Epstein Secrets

Source: DB FX Research EUR/USD PPP EUR/USD 20% Band 0.6 0.8 1.0 1.2 1.4 1.6 73 77 81 85 89 93

igure 1: The basic balance has turned positive... Figure 2: ...as current account surplus outweigh the net FDI outflows Source: DB FX Research and Eurostat Source: DB FX Research and Eurostat Figure 3: EUR/USD strongly correlated (0.88) with bilateral basic balance with the US Figure 4: Bilateral bas

h less liquidity After remaining within a narrow band (0.lpp) of zero for most of this year, inflation

3.0 3.5 4.0 2012 2013 PCE deflator Compensation per employee Employment Real total compensation 2014 2015 Source: Deutsche Bank Research , Eurostat 2016 2017 Figure 3: Investment spending recovery has flattened EA non-construction investment spending (lhs) German mfg orders from EA ex heavy

D bin Japan Figure 8: USD/JPY spot vs. PPP 20% Band USD/JPY 115 165 215 265 315 65 Source: Da

long term real rates Source: Deutsche Bank Research, Haver Analytics LP, Bloomberg EFTA01476084 Finance LP, ECB, Federal Reserve, Bank of Japan, Eurostat, BEA, CAO Similarly, the output gap has mirrored the dynamics of credit, as the unemployment rate peaked mid-2013 in the euro area vs. late 2009 i

120 130 60 70 80 90 USDTWI PPP USDTWI 20% Band 60 70 80 90 100 110 120 130 Figure 3: EU

gure 35: The basic balance remains in an uptrend... Figure 36: ...as current account surplus outweighs the FDI outflows Source: DB FX Research and Eurostat Source: DB FX Research and Eurostat Page 30 Deutsche Bank Securities Inc EFTA01464361 30 July 2013 Exchange Rate Perspectives: FX and the Fina

e 2% proportionate to index weights 70 60 50 40 30 20 10 0 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 — 2% —<0% 4 0.5 1 1.5 2 Source: Eurostat, BofA Merrill Lynch Global Research Source: Eurostat, BofA Merrill Lynch Global Research Core inflation at 0.8% is barely above the 2015 low of 0.6%

5 10 20 45 a= BofA-ML SGD NEER 5 === lower end of band 10 ——= mid-point 0 —— upper end of band eS & es &