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Deutsche BankResearch

DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1 MCI(P) 083/04/2017

US Income and Wealth Inequality

January 2018

Peter Hooper, Matthew Luzzetti, Brett Ryan, Justin Weidner, Torsten Slok, Rajsekhar Bhattacharyya60 Wall Street

New York, New York 10005Tel: 212 250 7275

Distributed on: 03/01/2018 22:45:39 GMT

7T2se3r0Ot6kwoPa

Provided for the exclusive use of Torsten Slok at DB Employee on 2018-01-04T14:45+00:00. DO NOT REDISTRIBUTE

Torsten Slok, [email protected] +1 212 250-2155January 2018Research

Deutsche Bank

Inequality is likely an important driver of populism.

It is important for markets to understand the drivers of inequality and how income and wealth inequality have developed in different countries.

The bottom line is that inequality is increasing in most countries around the world and there are no signs of this changing anytime soon.

Overview

1



Deutsche Bank

Drivers of income inequality

Source: OECD , DB Global Markets Research

Technological change

Trade globalization

Financial globalization

labor market institutions Tax policies

Technological change disproportionately raise demand for capital and skilled labor over low-skilled and unskilled labor by eliminating many jobs through

automation or upgrading the skill

level required to attain or keep those jobs

Trade openness raisesskill premium, but also increases real wages

by lowering import prices. While

increased trade lower income inequality in EMEs by increasing

demand and wages for abundant lower-skilled

workers.

FDI and portfolio flows increase income

inequality through concentration of

foreign assets and liabilities in relatively

higher skill- andtechnology-intensive sectors, pushing up

demand for wages of higher skilled workers.

More flexible labor market institutions

can pose challenges for

workers, especially those with low

skills, and hence play an important explaining role in

inequality developments

Governments in advanced

economies have historically mitigated inequality through

public policy—primarily

progressive taxes and social transfers

such as public retirement benefits.

Education

Effect of increased educational attainment on income inequality could be eitherpositive or negative depending on the evolution of rates of return to education.

Inequality Drivers

2



Deutsche Bank

Country groups with similar patterns of inequality


DenmarkIcelandNorwaySweden

Switzerland

BelgiumCzech Republic

EstoniaFinlandFrance

ItalySlovak Republic

Slovenia

AustriaGermanyGreeceHungaryJapanKorea

LuxembourgPolandSpain

AustraliaCanadaIreland

NetherlandsNew Zealand

United Kingdom

ChileIsrael

MexicoPortugalTurkey

United States

Low dispersion in labor income (high employment rate

and little wage dispersion). Cash transfers tend to be

universal and taxes are not highly progressive.

Average dispersion in labor income (little wage variation but low employment or high

part-time rate). Highly concentrated capital and self-

employment income. Cash transfers (largely insurance-

based) and taxes are not highly progressive

Individual labor income is concentrated, reflecting above average dispersion in wages

and a low employment or high part-time rate. Taxes and transfers are not highly

progressive.

Above average wage dispersion coupled with a high part-time rate. Cash transfers

are targeted and taxes are progressive.

High concentration of labor, capital and self-employment income. The poverty rate is

high.

Low inequality in household disposable income

Higher inequality in household disposable income

3



Deutsche Bank

Overview

4



Deutsche Bank

Percentage of population receiving food stamps, 2016

Source: CBPP, DB Global Markets Research

0-10%

10-20%

20-30%

5



Deutsche Bank

Financial resources: percent with zero or negative non-home wealth

20

22

24

26

28

30

32

1962 1969 1983 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016

%

20

22

24

26

28

30

32

%

More families than ever before have zero or negative non-home wealth

Source: Edward N. Wolff (2017). Survey of Consumer Finances, , DB Global Markets Research

A record high 30% of households have no wealth

6



Deutsche Bank

Median net worth(2016 Dollars)

57

70

8086

73 72

89

100 99

119

67 66

78

50

60

70

80

90

100

110

120

1962 1969 1983 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016

$ thous

50

60

70

80

90

100

110

120

$ thous

S&P500 and home prices may be at all-time highs but the median family still has low net worth

Source: Edward N. Wolff (2017). Survey of Consumer Finances, DB Global Markets Research

7



Deutsche Bank

US net wealth shares held by:

0

5

10

15

20

25

30

35

40

1913

1917

1921

1925

1929

1933

1937

1941

1945

1949

1953

1957

1961

1965

1969

1973

1977

1981

1985

1989

1993

1997

2001

2005

2009

2013

%

0

5

10

15

20

25

30

35

40

%Bottom 90% Top 0.1%

US: Top 0.1% owns as many assets as the bottom 90%

Source: The World Wealth and Income Database, DB Global Markets Research

Inequality trends began in the mid-1980s

8



Deutsche Bank

Mean Net Worth by age group (Ratio to Overall Mean)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

1989 2001 2016

Ratio

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

Ratio

Under 35 35-44 45-54 55-64 65-74 75 & over

Younger generations have smaller and smaller net worth

Source: Edward N. Wolff (2017) . Survey of Consumer Finances, DB Global Markets Research

9



Deutsche Bank

Income inequality very high in the United States


Gini cocefficient

0.20

0.25

0.30

0.35

0.40

Icel

and

Nor

way

Den

mar

kS

love

nia

Finl

and

Cze

ch R

epub

licB

elgi

umS

lova

k R

epub

licA

ustri

aS

wed

enLu

xem

bour

gN

ethe

rland

sH

unga

ryG

erm

any

Fran

ceS

witz

erla

ndP

olan

dK

orea

Irela

ndO

EC

DC

anad

aIta

lyJa

pan

New

Zea

land

Aus

tralia

Por

tuga

lG

reec

eS

pain

Latv

iaU

KE

ston

iaIs

rael

Turk

ey US 0.20

0.25

0.30

0.35

0.40

Note: Gini coefficients (disposable income, post taxes and transfers) are based on equivalised incomes for OECD countries, Colombia, Latvia and the Russian Federation; per-capita incomes for other countries; and per-capita consumption for India and Indonesia. Data from 2014 or latest year available.

More equal societies

US: high inequality

10



Deutsche Bank

Income inequality increasing everywhere


Gini coefficients of income inequality, mid-1980s and 2014 or latest available year

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

DNKCZE

NOR FINSWE

HUNDEU

LUXCAN

AUS ITANZL

JPN

GBR ISRUSA

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.501985 2014 or latest

Note: Note: Income refers to disposable household income, corrected for household size.

