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Global Macro Outlook:

Virus curve flattening, markets


stabilizing, slow recovery
Torsten Slok, Ph.D.
June 2020 Chief Economist
Managing Director
60 Wall Street
New York, New York 10005
Tel: 212 250 2155
Torsten.Slok@db.com

Distributed on: 30/06/2020 13:10:16 GMT

DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 064/04/2020.

7T2se3r0Ot6kwoPa
Virus peaked two months ago and market stress
is going away but speed of progress is slowing
# of countries Growth in new COVID-19 cases and VIX Index

Number of countries with higher than 5% growth rate in the daily number of confirmed cases (ls)
130 90
120 VIX (rs)
80
110
100 70
90
80 60
70
50
60
50 40
40
30 30

20
20
10
0 10
23-Jan 2-Feb 12-Feb22-Feb 3-Mar 13-Mar23-Mar 2-Apr 12-Apr 22-Apr 2-May12-May22-May 1-Jun 11-Jun
Source: JHU, Bloomberg Finance LP, DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 1
Outline

1. COVID-19: Virus curve flattening


2. COVID-19: Financial markets stabilizing
3. COVID-19: The swoosh-shaped economic recovery
4. Higher risk of deflation than inflation
5. Energy prices
6. The US fiscal expansion and long rates
7. Election uncertainty

Investment implications for rates, FX, credit, and equities

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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 2
Behavioral changes slowing growth over the coming quarters
Household sector
- Increase in precautionary savings for households, similar to what we saw after the Great Depression in the 1930s
- More space between seats at restaurants, cinemas, sport events, concerts, conferences, trains, busses, and airplanes
- Fewer people traveling on vacation and going out until we have a vaccine, all contributing to lower consumer spending
- Older generations staying at home until a vaccine is released, less willingness to put parents in retirement homes
- Limits on the number of people in supermarkets at the same time, more online shopping, more online doctor visits
- Fewer people going to fitness centers, doing group sports
- More people driving their own car to avoid public transportation
- Health insurance premiums going up

Corporate sector
- Less business travel globally, more video conferencing
- Staggered work schedules, more distance between seats in offices, fewer cubicles
- More permanent work from home solutions, more disaster planning
- Fewer buybacks, lower dividend payouts
- Health insurance costs going up, higher insurance premiums
- Increased pressure for paid sick leave, health benefits, labor protection, including for gig workers

Government sector
- Global restrictions on travel to and from high-risk areas, more fever scanners at airports, borders
- More regulation forcing households and corporates to hold, say, three months of cash in emergency savings
- More regulation and spending to ensure health care system is better prepared, a global covid-19 immunity registry
- Increased health safety regulations for retirements homes
- Stocking of medical supplies, including ventilators, domestically, a desire to be less dependent on other countries
- More systematic planning and preparedness, perhaps introduce better automatic stabilizers
- More supply of government bonds, increasing risk of a debt crisis

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 3
Will restaurants be back to normal by September?

Index, Restaurant attendance Index,


1 Mar=100 1 Mar=100
Texas Tennessee Georgia Florida
100 100
90 90
80 80
70 70
60 60
50 50
40 40
30 30
20 20
10 10
0 0
05-Apr-20
12-Apr-20
19-Apr-20
26-Apr-20

07-Jun-20
14-Jun-20
21-Jun-20
28-Jun-20
05-Jul-20
12-Jul-20
19-Jul-20
26-Jul-20
02-Aug-20
09-Aug-20
16-Aug-20
23-Aug-20
30-Aug-20
01-Mar-20
08-Mar-20
15-Mar-20
22-Mar-20
29-Mar-20

03-May-20
10-May-20
17-May-20
24-May-20
31-May-20

Note: Dotted lines are linear trend regressed on time from April 27.
Source: OpenTable State of the Industry, DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 4
1. COVID-19:
Virus curve flattening

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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 5
Lack of social distancing means the US
is now more than two weeks behind Italy
# of cases New Confirmed cases of COVID-19 in United States and Italy # of cases

40000 United States (ls) Italy (13 day lead,rs) 7000

35000 6000

30000
5000
25000
4000
20000
3000
15000
2000
10000

5000 1000

0 0

Source: JHU, WHO, DB Global Research


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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 6
Sweden never had a lockdown.
US ex New York looking very similar
New Confirmed cases of COVID-19 in United States ex New York and Sweden
# of cases # of cases
United States ex New York (ls) Sweden (4-day moving average, rs)
800
30000
700
25000
600
20000 500

15000 400

300
10000
200
5000
100

0 0

Source: JHU, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 7
Sweden kept stores and schools open
and still saw a flattening out of the virus curve
Cumulative deaths from COVID-19 in
G7 and Sweden, 7-day moving average
Germany Italy Japan Sweden
US UK France Canada
100000 10000

10000
1000

1000
Log scale

Log scale
100
100

10
10

1 1
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100105110
Days since average daily deaths crossed 3
Source: JHU, DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 8
%

10
12
14
16
18
20
22
Maine

Research
Florida

Deutsche Bank
West Virginia
Vermont
Delaware
Montana
Hawaii
Pennsylvania
New Hampshire
South Carolina
Oregon
Arizona
New Mexico
Connecticut
Michigan
Rhode Island
Iowa
Ohio
Arkansas
Wisconsin
Alabama
Missouri
South Dakota
Massachusetts
Wyoming
Kentucky
New York
Tennessee

Torsten Slok, torsten.slok@db.com +1 212 250-2155


North Carolina
New Jersey
Idaho
Kansas
Minnesota

June 2020
Mississippi
Indiana
Nebraska
Maine, Florida, and West Virginia

Source: US Census Bureau, DB Global Research Nevada


Oklahoma
Higher concentration of older people in

Illinois
Louisiana
Maryland
Virginia
Washington
North Dakota
California
Percentage of population 65 years and older in United States, 2018

Colorado
Georgia
Texas
Alaska
Utah
%

10
12
14
16
18
20
22

9
Share of population with diabetes

% Diabetes prevalence (% of population ages 20 to 79) in 2019 %

16 16
14 14
12 12
10 10
8 8
6 6
4 4
2 2
0 0
Canada

Switzerland
Saudi Arabia

Norway

Hong Kong
China

South Korea

Argentina

Australia
Japan
Turkey

Germany

Denmark
Brazil
South Africa

Spain

Indonesia
Russia

Singapore

France
Sweden
Mexico

UK
US

India

Europe

Italy
Note: Diabetes prevalence refers to the percentage of people ages 20-79 who have type 1 or type 2 diabetes.

Source: IDF Diabetes Atlas, DB Global Research


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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 10
2. COVID-19:
Financial markets stabilizing

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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 11
Central bank responses to COVID-19 in G7 and China

FRA DEU ITA GBR CAN USA JPN CHN

Monetary Policies
1. Policy rate cuts (basis points) - - - 65 150 150 - 30
2. Central bank liquidity support Y Y Y Y Y Y Y Y
3. Central bank swap lines Y Y Y Y Y Y Y -
4. Central bank asset purchase schemes Y Y Y Y Y Y Y -
External Policies
1. Foreign currency intervention - - - - - - - -
2. Capital flow measures - - - - - - - -
Financial Policies for Banks
1. Easing of the countercyclical capital buffer Y Y - Y - - - -
2. Easing of systemic risk or domestic capital buffer - - - - Y - - -

3. Use of capital buffers Y Y Y Y Y Y Y -


4. Use of liquidity buffers Y Y Y Y Y Y Y Y
5. Adjustments to provisioning requirements Y Y Y Y - Y - Y
Financial Policies for Borrowers
1. State loans or credit guarantees Y Y Y Y Y Y Y Y
2. Restructuring of loan terms or moratorium on payments Y - Y Y Y Y Y Y

Source: IMF, DB Global Research


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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 12
G3 central bank actions to support credit markets

Facilities introduced since February 2020


Money Markets and Government Securities Corporate Bonds Other Markets

Primary Market Corporate Credit Facility


Purchases of investment-grade bonds and Term Asset-Backed Securities
Primary Dealer Credit Facility some bonds recently downgraded from Loan Facility
Provision of credit to primary dealers in exchange investment Loans to holders of certain AAA rated
for a broad range of collateral for term funding with grade from eligible issuers, via an SPV, and asset-backed securities, including
maturities up to 90 days. loans to eligible borrowers. collateralized loan obligations and
US Commercial Paper Funding Facility Secondary Market Corporate Credit commercial mortgage backed
Federal Purchases from eligible issuers, via a Special Facility securities, based on newly and
Reserve Purpose Vehicle (SPV), of three-month US dollar– Purchases of investment-grade corporate recently originated consumer and
denominated commercial paper. bonds and some bonds recently downgraded small business loans.
Money Market Mutual Fund Facility from investment grade in the secondary Municipal Liquidity Facility
Provision of liquidity to eligible money market market from eligible issuers. Purchases of Purchases of short-term notes
mutual funds. investment grade exchange-traded funds issued by US states, counties, and
(ETFs) along with the remaining funds cities.
allocated to high-yield ETF purchases.
Pandemic Emergency Purchase Program
European Purchases of private and public sector securities, until the end of 2020, up to a total amount of EUR
Central 750 billion. Expanded European Central Bank Asset Purchase Program, with additional EUR 120
Bank billion in asset purchases focusing on the corporate sector. The collateral eligibility was amended to
promote inclusion of corporate sector securities.
Outright purchases of commercial paper and corporate bonds
A temporary (until the end of September 2020) increase in holdings of corporate bonds and
Purchase of Exchange Traded
commercial paper, moving from reinvesting proceeds of maturing assets into making net purchases.
Funds and Real Estate Investment
Policy actions to enhance the liquidity and functioning of short-term funding Markets
BoJ Trusts
The Bank of Japan announced funds-supplying operations against pooled collateral and purchases
A doubling in the pace of exchange
of Japanese government securities with repurchase agreements. In addition, it conducted
traded fund (ETF) purchases.
unscheduled outright purchases of Japanese government bonds and expanded its Securities
Lending Facility.

Source: IMF, DB Global Research


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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 13
US financial stress coming down from recent peak
Index OFR Financial Stress Index (0=Average Stress Level) (ls) Index
Bloomberg United States Financial Conditions Index (Inverted axis,rs)
30.0 -12

-10
22.5
-8

15.0
-6

-4
7.5

-2
0.0
0

-7.5 2
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: OFR, Bloomberg Finance LP, Haver Analytics, DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 14
Rates and equity vol coming down from record highs

Index 10yr treasury note VIX (ls) VIX (rs) Index

18 90

80
15
70

12 60

50
9
40

6 30

20
3
10

0 0
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Source: CBOE, WSJ, Haver Analytics, DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 15
Global stock markets coming back

$, tn Bloomberg world exchange market capitalization $, tn

100 100

90 90

80 80

70 70

60 60

50 50

40 40

30 30

20 20

10 10

0 0
07 08 09 10 11 12 13 14 15 16 17 18 19 20
Source: Bloomberg Finance LP, DB Global Research
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Fed and ECB support easing strains in funding markets

bps LIBOR-OIS spread (ls) FRA-OIS spread (ls) EURUSD swap basis (rs) bps

400 20

350 0

300 -20

250 -40

200 -60

150 -80

100 -100

50 -120

0 -140
08 09 10 11 12 13 14 15 16 17 18 19 20
Source: Bloomberg Finance LP, DB Global Research
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CPFF helping commercial paper markets
ppts ppts
3.5 Fin CP-OIS Non-fin CP - OIS 3.5

3.0 3.0

2.5 2.5

2.0 2.0

1.5 1.5

1.0 1.0

0.5 0.5

0.0 0.0

-0.5 -0.5

-1.0 -1.0
07 08 09 10 11 12 13 14 15 16 17 18 19 20
Source: Bloomberg Finance LP, DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 18
Yields on IG and HY corporate bonds coming down

% Bloomberg Barclays indices' yield to worst %

IG HY
25 25

20 20

15 15

10 10

5 5

0 0
90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20
Source: Bloomberg Finance LP, DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 19
IG and HY CDS coming down

USD Markit CDX North America 5y Indices USD

1000 HY (ls) IG (rs) 160

140
850

120
700

100

550
80

400
60

250 40
12 13 14 15 16 17 18 19 20
Source: Markit, Bloomberg Finance LP, DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 20
Less stress in credit markets

Index Performance of various ICE Bofa 7-10 bond indices Index


2/3/2020 = 100 2/3/2020 = 100
US treasury AAA China govt debt
UK Gilts AA German government
A France government debt Euro govt
BBB BB Greece govt. debt
B CCC or lower
110 110

105 105

100 100

95 95

90 90

85 85

80 80

75 75
03-Apr
08-Apr
13-Apr
18-Apr
23-Apr
28-Apr
04-Mar
09-Mar
14-Mar
19-Mar
24-Mar
29-Mar

03-May
08-May
13-May
18-May
23-May
28-May
03-Feb
08-Feb
13-Feb
18-Feb
23-Feb
28-Feb

Source: ICE BofA, Bloomberg Finance LP, DB Global Research


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Number of distressed issuers traded

# number TRACE number of distressed issuers traded (ls, inverted) % q/q AR


US GDP (rs)
0 5.5

100
3.5
200
1.5
300

400 -0.5

500 -2.5
600
-4.5
700
-6.5
800

900 -8.5
08 09 10 11 12 13 14 15 16 17 18 19 20
Note: Distressed bonds are bonds trading at more than 1000 basis points over the benchmark Treasury.

