Deutsche Bank-Thematic Research Monthly Chartbook Back to work… until Xm...-117600823

: 02/09/2025 16:29:11 GMT: 02/09/2025 16:29:11 GMTDeutsche BankResearchBack to work… until Xmas! September 2025IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. UNTIL 19th MARCH 2021 INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.Jim Reid Head of Global Economics & Thematic Research(+44)-20-7547-2943jim.reid@db.comHenry AllenMacro Strategist(+44)-20-7541-1149henry-f.allen@db.comRajsekhar Bhattacharyyarajsekhar-a.bhattacharyya@db.com ResearchDeutsche Bankjim.reid@db.comJim Reid | (+44) 20 7547 2943 | jim.reid@db.comTABLE OF CONTENTS1SectionPageCharts of the month02Are AI and US equities in a bubble?11The argument for higher equities…22The pros of the Fed cutting rates32The cons of the Fed cutting rates40Where should USTs should go if the Fed is cutting?48The state of play 5 months on from Liberation Day54The state of play after 225 days of Trump 2.064Some random but interesting slides73ResearchDeutsche Bankjim.reid@db.comJim Reid | (+44) 20 7547 2943 | jim.reid@db.comCharts of the month2ResearchDeutsche Bankjim.reid@db.comJim Reid | (+44) 20 7547 2943 | jim.reid@db.comWhen the Fed is in a rate cutting cycle when there’s no recession, the S&P has typically seen very strong performance....Median S&P 500 Performance after Fed cuts rates since 1957Source: Bloomberg Finance LP, NBER, Deutsche Bank3708090100110120130140150-365-292-219-146-73073146219292365438511584657730Days after the first rate cutIf no recessionIf recession within a year either sideTodayResearchDeutsche Bankjim.reid@db.comJim Reid | (+44) 20 7547 2943 | jim.reid@db.com... However US valuations are extreme and 10yr returns from this starting point are usually poor, especially in real terms... Contrast this to when valuations are low...0510152025303540455018811891190119111921193119411951 196119711981199120012011202110yr Nom Rtn: 74%10yr Real Rtn: 41% 10yr Nom Rtn: 269%10yr Real Rtn: 345% 10yr Nom Rtn: -29%10yr Real Rtn: -13% 10yr Nom Rtn: 216%10yr Real Rtn: 163% 10yr Nom Rtn: 53%10yr Real Rtn: -12% 10yr Nom Rtn: 475%10yr Real Rtn: 299% 10yr Nom Rtn: -9%10yr Real Rtn: -29% 10yr Nom Rtn: 338%10yr Real Rtn: 267% S&P 500 CAPE ratio with 10yr total returns from startSource: Robert Shiller, Finaeon, Deutsche Bank.4CurrentResearchDeutsche Bankjim.reid@db.comJim Reid | (+44) 20 7547 2943 | jim.reid@db.comPerhaps the next few months and quarters will be determined by how the Fed is influenced by outside pressure and the data….3.53.73.94.14.34.5%2025 PowellCookGoolsbeeJeffersonWilliamsBarrBowmanWallerKuglerMusalemKashkariCollinsSchmidHammackLoganDalyBosticBarkinHarkerChair facing regular attacks by TrumpBiden appointee Trump has moved to fireTrump first term appointees now voting for rate cutsBiden AppointeesKugler has resigned, to be replaced by Stephen MiranDB economists’ estimates for the 2025 dots from June SEP – Black are permanent voting members, Green for 2025, Red for 2026 and