11



Deutsche Bank

Across OECD countries, incomes have increased more for high-income households


Trends in real household incomes at the bottom, the middle and the top, OECD average, 1985 = 1

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1985 1990 1995 2000 2005 20101.00

1.10

1.20

1.30

1.40

1.50

1.60Bottom 10% Bottom 40%

Top 10% middle 50-90%

Note: Note: Income refers to disposable household income, corrected for household size. OECD is the unweighted average of 17 countries (Canada, Germany, Denmark,Finland, France, United Kingdom, Greece, Israel, Italy, Japan, Luxembourg, Mexico, Netherlands, Norway, New Zealand, Sweden and United States).

12



Deutsche Bank

US Income inequality today and over time

13



Deutsche Bank

Wealth and Income Inequality (Gini coefficients)

0.400.450.500.550.600.650.700.750.800.850.900.95

1962 1969 1983 1989 1992 1995 1998 2001 2004 2007 2010 2013 20160.400.450.500.550.600.650.700.750.800.850.900.95

Net worth Income Financial Resources

Gini coefficients have increased for both income and net worth


14



Deutsche Bank

Average pre-tax income in the U.S. in 2014

01

23

45

67

8

Full

popu

latio

n

Botto

m50

%

Mid

dle

40%

Top

10%

Top

1%

Top

0.1%

$mn

01

23

45

67

8

$mn

$65k $16k $65k $304k

$1.3mn

$6.0mn

The 2.3 million people in the top 1% of the income distribution earn on average $1.3mn per year

Source: Pikketty, Saez, and Zucman (2016, Table 1), DB Global Markets Research

234mn 117mn 94mn 23mn 2.3mn 234k

Bottom 50% of the income distribution

(117mn adults) earn on average $16k pear year

Number of adults in each income category

15



Deutsche Bank

Holdings of family wealth, by wealth group

0

15

30

45

60

75

1989 1992 1995 1998 2001 2004 2007 2010 2013

Trilli

on o

f 201

3 $

0

15

30

45

60

75

Trillion of 2013 $

Bottom 50 percent 51st to 90th percentiles Top 10 percent

US: The top 10 percent of families own $51trn inwealth, or about 75% of total household wealth

Source: Congressional Budget Office, using data from the Survey of Consumer Finances, supplemented with data from Forbes magazine's list of the nation's 400wealthiest people, DB Global Markets Research

16



Deutsche Bank

Source: Alvaredo et al. (2016)., DB Global Markets Research

Top 10% Pre-tax Income Share in the United States, 1917–2015

25

30

35

40

45

50

55

1913 1923 1933 1943 1953 1963 1973 1983 1993 2003 201325

30

35

40

45

50

55

Income share up significantly for highest incomes

Note: Series based on pre-tax cash market income including realized capital gains and excluding government transfers.

17



Deutsche Bank

Source: Atkinson, Piketty and Saez. (2015)., DB Global Markets Research

Decomposing the U.S. Top 10% Pre-tax Income into Three Groups

0

5

10

15

20

25

1913

1918

1923

1928

1933

1938

1943

1948

1953

1958

1963

1968

1973

1978

1983

1988

1993

1998

2003

2008

2013

%

0

5

10

15

20

25

%

Top 1% (incomes above $443,000 in 2015)Top 10-5% (incomes between $124,800 and $180,500)Top 5-1% (incomes between $180,500 and $443,000)

Share of total income accruing to each group

Note: Series based on pre-tax cash market income including realized capital gains and excluding government transfers.

Top 1% earn 22% of total income, up from 8% in the 1970s

18



Deutsche Bank

Source: Piketty (2014)., DB Global Markets Research

20

25

30

35

40

45

50

40 45 50 55 60 65 70 75 80 85 90 95 00 05 10

%

20

25

30

35

40

45

50

%Share of top income decile in total incomeShare of top inocme decile in total income excluding capital gainsShare of top wage decile in total wage bill

Wage inequality a key driver of income inequality

19



Deutsche Bank


U.S. Top 0.1% Pre-Tax Income Share and Composition

0%

2%

4%

6%

8%

10%

12%

14%

1916

1921

1926

1931

1936

1941

1946

1951

1956

1961

1966

1971

1976

1981

1986

1991

1996

2001

2006

2011

0%

2%

4%

6%

8%

10%

12%

14%Salaries Business Income Capital Income Capital Gains

Note: Series based on pre-tax cash market income including or excluding realized capital gains, and always excludinggovernment transfers.

Business income and capital gains make up bigger share of income for the Top 0.1%

20



Deutsche Bank

Incomes have stagnated for lower income groups, increased for higher income groups

Source: US Census, DB Global Markets Research

Real family income between 1967 and 2015, as % of 1973 level

0

20

40

60

80

100

120

140

160

180

1967 1972 1977 1982 1987 1992 1997 2002 2007 2012

%

0

20

40

60

80

100

120

140

160

180

%10th percentile limit 20th percentile limit 40th percentile limit50th (median) 60th percentile limit 80th percentile limit90th percentile limit 95th percentile limit

21



Deutsche Bank

Higher income growth at the top of the income distribution

Source: CBO, DB Global Markets Research

Cumulative Growth in Average Inflation-Adjusted After-Tax Income, by Before-Tax Income Group, 1979 to 2013

-50

0

50

100

150

200

250

300

350

1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

%

-50

0

50

100

150

200

250

300

350

%

Lowest Quintile

Middle Three Quintiles

81st to 99th Percentiles

Top 1 Percent

22



Deutsche Bank

Source: CBO, DB Global Markets Research

Gini Indexes Based on Market, Before-Tax, and After-Tax Income, 1979 to 2013

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

1980 1985 1990 1995 2000 2005 20100.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70Based on After-Tax Income Based on Before-Tax Income Based on Market Income

Income inequality up no matter how you measure the Gini coefficient

23



Deutsche Bank

Source: World Wealth and Income database , DB Global Markets Research

Share of total before tax income flowing to the highest income households in United States, 1913-2015

0%5%

10%15%20%25%30%35%40%45%50%55%

1913 1923 1933 1943 1953 1963 1973 1983 1993 2003 20130%5%10%15%20%25%30%35%40%45%50%55%Top 1 percent Top 10 percent

Income concentration at the top has increased since the 1970s

24



Deutsche Bank

Source: Census, BLS, Haver Analytics, DB Global Markets Research

United States : labor share vs Gini ratio1967-2015

y = -0.014x + 1.2814R2 = 0.6865

0.36

0.38

0.40

0.42

0.44

0.46

0.48

0.50

56 57 58 59 60 61 62 63 64

Total Economy: Labor Share (%)

Gin

i Rat

io fo

r Hou

seho

lds

Declining labor share is negatively related to higher inequality

25



Deutsche Bank

Tax cuts have increased inequality

Source: BLS, FRED, Piketty 2014 database, DB Global Markets Research

0

5

10

15

20

25

60 65 70 75 80 85 90 95 00 05 10 15

%

0

5

10

15

20

25

%Growth rate of federal tax receipts (10 yr MA)Share of top 1% (4 yr lead)