Source: BEA, Bloomberg Finance LP, DB Global Research


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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 22
US and European companies financed differently
Sources of financing for the corporate sector
IG Bonds - Euro area
United States Rated A and
Bank loans
above
19% IG Bonds -
8%
BBB
8%
HY bonds
Private-direct middle 2%
market loans
4% Institutional
leveraged
IG Bonds - Rated A and loans
above 2%
28%

Institutional leveraged IG Bonds - BBB Bank loans


loans 28% 80%
10%

HY bonds
11%

Source: Bloomberg Finance LP, IMF, DB Global Research


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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 23
US corporates getting financing other places than in banks
% U.S. Nonfinancial corporations business: %
Bank loans as a % of total debt
45 45

40 40

35 35

30 30

25 25

20 20

15 15
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20
Note: Bank loans is defined as the sum of loans and mortgages with depository institutions. Corporate debt is defined as the
sum of debt securities and bank loans
Source: FRB, Haver Analytics. DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 24
US credit markets have grown from $2trn in 2008 to $7trn today.
All driven by much more BBB and single-A paper outstanding

$ tn Market cap of Bloomberg Barclays corporate indexes $ tn


Aaa Aa A Baa Ba B Caa & below
9 8

8 7

7
6
6
5
5
4
4
3
3
2
2

1 1

0 0
05 06 07 08 09Source:
10 Bloomberg
11 12 13LP, DB
Finance 14Global
15Research
16 17 18 19 20
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 25
Duration of IG and HY indexes
# years Macaulay duration of Bloomberg Barclays corporate indices # years

IG HY
9 9

8 8

7 7

6 6

5 5

4 4

3 3

2 2
90 95 00 05 10 15 20
Source: Bloomberg Finance LP, DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 26
50% of the IG index is BBB
% Share of market value in Bloomberg Barclays USD IG %
BBB A AA AAA
100 100

75 75

50 50

25 25

0 0
90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20
Source: Bloomberg Finance LP, DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 27
Stock of corporate bonds outstanding, in USD

$, tn US corporate debt outstanding by S&P ratings $, tn

4.5 4.0

4.0 3.5
3.5 BBB-
3.0
3.0
2.5
2.5 BBB
A- 2.0
2.0
1.5
1.5 C
A CC 1.0
1.0 BB- CCC-
BBB+
CCC
0.5 AA- BB B- CCC+ 0.5
AA A+ B
AA+ BB+ B+
0.0 0.0
AAA AA A BBB BB B CCC-C D

Source: S&P, Bloomberg Finance LP, DB Global Research


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Foreign appetite for US IG and HY

% Holdings of corporate and foreign bonds as % of corporate and %


foreign bond outstanding
Foreigners Mutual funds Life insurance Banks Households
70 70

60 60

50 50

40 40

30 30

20 20

10 10

0 0
1955 1963 1971 1979 1987 1995 2003 2011 2019
Source: FRB, Haver Analytics, DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 29
Low primary dealer inventory of corporate bonds
relative to the stock of IG and HY outstanding

USD trn Total stock of US corporate bonds outstanding (ls) USD bln
Primary dealer inventory of corporate bonds (rs)
6.0 300

5.5
250
5.0
200
4.5

4.0 150

3.5
100
3.0
50
2.5

2.0 0
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Source: FRB-NY, FRB, Haver Analytics, DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 30
Fed Treasury purchases slowing down

$ bn, Treasury securities held outright by the Fed $ bn,


weekly chg. weekly chg.
375 350
350 325
325 300
300 275
275 250
250 225
225 200
200
175
175
150
150
125
125
100 100
75 75
50 50
25 25
0 0
-25 -25
-50 -50
06 08 10 12 14 16 18 20
Source: Federal Reserve, Haver Analytics, DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 31
Key vulnerabilities in HY, loan, and private credit markets

Vulnerabilities in global risky credit markets


Embedded and Liquidity,
Borrower’s Complexity
Size Valuations Financial Maturity, FX Concentration Interconnectedness
Leverage and Opacity
Leverage Mismatches

High-Yield • Borrowers in both


$1.9 Active CDX Top borrowers
Bond HY and LL
trillion market represent a
Market markets
sizable share of
• Correlations of HY
the market
• Repo, and LL credit
TRS,CLO • Crossover funds’ Low
warehouse Fund outflows investments in transparency
lines have can be sizable both HY and LL of the
High declined riskiness of
valuations • Bank credit investors’
before the lines can be exposures
COVID-19 • High firm
leverage quickly
Leveraged $4.0 outbreak repriced
Loan Market trillion • EBITDA add-
backs
• Large share of
B credit Top lenders
• LBO activity account for a
large share of
the market

Large locked- Low visibility


Capital call lines
in capital and of borrowers,
of credit Lenders in both LL
HTM positions investors,
• Limited and PD markets
and
data on
transactions
Private Debt $0.7 prices
Market trillion • High
return
targets

Source: IMF, DB Global Research


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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 32
The potential max size of the Fed’s
balance sheet depends on what they buy
Trillion Size of selected U.S. asset markets: outstanding Trillion
$ $
40 38.5 37.8 40

35 35

30 30

25 25
20.0
20 20
16.6
15 15

10 10
5.9
5 2.6 5
1.3 1.2
0 0
Equities Residential Commercial Treasury IG corporate Farmland HY & unrated Leveraged
real estate real estate securities bonds corporate loans*
bonds
Note: Data for 2019Q4.* The amount outstanding shows institutional leveraged loans and generally excludes loan commitments held by banks.
Source: Fed, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 33
S&P500 12 month forward multiple now at 21.3
Ratio S&P 500: 12 months forward P/E Ratio

26 26

24 24

22 22

20 20

18 18

16 16

14 14

12 12

10 10

8 8
91 93 95 97 99 01 03 05 07 09 11 13 15 17 19
Source: Bloomberg Finance LP, DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 34
S&P500 24 month forward P/E ratio at 24
Ratio S&P 500: 24 months forward P/E Ratio
25 25

23 23

21 21

19 19

17 17

15 15

13 13

11 11

9 9
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020
Source: Bloomberg Finance LP, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 35
3. COVID-19:
The swoosh-shaped
economic recovery

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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 36
The household savings rate increased
after the Great Depression in the 1930s
% Personal savings rate in United States %
35% 35%

30% 30%

25% 25%

20% 20%

15% 15%

10% 10%

5% 5%

0% 0%

-5% -5%

Source: Historical Statistics of United States US Census Bureau, BEA, FRED, Haver Analytics, DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 37
Fed’s weekly GDP index points to sharp drop in Q2
Lewis Mertens Stock Weekly Economic Index (Scaled to 4-quarter GDP Growth)
St. Louis Economic News Index: Real GDP for Current Quarter (SAAR, %Chg)
6% 6%
2% 2%
-2% -2%
-6% -6%
-10% -10%
-14% -14%
-18% -18%
-22% -22%
-26% -26%
-30% -30%
-34% -34%
-38% -38%
-42% -42%
-46% -46%
**Mobility trends for places like restaurants, cafes, shopping centers, theme parks, museums, libraries, and movie theaters
-50% -50%
*Changes for each day are compared to a baseline value for that day of the week:. The baseline is the median value, for the corresponding day
of 2008
the week, 2009
during the2010 2011Jan2012
5- week period 3–Feb 6, 2013
2020 2014 2015 2016 2017 2018 2019 2020
Source: LMS, FRBSTL, Haver Analytics, DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 38
Green shoots in restaurant bookings?
%y/y OpenTable network : year-over-year change in seated diners at restaurants %y.y
in United States

20 United States California Florida Georgia New York Texas 20

0 0

-20 -20

-40 -40

-60 -60

-80 -80

-100 -100

Source: OpenTable, DB Global Research


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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 39
Restaurant bookings up significantly
in Alabama and South Carolina
%y/y OpenTable network : year-over-year change in seated diners at restaurants %y.y
in United States
United States Alabama California
20 Florida Georgia New York 20
South Carolina Tennessee Texas
0 0

-20 -20

-40 -40

-60 -60

-80 -80

-100 -100
18-Feb
22-Feb
26-Feb

02-Apr
06-Apr
10-Apr
14-Apr
18-Apr
22-Apr
26-Apr
30-Apr
01-Mar
05-Mar
09-Mar
13-Mar
17-Mar
21-Mar
25-Mar
29-Mar

04-May
08-May
12-May
16-May
20-May
24-May
28-May
Note: This data shows year-over-year seated diners at restaurants on the OpenTable network across all channels: online reservations, phone
reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous
year.
Source: OpenTable , DB Global Research
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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 40
Restaurant bookings up in Indianapolis and San Diego
% OpenTable network : year-over-year change in seated diners at restaurants %
in major U.S. cities
80 80
Boston Denver Indianapolis Los Angeles New York
60 Pittsburgh San Diego San Francisco Seattle Washington 60
40 40
20 20
0 0
-20 -20
-40 -40
-60 -60
-80 -80
-100 -100
-120 -120

Note: This data shows year-over-year seated diners at restaurants on the OpenTable network across all channels: online reservations, phone
reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous
year.
Source: OpenTable , DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 41
Restaurant bookings across states
% OpenTable network : year-over-year change in seated diners at restaurants in United %
States as on May 25
0 0

-20 -20

-40 -40

-60 -60

-80 -80

-100 -100

-120 -120
Minnesota

Maryland
New York

Oklahoma
Illinois

New Mexico

New Jersey

District of Columbia
Michigan

Colorado

California

Missouri

Texas

South Carolina
Indiana
Louisiana

Utah

Kansas

Nebraska

Tennessee
Pennsylvania
Hawaii

Nevada
Oregon

North Carolina

Connecticut

Rhode Island
Massachusetts

Washington

Virginia

Ohio

Georgia

Arizona

Alabama
Wisconsin

Florida

Kentucky
Note: This data shows year-over-year seated diners at restaurants on the OpenTable network across all channels: online reservations, phone
reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous
year.
Source: OpenTable , DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 42
Restaurant bookings up in Germany
%y/y OpenTable network : year-over-year change in seated diners at restaurants %y/y

20 Canada Germany United Kingdom United States 20

0 0

-20 -20

-40 -40

-60 -60

-80 -80

-100 -100

Note: This data shows year-over-year seated diners at restaurants on the OpenTable network across all channels: online reservations, phone
reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous year.
Source: OpenTable , DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 43
US airline traffic currently 13% of normal
Thous. Total traveler throughput %
2019 (ls) 2020 (ls) Total traveler throughput in 2020 (as % of 2019, rs)
3000 100%
90%
2500
80%
70%
2000
60%
1500 50%
40%
1000
30%
20%
500
10%
0 0%
4-Mar
6-Mar
8-Mar

11-Apr
13-Apr
15-Apr
17-Apr
19-Apr
21-Apr
23-Apr
25-Apr
27-Apr
29-Apr
1-May
3-May
5-May
7-May
9-May
1-Apr
3-Apr
5-Apr
7-Apr
9-Apr
10-Mar
12-Mar
14-Mar
16-Mar
18-Mar
20-Mar
22-Mar
24-Mar
26-Mar
28-Mar
30-Mar

11-May
13-May
15-May
17-May
19-May
21-May
23-May
25-May
Source: Transport Security Administration, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 44
US: Citymapper mobility index
Citymapper mobility index
% of city moving compared to usual
120% Washington DC San Francisco Philadelphia New York City 120%
Los Angeles Chicago Boston Seattle
100% 100%

