1. Research
  2. Products & Topics
  3. Periodicals
  4. The House View Snapshot
January 23, 2018
This edition reviews the global macro outlook, with 2018 likely marking the peak of the current cyclical expansion. Read on for our views on the US macro outlook and the Fed, the eurozone and the ECB, China’s macro outlook and risks. Find also a summary of our views on key themes as well as on the different asset classes and the main macro and markets forecasts [more]
marcos.arana@db.com matthew.luzzetti@db.com michael.hsueh@db.com 23-Jan-2018 thehouseview@list.db.com http://houseview.research.db.com Deutsche Bank AG/London The views expressed above accurately reflect the personal views of the authors. The authors have not and will not receive any compensation for providing a specific recommendation or view. Investors should consider this report as only a single factor in making their investment decision. Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors. FOR OTHER IMPORTANT DISCLOSURES PLEASE VISIT HTTP://GM.DB.COM MCI (P) 083/04/2017. Deutsche Bank Research The House View Snapshot Macro views World  We expect global growth to accelerate to +3.8% in 2018, marginally faster than 2017 which was the fastest in a decade, with the improvement led by the US and emerging markets. Relative to consensus, we are most bearish on the UK and Japan. We expect the Eurozone to continue growing above potential, but do not anticipate any further acceleration. In China, we expect growth to slow, and are more worried about inflation and financial risks than consensus.  This remains a very robust and broad-based economic backdrop. However, 2018 should mark the peak of the current cyclical expansion, and growth should decelerate from 2019. United States  Growth to accelerate in 2018 to +2.7%, the fastest pace since 2015, boosted around 0.3-0.4pp by Trump’s tax reform. We note upside risks to this estimate given the potential for increased fiscal spending if Congress ends up raising its spending caps in the FY2018 budget.  Growth momentum remains very strong, with firms continuing to expand their capital expenditure and consumer spending accelerating impressively. A potential headwind to this outlook is in housing, where activity remains tepid and the new tax reform’s provisions could further weigh on the sector.  By several measures (e.g., ISM prices paid index, unemployment rate, gauges of underlying prices) inflation should accelerate in Q2-2018 after disappointing in 2017. We see core PCE inflation at +1.9% by the fourth quarter, at +2.2% by end-2019, above the Fed’s +2.0% target for the first time since 2006.  Dollar weakness (7% depreciation on a trade-weighted basis in 2017) should add a few tenths of a percentage point to both inflation and growth. Eurozone  Eurozone growth has risen to the fastest pace in a decade. We forecast +2.3% growth for 2018, in line with consensus. We expect growth to decelerate in the second half of the year as tailwinds fade.  Indeed the current pace of growth is far above our estimate of potential growth, which is around +1.0%. Cyclical momentum will naturally decline as output gaps close; financial conditions will tighten as the ECB exits its accommodative policy stance; and the boost from net exports will fade as Asia, and especially China, decelerate. A strong euro will also act as a drag on growth, albeit with a lag.  The political agenda remains busy, with Germany’s government formation, Brexit negotiations, the Italian election and the debate on EU reform. On all fronts, though, our baseline scenario is for little fundamental change or macro impact. China  China’s economy to continue decelerating in 2018. We forecast +6.3% growth vs. +6.9% for 2017. We see risks balanced on both sides. Fiscal and monetary policies will remain tight and investment will continue to slow. This will be partially balanced by strong wage growth and consumer spending.  Assuming growth decelerates as we expect, PBoC should ease monetary policy in H2 (we see two RRR cuts) as stimulus. Our base case is for policymakers to mitigate the extent of any slowdown, avoiding a sharp deceleration.  We see two major risks to our base case. The first is inflation: core inflation reached a 6-year high in 2017 and could rise further this quarter; this could prompt PBoC to raise rates (in the past we have seen hikes when CPI reached +3.0%). The second is financial stability on the back of high leverage in the financial sector. The system has grown more complex, credit quality has deteriorated, and IMF stress tests showed potential capital shortfalls at a significant number of large- and mid-sized banks. Emerging Markets  EM growth to remain broadly positive in 2018, but regional cycles becoming more differentiated: Latin America in a more favourable cyclical position than most of EM Asia and, to a lesser extent, CEEMEA.  The geo/political calendar presents idiosyncratic risk in many major EMs: general elections in Mexico, Brazil, Russia; regional elections in India, Indonesia; volatility in South Korea, South Africa, Turkey.  