.2%
-16.4%
6.1%
-5.2%
0.4%
-2.3%
1.4%
-0.9%
Footnotes: Time period is considered a tightening cycle when the Fed raises
rates
three or more consecutive times. The tightening cycle is considered over at
the last
rate hike. # of days is calendar days.
Source: FactSet, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
Tightening Trends
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Nov 76
May 81
JPN
EU
CAN
GBR
CHE
AUD
NZL
SWE
NOR
Total
Yes
Yes
Yes
Yes
Yes
Yes
N/A
Yes
Yes
8
Nov 82
Aug 84
No
Yes
Yes
Yes
No
Yes
N/A
Yes
Yes
6
Aug 86
May 89
Yes
Yes
Yes
Yes
Yes
Yes
N/A
Yes
Yes
8
Sep 92
Feb 95
No
No
Yes
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Yes
No
Yes
Yes
Yes
No
5
Nov 98
May 00
No
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
7
Jun 03
Jun 06
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
9
2016
Easing
Easing
No
Possibly
No
No
Easing
No
Easing
1
— Historically, global central banks move in tandem
when raising interest rates.
— However, in the onset of this tightening cycle, only
one other central bank (BoE) appears to be ready
to hike interest rates in 2016.
Footnotes: Data as of December 2015.
Source: Deutsche Bank Global Markets, Deutsche Bank Wealth Management.
16
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6
Global Fixed Income
Combing the Field for Yield
False Steps
1.50
2.00
2.50
3.00
3.50
4.00
4.50
2008
2010
10Y U.S. Treasury
2012
2014
2016
Fed Quarterly Survey of Professional Forecasters
— When looking at the Fed Quarterly Survey of
Professional Forecasters, forecasts for Treasury
yields have consistently overshot actual moves in
Treasury yields since 2008.
— The ECB's public sector purchase program
(PSPP) will likely have a total volume of €1490 bn
if it lasts until March 2017.
Footnotes: Data as of 3Q15.
Source: Philadelphia Fed, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
the Netherlands
Portugal
Slovakia
Based on historical ECB buying (Purchases as a % of Net Issuance)
395%
84%
189%
Finland
France
Ireland
Italy
Germany
Spain
Belgium
Austria
0%
100%
175%
363%
106%
387%
130%
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489%
117%
396%
200%
300%
400%
500%
600%
% of Negative Yielding Govt Bonds
0%
10%
20%
30%
40%
50%
60%
70%
Dec-15
30%
Footnotes: Data as of December 2015.
Source: Deutsche Bank Global Markets, Deutsche Bank Wealth Management.
Supply Drying Up in Europe
Footnotes: Data as of December 2015.
Source: ECB, Bloomberg LP, Barclays, Deutsche Bank Wealth Management.
17
Switzerland
Germany
France
Netherlands
Slovakia
Finland
Austria
Belgium
Denmark
Sweden
Luxembourg
Lithuania
Ireland
Italy
Spain
Slovenia
Portugal
Malta
Latvia
Cyprus
Total
EFTA01477396
Global Fixed Income
Combing the Field for Yield
Powerful Flows to U.S.
1,000
200
400
600
800
-800
-600
-400
-200
0
Mar-2009 Mar-2010 Mar-2011 Mar-2012 Mar-2013 Mar-2014 Mar-2015
United States
Euro Area
Japan
Net U.S. Treasury Issuance
— Given the superior yield and solid economic
outlook, U.S. bonds have seen steady inflows on a
rolling 12 month basis while European bonds have
seen steady outflows.
— Given our estimate that the federal budget deficit
should shrink to the lowest level since August 2008
in 2016 (—$414 billion), the need for Treasury
issuance is also shrinking.
$500
$1,000
$1,500
$2,000
-$500
$0
Est.
U.S. Supply Moderating
Footnotes: Data as of August 2015.
Source: Deutsche Bank Global Markets, Deutsche Bank Wealth Management.
Footnotes: Estimate as of December 2015.
Source: Deutsche Bank Global Markets, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
18
Rolling 12 Month Fixed Income Flows (bns)
in millions
2000
2001
2002
2003
2004
2005
2006
2007
EFTA01477397
2008
2009
2010
2011
2012
2013
2014
2015
2016
EFTA01477398
Global Fixed Income
Combing the Field for Yield
Convertibles
Historically, convertibles have a
high correlation to equities.
iC
Investment Grade Credit
The balance sheets are the healthiest for the
largest S&P 500 companies on record.
