EFTA01458537

2 October 2015 US Equity Insights 30 S&P EPS will be weak, weakest sales/EPS growth yet of the profit recession The DB Profit Indicator is a diffusion style index based on six macro indicators. It dropped to 49.2 in July and then 46.7 in August dragged down by Mfg. ISM, Exports and Oil prices. At -47 it suggests flat to slightly down y/y 3Q EPS. Btm-up 30 EPS is now $29.04, or -4.4% y/y on -3.40/6 say sales. EPS growth likely slows at Financials to flat ex litigation given soft capital markets conditions. Health Care EPS should be up high single-digit. Btm-up Tech EPS growth is now merely 2.8% y/y, on FX headwinds and still very sluggish corp IT spending. But final Tech EPS growth should be mid single digit on good growth at consumer exposed Tech. Btm-up 30 EPS will fall a bit more before urning up on typical "fishhook" beats. We think 3Q EPS will finalize around $29.75, down 2% y/y, with sales down -4%, and margins up slightly. Margin improvement is on a non-GAAP basis, GAAP margins and EPS are poor. Figure 1: Fishhooks: S&P 500 quarterly btm-up EPS revisions 33 100 29 I 28 CZ I. L ind 27 CI I 10l. 101, ‘. 74 25 23 22 Sane ®ES Cedursthe Bs,* WEik4a41.4a41 , 4,84t4a Figure 3: Change in btm-up 3015 EPS since 6:30/2015 (current 30 EPS is blended. actual for reported and consensus for the rest) 4% lig I 411 -I 4 64 2% 4 9% -30% a.0% -11% .1 ;I LE 6 (Figure 2: Change in quarterly EPS before and during ;reporting (1011 - now) as 5% 11,1.1„ 1....„ 11 Avg(1O11-1O15) 33 4 11 -8% - -ris -10% 0 •• el el 0. el el. el el V VVVV VI § § § § § •EPS boat dwrg waling EPS cut pro- lo reccrtrog Seas a Band to &wet Figure 4: Change in btm-up 2015 EPS since 6130/2015 3.6% 4% 2% Change In t(m-up 2015 EPS since 6302015 2.6% 02% 0.8% -1.11(11 4.2% 46% 0% -2% -0 0%0 WAS -0.6% -11% -21% 1 11% -0 7% 1114 -1e% A 40% -4% -39% .8% -142% -130% -10% 42% " e t u 8 in us ses a a I' a • U g Sane a Dosaa Sane Sa DIUtlthe Bart 0 'Pig; uz, gi Page 2 Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0118497 CONFIDENTIAL SDNY_GM_00264681 EFTA01458537