These fundamentals should support continued portfolio flows into EM and help the macro picture. Historically, Fed rate hikes have not interrupted EM flows unless long-end rates also increased. Monetary Policy  Fed : expect 4 rate hikes in 2018, more than FOMC guidance (3) and than market pricing (2.5).  ECB : expect QE to terminate at end-2018, first hike in mid-2019, broadly in line with market pricing.  BoJ : Kuroda to be reappointed, monetary policy broadly unchanged, but net QQE purchases to slow.  BoE : on hold until 2019 due to Brexit uncertainty, slow growth. Risks skewed to earlier rate hikes.  PBoC : policy steady through H1-2018, followed by 100 bps of RRR cuts as growth slows in H2. Risk of policy tightening if inflation surprises to the upside.  EM : regional divergence – tightening in Asia contrasts with room for rate cuts in LatAm. Distributed on: 23/01/2018 05:00:00 GMT 7T2se3r0Ot6kwoPa The House View: Snapshot (Continued) 23 January 2018 Key downside risks  Higher than expected inflation prompts fast monetary policy tightening, disrupts markets  Market correction : a global equity correction weighs on sentiment and wealth, triggers a recession  Financial stability : tighter policy or slower growth causes financial sector instability especially where leverage is high  China slowdown : higher inflation, a policy mistake, or financial stress leads to a marked deceleration in growth, with global ramifications though trade and financial channels Key themes  Cyclical recovery reaches its peak : most countries’ economic growth will plateau or decelerate in 2018, LatAm being a key exception. We forecast slower growth in the UK, Japan, China, and the rest of EM Asia in 2018, and in the US and the Eurozone in 2019. As such 2018 should mark the peak of the current cyclical expansion, and growth should decelerate from 2019.  Steady inflationary pressures : we expect inflation to start picking up more noticeably this year, as output gaps continue to close. Leading indicators suggest inflation will rise more noticeably from Q2 in the US; we expect similar dynamics in Europe. In EM, energy and food prices may accelerate, partially attributable to positive base effects, putting upward pressure on gauges of headline inflation.  The end of QE : 2018 (almost) the last year of QE (BoJ may continue QQE in 2019). We expect ECB purchases to end in Q4; the BoJ’s volume of purchases has slowed amid its YCC framework; the Fed will continue to let its balance sheet runoff accelerate. The end of QE will need to be watched carefully, given the program’s earlier impact on term premia and risk assets.  US government shutdown : modest negative for growth but should not derail Fed hiking plans. Based on prior episodes, a two-week shutdown could take 0.25-0.5pp from annualised quarterly growth. Market views Equities  Constructive US equities despite record levels. Corporate tax reform fully priced in at the index level, but strong US macro backdrop should support equities. We target the S&P500 at 3,000 for end-2018.  Neutral European equities, targeting the Euro Stoxx 600 at 395 for end-2018. PMIs and growth should plateau this year, and the euro’s strength will continue to weigh on exporters’ profits. Rates  Strategically bearish in US and Europe. Despite recent sell-off, the market is still pricing low inflation and little further tightening (“Fed is nearly done”) – at odds with our inflation and central bank views. FX  Bearish dollar: currency reached a medium-term peak. As in 2004-06, the dollar can weaken despite favourable rate differentials: wider twin deficit, record-high US asset valuations negative for inflows.  Bullish euro: flipside of our bearish dollar view; target 1.30 vs. dollar this year. ECB expectations have more room to reprice and the positive basic balance will keep flows highly supportive.  Bearish yen, but risks are balanced and prefer to buy volatility than take a positional view. Credit  Constructive credit short-term, as fundamental and policy support remain steady for now. As end of QE approaches in Europe and growth levels off, we expect credit to be pressured. EM  Positive macro backdrop of strong growth, rising but not yet high DM inflation, still low vol to continue supporting EM inflows and in turn asset valuations – even if performance should moderate after a stellar 2017. Returns to be tilted toward EM FX – we are long EM FX vs. USD.  However, risks remain higher than in 2017, given reduced central bank support, China’s deceleration, and potentially stretched valuations. Commodities  Negative on oil, positive on metals. Global growth points to continued commodity demand, but we expect oil prices to decline modestly from current levels as US supply rebounds.  The supply outlook is more nuanced for metals, as reforms, disruption, and slow supply growth, mean that robust industrial activity should support prices. Key macro and markets forecasts Recent publications  The House View: Happy holidays , 11-Dec-2017  The House View: Back to school , 17-Sep-2017  The House View: Taking a step back , 25-Jul-2017 GDP growth (%)Central Bank policy rate (%)Key market metrics 201620172018F2019FCurrentQ4-18FQ4-19FQ4-20FCurrentQ4-18FQ4-19FQ4-20F Global3. #N/A#N/A#N/A#N/A US1. 