80% 80%

60% 60%

40% 40%

20% 20%

0% 0%
10-Apr
14-Apr
18-Apr
22-Apr
26-Apr
30-Apr
1-Mar
5-Mar
9-Mar

4-May
8-May
13-Mar
17-Mar
21-Mar
25-Mar
29-Mar

12-May
16-May
20-May
24-May
28-May
2-Apr
6-Apr

Note: The Citymapper Mobility Index is calculated by comparing trips planned in the Citymapper app to a recent typical usage period. Trips planned
('Get Me Somewhere' and related) are correlated to trips taken (GO mode). Typical usage period is defined as 4 weeks between Jan 6th and Feb
2nd, 2020.
Source: Citymapper , DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 45
Citymapper mobility index
Citymapper mobility index
% of city moving compared to usual
140% Vancouver Toronto Tokyo Sydney 140%
Singapore Melbourne London Hong Kong
120% 120%

100% 100%

80% 80%

60% 60%

40% 40%

20% 20%

0% 0%

Note: The Citymapper Mobility Index is calculated by comparing trips planned in the Citymapper app to a recent typical usage period. Trips planned
('Get Me Somewhere' and related) are correlated to trips taken (GO mode). Typical usage period is defined as 4 weeks between Jan 6th and Feb
2nd, 2020.
Source: Citymapper , DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 46
% of city moving compared to usual
Citymapper Mobility Index
% of city moving compared to usual
60% Tue 26th May 60%

50% 50%

40% 40%

30% 30%

20% 20%

10% 10%

0% 0%
Hong Kong

Paris

Lyon

Vienna

Vancouver

Milan

Singapore

Philadelphia

Mexico City

Seattle

Boston

Chicago
Melbourne

Brussels
Stockholm

Madrid

Amsterdam

Los Angeles

New York City


Seoul

Berlin
Rhine-Ruhr
Moscow
St. Petersburg

Hamburg

Sydney

Montréal
Toronto

Lisbon

Rome

Istanbul
Copenhagen

Monaco

Birmingham
Barcelona

London

Manchester

São Paulo

Tokyo
Washington DC
San Francisco
Note: The Citymapper Mobility Index is calculated by comparing trips planned in the Citymapper app to a recent typical usage period. Trips planned
('Get Me Somewhere' and related) are correlated to trips taken (GO mode). Typical usage period is defined as 4 weeks between Jan 6th and Feb
2nd, 2020.
Source: Citymapper , DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 47
% of city moving compared to usual
Citymapper mobility index
% of city moving compared to usual
140% Hong Kong Stockholm St. Petersburg Seoul 140%
Paris Hamburg Lyon Berlin
120% Rhine-Ruhr Moscow 120%

100% 100%

80% 80%

60% 60%

40% 40%

20% 20%

0% 0%

Note: The Citymapper Mobility Index is calculated by comparing trips planned in the Citymapper app to a recent typical usage period. Trips planned
('Get Me Somewhere' and related) are correlated to trips taken (GO mode). Typical usage period is defined as 4 weeks between Jan 6th and Feb
2nd, 2020.
Source: Citymapper , DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 48
Global airline traffic slowly moving up
# of flights Total number of flights tracked by Flightradar24, per day (UTC time), # of flights
last 120 days
200,000 Number of flights 7-day moving average 200,000
180,000 180,000
160,000 160,000
140,000 140,000
120,000 120,000
100,000 100,000
80,000 80,000
60,000 60,000
40,000 40,000
20,000 20,000
0 0

Note: Total flights: Commercial flights above + rest of business jet flights + private flights + gliders + most helicopter flights + most ambulance flights +
government flights + some military flights + drones
Source: Flightradar24, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 49
Global commercial airline traffic still low
Number of commercial flights tracked by Flightradar24, per day (UTC time)
# of flights last 120 days # of flights
120,000 Number of flights 7-day moving average 120,000

100,000 100,000

80,000 80,000

60,000 60,000

40,000 40,000

20,000 20,000

0 0

Note: Commercial flights : Commercial passenger flights + cargo flights + charter flights + some business jet flights.
Source: Flightradar24, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 50
Congestion levels around the world
TomTom Traffic Index ranking 2019 : Top 50 City in world
75% 75%
70% Congestion level 70%
65% 65%
60% 60%
55% 55%
50% 50%
45% 45%
40% 40%
35% 35%
Mexico City

Krakow
Novosibirsk

Vancouver

Paris

Fortaleza
Bengaluru

Bogota

Recife
Saint Petersburg

Rio de Janeiro

Athens

Edinburgh

Cairo

Brussels

Budapest
Shenzhen
Manila

Mumbai
Pune
Moscow region (oblast)

Jakarta

Kyiv

Bucharest

Dublin

Lodz

Sao Paulo

Salvador
Kharkiv

Los Angeles

Warsaw

Kuala Lumpur
New Delhi

Samara

Yekaterinburg

Guangzhou
Zhuhai

Wroclaw

Rome

London

Dnipro
Lima

Istanbul

Odessa

Tel Aviv

Poznan

Chongqing
Bangkok

Santiago

Tokyo
Note: A 71% congestion level in Bengaluru, for example, means that a 30-minute trip will take 71% more time than it would during Bengaluru’s baseline
uncongested conditions. The baseline per city is calculated by analyzing free-flow travel times of all vehicles on the entire road network – recorded 24/7,
365 days a year.
Source: TomTom Traffic Index, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 51
Weekly NYC subway turnstile entries
Millions New York city subway usage Millions
MTA Weekly turnstile entries, system wide
45 40

40 35

35
30
30
25
25
20
20
15
15
10
10

5 5

0 0
2015 2016 2017 2018 2019 2020
Source: MTA, Bloomberg Finance LP, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 52
Daily NYC subway turnstile entries in 2020
Millions New York city subway usage Millions
MTA Daily turnstile entries in 2020, system wide
6 6

5 5

4 4

3 3

2 2

1 1

0 0
12-Feb
19-Feb
26-Feb

15-Apr
22-Apr
29-Apr
1-Jan
8-Jan

4-Mar

6-May

3-Jun
15-Jan
22-Jan
29-Jan

11-Mar
18-Mar
25-Mar

13-May
20-May
27-May

10-Jun
5-Feb

1-Apr
8-Apr

Source: MTA, Bloomberg Finance LP, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 53
Weekly Manhattan subway turnstile entries
Millions New York city subway usage
MTA Weekly turnstile entries, Manhattan
25

20

15

10

0
2015 2016 2017 2018 2019 2020
Source: MTA, Bloomberg Finance LP, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 54
Weekly 34th Street-Penn Station subway turnstile entries
Millions New York city subway usage Millions
MTA Weekly turnstile entries, 34-th St-Penn Station
1.2 1.2

1.0 1.0

0.8 0.8

0.6 0.6

0.4 0.4

0.2 0.2

0.0 0.0
2015 2016 2017 2018 2019 2020
Source: MTA, Bloomberg Finance LP, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 55
Weekly Bronx subway turnstile entries
Millions New York city subway usage Millions
MTA Weekly turnstile entries, Bronx
3.5 3.5

3.0 3.0

2.5 2.5

2.0 2.0

1.5 1.5

1.0 1.0

0.5 0.5

0.0 0.0
2015 2016 2017 2018 2019 2020
Source: MTA, Bloomberg Finance LP, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 56
Small businesses want to reopen the economy immediately
When do you think is the appropriate time to lift the non-essential
business and stay-at home restrictions in your state or city?
50% 50%
46%

40% 40%

31%
30% 30%

20% 17% 20%

10% 7% 10%

1%
0% 0%
Immediately In the next 30 1-2 months 3-4 months Whenever
days health experts
believe it’s safe
This NFIB Small Business Loan Programs and Re-Opening survey was conducted with a random sample of NFIB’s membership database
of about 300,000 small business owners. The survey was conducted by email on May 1, 2020. NFIB collected 842 usable responses.
Source: NFIB, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 57
Small businesses very bearish about the economic outlook
How long do you think it will take before your local economy
is back to near pre-crisis levels of economic activity?
45% 45%
40%
40% 40%

35% 35%

30% 30%

25% 25%
20% 19%
20% 20%

15% 13% 15%

10% 10%

5% 5%
1%
0% 0%
It is now By July By December Sometime in Between 2022-
2021 2024
This NFIB Small Business Loan Programs and Re-Opening survey was conducted with a random sample of NFIB’s membership database
of about 300,000 small business owners. The survey was conducted by email on May 1, 2020. NFIB collected 842 usable responses.
Source: NFIB, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 58
Small businesses most worried about getting customers back
How concerned are you about the following when your state re-opens the
economy and lifts business restrictions?
50% 50%
43% Very concerned
40% 38% 38% 40%
31% 31% 29%
30% 27% 30%
24% 24%
20% 17% 20%

10% 10%

0% 0%
Being able to stock up on hand

Being able to stock up on face

Managing employees’ health and

Finding workers to fill open


Getting customers back

Complying with the new federal


Increased liability

New workplace safety

Accessing credit or loan


Managing customers’ health and
paid sick leave and emergency
family medical leave mandates
sanitizer and disinfectant

regulations

programs
safety concerns

safety concerns

positions
coverings
supplies

This NFIB Small Business Loan Programs and Re-Opening survey was conducted with a random sample of NFIB’s membership database
of about 300,000 small business owners. The survey was conducted by email on May 1, 2020. NFIB collected 842 usable responses.
Source: NFIB, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 59
Lockdown effectiveness: A lot
of people moving around in the US
COVID-19 Community Mobility Report
Mobility changes*: Retail & recreation**
0% 0%
-10% -10%
-20% -20%
-30% -30%
-40% -40%
-50% -50%
-60% -60%
-70% 29-Mar-20 26-Apr-20 -70%
-80% -80%
21-May-20
-90% -90%
-100% -100%
Germany

Brazil

Canada

Japan

Indonesia
Argentina

United Kingdom

Australia
India

France

Mexico

South Africa

United States
Saudi Arabia

Italy

Turkey

South Korea
*Mobility trends for places like restaurants, cafes, shopping centers, theme parks, museums, libraries, and movie theaters. **Changes for each day are
compared to a baseline value for that day of the week:. The baseline is the median value, for the corresponding day of the week, during the 5- week
period Jan 3–Feb 6, 2020
Source: Google, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 60
US and Germany car traffic back to
January and February levels
Index Apple mobility trends reports: Driving Index
13-Jan-2020=100 13-Jan-2020=100
175 Germany Italy Spain UK United States 175

150 150

125 125

100 100

75 75

50 50

25 25

0 0

The data shows a relative volume of directions requests per country compared to a baseline volume on January 13th, 2020.
Source: Apple, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 61
Still a lot of people moving around
in the US relative to other countries
% Google COVID-19 Community Mobility Report %
Mobility changes* : Retail & recreation**
30 30
20 Canada France Germany Japan UK US 20
10 10
0 0
-10 -10
-20 -20
-30 -30
-40 -40
-50 -50
-60 -60
-70 -70
-80 -80
-90 -90
-100 -100

*Mobility trends for places like restaurants, cafes, shopping centers, theme parks, museums, libraries, and movie theaters. **Changes for each day are
compared to a baseline value for that day of the week:. The baseline is the median value, for the corresponding day of the week, during the 5- week
period Jan 3–Feb 6, 2020

Source: Google, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 62
In some states the unemployment rate is between
30% and 60%. In other states it is less than 20%
% Jobless claims in the last 14 weeks as a share of labor force %
21-Mar-20 28-Mar-20 4-Apr-20 11-Apr-20 18-Apr-20 25-Apr-20 2-May-20
9-May-20 16-May-20 23-May-20 30-May-20 6-Jun-20 13-Jun-20 20-Jun-20
60 60
Max difference between state level unemployment rates today: 44%-points
50 Max difference between state level unemployment rates at peak in 2009: 10%-points 50

40 40

30 30

20 20

10 10

0 0
District of…
Kentucky

Hawaii

Mississippi

Maine

Wisconsin

Virginia
Oklahoma

Rhode Island

New York
California
Florida

Arizona
Arkansas
Texas

New Mexico
Alabama

Indiana
Delaware
Oregon

Montana
Nevada

Michigan

Pennsylvania

Missouri

Illinois
Vermont

Kansas

Idaho

Nebraska
Alaska
Louisiana

Massachusetts
New Jersey

South Carolina
Minnesota
Ohio

West Virginia

Iowa
Georgia

Washington

New Hampshire

Connecticut
North Carolina

Maryland

North Dakota

Wyoming

South Dakota
Colorado

Utah
Tennessee
Source: Department of Labor, BLS, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 63
Filing method for unemployment claims:
Some states all by telephone, other states all via internet
Unemployment Insurance Initial Claims Filing Method
Internet Telephone In Person Other*
100% 100%

