1. Research
1. Mai 2019
Key highlights from Torsten Slok’s, Chief Economist, Monthly Chart Book detailing macro and economic drivers impacting markets today. [mehr]
Slide 1 May Economic Chart Book (Snapshot) Torsten Slok, Ph.D. Chief International Economist Managing Director 60 Wall Street New York, New York 10005 Tel: 212 250 2155 Torsten.Slok@db.com May 2019 DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1 MCI(P) 066/04/2019. Matthew Barnard Associate Director of N.A. Equity Research Managing Director 60 Wall Street New York, New York 10005 Tel: 212 - 250 - 5111 Matthew.S.Barnard@db.com Deutsche Bank Research 1 Torsten Slok, torsten.slok@db.com +1 212 250 - 2155 May 2019 May Economic Chart Book (Snapshot) Enclosed are select charts from our May Economic Chart Book discussing: • Updated global economic trends • Why the US is a 2 - 2 - 2 economy for the new two years • US GDP Outlook and risks • State of the US consumer • Policy options for the US, Europe and Japan when the next recession hits Link to Torsten Slok’s full May Economic Chart Book can be found here. Deutsche Bank Research 2 Torsten Slok, torsten.slok@db.com +1 212 250 - 2155 May 2019 For the US we expect 2% growth, 2% inflation, and near 2% Fed funds rate for the next two years. Upside risks: • US quickly completes trade deals with China and Europe • Brexit gets resolved quickly • European Parliamentary election in May with no impact on markets • German fiscal expansion Downside risks: • A sudden blowup in credit markets • The US consumer gets tired • The US trade war intensifies, in particular with Europe • Fed credibility is severely damaged • China gets a current account deficit Overview: Risks to the economic outlook Deutsche Bank Research 3 Torsten Slok, torsten.slok@db.com +1 212 250 - 2155 May 2019 US and Europe much more important for China than China is for US and Europe Source: IMF Spillover Report, DB Global Research Impact of 1% increase in China GDP Impact of 1% increase in Euro area GDP Impact of 1% increase in US GDP Deutsche Bank Research 4 Torsten Slok, torsten.slok@db.com +1 212 250 - 2155 May 2019 Consensus expectations Source: Bloomberg Finance LP, DB Global Research Consensus expects: 2% growth, 2% inflation, and Fed funds at 2.5% Deutsche Bank Research 5 Torsten Slok, torsten.slok@db.com +1 212 250 - 2155 May 2019 Capacity utilization has peaked Source: FRB, Haver Analytics, DB Global Research Deutsche Bank Research 6 Torsten Slok, torsten.slok@db.com +1 212 250 - 2155 May 2019 ISM and Markit PMI point to some downside risks to growth Source: ISM, IHSM, Haver Analytics, DB Global Research Deutsche Bank Research 7 Torsten Slok, torsten.slok@db.com +1 212 250 - 2155 May 2019 Credit card interest rate at highest level in decades Source: Federal Reserve Board, Haver Analytics, DB Global Research Commercial bank interest rate: credit cards, accounts assessed interest 11 12 13 14 15 16 17 959801040710131619 % 11 12 13 14 15 16 17 % Note: This rate is the annualized ratio of total finance charges at all reporting banks to the total average daily balances a gai nst which the finance charges were assessed Last observation 2019 Q1 Deutsche Bank Research 8 Torsten Slok, torsten.slok@db.com +1 212 250 - 2155 May 2019 Is the US expansion fizzling out? Source: BEA, Haver Analytics, DB Global Research Deutsche Bank Research 9 Torsten Slok, torsten.slok@db.com +1 212 250 - 2155 May 2019 The credit cycle is leading the economic cycle. Economic slowdown risk is rising Source: BLS, ABA, Haver Analytics, DB Global Research 2 4 6 8 10 12 657075808590950005101520 % 1.2 1.6 2.0 2.4 2.8 3.2 3.6 % Unemployment rate (ls) Delinquency rate on consumer loans (rs, 12m lead) Note: Composite consumer loans consists of eight loan types: personal, automobile direct & indirect, mobile homes, recreational vehicles, marine financing loans, property improvement and home equity and second mortgage loans. 4 years 5 years 1 year ? Deutsche Bank Research 10 Torsten Slok, torsten.slok@db.com +1 212 250 - 2155 May 2019 United States: Monetary policy:Rate cuts, forward guidance, average inflation targeting, QE, yield curve control, and CCyB. Negative interest rates unlikely, changing inflation target unlikely. Fiscal policy:Automatic stabilizers, active countercyclical policies, infrastructure spending Europe: Monetary policy: Forward guidance, TLTRO, credit easing, depo tiering, QE, increase the 33% issuer-limit, add more asset classes to the eligible QE list. Fiscal policy: Automatic stabilizers, German fiscal stimulus package, Italian structural reforms, complete banking union and capital markets union, more fiscal risk sharing. Japan: Monetary policy: Rate cuts, forward guidance, lower 10y yield target, increase ETF purchase volume, increase JGB purchase volume, purchas other assets such as mortgages or munis. Impact of these initiatives would likely be minimal. TLTRO expected to harm bank earnings. Fiscal policy: Postpone October’s consumption tax hike, increase infrastructure spending Overview: Policy options for US, Europe, and Japan when the next recession hits Deutsche Bank Research 11 Torsten Slok, torsten.slok@db.com +1 212 250 - 2155 May 2019 Torsten Slok, Ph.D. • Chief International Economist, Managing Director • Deutsche Bank Securities, Inc.  Torsten Slok joined Deutsche Bank Securities in the fall of 2005.  Mr. Slok’s Economics team has been top - ranked by Institutional Investor in fixed income and equities since 2010. Slok currently serves as a member of the Economic Club of New York  Prior to joining the firm, Mr. Slok worked at the OECD in Paris in the Money and Finance Division and the Structural Policy Analysis Division. Before joining the OECD he worked for four years at the IMF in the Division responsible for writing the World Economic Outlook and the Division responsible for China, Hong Kong, and Mongolia.  