Reagan tax cuts Bush tax cutsCorrelation = -0.63

26



Deutsche Bank

Different income growth under different political parties

Source: Unequal democracy by Larry Bartels, DB Global Markets Research

-1

-0.5

0

0.5

1

1.5

2

0 10 20 30 40 50 60 70 80 90 100Income quintile

Aver

age

annu

al g

row

th in

real

inco

me

Democrats Republicans%

27



Deutsche Bank

Total money earnings of US population in 2015 by educational attainment

010203040

50607080

$1 to

$2,

499

or le

ss$2

,500

to $

4,99

9$5

,000

to $

7,49

9$7

,500

to $

9,99

9$1

0,00

0 to

$12

,499

$12,

500

to $

14,9

99$1

5,00

0 to

$17

,499

$17,

500

to $

19,9

99$2

0,00

0 to

$22

,499

$22,

500

to $

24,9

99$2

5,00

0 to

$27

,499

$27,

500

to $

29,9

99$3

0,00

0 to

$32

,499

$32,

500

to $

34,9

99$3

5,00

0 to

$37

,499

$37,

500

to $

39,9

99$4

0,00

0 to

$42

,499

$42,

500

to $

44,9

99$4

5,00

0 to

$47

,499

$47,

500

to $

49,9

99$5

0,00

0 to

$52

,499

$52,

500

to $

54,9

99$5

5,00

0 to

$57

,499

$57,

500

to $

59,9

99$6

0,00

0 to

$62

,499

$62,

500

to $

64,9

99$6

5,00

0 to

$67

,499

$67,

500

to $

69,9

99$7

0,00

0 to

$72

,499

$72,

500

to $

74,9

99$7

5,00

0 to

$77

,499

$77,

500

to $

79,9

99$8

0,00

0 to

$82

,499

$82,

500

to $

84,9

99$8

5,00

0 to

$87

,499

$87,

500

to $

89,9

99$9

0,00

0 to

$92

,499

$92,

500

to $

94,9

99$9

5,00

0 to

$97

,499

$97,

500

to $

99,9

99$1

00,0

00 a

nd o

ver

Total money earnings in 2015

%

010203040

50607080

%

% with Bachelor's Degree or more % with High school and less

Source: Census, DB Global Markets Research

The more education you have the higher are your earnings

28



Deutsche Bank

Productivity growth vs wage growth

100

150

200

250

300

350

400

450

500

47 52 57 62 67 72 77 82 87 92 97 02 07 12

Index 1947=100

0.340

0.360

0.380

0.400

0.420

0.440

0.460Ratio

Real Output per Hour of All Persons(ls) Real Compensation per Hour(ls)Gini ratio (rs)

Source: BLS, Census, Haver Analytics, DB Global Markets Research

Disconnect between productivity and wage growth since 1970s contributed to higher inequality in the U.S

29



Deutsche Bank

Highest

30

40

50

60

70

84 89 94 99 04 09 14

%

30

40

50

60

70

%Luxuries Necessities

Spending on luxuries and necessities by income

Source: Consumer Expenditure Survey BLS, Haver Analytics, DB Global Markets Research

Fourth

30

40

50

60

70

84 89 94 99 04 09 14

%

30

40

50

60

70

%Luxuries Necessities

Third

30

40

50

60

70

84 89 94 99 04 09 14

%

30

40

50

60

70%

Luxuries NecessitiesSecond

30

40

50

60

70

84 89 94 99 04 09 14

%

30

40

50

60

70

%

Luxuries Necessities

Lowest

30

40

50

60

70

84 89 94 99 04 09 14

%

30

40

50

60

70

%

Luxuries Necessities

Luxuries are defined as goods or services consumed in greater proportions as a person’s income increases. Specifically luxuries are: Food away from home, Owned dwellings, Household furnishings, equipment, Vehicles, Cash contributions, Entertainment, Personal insurance, pensions, Other vehicle expenses, Public transportation, and Other lodging. Necessities are defined as goods or services whose consumption is proportionately less as a person’s income increases. Specifically, necessities are: Food at home, Rented dwellings, Utilities, fuels, public services, Healthcare, Education, Personal care, Tobacco, smoking products, Gas and motor oil, Housekeeping supplies, Alcoholic beverages, Reading, and Apparel and services.

Nominal consumption shares in total expenditure by income quintile

30



Deutsche Bank

US wealth inequality today and over time

31



Deutsche Bank

The Number of Households (in 1,000s) with Net Worth Equal to or Exceeding (in 1995$):

0

20000

40000

60000

80000

100000

120000

140000

1983 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016

Thous

0

20000

40000

60000

80000

100000

120000

140000

Thous.

Number of households 5 Million 10 Million 1 Million

600,000 households have net worth of more than $10mn


32



Deutsche Bank


Top 0.1% (above $20 million) Wealth Share in the United States, 1913–2012

0%

5%

10%

15%

20%

25%

1913

1918

1923

1928

1933

1938

1943

1948

1953

1958

1963

1968

1973

1978

1983

1988

1993

1998

2003

2008

2013

0%

5%

10%

15%

20%

25%


Wealth inequality has also increased

33



Deutsche Bank


Bottom 90% Wealth Share in the United States, 1917–2012

0%

5%

10%

15%

20%

25%

30%

35%

40%

1913

1918

1923

1928

1933

1938

1943

1948

1953

1958

1963

1968

1973

1978

1983

1988

1993

1998

2003

2008

2013

0%

5%

10%

15%

20%

25%

30%

35%

40%


Share of wealth owned by the bottom 90% has gone down

34



Deutsche Bank


Composition of the Bottom 90% U.S. Wealth Share

0%

5%

10%

15%

20%

25%

30%

35%

40%

1917

1922

1927

1932

1937

1942

1947

1952

1957

1962

1967

1972

1977

1982

1987

1992

1997

2002

2007

2012

0%

5%

10%

15%

20%

25%

30%

35%

40%Housing Equites & fixed income claims

Business assets Pensions


Composition of wealth for the bottom 90%

35



Deutsche Bank

Source: Saez and Zucman (2016).)., DB Global Markets Research

Real average wealth of bottom 90% and top 1% families

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,00019

4619

5019

5419

5819

6219

6619

7019

7419

7819

8219

8619

9019

9419

9820

0220

0620

10

Top

1% re

al a

vera

ge w

elat

h

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Botto

m 9

0% re

al a

vera

ge w

ealth

Top 1% (ls) Bottom 90% (rs)

Real values are obtained by using the GDP deflator, 2010 dollars.