10Y yield (%)2.652.952.962.96 Eurozone1. 10Y yield (%)0.570.85 #N/A#N/A Germany1. #N/A#N/A#N/A#N/A EUR/USD 1.2231.281.351.40 Japan0. 111.2120110100 UK1. #N/A GBP/USD1.3941.381.421.47 China6. 5002,8183,000 #N/A#N/A Stoxx 600402395 #N/A#N/A Oil WTI (USD/bbl)63.75456 #N/A Oil Brent (USD/bbl)69.16062 #N/A Current prices as of 22-Jan-2018 T he House View: Snapshot (Continued) 23 January 2018 Appendix 1 Important Disclosures *Other information available upon request Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors . Other information is sourced from Deutsche Bank, subject companies, and other sources. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr . Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing. Analyst Certification The views expressed in this report accurately reflect the personal views of the undersigned lead analyst about the subject issuers and the securities of those issuers. In addition, the undersigned lead analyst has not and will not receive any compensation for providing a specific recommendation or view in this report. Marcos Arana/Matthew Luzzetti/ Michael Hsueh The House View: Snapshot (Continued) 23 January 2018 Additional Information The information and opinions in this report were prepared by Deutsche Bank AG or one of its affiliates (collectively "Deutsche Bank"). Though the information herein is believed to be reliable and has been obtained from public sources believed to be reliable, Deutsche Bank makes no representation as to its accuracy or completeness. Hyperlinks to third- party websites in this report are provided for reader convenience only. Deutsche Bank neither endorses the content nor is responsible for the accuracy or security controls of those websites. If you use the services of Deutsche Bank in connection with a purchase or sale of a security that is discussed in this report, or is included or discussed in another communication (oral or written) from a Deutsche Bank analyst, Deutsche Bank may act as principal for its own account or as agent for another person. Deutsche Bank may consider this report in deciding to trade as principal. It may also engage in transactions, for its own account or with customers, in a manner inconsistent with the views taken in this research report. Others within Deutsche Bank, including strategists, sales staff and other analysts, may take views that are inconsistent with those taken in this research report. Deutsche Bank issues a variety of research products, including fundamental analysis, equity-linked analysis, quantitative analysis and trade ideas. Recommendations contained in one type of communication may differ from recommendations contained in others, whether as a result of differing time horizons, methodologies, perspectives or otherwise. Deutsche Bank and/or its affiliates may also be holding debt or equity securities of the issuers it writes on. Analysts are paid in part based on the profitability of Deutsche Bank AG and its affiliates, which includes investment banking, trading and principal trading revenues. Opinions, estimates and projections constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinions of Deutsche Bank and are subject to change without notice. Deutsche Bank provides liquidity for buyers and sellers of securities issued by the companies it covers. Deutsche Bank research analysts sometimes have shorter-term trade ideas that may be inconsistent with Deutsche Bank's existing longer-term ratings. Trade ideas for equities can be found at the SOLAR link at http://gm.db.com . A SOLAR idea represents a high- conviction belief by an analyst that a stock will outperform or underperform the market and/or a specified sector over a time frame of no less than two weeks and no more than six months. In addition to SOLAR ideas, analysts may occasionally discuss with our clients, and with Deutsche Bank salespersons and traders, trading strategies or ideas that reference catalysts or events that may have a near-term or medium-term impact on the market price of the securities discussed in this report, which impact may be directionally counter to the analysts' current 12-month view of total return or investment return as described herein. Deutsche Bank has no obligation to update, modify or amend this report or to otherwise notify a recipient thereof if an opinion, forecast or estimate changes or becomes inaccurate. Coverage and the frequency of changes in market conditions and in both general and company-specific economic prospects make it difficult to update research at defined intervals. Updates are at the sole discretion of the coverage analyst or of the Research Department Management, and the majority of reports are published at irregular intervals. This report is provided for informational purposes only and does not take into account the particular investment objectives, financial situations, or needs of individual clients. It is not an offer