EFTA01458248

eke: pereboos is a The bat; we," hrtatenent vntlr. liohts nisei-4as Twepectieti Pont* Heen4e*...ieuen 'does Low influence vie The misery index and equity-market valuations 1476 i 1 19* !WI la* 20:q ?V& 2011 • Muse eider ,^1.1f; aw,aF • SAP %C kePrt In*, Iftni Sow:* Teeerneon Reuters Destaetseten es of &la* Negatively correlated Unemployment and inflation are added together to form the misery index. History shows that valuations rise when the misery index falls and vice versa This can he easily explained since rising inflation leads to higher interest rates, diminishing the relative attractiveness of equities. When high interest rates coincide with high unemployment, this suggests a structurally weak economic environment, which, in its turn, is detrimental to valuations. Empirical analysis does not support the assumption that rate 7 :3:03 hikes will send equity markets 1*1 itIv down. High inflation forced the Fed to raise interest rates sharply between 1977 arid 1981, but the S&P 500 Index did not suffer a major reverse During the four subsequent tightening cycles, inflation was significantly lower. In this environment, the S&P 500 Index rallied slightly in one case and strongly in three cases. • ro.x.s ',pares (ter .uit • P42E frt•eal firs rat. (ICI em) • -AP ;nye ata4 Socket Thomson Reutem. Cunatowen, a. et 9.12/1.r, United States (federal funds rate) <Dec: Ine rid to raiee ra!te in StveraT small s:eps 0.75-1.00 %* (June 2016 F) . •'_>ntethe AVAllefeeest i.,e.ee fir Many of the fundamental factors underlying U.S. economic activity are solid and should lead to some pickup in the pace of economic growth in the coming years. II AIM *SM. Chag real geeIone 9;., 41h Aly I Cign, 7016 United States (GDP growth in %) The growsnl :mate( oe pba ono the ',tong condone of consumers alp.* in Ivo, e rig iv,- Teeth. 3.1 %* (2016 F) • (*Lew* AWM Nerecaeteeoe5/16/15 Past performance is not indicative of future returns. ft is not possible to invest directly in an index. No assurance can be given that any forecast or target will he reached. F = forecast. Forecasts are based on assumptions, estimates, opinions and hypothetical models or analyses that may prove to be incorrect. CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) CONFIDENTIAL CC.; %tn.* Antsr.e.se 2015 thests eso 0 5 DB-SDNY-0118072 SDNY_GM_00264256 EFTA01458248