Average wealth for the Top 1% and the Bottom 90%

36



Deutsche Bank

Types of assets held across wealth distribution

Source: Edward N. Wolff, (2014), Survey of Consumer Finances, DB Global Markets Research

Percent of total assets held by wealth Class, 2013

0

20

40

60

80

100

Fina

ncia

lse

curit

ies

Busi

ness

equi

ty

Stoc

ks &

mut

ual f

unds

Trus

ts

Stoc

ks,

dire

ctly

or

Non

-hom

ere

al e

stat

e

Dep

osits

Life

insu

ranc

e

Pens

ion

acco

unts

Prin

cipa

lre

side

nce

Tota

l deb

t

%

0

20

40

60

80

100

%Bottom 90% Next 9% Top 1%

Households are classified into wealth class according to their net worth. Brackets for 2013 are: Top one percent: Net worth of $7,766,500 or more. Next 9 percent: Net worth between $980,900 and $7,766,500. Bottom 90 Percent: Net worth less than $908,900.

37



Deutsche Bank

Wealth composition for middle income America

Source: Edward N. Wolff, (2014), Survey of Consumer Finances, DB Global Markets Research

Composition of household wealth of the middle three wealth quintiles, 1983-2013

0

20

40

60

80

100

1983 1989 1998 2001 2004 2007 2010 20130

20

40

60

80

100

Miscellaneous assetsUnincorporated business equityCorporate stock, financial securities, mutual funds, and personal trustsPension accountsLiquid assetsPrincipal residence

38



Deutsche Bank

The distribution of net worth, percentage share of net worth held by :

0

10

20

30

40

50

60

70

80

90

100

1962 1969 1983 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016

%

0

10

20

30

40

50

60

70

80

90

100

%

Top 1% Next 4% Bottom 95%

Top 5% of population hold 65% of net worth


39



Deutsche Bank

Composition of household wealth by wealth class, 2016: Top one perecent

(percent of gross assets)Principal residence

7.6%

Liquid assets4.6%

Pension accounts6.0%

Corporate stock, financial

securities,mutual funds, and personal

trusts31.4%

Unincorporated business equities

49.0%

Miscellaneous assets1.4%

Top 1%: Composition of gross assets


40



Deutsche Bank

Composition of household wealth by wealth class, 2016: middle 3 quintiles (percent of gross assets)

Principal residence61.9%

Liquid assets8.5%

Pension accounts16.6%

Corporate stock, financial

securities,mutual funds, and personal

trusts3.9%

Unincorporated business equities

7.9%

Miscellaneous assets1.2%

Middle 3 quintiles: Composition of gross assets


41



Deutsche Bank

Percent of total stocks and debt held by top 10% wealth class

0

10

20

30

40

50

60

70

80

90

100

1983 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016

%

0

10

20

30

40

50

60

70

80

90

100

%

Stocks directly or indirectly hold Total debt

The Top 10% own more stocks


42



Deutsche Bank

Ratio of the mean wealth of the Top one percent to median wealth:Actual change in the ratio

0

10

20

30

40

50

60

70

80

90

100

1983-1989 1989-2001 2001-2007 2007-2010 2010-2016

%

0

10

20

30

40

50

60

70

80

90

100

%

Mean wealth of the Top 1% divided by median wealth


43



Deutsche Bank

Average annual rates of return by wealth class, net worth

-12

-10

-8

-6

-4

-2

0

2

4

6

8

10

1983-1989 1989-2001 2001-2007 2007-2010 2010-2013 2013-2016 1983-2016

%

-12

-10

-8

-6

-4

-2

0

2

4

6

8

10

%

Top 1% Middle 3 Quintiles

Middle 3 quintiles have had higher returns than the Top1% since the crisis


44



Deutsche Bank

Percent of households holding stocks: Stock of $25,000 or more

10

12

14

16

18

20

22

24

26

28

1989 1992 1995 1998 2001 2004 2007 2010 2013 201610

12

14

16

18

20

22

24

26

28

*1995 dollars

25% of households hold more than $25K in stocks


45



Deutsche Bank

Concentration of stock ownership by wealth class, 2016

31.1

12.6 9.35 1.3 0.3 0.2

40.3

0

20

40

60

80

100

Top 1% Next 4% Next 5% Next 10% Secondquintile

Thirdquintile

Fourthquintile

Bottomquintile

%

0

20

40

60

80

100

%Shares Cumulative sum

Top 1% own 40% of stocks held by households


46



Deutsche Bank

Concentration of stock ownership by income class, 2016

60.5

24.8

5.8 4.8 2.8 0.4 0.80

20

40

60

80

100

$250

,000

or

mor

e

$100

,000

-$2

49,9

99

$75,

000-

$99,

999

$50,

000-

$74,

999

$25,

000-

$49,

999

$15,

000-

$24,

999

Und

er$1

5,00

0

%

0

20

40

60

80

100

%

Shares Cumulative sum

Households making more than $250K own 60% of stocks held by households


47



Deutsche Bank

Comparing US inequality with inequality

in other countries

48



Deutsche Bank

Source: WID database, DB Global Markets Research

Top 1% share of total economy-wide income

-10-505

10152025

US UK Germany France Sweden Japan India Indonesia SourthAfrica

China

%

-10-50510152025

%1980 Change in 1980-90 Change in 1990-00 Change in 2000-Latest

Note: Total income is defined as the sum of all income items reported on income tax returns, before any deduction.

The rich has gotten richer over time in most countries

49



Deutsche Bank


Change in income share, 1990-2009

-2

-1

0

1

2

3

4

Advanced Economies Emerging Economies

%

-2

-1

0

1

2

3

4

%

Middle 20% Top 20%

Incomes of the top 20% increased while incomes of middle 20% decreased

50



Deutsche Bank


Bottom 90%

0

0.1

0.2

0.3

0.4

0.5

0.6

France UK US

%

0

0.2

0.4

0.6

%

1980 2012

Top 1%

0

0.2

0.4

0.6

France UK US

%

0

0.2

0.4

0.6

%

1980 2012

Comparing inequality in US with France and UK

The top 1% and bottom 90% wealth distribution

51



Deutsche Bank


Top 1% Income Share: English Speaking Countries (U-shaped)

0%

5%

10%

15%

20%

25%

1913

1918

1923

1928

1933

1938

1943

1948

1953

1958

1963

1968

1973

1978

1983

1988

1993

1998

2003

2008

2013

0%

5%

10%

15%

20%

25%Canada United KingdomUnited States

U-shaped development in income inequality in English speaking countries

52



Deutsche Bank


Top 1% Income Share: Continental Europe and Japan (L-shaped)