90% 90%

80% 80%

70% 70%

60% 60%

50% 50%

40% 40%

30% 30%

20% 20%

10% 10%

0% 0%

GA
OK

MT

OR

MI
IA

WI
MN

OH

ME

MD
MO
MS
MA

TX

WY

VT
IN

ID

TN

LA

KY

WV

AZ
FL

SC

HI

AR

WA
IL

VA
AK

KS

PR
SD
PA

AL
CT

NE

UT

CO

DE

NV

RI

NJ

DC
NH

ND

NC

CA

NY

NM
Other includes Mail, Employer, Other and Missing. This report is based on Benefit Accuracy Measurement data for UI claimants with benefit years
beginning in the period from CY 2019 QTR 1 to CY 2019 QTR 4. These percentages are estimated from sample data and are subject to sampling and non-
sampling error.
Source: United States Department of Labor, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 64
April 2020: Percentage of unemployed
receiving unemployment benefits in each state

0-50% 50.1-60% 60.1-70% 70.1-80% 80.1-90% 90% & above

D.C

We calculated states’ percentage share by taking the continued-claims figures for the same week as the reference week for the BLS’s household
survey, then dividing it by the total unemployment figure.
Source: DOL, BLS, Haver Analytics, DB Global Research
Deutsche Bank
Alaska
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 65
Once the US economy reopens social distancing will be more difficult
in states with a large share of high contact intensity occupations
Share of contact intensive occupations

Percentage
22.86 – 24.62
21.83 – 22.86
21.53 – 21.83
21.16 – 21.53
20.63 – 21.16
19.11 – 20.63
Source: St. Louis Fed, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 66
Research
0.0
1.0
2.0
3.0
4.0
5.0

Deutsche Bank
Million
Preschool, Elementary, Middle,
Secondary, & Special Education
Teachers

Motor vehicle operators

Therapists, Vets., Nurses, Midwives,


Audiologists

Health Technologists and Technicians

Other Personal Care and Service


Workers

Food and Beverage Serving Workers

Home Health & Personal Care Aides; &


Nursing Assist., Orderlies, & Psychiatric
Aides
Healthcare Diagnosing or Treating
Practitioners

Torsten Slok, torsten.slok@db.com +1 212 250-2155


Other Healthcare Support Occupations

Barbers, Hairstylists, and


Cosmetologists

June 2020
Supervisors of Food Preparation and
Serving Workers

Other Teachers and Instructors

Pilots, air traffic controllers, and flight


Total number of workers in high contact occupations

attendants
Source: St. Louis Fed, 2017 American Community Survey, O*NET, DB Global Research

Supervisors of Personal Care and


Service Workers
Number of US workers in high contact intensity occupations

Occupational Therapy & Physical


Therapist Assistants and Aides
Million

0.0
1.0
2.0
3.0
4.0
5.0

67
There are 27mn US workers in
high contact intensity occupations
Million Total number of workers based on relative contact intensity Million
70 70

60 60

50 50

40 40

30 30

20 20

10 10

0 0
Low Medium High
Note: Low, medium & high contact-intensity categories are classified according to index scores of 0 to 50, 50 to 75, and 75 and above. This index score
is based on extent to which the job requires the worker to perform job tasks in close physical proximity to other people. The corresponding scores are
defined as follows: •I don’t work near other people (beyond 100 ft.): 0; •I work with others but not closely (e.g., private office): 25; •Slightly close (e.g.,
shared office): 50; •Moderately close (at arm’s length): 75; •Very close (near touching): 100

Source: St. Louis Fed, 2017 American Community Survey, O*NET, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 68
More difficult for lower income groups to work from home
Working from home by income group in the United States

Stayed home from work and unable to work Worked from home

19%
Top quintile 180K and up
71%

19%
Upper-middle quintile 90K-180K
54%

23%
Middle quintile 48K-89K
42%

23%
Lower-middle quintile 24K-74K
35%

45%
Bottom quintile <24K
41%

0% 20% 40% 60% 80%

Sample of 8572 randomly selected adults from the Gallup Panel, interviewed over the phone from March 16 to March 22
Source: Reeves , Richard V. and Jonathan Rothwell, “Class and COVID: How the less affluent face double risks,”
Brookings Institution March 2020 DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 69
Social distancing and income inequality
United States: Social distancing vs income inequality
70

Hawaii
District of Columbia
60 New York
New Jersey
(higher value = more distancing)

Washington California
Oregon
Massachusetts
Pennsylvania
Social distancing Index

Florida
50 Maryland
Nevada Rhode Island
Michigan Connecticut
Colorado Arizona
Delaware Illinois New Mexico
New Hampshire Louisiana
Virginia
40 Nebraska Minnesota Texas North Carolina
Kansas Georgia West Virginia
Wisconsin Ohio
South Carolina Kentucky
Indiana Vermont
Alaska
Utah Maine Missouri Mississippi
Iowa North Dakota Alabama
30 Idaho
Arkansas Tennessee
Wyoming Montana
Oklahoma
South Dakota
20

10
0.4 0.42 0.44 0.46 0.48 0.5 0.52 0.54 0.56

Gini coefficient* (higher value = more income inequality)


* US Census American Community Survey 2016
Source: Census, University of Maryland COVID-19 Impact Analysis Platform, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 70
Credit managers seeing more distress
Index NACM US Credit Managers Combined Sector Dollar Collections Index

70 70

65 65

60 60

55 55

50 50

45 45

40 40

35 35

30 30
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
The Credit Manager Survey (CMI) index, published is based on a survey of approximately 1,000 trade credit managers in the second half of each month, with about equal
representation between the manufacturing and service sectors. The survey asks respondents to comment whether they are seeing improvement, deterioration or no change for
various favorable and unfavorable factors. “’Dollar collections’ is one of such favorable factors. Higher dollar collections represent improved cash flow for the selling firm and the
ability of buying firms to pay.

Source: National Association of Credit Management , Bloomberg Finance LP, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 71
10s vs credit managers’ index
% 15-month
Change-ann ,
10 year trasury yield (ls)
4.5% Index 20
NACM Survey : amount of credit extended (rs)
4.0% 15

3.5%
10
3.0%
5
2.5%
0
2.0%
-5
1.5%
-10
1.0%

0.5% -15

0.0% -20
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: NACM, FRB, Haver Analytics, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 72
Local government:
Sales taxes as a share of total tax collections
% Share of various taxes in states' total taxes, Q4 2019 %
General sales Personal income tax Corporate net income tax
Property tax Licenses Selected sales
Natural resource severance tax Others
100 100
90 90
80 80
70 70
60 60
50 50
40 40
30 30
20 20
10 10
0 0
North…

Massachus…
South…

New…
West Virginia
Tennessee
Florida

Idaho

New Mexico
Nebraska
Washington

Pennsylvania

Illinois

New Jersey

Missouri

Connecticut

North Dakota

Vermont

Montana
Texas

Nevada
South Dakota

Mississippi

Wyoming
Indiana

Rhode Island

Louisiana

Wisconsin

Michigan

California
Minnesota
Colorado

Alaska
New York
Arkansas

Delaware
Hawaii

Ohio
Arizona
Kansas

Maine

Iowa
Total U.S.

Utah

Kentucky
Dist of Col
Oklahoma

Alabama

Georgia

Maryland

Virginia

Oregon
Source: Census, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 73
US: People over 55 years old
account for 40% of consumer spending
Share of total US consumer expenditures by age %
%
65 years and above 55 years and above
45 45

40 40

35 35

30 30

25 25

20 20

15 15

10 10
1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018
Source: BLS, Haver Analytics, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 74
Consumption patterns of US consumers
above and below 65 years old
Consumer expenditure by category : Consumer expenditure by category :
Under 65 years 65 years and older
Cash
Tobacco, 0% Contributions ,
5% Personal
Education, 1%
insurance and
Cash Personal Miscellaneous, pensions, 7%
Contributions , insurance and Food at 2%
3% pensions, 13% home, Food away from Food at Food away
home, 6% home, 8% from home, 5%
Miscellaneous, 7%
2% Alcoholic Alcoholic
Beverages , 1% Reading , 0%
Beverages ,
Tobacco, 1% Personal 1%
Education, 3% Care, 1% Rented
Reading , 0% Owned Dwellings, 5%
Entertainment, dwellings, Rented Owned
5% 11% Dwellings, 7% dwellings, 12%
Personal Other Entertainment, Health care, Other Lodging,
Care, 1% Lodging, 1% 6% 13% 2%
Health care, 7% Natural gas,
1%
Natural gas, 1% Other Fuels,
0%
Electricity, 2%
Electricity, 3%
Water Other Fuels, 0%
Transportation, , 1% Transportation, Residential
16% 14% phone
Cellul Residential Apparel and service, 1%
Apparel and ar phone services, 2%
services, 3% Phone service, 0% Cellular Phone,
, 2% Water 1%
Household Personal , 1%
furnishings and services, 1%
equipment, 3% Other Personal
Household Household services,
Housekeeping
furnishings and 0%
Housekeeping Expenses , 2% equipment, 3%
supplies, 1%
supplies, 1% Other
Household
Expenses , 2%

Note: Data for 2018. Source: BLS, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 75
Households scaling back purchases of non-essentials
% SCE survey: Median expected change in household spending %
over next 12 months
Essentials Non-essentials
3.50 3.50

3.00 3.00

2.50 2.50

2.00 2.00

1.50 1.50

1.00 1.00

0.50 0.50

0.00 0.00
15 16 17 18 19 20

Source: NY Fed SCE Household Spending Survey, Haver Analytics, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 76
Households scaling back spending on vacations
% SCE survey: Average percent chance of household purchasing each %
item over the next four months
Electronics Furniture Home appliances
35 35
Home repairs House or apartment Vehicles
Vacations
30 30

25 25

20 20

15 15

10 10

5 5

0 0
15 16 17 18 19 20
Source: NY Fed SCE Household Spending Survey, Haver Analytics, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 77
Normally during recessions consumers don’t
believe things will get better in six months time
% Conference Board: expectations for 6 months hence %
Better Worse
45 45
“Things will be
a lot better
40 in 6 months” 40

35 35

30 30

25 25

20 20

15 15

10 10

5 5
“Things not better “Things not better
in 6 months” in 6 months”
0 0
67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19
Source: The Conference Board, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 78
US: Expected change in unemployment benefits
% SCE Public Policy: expected changes in next 12 months: unemployment %
benefits
Increase No change Decrease
70 70

60 60

50 50

40 40

30 30

20 20

10 10

0 0
Aug-15

Aug-16

Aug-17

Aug-18

Aug-19
Apr-16

Apr-17

Apr-18

Apr-19

Apr-20
Dec-15

Dec-16

Dec-17

Dec-18

Dec-19
Source: FRB New York, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 79
US: Commercial bank loan delinquency rate
highly correlated with the unemployment rate
% %
Loan delinquency rate, All loans and leases (ls) Unemployment rate (rs)
8% 16%

7% 14%
Q2 2020 :
13.5%
6%
12%
5%
10%
4%
8%
3%
6%
2%

1% 4%

0% 2%
85 88 91 94 97 00 03 06 09 12 15 18 21
Source: BLS, FRB Loan charge-offs and delinquencies, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 80
Conversation is changing from liquidity to solvency
% United States # number
Unemployment rate (ls) Total new Chapter 11 bankruptcy filings (rs)
of cases

15% 8000
14%
7000
13%
12% 6000
11%
5000
10%
9% 4000
8%
3000
7%
6% 2000
5%
1000
4%
3% 0
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
Source: BLS, Administrative Office of US Courts, Haver Analytics, Bloomberg Finance LP, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 81
Households withdrawing money from retirement accounts
“In the last 60 days, have you taken any money out of your retirement
savings account due to coronavirus-related circumstances?”