7C
Footnotes: Data is monthly and as of December 2015.
Source: FactSet, Deutsche Bank Wealth Management.
Footnotes: Data as of December 31, 2015.
Source: FactSet, Deutsche Bank Wealth Management.
High Yield
100
110
120
60
70
80
90
-252
-201
-150
-99
-48
3
54
High Yield Spreads in Tightening Cycle
Footnotes: Data as of December 31, 2015.
Source: FactSet, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
105
156
207
Current Cycle
First Fed Rate Hike
Selective
EM Debt
-4.5%
-4.0%
-3.5%
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
EFTA01477399
Volatile currencies and
weak fiscal health keeps
us cautious on EM debt.
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
(AVG) EM Fiscal Deficit as % GDP
Footnotes: Data as of December 2015. IMF estimate for 2015.
Source: Bloomberg Finance LP, Deutsche Bank Wealth Management.
19
Cautious
EFTA01477400
7
Global Equities
All Eyes on Earnings
Rolling Return: EAFE vs. U.S.
-70.0%
-50.0%
-30.0%
-10.0%
10.0%
30.0%
50.0%
Dec-72
Jan-80
International outperforming U.S.
International Post Fed Hike
U.S. outperforming International
Feb-87
Mar-94
Apr-01
May-08
MSCI EAFE (USD) vs S&P 500 (Rolling 3 YR Return Annualized)
— Historically, the performance of international
equities relative to the U.S. has shifted in cycles.
— In fact, the past five cycles that international
equities outperformed U.S. equities lasted, on
average, 3.4 years.
— On a rolling three year basis, the U.S. has been
outperforming international equities for —6 years.
— Historically, the U.S. has outperformed for, on
average, four years.
Footnotes: Data is monthly and as of December 2015. Price return only in USD.
Source: FactSet, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
Footnotes: Time period is considered a tightening cycle when the Fed raises
rates
three or more consecutive times. The tightening cycle is considered over at
the last
rate hike. # of days is calendar days. Tightening cycles date back to 1970.
Source: FactSet, Deutsche Bank Wealth Management.
20
Jun-15
S&P 500 Performance vs MSCI EAFE (USD)
— Following the onset of a Fed tightening cycle, the
S&P 500 has historically underperformed the
MSCI EAFE Index.
-16%
-14%
-12%
-10%
-8%
EFTA01477401
-6%
-4%
-2%
0%
2%
First rate hike
0
8
16
24
32
40
48
56
64
72
80
88
96
104
112
120
128
136
144
152
160
168
176
184
192
200
208
216
224
232
240
248
EFTA01477402
Global Equities
All Eyes on Earnings
Valuations in the Range
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Japan
Europe ex UK MSCI AC World
Grey bar is high and low P/E (LTM)
Blue line is 10 year average
Red diamond is current P/E (LTM)
U.S. Profit Recession Ending
-5%
0%
5%
10%
15%
15%
S&P 500 Earnings Growth (YoY)
10%
9%
6% 6%
5%
4%
1%
0%
0%
-4%
2%
9%
7%
9%
S&P 500
UK
— Most developed equity market valuations are
above their historical average and close to the
upper end of their 10-year range.
— In addition, there is little distinction between
earnings growth amongst the developed markets
for 2016.
Earnings Growth Similarities
Footnotes: Data and estimates as of December 31, 2015.
Source: FactSet, Deutsche Bank Wealth Management.
0%
1%
2%
EFTA01477403
3%
4%
5%
6%
7%
8%
9%
10%
MSCI Japan
Footnotes: Time period reflects trailing 10 years as of December 31, 2015.
Source: FactSet, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
S&P 500
EuroStoxx 50
Footnotes: Estimates as of November 2015.
Source: Deutsche Bank Wealth Management.
21
FTSE 100
DAX
Year-over-Year Growth (%)
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
EFTA01477404
Will the EM Giants Awaken?
8
EM Equities
Disappearing Growth Premium
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
4Q03 1Q05 2006 3Q07 4Q08 1010 2Q11 3Q12 4013 1Q15
Average EM Growth Premium (LHS)
(AVG) Average EM Growth Premium (LHS)
MSCI EM (local) - S&P 500 Index (RHS)
— Emerging market equities have benefitted from
superior economic growth over the developed
markets in recent years.