0%

5%

10%

15%

20%

25%

30%

1910

1915

1920

1925

1930

1935

1940

1945

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

0%

5%

10%

15%

20%

25%

30%France SwedenJapan

L-shaped development in income inequality in Europe and Japan

53



Deutsche Bank

Source: Piketty (2014). Figure also appears in Piketty and Saez (2014)., DB Global Markets Research

Top income tax rates, 1900-2013

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010The top marginal tax rate of the income tax (applying to the highest incomes) in the U.S. dropped from 70% in 1980 to 28% in 1988.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%U.S. Germany France U.K.Marginal tax rate applying to the highest incomes

Marginal tax rates down in recent decades

54



Deutsche Bank

0

10

20

30

40

50

60

70

80

1981 2013

%

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

%Dividend income tax (ls) Corporate income tax (ls)

Top 1% income share (rs)

Other taxes affecting the top 1% have also fallen

Source: OECD Tax Database, OECD Income Database, DB Global Markets Research

55



Deutsche Bank

Trends in real household income by income group, mid-1980s to late 2000s, average annual change in percent

-1

0

1

2

3

4

5

Japa

n

Turk

ey

Hun

gary

Italy

Uni

ted

Sta

tes

Ger

man

y

Den

mar

k

Can

ada

Bel

gium

Fran

ce

Aus

tria

Mex

ico

Net

herla

nds

New

Zea

land

OE

CD

-27

Chi

le

Finl

and

Sw

eden

Por

tuga

l

Gre

ece

Uni

ted

Kin

gdom

Luxe

mbo

urg

Nor

way

Isra

el1

Cze

ch R

epub

lic

Spa

in

Aus

tralia

Irela

nd

%

-1

0

1

2

3

4

5

%

Total population Bottom decile Top decile

Big differences in income growth across the income distribution

Source: OECD, DB Global Markets Research

Note: Income refers to disposable household income, corrected for household size and deflated by the consumer price index (CPI). Average annual changes are calculated over the period from 1985 to 2008, with a number of exceptions: 1983 was the earliest year for Austria, Belgium, and Sweden; 1984 for France, Italy, Mexico, Turkey and the United States; 1986 for Finland, Luxembourg, and Norway; 1987 for Ireland; 1988 for Greece; 1991 for Hungary; 1992 for the Czech Republic; 1995 for Australia and Portugal and 1996 for Chile. The latest year for Chile was 2009; for Denmark, Hungary, and Turkey it was 2007; and for Japan 2006. Changes exclude the years 2000 to 2004 for Austria, Belgium, Ireland, Portugal and Spain for which surveys were not comparable.

56



Deutsche Bank

Developments in product market regulation, employment protection legislation, tax wedges and union density, OECD average, 1980-2008

(1980 = 100)

0

25

50

75

100

125

150

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

0

25

50

75

100

125

150

PMR Tax wedge Union density EPL

1980=100 1985=100

Product and labour market regulations and institutions became weaker


Note: “PMR” is a summary indicator for product market regulation. “EPL” is a summary indicator of the strictness of overall employment protection legislation (only available from 1985 onwards). “Tax wedge” refers to an average worker and is the sum of income tax and employees and employers payroll taxes as a percentage of labour costs. “Union density” is the number of union members as a proportion of all employees eligible to be members.

57



Deutsche Bank

Trends in annual hours worked by the bottom and top 20% of earners, OECD average, mid-1980s to mid-2000s

-8 -6 -4 -2 0 2 4 6 8Percentage change in hours worked

Total Bottom quintile Top quintile

Hours worked declined more among lower-wage workers


Note: Paid workers of working age.

58



Deutsche Bank

The capital share in rich countries, 1975-2010

10

15

20

25

30

35

40

75 80 85 90 95 00 05 10

%

0

5

10

15

20

25

30

35

40

%U.S. Japan Germany France U.K.

Italy Canada Australia

Capital income bigger part of total income in advanced economies than in the past

Source: Piketty (2014), DB Global Markets Research

59



Deutsche Bank

Median net household wealth, 2010 or latest available year values in 2005 USD

0

50000100000

150000

200000

250000300000

350000

400000N

ethe

rland

s

Ger

man

y

Uni

ted

Sta

tes

Finl

and

Aus

tria

Slo

vak

Rep

ublic

Nor

way

Por

tuga

l

Fran

ce

Gre

ece

OE

CD

18

Kor

ea

Can

ada

Italy

Uni

ted

Kin

gdom

Bel

gium

Spa

in

Aus

tralia

Luxe

mbo

urg

$

50000

100000

150000

200000

250000

300000

350000

400000

$

Median net household wealth low in the US

Source: OECD Wealth Distribution Database., DB Global Markets Research

60



Deutsche Bank

Net household wealth, Bottom quintile2010 or latest available year, values in 2005 USD

-50 000

-40 000

-30 000

-20 000

-10 000

10 000

20 000

30 000

Nor

way

Net

herla

nds

Uni

ted

Stat

esFi

nlan

d

Aust

ria

Ger

man

y

OEC

D18

Fran

ce

Portu

gal

Luxe

mbo

urg

Gre

ece

Belg

ium

Kore

a

Can

ada

Italy

Aust

ralia

Uni

ted

King

dom

Spai

nSl

ovak

Rep

ublic

$

-50000

-40000

-30000

-20000

-10000

0

10000

20000

30000

$

Net household wealth at bottom of wealth distribution


61



Deutsche Bank

Net household wealth, Top quintile2010 or latest available year, values in 2005 USD

500 000

1 000 000

1 500 000

2 000 000

2 500 000

Slov

akR

epub

licFi

nlan

dG

reec

e

Nor

way

Portu

gal

Net

herla

nds

Fran

ce

Ger

man

yKo

rea

Italy

OEC

D18

Sp

ain

Belg

ium

Aust

ralia

Uni

ted

King

dom

Aust

ria

Can

ada

Uni

ted

Stat

esLu

xem

bour

g

$

0

500000

1000000

1500000

2000000

2500000

$

Net household wealth at top of wealth distribution


62



Deutsche Bank

The distribution of income, percentage of income earned by:

0

20

40

60

80

100

1962 1969 1982 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015

%

0

20

40

60

80

100

%Top 1% Next 4% Bottom 95%

Top 5% earn 40% of income

Source: Edward N. Wolff (2017) . Survey of Consumer Finances, DB Global Markets Research

63



Deutsche Bank

The opioid crisis and labor supply

64



Deutsche Bank

Life expectancy a birth in the United States

66

68

70

72

74

76

78

80

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Year

66

68

70

72

74

76

78

80

Year

Life expectancy at birth falling recently

Source: CDC , DB Global Markets Research

65



Deutsche Bank

Source: https://obamawhitehouse.archives.gov/sites/default/files/ondcp/policy-and-research/2016_ndcs_data_supplement_20170110.pdf, DB Global Markets Research