or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy. Target prices are inherently imprecise and a product of the analyst’s judgment. The financial instruments discussed in this report may not be suitable for all investors, and investors must make their own informed investment decisions. Prices and availability of financial instruments are subject to change without notice, and investment transactions can lead to losses as a result of price fluctuations and other factors. If a financial instrument is denominated in a currency other than an investor's currency, a change in exchange rates may adversely affect the investment. Past performance is not necessarily indicative of future results. Performance calculations exclude transaction costs, unless otherwise indicated. Unless otherwise indicated, prices are current as of the end of the previous trading session and are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is also sourced from Deutsche Bank, subject companies, and other parties. The Deutsche Bank Research Department is independent of other business divisions of the Bank. Details regarding organizational arrangements and information barriers we have established to prevent and avoid conflicts of interest with respect to our research are available on our website under Disclaimer, found on the Legal tab. Macroeconomic fluctuations often account for most of the risks associated with exposures to instruments that promise to pay fixed or variable interest rates. For an investor who is long fixed-rate instruments (thus receiving these cash The House View: Snapshot (Continued) 23 January 2018 flows), increases in interest rates naturally lift the discount factors applied to the expected cash flows and thus cause a loss. The longer the maturity of a certain cash flow and the higher the move in the discount factor, the higher will be the loss. Upside surprises in inflation, fiscal funding needs, and FX depreciation rates are among the most common adverse macroeconomic shocks to receivers. But counterparty exposure, issuer creditworthiness, client segmentation, regulation (including changes in assets holding limits for different types of investors), changes in tax policies, currency convertibility (which may constrain currency conversion, repatriation of profits and/or liquidation of positions), and settlement issues related to local clearing houses are also important risk factors. The sensitivity of fixed-income instruments to macroeconomic shocks may be mitigated by indexing the contracted cash flows to inflation, to FX depreciation, or to specified interest rates – these are common in emerging markets. The index fixings may – by construction – lag or mis-measure the actual move in the underlying variables they are intended to track. The choice of the proper fixing (or metric) is particularly important in swaps markets, where floating coupon rates (i.e., coupons indexed to a typically short-dated interest rate reference index) are exchanged for fixed coupons. Funding in a currency that differs from the currency in which coupons are denominated carries FX risk. Options on swaps (swaptions) the risks typical to options in addition to the risks related to rates movements. Derivative transactions involve numerous risks including market, counterparty default and illiquidity risk. The appropriateness of these products for use by investors depends on the investors' own circumstances, including their tax position, their regulatory environment and the nature of their other assets and liabilities; as such, investors should take expert legal and financial advice before entering into any transaction similar to or inspired by the contents of this publication. The risk of loss in futures trading and options, foreign or domestic, can be substantial. As a result of the high degree of leverage obtainable in futures and options trading, losses may be incurred that are greater than the amount of funds initially deposited – up to theoretically unlimited losses. Trading in options involves risk and is not suitable for all investors. Prior to buying or selling an option, investors must review the "Characteristics and Risks of Standardized Options”, at http://www.optionsclearing.com/about/publications/character-risks.jsp . If you are unable to access the website, please contact your Deutsche Bank representative for a copy of this important document. Participants in foreign exchange transactions may incur risks arising from several factors, including: (i) exchange rates can be volatile and are subject to large fluctuations; (ii) the value of currencies may be affected by numerous market factors, including world and national economic, political and regulatory events, events in equity and debt markets and changes in interest rates; and (iii) currencies may be subject to devaluation or government-imposed exchange controls, which could affect the value of the currency. Investors in securities such as ADRs, whose values are affected by the currency of an underlying security, effectively assume currency risk. Deutsche Bank is not acting as a financial adviser, consultant