— However, that growth premium has been
eliminated and has resulted in emerging market
equities lagging developed market equities.
— Emerging markets experienced several years
of an earnings growth premium over the U.S.
— However, the collapse in commodity prices
and lackluster economic growth in EM has
resulted in the earnings growth premium
collapsing.
— As a result, the U.S. has been outperforming
the emerging markets.
Footnotes: Data as of 3Q15.
Source: Bloomberg Finance LP, FactSet, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
Footnotes: Data as of December 31, 2015.
Source: FactSet, Deutsche Bank Wealth Management.
22
100
120
140
160
20
40
60
80
-20
0
Earnings Growth Premium Gone
EFTA01477405
Peak EM Earnings
Peak U.S.
Earnings
EFTA01477406
EM Equities
Favor Select Asia
Valuations More Attractive
Sector Exposure More Appealing
30.0
EM Asia EM Latam
20.0
10.0
00
— From a valuation basis, Asia looks more
attractive than Latin America relative to the MSCI
AC World.
— In addition, Asia has more exposure to some of
our favorite sectors (e.g. tech, discretionary).
Footnotes: Data as of December 31, 2015.
Source: FactSet, Deutsche Bank Wealth Management.
Footnotes: Data as of December 2015.
Source: FactSet, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
23
In percentage terms
Financials
Information
Technology
Consumer
Discretionary
Industrials
Telecom
Consumer Staples
Materials
Energy
Health Care
Utilities
EFTA01477407
9
Equity Sectors
An "Appreciation" for Innovation and Demographics
Solid Earnings Growth Expected
Tech Valuations Attractive
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
S&P 500 Info Tech P/E (LTM) Relative to S&P 500 P/E (LTM)
(AVG) S&P 500 Info Tech P/E (LTM) Relative to S&P 500 P/E (LTM)
— Technology is one of our favorite sectors due to
attractive valuations and fundamentals.
— In fact, valuations are well below average versus
the S&P 500.
— From an earnings perspective, consumer
discretionary, info tech and financials are
expected to be the leaders in earnings growth.
'14
'15
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
2016 Earnings Estimate
Footnotes: Data is as of December 31, 2015.
Source: FactSet, Deutsche Bank Wealth Management.
Footnotes: Data as of December 2015.
EFTA01477408
Source: FactSet, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
24
Consumer
Discretionary
Info Tech
Financials
Health Care
Energy
Materials
Industrials
Consumer Staples
Utilities
Telecom Services
EFTA01477409
Equity Sectors
A Poem by an Old-Timer
An application was for employment
A program was a TV show
A cursor used profanity
A keyboard was a piano!
Memory was something that you lost with age
A CD was a bank account!
And if you had a broken disk,
It would hurt when you found out!
Compress was something you did to garbage
Not something you did to a file
And if you unzipped anything in public
You'd be in jail for awhile!
Source: marketoonist.com, Deutsche Bank Wealth Management.
Log on was adding wood to a fire
Hard drive was a long trip on the road
A mouse pad was where a mouse lived
And a backup happened to your commode!
Cut--you did with a pocket knife
Paste you did with glue
A web was a spider's home
And a virus was the flu!
I guess I'll stick to my pad and paper
And the memory in my head
I hear nobody's been killed in a computer crash
But when it happens they wish they were dead!
Author: Unknown
Source: Copyright 2014 John Klossner, www.jklossner.com
Deutsche Bank
Wealth Management
25
Internet of Things
.Changing our Vocabulary
Internet Connectivity
EFTA01477410
Equity Sectors
An "Appreciation" for Innovation and Demographics
New Wave of Technology — The "Internet of Things"
Footnotes: Data as of December 2015.
Source: Machina Research, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
26
EFTA01477411
Equity Sectors
An "Appreciation" for Innovation and Demographics
Record Orphan Drug Approvals
10
20
30
40
50
60
0
FDA Orphan Drug Approvals by Year
Six Year Challenge?*
Footnotes: Data as of December 31, 2014.
10
15
20
25
30
35
40
45
0
5
2011
2012
2013
2014
2015
Footnotes: Data as of December 31, 2015. *Annual total return, Healthcare is
S&P 500 healthcare.