Yes No, but plan to No, and don't plan to

30%

50%

19%

MagnifyMoney conducted an online survey of 1,239 Americans with a retirement savings account. The sample base was proportioned to
represent the overall population, and the survey was fielded April 28-May 1, 2020.
Data comes for here https://www.magnifymoney.com/blog/news/early-withdrawal-coronavirus/

Source: MagnifyMoney, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 82
Credit card interest rate near highest levels in decades
% Commercial bank interest rate: credit cards, %
accounts assessed interest

18 18

17 17

16 16

15 15

14 14

13 13

12 12

11 11
95 98 01 04 07 10 13 16 19
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
Source: Federal Reserve Board, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 83
Auto loan interest rates increased by 2%-points in 2018

% Auto loan interest rate %


8 8
36 month used car 60 month new car

7 7

6 6

5 5

4 4

3 3

2 2
08 09 10 11 12 13 14 15 16 17 18 19
Source: FRB, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 84
Delinquency rates moving up for consumers

% Balance Auto loan delinquencies (90+ days, ls) % Balance


Credit card delinquencies (90+ days, rs)
5.5 14

5.0 13
12
4.5
11
4.0 10
3.5 9

3.0 8
7
2.5
6
2.0 5
1.5 4
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Source: FRB, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 85
Auto loans: Lower income groups currently at 2006
levels in terms of debt and interest payments
Consumer Expenditure Survey: Motor vehicle purchases & vehicle
% finance charges as a share of average consumer expenditure %

9 9
2006 2009 2018
8 8
7 7
6 6
5 5
4 4
3 3
2 2
1 1
0 0
Lowest 20 % Second income Third income Fourth income Highest 20%
income quintile quintile quintile quintile income quintile

Source: BLS, Haver Analytics, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 86
US: Auto loan interest rates higher across all FICO scores

% Interest rate on 36-month auto loan by FICO score %


18 18
December 2015 February 2020
16 16

14 14

12 12

10 10

8 8

6 6

4 4

2 2

0 0
720-850 690-719 660-689 620-659 590-619 500-589

Source: myfico.com, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 87
80% of cars sold are financed.
And 20% of car sales are subprime
% Share in total auto loan originations in Q1- 2020 %

100 100

80 80

60 60

40 40

20 20

0 0
Subprime Prime

Source: New York Fed Consumer Credit Panel/Equifax, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 88
Average amount financed on new car loans moving higher

$ Finance companies: new car loans: average amount financed $


32000 32000

30000 30000

28000 28000

26000 26000

24000 24000

22000 22000
08 09 10 11 12 13 14 15 16 17 18 19 20

Source: FRB, Haver Analytics, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 89
More households falling behind on their auto
loans, credit card loans, and mortgages
% Unemployment rate (ls) %
Delinquency rate on consumer loans (rs, 12m lead)

16 3.6

14 3.2
12
2.8
10
2.4
8
2.0
6

4 1.6

2 1.2
65 70 75 80 85 90 95 00 05 10 15 20
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.
Source: BLS, ABA, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 90
More people would prefer to work from home permanently

Survey: Would you rather work from Survey: Are you more
home full time moving forward productive working from home

Not sure
To early to yet
tell 24.0%
16.6%
Yes
44.4%
Yes
51.4%
No
32.0% No
31.6%

Source: Zippia Poll Survey , DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 91
Pent-up demand: A lot of money on the sidelines
for consumer spending and buying stocks and credit
$ Bil. Money market mutual fund: Total assets $ Bil.
350 Weekly change (rs) Level (ls) 5000

300
4500
250

200
4000
150

100 3500

50
3000
0

-50
2500
-100

-150 2000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: ICI, Haver Analytics, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 92
Not U or L but deep V
$ Trillion Real GDP in United States $ Trillion

DB Forecast CBO May 2020 Interim Forecast Blue Chip


21 20

20 19

19
18
18
17
17
16
16
15
15
14
14

13 13

12 12
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025
Source: BEA, CBO, Wolters Kluwer, Haver Analytics, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 93
Sharp decline in capex
Index ISM manufacturing: new orders index (ls) % y/y
Real private nonresidential fixed investment: equipment (rs)
80 30

70 20

60 10

50 0

40 -10

30 -20

20 -30
01 03 05 07 09 11 13 15 17 19
Source: BEA, ISM, Haver Analytics, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 94
4. Higher risk of
deflation than inflation

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 95
Inflation will not be a problem for many, many years
Capacity utilization: Total industry
90% 90%

85% 85%

80% 80%

75% 75%

70% 70%

65% 65%

60% 60%
1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 2019
Source: FRB, Haver Analytics, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 96
Inflation not a problem anytime soon
%y/y United States: Core CPI and NFIB survey %
Core CPI (ls)
NFIB: Percent planning to raise average selling prices, net* (12 month lead, rs)
3.0 40%

35%
2.5 30%

25%
2.0
20%

15%
1.5
10%

1.0 5%

0%

0.5 -5%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
*Less percent planning reduction
Source: BLS, NFIB, Haver Analytics DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 97
US: Velocity is positively correlated with inflation

% y/y Velocity of money (20m lead, ls) Core CPI (rs) % y/y
5 3.0
2.5
0
2.0
-5 1.5
1.0
-10
0.5
-15
0.0

-20 -0.5
-1.0
-25
-1.5
-30 -2.0
00 02 04 06 08 10 12 14 16 18 20
Note: Velocity of money is nominal GDP divided by M2.
Source: FRB, BLS, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 98
Supply chain disruptions have very small weight in CPI basket

CPI weights in Apr-20


Items
(Percent)
New Vehicles 3.8
Meats, Poultry, Fish, & Eggs 1.8
Information Tech, Hardware, & Services 1.3
Prescription Drugs 1.2
Lodging Away from Home 0.9
Furniture and Bedding 0.9
Airline Fare 0.6
Sporting Goods 0.6
Spices, Seasonings, Condiments, Sauces 0.3
Frozen & Freeze Dried Prepared Foods 0.3
Appliances 0.2
Medical Equipment and Supplies 0.1
Sum 12.0
Memo, three biggest weights in CPI index:
Housing 42.5
Food & Beverages 15.2
Transportation 14.7

Source: BLS, Haver Analytics, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 99
5. Energy prices

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 100
40% of oil demand comes from cars and trucks

% Oil demand by sector %


Trucks Cars Non-combusted Industry Non-road Buildings Power
Estimates->
100 100
90 90
80 80
70 70
60 60
50 50
40 40
30 30
20 20
10 10
0 0
2010 2015 2020 2030
Source: BP Energy Outlook 2019, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 101
Dramatic decline in US oil consumption
'000 barrels a day United States: Total oil consumption '000 barrels a day

Level 8- Week Moving Average


23000 23000

22000 22000

21000 21000

20000 20000

19000 19000

18000 18000

17000 17000

16000 16000

15000 15000

14000 14000

13000 13000
1990 1995 2000 2005 2010 2015 2020
Source: US Department of Energy, Bloomberg Finance LP, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 102
Cushing crude oil stock versus storage capacity
Million barrel United States : DOE Cushing Oklahoma Crude Oil Million barrel
Total Stock

80 Working storage capacity as of September 30, 2019: 76 Million 80

70 70

60
60
50
50
40
40
30
30
20

20 10

10 -
2014 2015 2016 2017 2018 2019 2020
Source: EIA, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 103
Oil floating storage at record high
Million barrel Global crude oil floating storage Million barrel
200 200

180 180

160 160

140 140

120 120

100 100

80 80
Average
60 60

40 40

20 20
Jan-16

Apr-16

Jul-16

Jan-17

Apr-17

Jul-17

Jan-18

Apr-18

Jul-18

Jan-19

Apr-19

Jul-19

Jan-20

Apr-20

Jul-20
Oct-16

Oct-17

Oct-18

Oct-19
Source: VORTEXA, Bloomberg Finance LP, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 104
Lower WTI pushing retail gas prices down
$/barrel WTI Crude Oil Cushing and Gasoline price $/gallon
US Crude Oil WTI Cushing OK Spot (ls)
80 US Retail Automotive Gasoline Total All Grades Average Spot (rs)
3.1

60
2.9

40 2.7

2.5
20

2.3
0
2.1

-20
1.9

-40 1.7
2015 2016 2017 2018 2019 2020

Source: US Department of Energy, Bloomberg Finance LP, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 105
Cars on the roads in the US are on average 12 years old
# of years Average Age of Light Vehicles in Operation in the United States # of years

12.0 12.0

11.5 11.5

11.0 11.0

10.5 10.5

10.0 10.0

9.5 9.5

9.0 9.0

8.5 8.5

8.0 8.0
1995 1998 2001 2004 2007 2010 2013 2016 2019
Source: United States Department of Transportation , DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 106
Gas price at the pump
US$ per Gallon United States : Regular Fuel price US$ per Gallon
2.00 2.00

1.95 1.95

1.90 1.90

1.85 1.85

1.80 1.80

1.75 1.75

1.70 1.70

Note: Regular Unleaded Gas Prices

Source: GasBuddy, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 107
Most expensive states to buy fuel
US$ per Gallon Most Expensive Fuel price by state: Top 25 US$ per Gallon
3.5 3.5
3.3 3.3
3.1 3.1
2.9 2.9
2.7 2.7
2.5 2.5
2.3 2.3
2.1 2.1
1.9 1.9
1.7 1.7
1.5 1.5

Note: Regular Unleaded Gas Prices as of May 27, 2020

Source: GasBuddy, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 108
States with lowest fuel prices
US$ per Gallon Leat Expensive Fuel price by state: Top 25 US$ per Gallon
1.9 1.9

1.8 1.8

1.7 1.7

1.6 1.6

1.5 1.5

Note: Regular Unleaded Gas Prices as of May 27, 2020

Source: GasBuddy, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 109
Gas prices at the pump: Regular fuel

Note: Regular Unleaded Gas Prices as of May 27, 2020

Source: GasBuddy, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 110
6. The US fiscal expansion
and long rates

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 111
Fiscal crises in advanced economies
normally triggered by a sudden loss of market
confidence or large increases in government bond auctions
% Fiscal crises episodes (1980-2016)
Loss of market confidence Credit event
Exceptionally large official financing Implicit domestic default

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Advanced Emerging Markets Low-income Total
economies (AEs) (EMs) countries (LICs)
Source: Debt Is Not Free (IMF, 2020), DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 112
Downtrend in bid-to-cover ratios for US Treasuries

Ratio Treasury auction results : bid-to-cover ratio Ratio


4.5 4.5
2-year 10-year
4.0 4.0

3.5 3.5

3.0 3.0

2.5 2.5

2.0 2.0

1.5 1.5

1.0 1.0
94 96 98 00 02 04 06 08 10 12 14 16 18 20

Source: Bloomberg Finance LP, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 113
Record high level of world GDP experiencing negative real interest rates

% Percentage share of advanced countries GDP %


recording negative real rate since 1314

100% 3 year moving average 5 year moving average June, 2020 100%
90% 90%
80% 80%
70% 70%
60% 60%
50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 0%
1314
1339
1364
1389
1414
1439
1464
1489
1514
1539
1564
1589
1614
1639
1664
1689
1714
1739
1764
1789
1814
1839
1864
1889
1914
1939
1964
1989
2014
Note: Advanced countries here are Italy, France, Germany, Spain, Netherlands, Japan , UK & US

Source: National sources, Paul Schmelzing (BoE, January 2020, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 114
Big jump in budget deficit and unemployment rate
% Fiscal budget and unemployment rate %12 month MA
Unemployment rate (ls) Federal Surplus/Deficit(-) as a % of GDP (inverted,rs)
20% -25%
19%
18%
17% -20%
16%
15%
14%
13% -15%
12%
11%
10% -10%
9%
8%
7%
6% -5%
5%
4%
3% 0%
2%
1%
0%
70 75 80 85 90 95 00 05 10 15 20

Source: BLS, US Treasury, BEA, Haver Analytics, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 115
Growing fiscal deficit would normally push long rates up but
since 2009 global QE and forward guidance have kept rates low
% Fed ACM term premium: 10 yr (ls) % 12 month
Federal surplus/ deficit (-) as a % of GDP (inverted,rs) MA
8 -28
-26
7 -24
-22
6 -20
-18
5 -16
-14
4 -12
-10
3 -8
-6
2 -4
-2
1 0
2
0 4
6
-1 8
10
-2 12
67 71 75 79 83 87 91 95 99 03 07 11 15 19

Source: FRBNY, US Treasury, BEA, Haver Analytics, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 116
Normally when the economy enters a recession the term premium rises

% Fed ACM term premium: 10 yr (ls) Unemployment rate (rs) %


6 DB forecast 15
2020Q2
14
5 13
12
4 11
10
3 9
8
2
7
1 6
5
0 4
3
-1 2
1
-2 0
1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017
Source: BLS, FRBNY, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 117
Fiscal deficit and 10-year rates

% % 12 month
10 yr treasury yield (ls) Federal surplus/ deficit (-) as a % of GDP (inverted,rs) MA
21 -25
Dec 2020
19
-21
17
-17
15

13 -13

11
-9
9
-5
7

5 -1

3
3
1
7
-1
67 71 75 79 83 87 91 95 99 03 07 11 15 19
Source: FRB, US Treasury, BEA, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 118
Global debt as a share of GDP