Price of heroin has fallen a lot

Price of heroin in United States, 1981-2012

0

500

1000

1500

2000

2500

3000

3500

1981 1986 1991 1996 2001 2006 2011

Price per pure gram (2012

dollars)

0

500

1000

1500

2000

2500

3000

3500

Price per pure gram (2012

dollars)

66



Deutsche Bank

Unintentional overdose deaths in the United States,1980-2015

0

2

4

6

8

10

12

14

16

18

1980 1985 1990 1995 2000 2005 2010 2015

Per 100000

0

2

4

6

8

10

12

14

16

18

Per 100000

Source: cdc.gov/nchs/data, DB Global Markets Research

More people die of an opioid overdose

67



Deutsche Bank

Death by drug overdoes in 2015

Source: https://www.cdc.gov/drugoverdose/data/statedeaths.html, DB Global Markets Research

68



Deutsche Bank

Self-reported last use of heroin

100

200

300

400

500

600

700

800

900

1000

2002 2004 2006 2008 2010 2012 2014 2016

Thousands

100

200

300

400

500

600

700

800

900

1000

Thousands

Past Year Past Month

Source: samhsa.gov/study-dataset/national-survey-drug-use-and health- 2002-15 & 2013, DB Global Markets Research

More people use heroin

69



Deutsche Bank

Source: https://www.brookings.edu/wp-content/uploads/2017/09/1_krueger.pdf, (Table 4), BLS (American Time Use Survey), DB Global Markets Research

Self-reported health status for workersage 25-54 by labor force status

Employed men Unemployed men Men not in labor force

Employed women Unemployed women Women not in labor force

Excellent PoorVery good Good Fair

70



Deutsche Bank

G7: Prison population rate

0

100

200

300

400

500

600

700

US UK Canada France Italy Germany Japan

Per 100k people

0

100

200

300

400

500

600

700

Per 100k people

Many more people in prison in the United States

Source:http://prisonstudies.org/sites/default/files/resources/downloads/world_prison_population_list_11th_edition_0.pdf, DB Global Markets Research

71



Deutsche Bank

Source: https://www.kff.org/infographic/medicaids-role-in-addressing-opioid-epidemic/, DB Global Markets Research

Medicaid covers 30% of the 2.2mn adults with opioid addiction

Medicaid covers 3 in 10 nonelderly adults with opioid addiction

30%

40%

10%

20% Medicaid

Private insurance

Other/Unknown

Uninsured

Total: 2.2 million in 2015

72



Deutsche Bank

Peter Hooper• Managing Director, Chief Economist• Deutsche Bank Securities, Inc.• +1 (212) 250-7352• [email protected]

• Peter Hooper is currently Managing Director and Chief Economist for Deutsche BankSecurities. He joined Deutsche Bank Securities in the fall of 1999, first as ChiefInternational Economist and shortly thereafter as Chief US Economist. He became ChiefEconomist and co-head of global economics in 2006. Prior to joining Deutsche Bank,Hooper enjoyed a distinguished 26-year career at the Federal Reserve Board inWashington, D.C. While rising to senior levels of the Fed staff, he held numerouspositions, including as an economist on the FOMC and as Deputy Director of the Divisionof International Finance.

• Hooper produces weekly and quarterly publications for Deutsche Bank with a focus onUS and global economic developments and Fed policy; he also comments on US andglobal economic and financial developments in the news media. His US Economics teamhas been ranked No. 1 in fixed income research by Institutional Investor in 2010 and2011. Hooper currently serves as a member of the Economic Advisory Panel of theFederal Reserve Bank of New York, a member and former chairman of the EconomicAdvisory Committee of the American Bankers Association, a founding member of the USMonetary Policy Forum, a member of the Economic Leadership Council for the Universityof Michigan, and a member of the Forecasters’ Club of New York.

• Hooper earned a BA in Economics (cum laude) from Princeton University and an MA andPh.D. in Economics from University of Michigan. He has published numerous books,journal articles, and reviews on economics and policy analysis.

73



Deutsche Bank

Torsten Slok, Ph.D.• Chief International Economist, Managing Director• Deutsche Bank Securities, Inc.

Torsten Slok joined Deutsche Bank Securities in the fall of 2005. Mr. Slok’s Economics team has been top-ranked by Institutional Investor for the past

four years. 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.

74



Deutsche Bank

Brett Ryan• Director• Deutsche Bank Securities, Inc.

Brett Ryan joined Deutsche Bank's US Economics Research team in May 2010. Prior to joining the team, Brett spent five years at Deutsche Bank in the institutional equity research sales group. Brett has a Bachelor of Arts degree from the University of Pennsylvania; majoring in politics, philosophy and economics.

75



Deutsche Bank

04/01/2018 03:04:08 2010 DB Blue template

Matthew Luzzetti(+1) 212 [email protected]

Matthew Luzzetti joined Deutsche Bank in September 2012 and is currently a senior economist in DB’s top Institutional Investor-ranked economics team in New York. He previously held a position in DB’s Office of the Chief Economist in London. Matthew’s research focuses primarily on the US economy and Fed policy, where he regularly contributes to DB’s Global Economics publications, including Global Economic Perspectives and The House View.

Matthew holds a Ph.D. in Economics from the University of California, Los Angeles. While at UCLA, Matthew worked at the U.S. Department of the Treasury in the Office of Financial Research. Prior to graduate school, he worked as a research analyst in the macroeconomics department at the Federal Reserve Bank of Philadelphia.

76


mailto:[email protected]


Deutsche Bank

04/01/2018 03:04:08 2010 DB Blue template

Appendix 1Important Disclosures*Other Information Available upon Request

Analyst CertificationThe views expressed in this report accurately reflect the personal views of the undersigned lead analyst about thesubject issuers and the securities of those issuers. In addition, the undersigned lead analyst has not and will notreceive any compensation for providing a specific recommendation or view in this report. Torsten Slok

Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced fromlocal 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 onsecurities other than the primary subject of this research, please see the most recently published company report orvisit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr.Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities underthe “Disclosures Lookup” and “Legal” tabs. Investors are strongly encouraged to review this information beforeinvesting.