Source: FactSet, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
Source: FDA Blog, Deutsche Bank Wealth Management.
Healthcare S&P 500
Genome Costs Decreasing
—$95million
$1,000
$10,000
$100,000
$1,000,000
$10,000,000
$100,000,000
—$1 thousand
2001 2003 2004 2005 2007 2008 2009 2011 2012 2013 2015
Cost per Genome
— Despite positive fundamentals, because of the
uncertainty surrounding the political landscape and
the volatility that may arise in many healthcare
names, we would favor tech, financials and
consumer discretionary over healthcare.
EFTA01477412
- If political rhetoric intensifies, so could volatility.
This may result in attractive buying opportunities as
we remain constructive long term on healthcare
due to visible earnings growth, continued
innovation and favorable demographics.
Footnotes: Data is as of November 2015.
Source: Deutsche Bank Wealth Management.
27
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
EFTA01477413
10 Crude Oil
A "Glut"ton for Punishment...is $55 Oil Enough?
Oil Falls Drop in Perspective
-90%
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
1 31 61 91 121 151 181 211 241 271 301 331 361 391 421 451 481
1985
1990
1997
2000
2008
2014
— The current crude oil decline is the second longest
in length since 1985. Throughout this decline,
crude oil has fallen -67%.
— In analyzing the WTI futures curve, producers are
not pricing in $55/barrel oil until December 2021.
— As the futures curve shows prices below breakeven
prices for U.S. producers for many years to come,
production should continue to decline.
Footnotes: Data as of December 31, 2015.
Source: FactSet, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
Footnotes: Data as of December 31, 2015.
Source: FactSet, Deutsche Bank Wealth Management.
28
Futures Curves Moving Lower
30
35
40
45
50
55
60
65
70
75
6/30/2015
9/30/2015
12/31/2015
Footnotes: Data as of December 31, 2015.
Source: Bloomberg Finance LP, Deutsche Bank Wealth Management.
EFTA01477414
U.S. Production Slowly Falling
-4.2%
Jul-15
Nov-15
Mar-16
Jul-16
Nov-16
Mar-17
Jul-17
Nov-17
Mar-18
Jul-18
Nov-18
Mar-19
Jul-19
Nov-19
Mar-20
Jul-20
Nov-20
Mar-21
Jul-21
Nov-21
Mar-22
Jul-22
Nov-22
Mar-23
Jul-23
Nov-23
Mar-24
Jul-24
Nov-24
EFTA01477415
Crude Oil
A "Glut"ton for Punishment...is $55 Oil Enough?
Energy Stocks Expensive
Oil Driving High Yield Spreads
— Currently, energy stocks are trading at levels that
would suggest a $58 oil price, higher than our 12
month target of $55.
— This warrants continued caution on energy stocks.
— High yield energy debt is trading at distressed
levels (above 1000 bps) suggesting the
expectation of higher defaults may be priced in.
Footnotes: Data as of December 15, 2015.
Source: Deutsche Bank Wealth Management calculations.
Footnotes: Data as of December 31, 2015.
Source: FactSet, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
29
Oil prices inverted
In hundreds
EFTA01477416
Crude Oil
A "Glut"ton for Punishment...is $55 Oil Enough?
MLP Decline Worse Than 2008
100
110
40
50
60
70
80
90
0
50
100 150 200 250 300 350 400 450 500 550
2007-2008 Decline
Current Decline
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Dec-02 Jun-04 Nov-05 Apr-07 Sep-08 Mar-10 Aug -11 Jan-13 Jun-14 Dec-15
Alerian MLP Index - 10YR Treasury Yield
Alerian MLP Index Dividend Yield
10YR U.S. Treasury Yield
— Currently, MLPs have fallen in a similar manner
to the 2007-2008 "Great Recession."
— The dividend yield of the Alerian MLP Index is near
the highest level (614 bps) over the 10 year
Treasury yield since 2009.
Dividend Yield vs. 10YR Yield
Footnotes: Data as of December 31, 2015.
Source: Bloomberg Finance LP, Deutsche Bank Wealth Management.
Footnotes: Data as of December 31, 2015.