Global sectoral debt as % of GDP


% %
Households Non-fin corporates Government Financial Corporates
325 325
300 300
275 275
250 250
225 225
200 200
175 175
150 150
125 125
100 100
75 75
50 50
25 25
0 0
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
Source: IIF Global Debt Monitor, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 119
Demand and supply in Treasury markets
$bln United States: Treasury issuance and Fed QE $bln
12m sum 12m sum
Fed Treasury purchases Net issuance
3100 3100

2600 2600

2100 2100

1600 1600

1100 1100

600 600

100 100

-400 -400
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Note: Fed purchases shown are only for coupon bearing securities; Net issuance forecasts are adjusted for settlement cash
flows to account for original month of issuance
Source: Steven Zeng, BPD, Fed, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 120
Liquidity in US Treasury markets
% pt Bid-offer spread in US Treasuries % pt
March 23: Fed
Announces Extensive
New Measures To April 23: Fed to
Support The Economy Expand Access
March 15: The Fed Funds Rate to PPPLF
Cut to Zero & Fed announced a Program
0.016 new round of QE
0.016
April 6: Fed
March 17: Fed announced to
Announces April 30: Fed
Create of a Commercial Paper
0.014 Funding Facility (CPFF) and a
Three New Expands Main 0.014
Emergency Street Lending
Primary Dealer Credit Facility
Lending Program
(PDCF)
Facilities
0.012 Designed to 0.012
Implement
CARES Act
0.01 0.01

0.008 0.008

0.006 0.006

0.004 0.004

0.002 0.002

0 0
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
Source: Bloomberg Finance LP, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 121
7. Election uncertainty

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 122
Voter turnout in Midterm and Presidential elections since 1789
Voting eligible United States: Voter turnout rates, 1789-2018 Voting eligible
population turnout population turnout
rate rate
Presidential election Midterm election
100 100
90 90
80 80
70 70
60 60
50 50
40 40
30 30
20 20
10 10
0 0
17 9
99

18 9
18 9
29

18 9
18 9
59

18 9
79

18 9
19 9
19 9
19

19 9
39

19 9
19 9
69

19 9
19 9
99

20 9
19
8

0
1

3
4

8
9
0

4
5

7
8

0
17

18

18

18

18

19

19

19

20
Note: The voting-eligible population (VEP) represents an estimate of persons eligible to vote regardless of voter registration status in an election
Source: http://www.electproject.org/, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 123
Trump job approval rating not too different from
Obama or Clinton at this point in presidency
% Presidential job approval %
Trump Clinton Obama
100 100
90 90
80 80
70 70
60 60
50 50
40 40
30 30
20 20
10 10
0 0
0 10 20 30 40 50 60 70 80 90 100110 120130 140150160 170180 190200
First 200 weeks
Source: American Presidency Project, Gallup, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 124
Net migration into the US down 40% in recent years

Thousands Net migration between the United States and Abroad Thousands

1200 1200

1000 1000

800 800

600 600

400 400

200 200

0 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*
* Data shown for 2019 are projections. Each year represents the annual estimates period ending on June 30. Released data will report 2010 as a quarter year
(April 1, 2010-June 30, 2010) instead of a full year
Source: U.S. Census Bureau, Vintage 2019 Population Estimates, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 125
10% of voters in 2020 will be foreign born

% Percent of U.S. eligible voters who are foreign born %


10 10

9 9

8 8

7 7

6 6

5 5
2000 2008 2012 2016 2018 2020
Note: Data for 2020 from Pew Research Center projections based on U.S. Census Bureau population projections.

Source: PEW Research, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 126
The share of income going to the Bottom 50% of the
population is down in the US and unchanged in Europe

% Share of national income: bottom 50% percentile


%
US Europe
19 19

18 18

17 17

16 16

15 15

14 14

13 13

12 12
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017
Source: Saez (2019), Blanchet, Chancel & Gethin (April 2019), WID, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 127
The share of income going to the Top 1% is
up 6%-points in the US and 2%-points in Europe

% Share of national income: top 1% percentile %


US Europe
21 21
20 20
19 19
18 18
17 17
16 16
15 15
14 14
13 13
12 12
11 11
10 10
9 9
8 8
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017

Source: Saez (2019), Blanchet, Chancel & Gethin (April 2019), WID, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 128
10% of the US population own 84%
of all stocks held by households
% Percent of total investment assets held, by wealth distribution %

Top 10% Bottom 90%


100 100
16%
80 80

60 60
84%
40 40

20 20

0 0
Business equity Stocks, directly or indirectly Non-home real estate
owned*
* Includes direct ownership of stocks and indirect ownership through mutual funds, trusts, and IRAs, Keogh plans, 401(k) plans, and other
retirement accounts
Source: Edward N. Wolff, (2018), Survey of Consumer Finances, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 129
US consumer outlook: Many low- and middle-income
households have lost jobs and have little savings

Net saving rates across the income distribution


0.12 0.12
Top 1% Next 9% Bottom 90%
0.10 0.10

0.08 0.08

0.06 0.06

0.04 0.04

0.02 0.02

0.00 0.00

-0.02 -0.02

-0.04 -0.04

-0.06 -0.06
1970s 1980s 1990s 2000s 2010s

Source: Mian, Straub & Sufi “The Saving Glut of the Rich and the Rise in Household Debt,” (Nov 2019), DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 130
US: Coronavirus likely to have bigger impact on low-income groups

% Percent of private industry workers with access to paid sick leave, %


vacation, and holidays, by wage category, 2019
100 Paid sick leave Paid vacation Paid holidays 100
90 90
80 80
70 70
60 60
50 50
40 40
30 30
20 20
10 10
0 0
Lowest 10 Lowest 25 Second 25 Third 25 Highest 25 Highest 10
percent percent percent percent percent percent
Source: Bureau of Labor Statistics, National Compensation Survey, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 131
Paid sick leave and healthcare access by establishment size

% Percentage share of private industry employees with access to work %


benefits by establishment size

100 Paid sick leave Healthcare access 100


90 90
80 80
70 70
60 60
50 50
40 40
30 30
20 20
10 10
0 0
1 to 99 workers 1 to 49 workers 50 to 99 workers 100 to 499 500 workers or
workers more
Source: BLS, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 132
US: Reasons why uninsured don’t have health insurance
% Reasons for being uninsured among uninsured nonelderly adults %

45 45
40 40
35 35
30 30
25 25
20 20
15 15
10 10
5 5
0 0
Cost is too high Lost job or Lost medicaid Status change Employer does No need for
changed not offer or health coverage
employers ineligible for
coverage
Note: Status change includes marital status change, death of spouse or parent, or ineligible due to age or leaving school.
Source: Kaiser Family Foundation analysis of 2018 National Health Interview Survey, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 133
US: Only 26% of workers throughout their 50s and early
60s work in jobs with both health and retirement benefits
Demographics at ages 50-62 based on
a benefits only definition of nontraditional work
Early retirement Weak attachment Mostly nontraditional
Mostly traditional All traditional

21%
26%

16%

26% 11%

Source: Center for Retirement Research at Boston College, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 134
53% of US households don’t have emergency savings

% Percentage of adults with no emergency savings account %


70 70

59 59
60 56 60
53
49 48 48
50 50

40 37 40

30 30

20 20

10 10

0 0
Total

+80
18-29

20-39

40-49

50-59

60-69

70-79
Age
Source: AARP, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 135
25% of US households with income higher
than $150,000 don’t have emergency savings

% Percentage of adults with no %s


90 emergency savings account, by income 90
78
80 80
70
67 70
59
60 53 60
50 47 50
38 35
40 40
30 25 30
20 20
10 10
0 0
Total

<$20K

$100K-
$20K-$39K

$40K-$59K

$60K-$75K

$75K-$99K

>$150K
$149K
Household income
Source: AARP, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 136
Length of time households could cover expenses with existing money
Question: "At current level of spending, how long could you afford to cover expenses, if
you and your household had to live off only the money you have readily available without
% drawing from retirement accounts or borrowing? " %
Less than 1 week 1-3 weeks 1-2 months 3-5 months +6 months

100 100
90 23 90
80 80
53
70 16 70
60 60
50 22 50
40 40
22
30 21 30
20 20
18
10 18 10
5
0 2 0
Has emergency savings account No emergency savings account
Source: AARP, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 137
Rich countries tend to have a bigger
middle class, except the United States
Share of population in middle-income
households and annual median income
Middle-income
share (%)
80 ISL
CZE NLD FRA DNK
SVK
HUN SWE NOR
BEL
70
SVN JPN FIN AUT
POL DEU
PRT
GRC LUX
60 KOR CHE
CAN
IRL AUS
LVA
ITA GBR
50 CHN
ESP USA
TUR LTU
ISR
CHL EST
IND
BRA
US at same level as
40 RUS China, Turkey, Russia
ZAF MEX

30
0 5000 10000 15000 20000 25000 30000 35000 40000
Median income (USD per year, PPP adjusted)
Note: Middle-income classes and median incomes are defined relative to equivalised household disposable income. The middle-income class comprises
individuals in households with incomes that are between 75% and 200% of the median.
Source: OECD report “Under Pressure: The Squeezed Middle Class” (2019), DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 138
More people delaying medical treatment for financial reasons

Within the last twelve months, have you or a member of your family put off
% any sort of medical treatment because of the cost you would have to pay? %

% put off treatment for any condition % Put off treatment for serious condition
35 35

30 30

25 25

20 20

15 15

10 10

5 5
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

Source: Gallup Survey, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 139
Older households richer.
Younger households poorer
% Change in real median family net worth by age of head %

35-44 years 45-54 years 55-64 years 65-74 years 75+ years
100 100

80 80

60 60

40 40

20 20

0 0

-20 -20

-40 -40

-60 -60
1989 1992 1995 1998 2001 2004 2007 2010 2013 2016
Source: FRB, Haver Analytics DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 140
Investment
implications

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 141
Top 18 questions for markets

The economy
1. How will different reopening strategies and very different levels of unemployment impact the shape of the recovery?
2. Many consumers and corporates have missed payments on debt on April 1 and May 1, what will happen if many also
miss payments on June 1, and higher 90-day delinquency rates begin to trigger a wave of defaults?
3. The current deep recession will result in disinflation over the coming years, are there any valid arguments for inflation?
4. What behavioral changes will we see from consumers over the coming quarters?
5. What behavioral changes will we see from corporates over the coming quarters?
6. What behavioral changes will we see from banks and private buyers of corporate credit over the coming quarters?
7. What are the risks that the current liquidity crisis will turn into a solvency crisis?

The policy reaction


8. Which countries will do additional fiscal stimulus?
9. What are the risks of doing massive fiscal policy?
10. What are the risks of doing massive monetary policy?
11. What are the consequences of the weighted average maturity of US government debt outstanding moving rapidly
lower over the coming quarters, will the market pay attention and begin to worry about US fiscal sustainability?
12. What are the consequences of the Fed’s unwillingness to do yield curve control in the long end of the curve, are they
trying to draw a line between monetary and fiscal policy?
13. When will credit and equity markets again be driven by fundamentals?

The future
14. What are the policy options for fiscal policy and central banks if we get a second wave of infections?
15. Will we see new rules and regulations for households, small businesses, large businesses, and financial services?
16. What are the geopolitical consequences for the relationship between the US, Europe, and China?
17. What will happen when Fed Chair Powell’s term ends in February 2022, this has to be decided in 2021?
18. COVID-19 and the associated fiscal policy response have magnified income inequality, wealth inequality, and health
care inequality even further, what are the political consequences of these multi-decade trends accelerating?

Source: DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 142
S&P500 performance since February 24
% S&P 500 total returns by sector %

5 Feb 24 - Mar 20 Feb 24 - May 28 5

-5 -5

-15 -15

-25 -25

-35 -35

-45 -45

-55 -55
Energy

Industrial

Financial

Real estate

Consumer Staples
Materials

Consumer disc.