77


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https://gm.db.com/equities


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Deutsche Bank may consider this report in deciding to trade as principal. It may also engage in transactions, for its own account or with customers, in a manner inconsistent with the views taken in thisresearch report. Others within Deutsche Bank, including strategists, sales staff and other analysts, may take views that are inconsistent with those taken in this research report. Deutsche Bank issues a varietyof research products, including fundamental analysis, equity-linked analysis, quantitative analysis and trade ideas. Recommendations contained in one type of communication may differ fromrecommendations contained in others, whether as a result of differing time horizons, methodologies, perspectives or otherwise. Deutsche Bank and/or its affiliates may also be holding debt or equity securitiesof the issuers it writes on. Analysts are paid in part based on the profitability of Deutsche Bank AG and its affiliates, which includes investment banking, trading and principal trading revenues.

Opinions, estimates and projections constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinions of Deutsche Bank and are subject to change withoutnotice. Deutsche Bank provides liquidity for buyers and sellers of securities issued by the companies it covers. Deutsche Bank research analysts sometimes have shorter-term trade ideas that may beinconsistent with Deutsche Bank's existing longer-term ratings. Trade ideas for equities can be found at the SOLAR link at http://gm.db.com. A SOLAR idea represents a high-conviction belief by an analystthat a stock will outperform or underperform the market and/or a specified sector over a time frame of no less than two weeks and no more than six months. In addition to SOLAR ideas, analysts mayoccasionally discuss with our clients, and with Deutsche Bank salespersons and traders, trading strategies or ideas that reference catalysts or events that may have a near-term or medium-term impact on themarket price of the securities discussed in this report, which impact may be directionally counter to the analysts' current 12-month view of total return or investment return as described herein. Deutsche Bankhas no obligation to update, modify or amend this report or to otherwise notify a recipient thereof if an opinion, forecast or estimate changes or becomes inaccurate. Coverage and the frequency of changes inmarket conditions and in both general and company-specific economic prospects make it difficult to update research at defined intervals. Updates are at the sole discretion of the coverage analyst or of theResearch Department Management, and the majority of reports are published at irregular intervals. This report is provided for informational purposes only and does not take into account the particularinvestment objectives, financial situations, or needs of individual clients. It is not an offer or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy.Target prices are inherently imprecise and a product of the analyst’s judgment. The financial instruments discussed in this report may not be suitable for all investors, and investors must make their owninformed investment decisions. Prices and availability of financial instruments are subject to change without notice, and investment transactions can lead to losses as a result of price fluctuations and otherfactors. If a financial instrument is denominated in a currency other than an investor's currency, a change in exchange rates may adversely affect the investment. Past performance is not necessarilyindicative of future results. Performance calculations exclude transaction costs, unless otherwise indicated. Unless otherwise indicated, prices are current as of the end of the previous trading session and aresourced from local exchanges via Reuters, Bloomberg and other vendors. Data is also sourced from Deutsche Bank, subject companies, and other parties.

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Macroeconomic fluctuations often account for most of the risks associated with exposures to instruments that promise to pay fixed or variable interest rates. For an investor who is long fixed-rate instruments(thus receiving these cash flows), increases in interest rates naturally lift the discount factors applied to the expected cash flows and thus cause a loss. The longer the maturity of a certain cash flow and thehigher the move in the discount factor, the higher will be the loss. Upside surprises in inflation, fiscal funding needs, and FX depreciation rates are among the most common adverse macroeconomic shocks toreceivers. But counterparty exposure, issuer creditworthiness, client segmentation, regulation (including changes in assets holding limits for different types of investors), changes in tax policies, currencyconvertibility (which may constrain currency conversion, repatriation of profits and/or liquidation of positions), and settlement issues related to local clearing houses are also important risk factors. Thesensitivity of fixed-income instruments to macroeconomic shocks may be mitigated by indexing the contracted cash flows to inflation, to FX depreciation, or to specified interest rates – these are common inemerging markets. The index fixings may – by construction – lag or mis-measure the actual move in the underlying variables they are intended to track. The choice of the proper fixing (or metric) is particularlyimportant in swaps markets, where floating coupon rates (i.e., coupons indexed to a typically short-dated interest rate reference index) are exchanged for fixed coupons. Funding in a currency that differs fromthe currency in which coupons are denominated carries FX risk. Options on swaps (swaptions) the risks typical to options in addition to the risks related to rates movements.

Derivative transactions involve numerous risks including market, counterparty default and illiquidity risk. The appropriateness of these products for use by investors depends on the investors' owncircumstances, including their tax position, their regulatory environment and the nature of their other assets and liabilities; as such, investors should take expert legal and financial advice before entering intoany transaction similar to or inspired by the contents of this publication. The risk of loss in futures trading and options, foreign or domestic, can be substantial. As a result of the high degree of leverageobtainable in futures and options trading, losses may be incurred that are greater than the amount of funds initially deposited – up to theoretically unlimited losses. Trading in options involves risk and is notsuitable for all investors. Prior to buying or selling an option, investors must review the "Characteristics and Risks of Standardized Options”, at http://www.optionsclearing.com/about/publications/character-risks.jsp. If you are unable to access the website, please contact your Deutsche Bank representative for a copy of this important document.

Participants in foreign exchange transactions may incur risks arising from several factors, including: (i) exchange rates can be volatile and are subject to large fluctuations; (ii) the value of currencies may beaffected by numerous market factors, including world and national economic, political and regulatory events, events in equity and debt markets and changes in interest rates; and (iii) currencies may be subjectto devaluation or government-imposed exchange controls, which could affect the value of the currency. Investors in securities such as ADRs, whose values are affected by the currency of an underlyingsecurity, effectively assume currency risk.

78



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Deutsche Bank is not acting as a financial adviser, consultant or fiduciary to you or any of your agents with respect to any information provided in this report. Deutsche Bank does not provide investment,legal, tax or accounting advice, and is not acting as an impartial adviser. Information contained herein is being provided on the basis that the recipient will make an independent assessment of the merits ofany investment decision, and is not meant for retirement accounts or for any specific person or account type. The information we provide is directed only to persons we believe to be financially sophisticated,who are capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies, and who understand that Deutsche Bank has financialinterests in the offering of its products and services. If this is not the case, or if you or your agent are an IRA or other retail investor receiving this directly from us, we ask that you inform us immediately.

Unless governing law provides otherwise, all transactions should be executed through the Deutsche Bank entity in the investor's home jurisdiction. Aside from within this report, important risk and conflictdisclosures can also be found at https://gm.db.com on each company’s research page and under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this informationbefore investing.

United States: Approved and/or distributed by Deutsche Bank Securities Incorporated, a member of FINRA, NFA and SIPC. Analysts located outside of the United States are employed by non-US affiliates thatare not subject to FINRA regulations, including those regarding contacts with issuer companies.

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United Kingdom: Approved and/or distributed by Deutsche Bank AG acting through its London Branch at Winchester House, 1 Great Winchester Street, London EC2N 2DB. Deutsche Bank AG in the UnitedKingdom is authorised by the Prudential Regulation Authority and is subject to limited regulation by the Prudential Regulation Authority and Financial Conduct Authority. Details about the extent of ourauthorisation and regulation are available on request.