Source: Bloomberg Finance LP, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
30
EFTA01477417
Review of 2015 Themes
Investment Theme
Good, but Not "Great
Expectations"
Diverging Dynamics in Monetary
Policy
Fixed Income — Shooting at Small
Targets
EM Fixed Income — Hard Pressed
DM Equities — "Earning" Their
Way Higher
Dividend Stocks
Sector Focus
EM Equities — Honey I Shrunk the
Growth Premium
Dollar Dominance to Continue
Real Assets — Rank Rattle and
Roll
Deutsche Bank
Wealth Management
Total Score for 2015 = 90%
Investment Theme
Recommendation
Dial Down Return Expectations as
Valuations are Less Attractive and
Volatility is to Increase
U.S. to be the Developed Market
Leader, Leading to Diverging Monetary
Policy
Slight Rise in Treasury Yields; Favor
Investment Grade and High Yield over
Treasuries
Favor EM Hard Currency Bonds over
EM Local Currency Bonds
Accommodative Policy Will Drive
Global Equities Higher. S&P will Post
Positive Returns for Seventh Year
Favor Dividend Paying Stocks
The NASDAQ will reach a record high.
Favor Consumer Discretionary and
Info Tech
Favor DM Equities over EM. Within
EM, favor Asia over LATAM
The Dollar Will Continue to Rally in
2015. Invest on a Currency Hedged
Basis
Favor REITs and Infrastructure Over
Crude Oil and Gold
Grade
'A
EFTA01477418
IE
IC
IC
IC
IC
IC
IC
Rationale
S&P 500 PE contracted for the first time since 2011 and average
daily S&P 500 volatility (16.7) was the highest since 2012. FX and
Treasury Volatility also increased.
The U.S. is on path to post 2.2% growth compared to 1.4% in
Europe and 0.8% in Japan. The Fed hiked rates for the first time
since 2006, while the ECB announced QE.
10 Year treasury yields rose only 10 bps throughout 2015.
However, both high yield and investment grade credit
underperformed treasuries.
EM hard currency bonds significantly outperformed both local
currency bonds and the Barclays Agg by 1167 bps and 74 bps,
respectively.
While the S&P 500 is on pace to post slightly positive earnings
and returns for the seventh straight year. On the back of weaker
currencies, Europe and Japanese earnings outpaced the U.S.
Both the S&P 500 Dividend Aristocrats Index (+0.93%) and the
EuroStoxx 50 (7.3%) were positive in 2015.
The NASDAQ reached a record high in 2015. Both consumer
discretionary (+10.1%) and info tech (+5.9%) outperformed the
S&P 500 (+1.4%).
DM equities (MSCI EAFE: -0.4% USD) outperformed EM equities
(MSCI EM: -14.6% USD) by 1421 bps. Within EM, Asia
outperformed LATAM by 2192 bps.
The Dollar rose —9% in 2015 and has rallied against every major
currency. While the MSCI AC World is down 1.8% in USD terms,
it is up 1.8% in local terms.
While REITs (+2.8%) outperformed both gold (-10.5%) and crude
oil (-30.5%), infrastructure (-14.4%) lagged gold returns.
Footnotes: Data as of December 31, 2015.
Source: FactSet, Bloomberg Finance LP, Deutsche Bank Wealth Management.