Mr. Slok studied at University of Copenhagen and Princeton University. He has published numerous journal articles and reviews on economics and policy analysis, including in Journal of International Economics, Journal of International Money and Finance, and The Econometric Journal. Deutsche Bank Research 12 Torsten Slok, torsten.slok@db.com +1 212 250 - 2155 May 2019 01/05/2019 18:49:51 2010 DB Blue template Appendix 1 Important Disclosures *Other Information Available upon Request 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. Torsten Slok 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 https://research.db.com/Research/Disclosures/CompanySearch . Aside from within this report, important conflict disclosures can also be found at https://research.db.com/Research/Topics/Equities?topicId=RB0002 under the “Disclosures Lookup” and “Legal” tabs . Investors are strongly encouraged to review this information before investing . Deutsche Bank Research 13 Torsten Slok, torsten.slok@db.com +1 212 250 - 2155 May 2019 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 . Some trade ideas for equities are listed as Catalyst Calls on the Research Website (https : //research . db . com/Research/) , and can be found on the general coverage list and also on the covered company’s page . A Catalyst Call 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 three months . In addition to Catalyst Calls, 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 our organizational arrangements and information barriers we have to prevent and avoid conflicts of interest with respect to our research are available on our website (https : //research . db . com/Research/) under Disclaimer . 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 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 the following : ( 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 Research 14 Torsten Slok, torsten.slok@db.com +1 212 250 - 2155 May 2019 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 conflict disclosures can also be found at https : //research . db . com/Research/ on each company’s research page . Investors are strongly encouraged to review this information before investing . Deutsche Bank (which includes Deutsche Bank AG, its branches and affiliated companies) is not acting as a financial adviser, consultant or fiduciary to you or any of your agents (collectively, “You” or “Your”) with respect to any information provided in this report . Deutsche Bank does not provide investment, legal, tax or accounting advice, Deutsche Bank is not acting as your impartial adviser, and does not express any opinion or recommendation whatsoever as to any strategies, products or any other information presented in the materials . Information contained herein is being provided solely on the basis that the recipient will make an independent assessment of the merits of any investment decision, and it does not constitute a recommendation of, or express an opinion on, any product or service or any trading strategy . The information presented is general in nature and is not directed to retirement accounts or any specific person or account type, and is therefore provided to You on the express basis that it is not advice, and You may not rely upon it in making Your decision . The information we provide is being 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 are an IRA or other retail investor receiving this directly from us, we ask that you inform us immediately . In July 2018 , Deutsche Bank revised its rating system for short term ideas whereby the branding has been changed to Catalyst Calls (“CC”) from SOLAR ideas ; the rating categories for Catalyst Calls originated in the Americas region have been made consistent with the categories used by Analysts globally ; and the effective time period for CCs has been reduced from a maximum of 180 days to 90 days . 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 . 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 EC 2 N 2 DB . Deutsche Bank AG in the United Kingdom is authorised by the 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 : U 65990 MH 2002 PTC 137431 and registered office at 14 th 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 no .: INZ 000252437 ; Merchant Banker bearing SEBI Registration no .: INM 000010833 and Research Analyst bearing SEBI Registration no .: INH 000001741 . DEIPL may have received administrative warnings from the SEBI for breaches of Indian regulations . 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 . Deutsche Bank Research 15 Torsten Slok, torsten.slok@db.com +1 212 250 - 2155 May 2019 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 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 - 17 th 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 only undertake the financial services activities that fall within the scope of its existing DFSA license . 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 . In preparing this report, the primary analyst or an individual who assisted in the preparation of this report has likely been in contact with the company that is the subject of this research for confirmation/clarification of data, facts, statements, permission to use company - sourced material in the report, and/or site - visit attendance . Without prior approval from Research Management, analysts may not accept from current or potential Banking clients the costs of travel, accommodations, or other expenses incurred by analysts attending site visits, conferences, social events, and the like . Similarly, without prior approval from Research Management and Anti - Bribery and Corruption (“ABC”) team, analysts may not accept perks or other items of value for their personal use from issuers they cover . 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 © 2019 Deutsche Bank AG