Hong Kong: Distributed by Deutsche Bank AG, Hong Kong Branch or Deutsche Securities Asia Limited (save that any research relating to futures contracts within the meaning of the Hong Kong Securities andFutures Ordinance Cap. 571 shall be distributed solely by Deutsche Securities Asia Limited). The provisions set out above in the "Additional Information" section shall apply to the fullest extent permissible bylocal laws and regulations, including without limitation the Code of Conduct for Persons Licensed or Registered with the Securities and Futures Commission. .

India: Prepared by Deutsche Equities India Private Limited (DEIPL) having CIN: U65990MH2002PTC137431 and registered office at 14th Floor, The Capital, C-70, G Block, Bandra Kurla Complex Mumbai (India)400051. Tel: + 91 22 7180 4444. It is registered by the Securities and Exchange Board of India (SEBI) as a Stock broker bearing registration nos.: NSE (Capital Market Segment) - INB231196834, NSE (F&OSegment) INF231196834, NSE (Currency Derivatives Segment) INE231196834, BSE (Capital Market Segment) INB011196830; Merchant Banker bearing SEBI Registration no.: INM000010833 and ResearchAnalyst bearing SEBI Registration no.: INH000001741. DEIPL may have received administrative warnings from the SEBI for breaches of Indian regulations. Deutsche Bank and/or its affiliate(s) may have debtholdings or positions in the subject company. With regard to information on associates, please refer to the “Shareholdings” section in the Annual Report at: https://www.db.com/ir/en/annual-reports.htm.

Japan: Approved and/or distributed by Deutsche Securities Inc.(DSI). Registration number - Registered as a financial instruments dealer by the Head of the Kanto Local Finance Bureau (Kinsho) No. 117.Member of associations: JSDA, Type II Financial Instruments Firms Association and The Financial Futures Association of Japan. Commissions and risks involved in stock transactions - for stock transactions,we charge stock commissions and consumption tax by multiplying the transaction amount by the commission rate agreed with each customer. Stock transactions can lead to losses as a result of share pricefluctuations and other factors. Transactions in foreign stocks can lead to additional losses stemming from foreign exchange fluctuations. We may also charge commissions and fees for certain categories ofinvestment advice, products and services. Recommended investment strategies, products and services carry the risk of losses to principal and other losses as a result of changes in market and/or economictrends, and/or fluctuations in market value. Before deciding on the purchase of financial products and/or services, customers should carefully read the relevant disclosures, prospectuses and otherdocumentation. "Moody's", "Standard & Poor's", and "Fitch" mentioned in this report are not registered credit rating agencies in Japan unless Japan or "Nippon" is specifically designated in the name of theentity. Reports on Japanese listed companies not written by analysts of DSI are written by Deutsche Bank Group's analysts with the coverage companies specified by DSI. Some of the foreign securities statedon this report are not disclosed according to the Financial Instruments and Exchange Law of Japan. Target prices set by Deutsche Bank's equity analysts are based on a 12-month forecast period..

Korea: Distributed by Deutsche Securities Korea Co.

South Africa: Deutsche Bank AG Johannesburg is incorporated in the Federal Republic of Germany (Branch Register Number in South Africa: 1998/003298/10).

Singapore: This report is issued by Deutsche Bank AG, Singapore Branch or Deutsche Securities Asia Limited, Singapore Branch (One Raffles Quay #18-00 South Tower Singapore 048583, +65 6423 8001),which may be contacted in respect of any matters arising from, or in connection with, this report. Where this report is issued or promulgated by Deutsche Bank in Singapore to a person who is not anaccredited investor, expert investor or institutional investor (as defined in the applicable Singapore laws and regulations), they accept legal responsibility to such person for its contents.

Taiwan: Information on securities/investments that trade in Taiwan is for your reference only. Readers should independently evaluate investment risks and are solely responsible for their investment decisions.Deutsche Bank research may not be distributed to the Taiwan public media or quoted or used by the Taiwan public media without written consent. Information on securities/instruments that do not trade inTaiwan is for informational purposes only and is not to be construed as a recommendation to trade in such securities/instruments. Deutsche Securities Asia Limited, Taipei Branch may not executetransactions for clients in these securities/instruments.

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Qatar: Deutsche Bank AG in the Qatar Financial Centre (registered no. 00032) is regulated by the Qatar Financial Centre Regulatory Authority. Deutsche Bank AG - QFC Branch may undertake only the financialservices activities that fall within the scope of its existing QFCRA license. Its principal place of business in the QFC: Qatar Financial Centre, Tower, West Bay, Level 5, PO Box 14928, Doha, Qatar. Thisinformation has been distributed by Deutsche Bank AG. Related financial products or services are only available only to Business Customers, as defined by the Qatar Financial Centre Regulatory Authority.

Russia: The information, interpretation and opinions submitted herein are not in the context of, and do not constitute, any appraisal or evaluation activity requiring a license in the Russian Federation.

Kingdom of Saudi Arabia: Deutsche Securities Saudi Arabia LLC Company (registered no. 07073-37) is regulated by the Capital Market Authority. Deutsche Securities Saudi Arabia may undertake only thefinancial services activities that fall within the scope of its existing CMA license. Its principal place of business in Saudi Arabia: King Fahad Road, Al Olaya District, P.O. Box 301809, Faisaliah Tower - 17thFloor, 11372 Riyadh, Saudi Arabia.

United Arab Emirates: Deutsche Bank AG in the Dubai International Financial Centre (registered no. 00045) is regulated by the Dubai Financial Services Authority. Deutsche Bank AG - DIFC Branch mayundertake only the financial services activities that fall within the scope of its existing DFSA license. Its principal place of business in the DIFC: Dubai International Financial Centre, The Gate Village, Building 5,PO Box 504902, Dubai, U.A.E. This information has been distributed by Deutsche Bank AG. Related financial products or services are available only to Professional Clients, as defined by the Dubai FinancialServices Authority.

Australia and New Zealand: This research is intended only for "wholesale clients" within the meaning of the Australian Corporations Act and New Zealand Financial Advisors Act, respectively. Please refer toAustralia-specific research disclosures and related information at https://australia.db.com/australia/content/research-information.html Where research refers to any particular financial product recipients of theresearch should consider any product disclosure statement, prospectus or other applicable disclosure document before making any decision about whether to acquire the product.

Additional information relative to securities, other financial products or issuers discussed in this report is available upon request. This report may not be reproduced, distributed or published without DeutscheBank's prior written consent.

Copyright © 2018 Deutsche Bank AG

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