IT
Utilities

S&P 500

Telecom

Health care
Source: Standard & Poor’s, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 143
Time it takes from VIX crossing 40
until S&P500 reaches new all-time high

# months from VIX crossing 40


Date when VIX crossed 40
until S&P500 reached new all-time high

19-Oct-87 15 months
28-Aug-98 2 months
17-Sep-01 50 months
16-Jul-02 42 months
29-Sep-08 39 months

20-May-10 25 months

8-Aug-11 14 months
Average 27 months
Median 25 months

Source: WSJ, S&P, Haver Analytics, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 144
Who owns different countries’ government bonds?
Investorbase of advanced economies, 2019-Q4 (as % of total)

Foreign Official Foreign Banks Foreign Nonbanks


Domestic Central Bank Domestic Banks Domestic Nonbanks
100% 100%
90% 90%
80% 80%
70% 70%
60% 60%
50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 0%
Austria
Denmark

Norway

United States

Spain

Italy
Netherlands

France

Slovenia

Canada
Greece

Australia
Portugal

New Zealand
Germany
Ireland

Finland

Belgium

Korea
Switzerland

Japan
Sweden

United Kingdom

Czech Republic
Note: Coverage is for general government

Source: IMF, Haver Analytics,DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 145
Market cap of the US Fallen Angels Index
$, bn Market cap of Bloomberg Barclays Fallen Angels Index $, bn

330 330

300 $300bn 300

270 270

240 240

210 210

180 180

150 150

120 120

90 90
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

Note: The Bloomberg Barclays USD Global Corporate ex EM Fallen Angels 3% Issuer Capped Index tracks bonds that are issued in
developed markets and are rated High Yield & were rated Investment Grade either at issuance or at least once since issuance.

Source: Bloomberg Finance LP, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 146
Attractive again for Europeans to buy US Treasuries
% pts 10yr Treasury minus 10yr German bund, currency hedged % pts

2.0 2.0

1.5 1.5

1.0 1.0

0.5 0.5

0.0 0.0

-0.5 -0.5

-1.0 -1.0

-1.5 -1.5

-2.0 -2.0
2008 2010 2012 2014 2016 2018 2020

Source: Bloomberg Finance LP, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 147
Spread between CCC and BB corporate bond yields

% pts Spread between CCC and BB Yields % pts


10 Bloomberg Barclays Capital Caa US High Yield Average OAS minus Bloomberg
10
Barclays Capital B US High Yield Average OAS
9 9

8 8

7 7

6 6

5 5

4 4

3 3

2 2

1 1
2015 2016 2017 2018 2019 2020
Source: Bloomberg Finance LP, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 148
Fed funds versus market predictions
of where Fed Funds is going
% Fed fund futures at different points in time %

6 6

5 5
The market was wrong

4 4

Latest forecast
by the market
3 3
The market
was wrong

2 2

1 1

The market
was wrong
0 0
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Source: Bloomberg Finance LP, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 149
Professional forecasters predicting higher rates again…
% Actual 10y rate and forecasts for the 10y rate from the Fed's %
quarterly Survey of Professional Forecasters
5.5 5.5

5.0 5.0

4.5 4.5

4.0 4.0

3.5 3.5

3.0 3.0

2.5 2.5

2.0 2.0

1.5 Latest 12-month 1.5


forecast : 0.95%
1.0 1.0

0.5 0.5

Source: FRB, Federal Reserve Bank of Philadelphia, Haver Analytics DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 150
Bank of Japan owns almost 80%
of all ETFs domiciled in Japan
% Share of ETFs purchased by BoJ as %
a share of total AUM of ETFs in Japan
90 90

80 80

70 70

60 60

50 50

40 40

30 30

20 20

10 10

0 0
11 12 13 14 15 16 17 18 19 20

Source: BoJ, Haver Analytics, Bloomberg Finance LP, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 151
Design and size of fiscal response to
COVID-19 has been very different across countries
% GDP Fiscal measures announced in G20 countries % GDP
Revenue and expenditure measures Loan guarantees, loans, and equity injections
35 35

30 30

25 25

20 20

15 15

10 10

5 5

0 0
Germany Italy UK Japan France US Australia Spain Korea Canada Brazil India China
Note: Data as of May 13, 2020.
Source: IMF, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 152
Google Mobility and the S&P500

% United States : Google Mobility trends and S&P 500 Index


3.0 3400
Daily % change in US Google Mobility data (7-day moving average, ls)
S&P 500 Stock price index (rs)
2.0 3200

1.0 3000

0.0 2800

-1.0 2600

-2.0 2400

-3.0 2200

Source: Google, S&P, Haver Analytics, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 153
Bankruptcy filings vs. HY
% Index
24% ICE BofA Merrill Lynch HY Corporte Master II effective yield (ls) 36
NACM survey : Filings for bankruptcies (rs)
22%
40
20%

18%
44
16%

14% 48

12%
52
10%

8%
56
6%

4% 60
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: NACM, ICE/BAML, Haver Analytics, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 154
Record-high US budget deficit
$ Billion Federal budget balance in the United States $ Billion
250 250

150 150

50 50

-50 -50

-150 -150

-250 -250

-350 -350

-450 -450

-550 -550

-650 -650

-750 -750
1954 1960 1966 1972 1978 1984 1990 1996 2002 2008 2014 2020
Source: U.S. Treasury, Haver Analytics, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 155
Move and VIX coming down
Index MOVE Index and VIX Index Index
175 MOVE Index (ls) VIX Index (rs) 100

90
150
80

70
125
60

100 50

40
75
30

20
50
10

25 0
1-Jan 16-Jan 31-Jan 15-Feb 1-Mar 16-Mar 31-Mar 15-Apr 30-Apr 15-May 30-May 14-Jun
Source: BoAML, WSJ, Haver Analytics, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 156
Unemployment rate has to get down to 4% to 6%
before the Fed will consider raising rates again
% %
Fed funds target rate (ls) Civilian unemployment rate:16 yr+ (rs)

12 15.0

10
12.5

8
10.0

7.5
4 UR=6.4%

UR=
5.0
2 5.4% UR=4.9%

0 2.5
81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19
Source: FRB, BLS, Haver Analytics, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 157
90% of government bonds trade at yields lower than 1%
% Percent of advanced economy government bonds outstanding by yield %
Negative 0-1 1-2 2-3 Above 3

100 100
90 90
80 80
70 70
60 60
50 50
40 40
30 30
20 20
10 10
0 0
12 13 14 15 16 17 18 19 20
Last obs:
June 2020
Source: IMF, Bloomberg Finance LP, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 158
Who owns US High Yield?

High yield bond investor base, 2019


Other
Offshore funds

Pensions
Insurers

Hedge Funds

High-yield mutual
funds and ETFs

Income and global


high yield mutual
funds

Source: IMF, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 159
Who owns leveraged loans?

Global holders of leveraged loans, 2018

Others CLOs

Insurers

Investment funds

US banks
UK banks

Japanese banks

EU banks

Source: IMF, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 160
Who owns US private credit?

Institutional investors in US private debt funds, 2019

Family offices and


Other wealth managers

Asset and fund of


fund managers

Insurers Private and public


pensions

Foundations and
endowments

Source: IMF, DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 161
More than half of mail delivered by US Postal Service is marketing

Share of volume of different types of mail: 2019

0.6%
First-class 3% 0.2%
mail
4%
Marketing mail

39%
Shipping and
packaging
services
Periodicals
53%
International

Other

Source: Postal Service Annual report, Postal regulatory Commission, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 162
Half of US households have experienced
loss of income because of COVID-19
% of households US Census Household Pulse Survey % of households
60 May 5 2020 May 12 2020 May 19 2020 May 26 2020 Jun 2 2020 60

50 50

40 40

30 30

20 20

10 10

0 0
Loss in employment Expected loss in Food Sufficiency Delayed Medical Housing insecurity
income Employment income Care

Note: Percentages are based on reporting distributions and do not include the populations that did not respond to specific items.
Source: Census, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 163
Income losses more pronounced
among low-income households
% of households US Census Houehold Pulse Survey % of households
Loss in employment income by household income
70 05-May-2020 12-May-2020 19-May-2020 26-May-2020 02-Jun-2020 60

60 50

50
40
40
30
30
20
20

10 10

0 0
Less than $25,000- $35,000 - $50,000 - $75,000 - $100,000 - $150,000 - $200,000+
$25,000 $34,999 $49,999 $74,999 $99,999 $149,999 $199,999

Note: Percentages are based on reporting distributions and do not include the populations that did not respond to specific items.
Source: Census, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 164
Income losses in May 2020 higher among younger people
% of households US Census Houehold Pulse Survey % of households
Loss in employment income by age group
70 05-May-2020 12-May-2020 19-May-2020 26-May-2020 02-Jun-2020 70

60 60

50 50

40 40

30 30

20 20

10 10

0 0
18-24 25-39 40-54 55-64 65+
Note: Percentages are based on reporting distributions and do not include the populations that did not respond to specific items.
Source: Census, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 165
30
35
40
45
50
55
60
65
Nevada

Research
Michigan
California

Deutsche Bank
Hawaii
New York
Pennsylvania
% of households

New Jersey
Louisiana
Florida
Vermont
Delaware
Mississippi
New Mexico
Illinois
Oregon
Indiana
Minnesota
Arizona
Connecticut
Rhode Island
Georgia
Texas
Maine
Alaska
Tennessee
Massachusetts
Colorado
North Carolina

Torsten Slok, torsten.slok@db.com +1 212 250-2155


Ohio
New Hampshire
South Carolina
Week 4: May 26, 2020

Maryland
Washington

June 2020
Source: Census, DB Global Research
Virginia
West Virginia
US Census Household Pulse Survey

South Dakota
Kentucky
Wisconsin
Kansas
Alabama
Loss in employment income by state in United States

Utah
Montana
Oklahoma
Missouri
Arkansas
District of…
Iowa
More than 50% of households in Nevada, Michigan, California, Hawaii,
NY, and Pennsylvania experiencing income loss because of COVID-19

Wyoming
North Dakota
Nebraska
Idaho
166
% of households

30
35
40
45
50
55
60
65
Investment implications summarized
Fed outlook
GDP will decline 39% in Q2. The CBO estimates the unemployment rate
– Fed on hold will be 10% in 2020Q4.

Bond markets
Fed tapering and exit from lockdown pushing long rates higher and curve
- 10s slowly higher
steeper by end of 2020.

Credit
- Credit spreads Fed support and more liquid markets will narrow IG and HY spreads over
narrower the coming quarters

Stock markets
Fed liquidity support and exit from lockdown will push equities higher.
- Flatter epi curve and S&P500 will be 3250 by the end of 2020.
recession curve
FX
- Dollar down EURUSD at 1.20 by year-end

Commodities
40% of oil demand going to trucks and cars. Exit from lockdown pushing
- Coronavirus and oil prices higher.
slower global growth
Emerging markets
Coronavirus and low oil prices is negative for commodity exporters. Global
- Hard hit by virus and recovery helpful for EM. Dovish Fed and ECB helpful for EM.
low oil prices

Source: DB Global Research

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 167
Number of vaccine trials by country

Number Number of COVID-19 vaccine trials Number

45 Clinical evaluation Pre-clinical evaluation 45

40 40

35 35

30 30

25 25

20 20

15 15

10 10

5 5

0 0
Canada
US

China

UK

Germany

Belgium

Denmark

Israel
Japan

Spain
India

Australia
France

Italy
Russia

Note: Data as of June 2020..