or fiduciary to you or any of your agents with respect to any information provided in this report. Deutsche Bank does not provide investment, legal, tax or accounting advice, and is not acting as an impartial adviser. Information contained herein is being provided on the basis that the recipient will make an independent assessment of the merits of any investment decision, and is not meant for retirement accounts or for any specific person or account type. The information we provide is directed only to persons we believe to be financially sophisticated, who are capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies, and who understand that Deutsche Bank has financial interests in the offering of its products and services. If this is not the case, or if you or your agent are an IRA or other retail investor receiving this directly from us, we ask that you inform us immediately. Unless governing law provides otherwise, all transactions should be executed through the Deutsche Bank entity in the investor's home jurisdiction. Aside from within this report, important risk and conflict disclosures can also be found at https://gm.db.com on each company’s research page and under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing. United States: Approved and/or distributed by Deutsche Bank Securities Incorporated, a member of FINRA, NFA and SIPC. Analysts located outside of the United States are employed by non-US affiliates that are not subject to FINRA regulations, including those regarding contacts with issuer companies. Germany: Approved and/or distributed by Deutsche Bank AG, a joint stock corporation with limited liability incorporated in the Federal Republic of Germany with its principal office in Frankfurt am Main. Deutsche Bank AG is authorized under German Banking Law and is subject to supervision by the European Central Bank and by BaFin, Germany’s Federal Financial Supervisory Authority. United Kingdom: Approved and/or distributed by Deutsche Bank AG acting through its London Branch at Winchester House, 1 Great Winchester Street, London EC2N 2DB. Deutsche Bank AG in the United Kingdom is authorised by the The House View: Snapshot (Continued) 23 January 2018 Prudential Regulation Authority and is subject to limited regulation by the Prudential Regulation Authority and Financial Conduct Authority. Details about the extent of our authorisation and regulation are available on request. Hong Kong: Distributed by Deutsche Bank AG, Hong Kong Branch or Deutsche Securities Asia Limited (save that any research relating to futures contracts within the meaning of the Hong Kong Securities and Futures Ordinance Cap. 571 shall be distributed solely by Deutsche Securities Asia Limited). The provisions set out above in the "Additional Information" section shall apply to the fullest extent permissible by local laws and regulations, including without limitation the Code of Conduct for Persons Licensed or Registered with the Securities and Futures Commission. . India: Prepared by Deutsche Equities India Private Limited (DEIPL) having CIN: U65990MH2002PTC137431 and registered office at 14th Floor, The Capital, C-70, G Block, Bandra Kurla Complex Mumbai (India) 400051. Tel: + 91 22 7180 4444. It is registered by the Securities and Exchange Board of India (SEBI) as a Stock broker bearing registration nos.: NSE (Capital Market Segment) - INB231196834, NSE (F&O Segment) INF231196834, NSE (Currency Derivatives Segment) INE231196834, BSE (Capital Market Segment) INB011196830; Merchant Banker bearing SEBI Registration no.: INM000010833 and Research Analyst bearing SEBI Registration no.: INH000001741. DEIPL may have received administrative warnings from the SEBI for breaches of Indian regulations. The transmission of research through DEIPL is Deutsche Bank's determination and will not make a recipient a client of DEIPL. Deutsche Bank and/or its affiliate(s) may have debt holdings or positions in the subject company. With regard to information on associates, please refer to the “Shareholdings” section in the Annual Report at: https://www.db.com/ir/en/annual-reports.htm . Japan: Approved and/or distributed by Deutsche Securities Inc.(DSI). Registration number - Registered as a financial instruments dealer by the Head of the Kanto Local Finance Bureau (Kinsho) No. 117. Member of associations: JSDA, Type II Financial Instruments Firms Association and The Financial Futures Association of Japan. Commissions and risks involved in stock transactions - for stock transactions, we charge stock commissions and consumption tax by multiplying the transaction amount by the commission rate agreed with each customer. Stock transactions can lead to losses as a result of share price fluctuations and other factors. Transactions in foreign stocks can lead to additional losses stemming from foreign exchange fluctuations. We may also charge commissions and fees for certain categories of investment advice, products and services. Recommended investment strategies, products and services carry the risk of losses to principal and other losses as a result of