31
EFTA01477419
Multi Asset Investment Committee Forecasts
January 2016
GDP Growth
in %
World
USA
Euroland
UK
Japan
China
Inflation
in %
USA (core PCE)
Euroland
UK
Japan
China
Curr Acct Balance
in % of GDP
USA
Euroland
UK
Japan
China
Fiscal Balance
in % of GDP
USA
Euroland
UK
Japan
China
Key Interest Rates
USA (Fed funds)
Euroland (Refi rate)
UK (Repo rate)
Japan (Mmkt rate)
2015
3.2%
2.2%
1.4%
2.5%
0.8%
6.8%
2015
1.4%
0.1%
0.2%
0.7%
1.5%
2015
-2.8%
EFTA01477420
3.0%
-3.7%
2.0%
2.0%
2015
-2.5%
-2.2%
-4.5%
-6.5%
-2.4%
Currentl
0.25%
0.05%
0.50%
0.10%
2016
Currencies
3.4%
2.4%
1.6%
2.2%
1.2%
6.0%
2016
1.6%
1.2%
1.8%
0.8%
1.2%
USA (S&P 500)
2016
-3.0%
3.0%
-3.2%
2.0%
1.8%
2016
USA
-2.3%
-1.9%
-3.8%
-6.5%
-2.4%
12 Mo Forecast
(Dec 2016)
0.75-1.00%
0.05%
0.75%
0.10%
Euroland (German Bund)
UK
EFTA01477421
Japan
Credit
Barclays U.S. High Yield
2.05%
0.41%
1.71%
0.23%
Current
Couponl
6.70%
JPM GBI- EM Global Diversified (Local)
JPM EMBIG (EM Broad Index) (Hard Currency)
Yield
9.47%
7.08%
Current
Spread5
799
457
J
J
J
J
Next 3%+ Move6
2.40%
0.75%
2.20%
0.35%
12-Month (Price Return
Estimate)
-2.3%
-0.9%
-2.7%
-2.3%
-0.9%
12 Month Return
4.4%
Euroland (Euro Stoxx 50)
Germany (DAX)
UK (FTSE 100)
MSCI Japan (JPY)
Asia ex Japan (MSCI in USD)
Latin America (MSCI in USD)
Sovereign Rates
1907
3023
9765
5900
832
EFTA01477422
448
1621
Currentl
Oil (WTI) in USD
Gold in USD
Equities
32
1096
Currentl
Dividend
Yield
2.2%
3.5%
2.8%
4.2%
1.9%
2.7%
3.1%
P/E (LTM)2
16.27
13.26
12.30
14.97
13.71
11.27
13.36
NTM P/E
Forecast3
16.75
14.50
13.75
14.75
16.00
12.00
14.00
NTM EPS
Forecast3
124
236
819
400
62
39
104
EUR vs. USD
USD vs. JPY
EUR vs CHF
GBP vs USD
USD vs CNY*
Commodities
Currentl
EFTA01477423
1.08
118.51
1.10
1.43
6.58
Currentl
Next 3%+ Move
JR
JR
Next 3%+ Move
JR
JR
JR
14
14
ON
eg
Next 3%+ Yield Move4
Next 3%+ Move
ON
14
12 Month Forecast
(Dec 2016)
0.95
130.00
1.13
1.52
6.90
12 Month Forecast
(Dec 2016)
50
1000
12 Month Forecast
(Dec 2016)
2080
3400
11300
5900
1000
470
1500
12 Month Forecast
(Dec 2016)
12 Month Return
(Dec 2016)
-12.2%
9.7%
2.9%
6.0%
4.9%
EFTA01477424
12 Month Return
(Dec 2016)
55.3%
-8.8%
12 Month Return
(Dec 2016)
11.3%
16.0%
15.7%
4.2%
22.1%
7.6%
-4.3%
12 Month Return
(Dec 2016)
Footnotes: Macro estimates are according to Deutsche Asset & Wealth
Management and are as of November 2015. U.S. GDP is 4Q over 4Q. 1 Current as
of January 22, 2016. 2
LTM stands for last twelve months. 3 P/E and EPS forecasts are according to
Deutsche Asset & Wealth Management 4 Direction in sovereign bonds is yield
move. 5 High yield
spread is high yield versus five year Treasury. 6 Next 3% move in credit is
return move.
Source: FactSet, Deutsche Bank Wealth Management.
Deutsche Bank
Wealth Management
EFTA01477425
Investment Strategy Group
Important Information
Larry Adam, CFA@, CIMAO
CIO & Chief Investment Strategist
Telephone (410) 895-4135
Facsimile (410) 895-4250
[email protected]
Megan Horneman
Investment Strategist
Telephone (410) 895-4148
Facsimile (410) 895-4250
[email protected]
Matt Barry
Investment Strategy Analyst
Telephone (410) 895-4282
Facsimile (410) 895-4250
[email protected]
This document has been prepared for informational purposes only and is not
an offer, or solicitation of an offer, to buy or sell any security, or a
recommendation to enter
into any transaction relating to the products and services described herein.
Before entering into any transaction, you should take steps to ensure that
you understand and
have made an independent assessment of the appropriateness of the
transaction in light of your own particular financial, legal and tax
situation, investment objectives
and level of risk tolerance, and you should consult your legal and tax
advisers to determine how these products and/or services may affect you.