Source: WHO, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 168
Kurzarbeit

# million German labor market # million


workers workers
12 Total unemployed persons Workers listed in company notices of short-time work 12

10 10

8 8

6 6

4 4

2 2

0 0
07 08 09 10 11 12 13 14 15 16 17 18 19 20

Source: Bundesbank, Federal Employment Agency, Haver Analytics, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 169
Labor market performance very different in US and Germany
% Unemployment rate %
US Germany
15 15
14 14
13 13
12 12
11 11
10 10
9 9
8 8
7 7
6 6
5 5
4 4
3 3
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

Source: BLS, Bundesbank, Haver Analytics, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 170
German auto industry coming back
% y/y Germany % y/y
Exports of passenger cars Passenger car production
80 80

60 60

40 40

20 20

0 0

-20 -20

-40 -40

-60 -60

-80 -80

-100 -100
08 10 12 14 16 18 20

Source: Verband der Automobilindustrie, Haver Analytics, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 171
Summer reading

• Advice and Dissent: Why America Suffers When Economics and Politics Collide, by Alan Blinder
• The Deficit Myth: Modern Monetary Theory, by Stephanie Kelton
• The Economics of Race in the United States, by Brendan O'Flaherty
• Away from Chaos: The Middle East and the Challenge to the West, by Giles Keppel
• Deaths of Despair and the Future of Capitalism, by Case and Deaton
• Competitive Advantage in Investing, by Steve Abrahams
• The Great Reversal: How America Gave Up on Free Markets, by Thomas Philippon
• The Euro and the Battle of Ideas, by Brunnermeier, James, and Landau
• Superpower Showdown, a cold war between US and China, by Davis and Wei
• What Is Populism? by Jan-Werner Muller

Source: DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 172
S&P500 and consumer confidence
Index Stock market and consumer confidence Index
Stock Price Index: Standard & Poor's 500 Composite (ls) Consumer Confidence (rs)
3500 160

3000 140

120
2500
100
2000
80
1500
60
1000
40

500 20

0 0
08 09 10 11 12 13 14 15 16 17 18 19 20
Source: S&P, The Conference Board, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 173
US employment report, response rate in household survey
CPS Household Survey Response Rate, 2010-2020
100% 100%

95% 95%

90% 90%

85% 85%

80% 80%

75% 75%

70% 70%

65% 65%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: BLS, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 174
At current speed of normalization airline
traffic will be back to pre-virus levels in June 2021
Number of TSA checkpoint travel numbers in United States Number of
passengers passengers
Total Traveler Throughput
2,500,000 2,500,000

2,000,000 2,000,000

1,500,000 1,500,000

1,000,000 1,000,000

500,000 500,000

0 0
1-Mar-20

12-Apr-20
26-Apr-20

22-Nov-20

20-Dec-20
21-Jun-20

19-Jul-20

16-Aug-20
30-Aug-20
13-Sep-20
27-Sep-20
11-Oct-20
25-Oct-20

14-Feb-21
28-Feb-21
8-Nov-20

6-Dec-20

17-Jan-21
31-Jan-21

11-Apr-21
25-Apr-21
9-May-21

20-Jun-21
7-Jun-20

3-Jan-21

6-Jun-21
15-Mar-20
29-Mar-20

5-Jul-20

2-Aug-20
10-May-20
24-May-20

14-Mar-21
28-Mar-21

23-May-21
Note: Dotted line is linear trend regressed on time from April 12.
Source: Department of Homeland Security, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 175
US: Rising share of companies with debt
servicing costs that are higher than profits
US: Share of “zombie” firms
%
20
18
16
14
12
10
8
6
4
2
0
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020

Note: Firm-level data is used to calculate the share of listed firms that are more than ten years old with
an interest coverage ratio less than one for three years in a row.

Source: Datastream, Worldscope, DB Global Research


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Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 176
Germany: Rising share of companies with interest
payments that are higher than earnings
%
Germany: Share of “zombie” firms
30

25

20

15

10

0
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020
Note: Firm-level data is used to calculate the share of listed firms that are more than ten years old with
an interest coverage ratio less than one for three years in a row.
Source: Datastream, Worldscope, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 177
UK: Rising share of companies with interest
payments that are higher than earnings
UK: Share of “zombie” firms
%

30

25

20

15

10

0
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020
Note: Firm-level data is used to calculate the share of listed firms that are more than ten years old with
an interest coverage ratio less than one for three years in a row.
Source: Datastream, Worldscope, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 178
France: Rising share of companies with interest
payments that are higher than earnings
% France: Share of “zombie” firms
30

25

20

15

10

0
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020
Note: Firm-level data is used to calculate the share of listed firms that are more than ten years old with
an interest coverage ratio less than one for three years in a row.
Source: Datastream, Worldscope, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 179
Many low wage jobs are close physical proximity occupations
# of workers Top 10 Occupations Among Low-Wage Workers, 2018 # of workers

1,800,000 Number of Low-Wage Workers 1,800,000


1,600,000 1,600,000
1,400,000 1,400,000
1,200,000 1,200,000
1,000,000 1,000,000
800,000 800,000
600,000 600,000
400,000 400,000
200,000 200,000
0 0
Cooks

Drivers/Sales Workers and


Cashiers

Waiters and Waitresses


Retail Salespersons

Laborers & Freight, Stock,

Janitors and Building

Stockers and Order Fillers


Customer Service

Teaching Assistants
Representatives

and Material Movers

Cleaners

Truck Drivers
Note: Low-Wage Workers defined as those in bottom quintile of people who earned at least $1000 in past year and worked at least 20 hours in usual
week working.
Source: KFF analysis of 2018 American Community Survey, 1-Year Estimates, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 180
Health insurance coverage among low-wage workers

Health insurance coverage among low-wage workers, 2018

Unisured Medicaid
21% 22%
Military or
Medicare
3%
Direct purchase
10%
Employer-based
45%

Note: Includes low wage workers, defined as bottom quintile earners among nonelderly adults earning at least $1000 in past year and working at
least 20 hours per week in a usual week working
Source: KFF analysis of 2018 American Community Survey, 1-Year Estimates, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 181
Will underlying cash flows be consistent
with a V-shaped recovery in the price of loans?
Price S&P/LSTA Leveraged Loan Indexes Price

B BB
105 105

100 100

95 95

90 90

85 85

80 80

75 75
Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20

Source: S&P, Bloomberg Finance LP, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 182
MMT works until it doesn’t

MMT assumes that the Fed can purchase all Treasuries with no consequences. But
the risk-free asset is used to price all private sector assets such as the S&P500, IG,
and HY credit. Put differently, the result of the Fed buying all Treasuries – and now
also IG and fallen angels – is that the Fed ends up controlling all asset prices. As
a result, pricing in stock markets and bond markets no longer reflect the true
default risks of individual assets. And if prices of government bonds, credit, and
equity are no longer a correct reflection of the true default risk in these asset classes,
then it ultimately increases the likelihood that investors, including foreigners, no longer
want to buy any public or private sector asset in the country doing MMT. Looking at it
from the finance textbook, MMT assumes that undermining the assumptions
about what a risk-free asset is will have no consequences for the currency and
demand for private sector assets. As we know from history, countries that have
monetized their debt have not only seen consequences for government bond interest
rates but also for demand for private sector equity and credit, including from foreigners.
In short, if you assume that investors don’t care about whether the price of
Treasuries, credit, and S&P500 is a true reflection of the underlying default risks,
then MMT works. Or rephrasing the old IMF saying about countries growing
government debt levels: MMT works until it doesn’t.

Source: DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 183
Central bank ownership of domestic government debt

% Central banks' ownership of %


government debt, share of outstanding
50 Fed ECB BoE BoJ 50

45 45

40 40

35 35

30 30

25 25

20 20

15 15

10 10

5 5

0 0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Source: DB Rates Strategy, Fed, ECB, BoE, BoJ, Treasury, ONS, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 184
Main reason for not working for pay?
NORC COVID Impact Survey
In the past 7 days, did you do any work for pay at a job or business?
If not, what was your main reason for not working for pay?
60% 60%

50% 50%

40% 40%

30% 30%

20% 20%

10% 10%

0% No, I was laid-off temporarily 0%


No, I do not want to be
Work for Pay in Past 7 Days

No, I Am Retired

looking for work since before

No, I was not at my usual job

No, I was not at my usual job


began looking for work after

No, I was caring for an


No, I was unemployed and
employed at this time

No, I was unemployed but

because I had or cared for


someone with COVID-19
because I was caring for

elderly person
or furloughed

March 1

children
March

The survey of 2,047 adults was conducted May 30–June 8 using a sample drawn from NORC’s probability-based AmeriSpeak Panel, which is designed
to be representative of the U.S. population.
Source: NORC COVID Impact Survey, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 185
How likely do you think it is that you will be employed?
NORC COVID-19 Impact Survey: how likely do you think it is that you will be
employed ?
30 Days from Now 3 Months from Now
70% 70%

60% 60%

50% 50%

40% 40%

30% 30%

20% 20%

10% 10%

0% 0%
Week1 Week2 Week3

Source: NORC COVID Impact Survey, Haver Analytics, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 186
How would you pay for a $400 unexpected expense?
NORC COVID Impact Survey:
Suppose that you have an unexpected expense that costs $400. Based on
your current financial situation, how would you pay for this expense?
60% 60%
Week3 Week2 Week1

50% 50%

40% 40%

30% 30%

20% 20%

10% 10%

0% 0%
Use money Put it on credit Put it on credit Unable to pay Borrow from a Sell something Use money from Use a payday
currently card and pay it card and pay it for it right now friend or family a bank loan or loan, deposit
inchecking or off in full at the off over time member line of credit advance or
savings account next statement overdraft
or with cash

Source: NORC COVID Impact Survey, Haver Analytics, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 187
Share getting this type of assistance in the past week
NORC COIVD-19 Impact Survey
In the past 7 days, persons received or applied for the following forms of
30% 30%
income or assistance?
25% Week3 Week2 Week1 25%

20% 20%

15% 15%

10% 10%

5% 5%

0% 0%
Social Security

Other govt aid


Govt health insurance

SNAP

Unemployment insurance

Other Assistance

TANF

Assistance from union/ Other


Assist from church or religious
Food pantry

Supplemental Social Security

Assist from other community


association

org
org

Source: NORC COVID Impact Survey, Haver Analytics, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 188
Share of people believing they will be employed within 30 days
NORC COVID Impact Survey
Percent of individuals believe they will be employed in 30 days, by
sampled region
70% 70%
60% 60%
50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 0%

The survey was conducted May 30–June 8 using a sample drawn from NORC’s probability-based AmeriSpeak Panel, which is designed to be
representative of the U.S. population.
Source: NORC COVID Impact Survey, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 189
US: Coronavirus reproduction rate, by state
value value
Rt estimates by state - Covid-19
1.8 1.8

1.6 1.6
More cases should be expected
1.4 1.4

1.2 1.2

1.0 1.0

0.8 0.8
Fewer cases should be expected
0.6 0.6
Kentucky

Wisconsin
District of Columbia

Virginia

Maine

New Mexico

Alabama
Vermont

California

Mississippi
Rhode Island
Illinois

New York
Indiana

Kansas

Delaware

Arkansas

Texas

Arizona

Hawaii
Pennsylvania
Nebraska

Ohio

Iowa

West Virginia

Idaho

Missouri
Oregon
Florida

Oklahoma
Montana
Louisiana
Massachusetts

New Jersey

Michigan

South Dakota
Connecticut

Maryland
Minnesota

North Dakota

Colorado

Washington

Utah

Wyoming
Alaska

South Carolina

Nevada
New Hampshire

North Carolina
Georgia
Tennessee
Note: Rt represents the effective reproduction rate of the virus; it is the average number of people who become infected by an infectious person;
values over 1 indicate we should expect more cases in that area and less than 1 indicate we should expect fewer; data as of 23 June 2020

Source: Rt.live, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 190
COVID-19 and inflation expectations
# of cases United States: COVID-19 and inflation expectations %

Daily growth in Confirmed COVID-19 cases (12-days moving average) (ls)


35000 -1.4
US Breakeven 2 Year (Inverted axis, 20 days lead, rs)

30000 -0.9

25000
-0.4
20000
0.1
15000
0.6
10000

5000 1.1

0 1.6
23-Feb

12-Apr
19-Apr
26-Apr
1-Mar
8-Mar

3-May

7-Jun

5-Jul
15-Mar
22-Mar
29-Mar

10-May
17-May
24-May
31-May

14-Jun
21-Jun
28-Jun
5-Apr

12-Jul
19-Jul
26-Jul
Source: JHU, Bloomberg Finance LP, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 191
Mortgage rates have fallen less than Treasury rates

% FHLMC: 30 yr fixed-rate mortgage rate (ls) 10yr treasury note yield (rs) %

7.5 6.4

7.0
5.4
6.5

6.0 Mortgage spread normalized


4.4
once the recession ended
5.5

5.0 3.4

4.5
2.4
4.0

3.5
1.4
3.0 Mortgage spread has widened
out during this recession
2.5 0.4
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Source: FHLMC, FRB, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 192
Only half of the US population has a job

% Civilian employment/population ratio: 16 yr + %


65 65

62 62

59 59

56 56

53 53

50 50
48 53 58 63 68 73 78 83 88 93 98 03 08 13 18
Source: BLS, Haver Analytics, DB Global Research
Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 193
If it hadn’t been for the aggressive US fiscal response
the US recession would have been much deeper
$, bn $, bn
Personal income less government transfers
SAAR SAAR
Government transfers, including unemployment benefits
21000 21000

14000 14000
Significant decline in
household income
ex unemployment benefits

7000 7000

0 0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

Source: BEA, Haver Analytics, DB Global Research


Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 194
Torsten Slok, Ph.D.
• Chief 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, including #1 in 2019. 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.

Rajsekhar Bhattacharyya and Krishna Bhimavarapu are employees of Acuity Knowledge Partners, a third-party research service provider to Deutsche Bank

Deutsche Bank
Research Torsten Slok, torsten.slok@db.com +1 212 250-2155 June 2020 195
Appendix 1
Important Disclosures
*Other Information Available upon Request

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.

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

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Backtested, hypothetical or simulated performance results have inherent limitations. Unlike an actual performance record based on trading actual client portfolios, simulated results are achieved by means of
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