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Transcript of Deutsche Bank Research March Economic Chart Book (Snapshot) Deutsche Bank analyst, Deutsche Bank may

  • March 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

    March 2019

    DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI(P) 091/04/2018.

    Deutsche Bank Research

    7T2se3r0Ot6kwoPa

    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

  • 1Torsten Slok, torsten.slok@db.com +1 212 250-2155 March 2019Research Deutsche Bank

    March Economic Chart Book (Snapshot)

    Enclosed are select charts from our March Economic Chart Book discussing:

    • Global Economic Slowdown • US GDP and Economic Outlook • The US Labor Market • The US Housing Market • Consumer Credit Trends • US Treasury Supply

    Link to Torsten Slok’s full March Economic Chart Book can be found here.

    https://research.db.com/Research/api/1.0/file/2795-301809c9_7dd8_4106_93be_ac0178aa1992_604?fileToken=YYY122_oYtTxC8TxkqNQPBii034%2bMKHceIrQ7ywaub9ue7YtAkTf044kJcmuUVcSYJm17vk58WGlxAVgjlKgFvJCd2Ovi021mpf0lc5q9BeIwNj2/k%3d

  • 2Torsten Slok, torsten.slok@db.com +1 212 250-2155 March 2019Research Deutsche Bank

    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

    95 98 01 04 07 10 13 16 19

    %

    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 against which the finance charges were assessed

  • 3Torsten Slok, torsten.slok@db.com +1 212 250-2155 March 2019Research Deutsche Bank

    Downside risks to home sales

    Source: NAR, University of Michigan, Haver Analytics, DB Global Research

    Current conditions for buying vehicles and houses by top 33% household income tercile

    3000

    3500

    4000

    4500

    5000

    5500

    6000

    6500

    7000

    7500

    00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

    Th ou

    s. u

    ni t

    120

    130

    140

    150

    160

    170

    180

    190

    200

    Index score

    NAR Existing home sales , United States (33 month mag, ls)

    Current conditions for buying houses : top 33% household income (rs)

  • 4Torsten Slok, torsten.slok@db.com +1 212 250-2155 March 2019Research Deutsche Bank

    More delinquent credit card loans

    Source: American Bankers Association, Haver Analytics, DB Global Research

    Open end loans: number of delinquent bank card Credit loans

    2.25

    3.00

    3.75

    4.50

    5.25

    00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

    %

    2.25

    3.00

    3.75

    4.50

    5.25 %

    As a % of loans with outstanding balance

  • 5Torsten Slok, torsten.slok@db.com +1 212 250-2155 March 2019Research Deutsche Bank

    Will declining PMIs abroad also pull down ISM?

    Source: ISM, Markit, Haver Analytics, DB Global Research

    Global manufacturing PMIs

    40

    45

    50

    55

    60

    65

    10 12 14 16 18

    Index

    40

    45

    50

    55

    60

    65

    Index US (ISM) Germany Italy China France

  • 6Torsten Slok, torsten.slok@db.com +1 212 250-2155 March 2019Research Deutsche Bank

    Downside risks to global trade and growth

    Source: CPB, IHS Markit, Haver Analytics, DB Global Research

    New Export orders and world trade volumes

    46

    47

    48

    49

    50

    51

    52

    53

    54

    55

    56

    2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

    Index

    -2

    -1

    0

    1

    2

    3

    4

    5

    6

    7

    %y/y

    Global manfacturing PMI : New export orders (6 month lead, ls)

    World trade volume (3 month MA rs)

  • 7Torsten Slok, torsten.slok@db.com +1 212 250-2155 March 2019Research Deutsche Bank

    Consensus expects strong above trend growth in the US driven by strong capex growth

    Source: Bloomberg Finance LP, DB Global Research

  • 8Torsten Slok, torsten.slok@db.com +1 212 250-2155 March 2019Research Deutsche Bank

    US fixed income supply

    0.0

    0.5

    1.0

    1.5

    2.0

    2.5

    3.0

    2017 2018 2019 2020 2021 2022

    Trillion $

    0.0

    0.5

    1.0

    1.5

    2.0

    2.5

    3.0

    Trillion $

    CBO baseline deficit Fed SOMA Redemptions

    IG bonds maturing HY bonds maturing

    Source: Steven Zeng, Michal Jezek, Standard & Poor’s Financial Services LLC, DB Global Research

    Stock of risk-free assets growing dramatically: Explosion in US Treasury supply from tax cuts and Fed balance sheet rundown will crowd out investments in IG, HY, and equities

    US bond supply rising from $1trn in 2017 to $1.5trn in 2018 and $2trn in 2019

  • 9Torsten Slok, torsten.slok@db.com +1 212 250-2155 March 2019Research Deutsche Bank

    Significant buying of Treasuries among US domestic investors at the moment

    Source: FRB, Haver Analytics, DB Global Markets Research

    Holdings of Treasuries as % of treasury debt outstanding

    0

    10

    20

    30

    40

    50

    60

    70

    80

    85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19

    %

    0

    10

    20

    30

    40

    50

    60

    70

    80

    % Federal Reserve US domestic real money, banks, and households Foreigners

  • 10Torsten Slok, torsten.slok@db.com +1 212 250-2155 March 2019Research Deutsche Bank

    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.

  • 11Torsten Slok, torsten.slok@db.com +1 212 250-2155 March 2019Research Deutsche Bank

    05/03/2019 23:50:37 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/ on each company’s research page. Investors are strongly encouraged to review this information before investing.

    https://research.db.com/Research/Disclosures/CompanySearch. https://research.db.com/Research/Disclosures/CompanySearch

  • 12Torsten Slok, torsten.slok@db.com +1 212 250-2155 March 2019Research Deutsche Bank

    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