Deutsche Bank does not
provide accounting, tax or legal advice. Investing in financial markets
involves a substantial degree of risk. There can be no assurance that the
investment objectives
described herein will be achieved. Investment losses may occur, and
investors could lose some or all of their investment. Although this document
has been carefully
prepared and is based on information from sources believed to be reliable,
no representation is made that it is accurate and complete. We have no
obligation to update or
amend the information provided herein, and information is subject to change
without notice. The past performance of a product or service does not
guarantee or predict its
future performance. The price or value of investments to which this
commentary relates, directly or indirectly, may rise or fall. Unless you are
notified to the contrary, any
products and services mentioned are not guaranteed by the FDIC (or by any
governmental entity) and are not guaranteed by or obligations of Deutsche
Bank.
This document contains "forward-looking statements"- that is, statements
related to future, not past, events. In this context, forward-looking
statements often address
expected future business and financial performance, and often contain words
EFTA01477426
such as "expect," "anticipate," "intend," "plan," "believe," "seek," or
"will." Forward-looking
statements by their nature address matters that are, to different degrees,
uncertain. Particular uncertainties that could adversely or positively
affect future results include:
the behavior of financial markets, including fluctuations in interest and
exchange rates, commodity and equity prices and the value of financial
assets; continued volatility
and further deterioration of the capital markets; the commercial and
consumer credit environment; the impact of regulation and regulatory,
investigative and legal actions;
strategic actions, including acquisitions and dispositions; future
integration of acquired businesses; future financial performance of major
industries; and numerous other
matters of national, regional and global scale, including those of a
political, economic, business and competitive nature. These uncertainties
may cause actual future
results to be materially different than those expressed in our forward -
looking statements.
The information on the benchmarks is presented for illustrative purposes
only and is not intended to imply the potential performance of any fund or
investment.
Benchmarks are not available for direct investment. Benchmark performance
assumes the reinvestment of all distributions, but does not assume any
transaction costs,
taxes, management fees or other expenses. The performance of the benchmarks
may vary from investments held in the account.
Investing in financial markets involves a substantial degree of risk. There
can be no assurance that the investor will achieve positive results.
Investment losses may
occur, and investors could lose some or all of their investment. No
guarantee or representation is made that any investment idea, including,
without limitation, the
investment objective, diversification strategy, or risk monitoring goal,
will be successful, and investment results may vary substantially over time.
Investment losses may
occur from time to time. Nothing herein is intended to imply that an
investment may be considered "conservative", "safe", "risk free" or "risk
averse". Economic, market,
and other conditions could also cause the investments to alter their
investment objectives, guidelines, and restrictions.
Bonds are subject to interest rate risk. When interest rates rise, bond
prices fall; generally the longer a bond's maturity, the more sensitive it
is to this risk. Bonds may also
be subject to call risk, which is the risk that the issuer will redeem the
debt at its option, fully or partially, before the scheduled maturity date.
The market value of debt
instruments may fluctuate, and proceeds from sales prior to maturity may be
more or less than the amount originally invested or the maturity value due
to changes in
market conditions or changes in the credit quality of the issuer. Bonds are
EFTA01477427
subject to the credit risk of the issuer. This is the risk that the issuer
might be unable to make
interest and/or principal payments on a timely basis. Bonds are also subject
to reinvestment risk, which is the risk that principal and/or interest
payments from a given
investment may be reinvested at a lower interest rate. Investing in high
yield bonds, which tend to be more volatile than investment grade fixed
income securities, is
speculative. These bonds are affected by interest rate changes and the
creditworthiness of the issuers, and investing in high yield bonds poses
additional credit risk, as
well as greater risk of default.
Investments in Foreign Countries - Such investments may be in countries that
prove to be politically or economically unstable. Furthermore, in the case
of investments in
foreign securities or other assets, any fluctuations in currency exchange
rates will affect the value of the investments and any restrictions imposed
to prevent capital flight
may make it difficult or impossible to exchange or repatriate foreign
currency.
If
Deutsche Bank
Wealth Management
33
ℹ️ Document Details
SHA-256
fe3a1224cbf42cf9547d4f3a49f009d3d438a950efd8b049da04f915daa0501c
Bates Number
EFTA01477363
Dataset
DataSet-10
Document Type
document
Pages
69
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