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%

Euro Area ™ undexd -05 875 90 -0.6 775 -0.7 675 -3% 2008 2009 2010 2011 2012 2005 2006 2007 2008 2009 2010 2011 Source: Citigroup, Bloomberg. Source: Eurostat, Bundesbank. After four years that challenge some of the basic assumptions of efficient markets and laissez-faire capitalism, there is a pent-up dem

reland, Spain & Portugal 16% 105. 14% 100 17% i 10% od B% 85 G% Germany ad Ao, a aa 2007 2008 2009 2010 2011 0% aa ae ; Source: INE, CSO, ISTAT, NSS, Eurostat, Bundesbank, J.P. Morgan Ve7O gf TOG 188 TO 1D ZO aT Securities LLC, J.P. Morgan Private Bank. Periphery =Portugal, Ireland, lialy, Source: J.P. Morg

h more time to fail. Industrial production Index, 100 = January 2007 110 105 100 95 90 85 80 15 2007 2009 2010 2011 Source: INE, CSO, ISTAT, NSS, Eurostat, Bundesbank, J.P. Morgan Securities LLC, J.P. Morgan Private Bank. Periphery = Portugal, Ireland, Italy, Greece, Spain. 2008 * The current EFSF len

+ February LTRO, estimated at 2x net December LTRO ---tr • 30% Japan 25% 20% 15% 10% 5% 2007 2008 2009 2010 2011 Source: FRB, BEA, ECB, Eurostat, BoE, UKOffice for National Statistics. BoJ, Japan Cabinet Office. Italy's sovereign yield curve Pe cent 9% 8% 7% 6% 5% 4% 3% 2% 1% Nove

loyment 1:-. yoyl 1.0 1.all Prices, wages and costs Prices l''.'o YOYI Harmonised CPI ECCPEMUY 0.2 0.1 0 0.1 4.1 0.1 0.1 O. Core HICP (Eurostat) CPEXEMUY 0.8 0.9 11 0.9 0.9 1.1 0.9 0 Hat monised PPI PPIXEMU -1.1 -1.9 -2.0 -2.6 .2.13 •24 Oil Price (USD) EUCREIRCIT 61.7 60.2

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

A_R1_02049745 EFTA02696367 Macro ...But This Is Not 2008 0 0 CO z z z cc O a. cc O. a a. 0 Source: Bloomberg Sources: FRB, BEA, ECB, Eurostat, BoE, Office for National Statistics. BoJ. Cabinet Office. Data as of O4 2011. U.S. Households Deleveraging %GDP 130% 120% 110% 100% 90% 80%

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

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

ll public sector employees e Reduce state payroll via attrition e 50% bonus tax on top bank executives e Privatize state-owned industries Source: Eurostat, European Commission, IMF, New York Times, Financial Times, BBC, Wall Street Journal. USA Inc. | Consequences of Inaction 426 HOUSE_OVERSIGHT_02105

ase the overall costs to the healthcare system by reducing reliance on equally costly, but less effective and more toxic treatments, by @ CMS, OECD, Eurostat 4 CONTROL NUMBER 257 - CONFIDENTIAL HOUSE_OVERSIGHT_024015 reducing clinic visits and hospital admissions and by controlling or curing disease so

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