changes in market and/or economic trends, and/or fluctuations in market value. Before deciding on the purchase of financial products and/or services, customers should carefully read the relevant disclosures, prospectuses and other documentation. "Moody's", "Standard & Poor's", and "Fitch" mentioned in this report are not registered credit rating agencies in Japan unless Japan or "Nippon" is specifically designated in the name of the entity. Reports on Japanese listed companies not written by analysts of DSI are written by Deutsche Bank Group's analysts with the coverage companies specified by DSI. Some of the foreign securities stated on this report are not disclosed according to the Financial Instruments and Exchange Law of Japan. Target prices set by Deutsche Bank's equity analysts are based on a 12-month forecast period.. Korea: Distributed by Deutsche Securities Korea Co. South Africa: Deutsche Bank AG Johannesburg is incorporated in the Federal Republic of Germany (Branch Register Number in South Africa: 1998/003298/10). Singapore: This report is issued by Deutsche Bank AG, Singapore Branch or Deutsche Securities Asia Limited, Singapore Branch (One Raffles Quay #18-00 South Tower Singapore 048583, +65 6423 8001), which may be contacted in respect of any matters arising from, or in connection with, this report. Where this report is issued or promulgated by Deutsche Bank in Singapore to a person who is not an accredited investor, expert investor or institutional investor (as defined in the applicable Singapore laws and regulations), they accept legal responsibility to such person for its contents. Taiwan: Information on securities/investments that trade in Taiwan is for your reference only. Readers should independently evaluate investment risks and are solely responsible for their investment decisions. Deutsche Bank research may not be distributed to the Taiwan public media or quoted or used by the Taiwan public media without written consent. Information on securities/instruments that do not trade in Taiwan is for informational purposes only and is not to be construed as a recommendation to trade in such securities/instruments. Deutsche Securities Asia Limited, Taipei Branch may not execute transactions for clients in these securities/instruments. Qatar: Deutsche Bank AG in the Qatar Financial Centre (registered no. 00032) is regulated by the Qatar Financial Centre Regulatory Authority. Deutsche Bank AG - QFC Branch may undertake only the financial services activities that fall The House View: Snapshot (Continued) 23 January 2018 within the scope of its existing QFCRA license. Its principal place of business in the QFC: Qatar Financial Centre, Tower, West Bay, Level 5, PO Box 14928, Doha, Qatar. This information has been distributed by Deutsche Bank AG. Related financial products or services are only available only to Business Customers, as defined by the Qatar Financial Centre Regulatory Authority. Russia: The information, interpretation and opinions submitted herein are not in the context of, and do not constitute, any appraisal or evaluation activity requiring a license in the Russian Federation. Kingdom of Saudi Arabia: Deutsche Securities Saudi Arabia LLC Company (registered no. 07073-37) is regulated by the Capital Market Authority. Deutsche Securities Saudi Arabia may undertake only the financial services activities that fall within the scope of its existing CMA license. Its principal place of business in Saudi Arabia: King Fahad Road, Al Olaya District, P.O. Box 301809, Faisaliah Tower - 17th Floor, 11372 Riyadh, Saudi Arabia. United Arab Emirates: Deutsche Bank AG in the Dubai International Financial Centre (registered no. 00045) is regulated by the Dubai Financial Services Authority. Deutsche Bank AG - DIFC Branch may undertake only the financial services activities that fall within the scope of its existing DFSA license. Its principal place of business in the DIFC: Dubai International Financial Centre, The Gate Village, Building 5, PO Box 504902, Dubai, U.A.E. This information has been distributed by Deutsche Bank AG. Related financial products or services are available only to Professional Clients, as defined by the Dubai Financial Services Authority. Australia and New Zealand: This research is intended only for "wholesale clients" within the meaning of the Australian Corporations Act and New Zealand Financial Advisors Act, respectively. Please refer to Australia-specific research disclosures and related information at https://australia.db.com/australia/content/research-information.html Where research refers to any particular financial product recipients of the research should consider any product disclosure statement, prospectus or other applicable disclosure document before making any decision about whether to acquire the product. Additional information relative to securities, other financial products or issuers discussed in this report is available upon request. This report may not be reproduced, distributed or published without Deutsche Bank's prior written consent. Copyright © 2018 Deutsche Bank AG