Chief Investment Officer Ben Pace of Deutsche Bank presents on the state of the world economy and how it will effect luxury real estate prices in 2012 and beyond. From The Key 2012, luxury real estate conference by Concierge Auctions.

1. Contents
1 Global economy
2 Fixed income
3 Equities
4 FX and commodities
5 Investment forecasts
6 Important notes
Deutsche Bank 1
Private Wealth Management

2. Global economy
Deutsche Bank
Private Wealth Management

3. The global economy
A tenuous and uneven recovery
World growth slowing ― The outlook for the world economy has
Contribution to growth, selected countries, % % change year over year deteriorated and we now expect 2.9% growth
this year and 3.1% in 2013, down almost half a
percent from previous estimates. Our 2014
global growth estimate is 3.8%.
― A slow recovery in the U.S., and the prospect of
the “fiscal cliff” at the end of 2012, brings our
GDP growth estimates 2.1% for this year and
1.9% for next year.
― We expect the Eurozone to bottom out in the
fourth quarter, but the outlook remains poor.
― Most emerging markets are likely to slow
because of weaker exports to developed
economies.
― With central banks redoubling their efforts to
Source: Haver Analytics; IMP; The Economist Estimates based on 52 countries representing support growth, we do not expect any interest
As of 10/9/2012 90% of world GDP. Weighted by GDP at
purchasing power parity
rate rises in the U.S. or Europe until 2015 at the
earliest.
Deutsche Bank 3
Private Wealth Management

4. U.S. growth intact, but fragile
Data surprise indicator:
― The U.S. is in a stronger position than other
The downward trend has reverted developed economies, but the looming fiscal cliff
0.4 could stop the economy dead in its tracks. Our
expectation is that Congress will find a way to
avoid this scenario, but not without some near-term
0.2 turmoil.
― While unemployment remains stubbornly high, the
0.0 7.9% number in the November 6 report was at
least psychologically important and may support
already rising consumer confidence.
-0.2
― The housing market continues to improve and we
-0.4 are seeing the end of consumer deleveraging.
-0.6
Jan 10 Sep 10 May 11 Jan 12 Sep 12
DB Macro Pulse Indicator (MPI) measures data surprises positive (negative) readings indicate data has been better (worse) than expected. Source: BLS, Deutsche Bank CIB Research.
Deutsche Bank 4
Private Wealth Management

5. The fiscal cliff remains a key uncertainty
We expect a compromise to reduce the impact ― If nothing is done to avert this crisis, the fiscal
adjustment in 2013 would be approximately 750
of the fiscal cliff to 1.5% of GDP
billion, or around 5% of GDP.
― We do expect that there will be a deal after the
election that reduces the impact to 1.5% of GDP.
― Risks include a recession in the first half of 2013 if
a deal does not materialize and a potential credit
downgrade if the spending cuts are not put into
place.
Deutsche Bank 5
Private Wealth Management

6. The Eurozone should resume modest growth in 2013
We expect Eurozone GDP to bottom out in Q4 with a ― The economic outlook remains very weak in the
modest rebound beginning Q1 2013 Eurozone with limited signs of a meaningful
recovery.
% qoq
― PMIs surprised to the downside in September
with a substantial drop in services, but a
moderate rise in manufacturing.
― There is considerable divergence between
countries:
– Germany PMIs rose to the highest level in
five months
– France weakened sharply
– The periphery weakened further
Source: Haver Analytics, Deutsche Bank Research
Deutsche Bank 6
Private Wealth Management

7. Economic cycles in developed and emerging markets
becoming increasingly coupled
Correlation of growth cycles in the developed and ― Weakness in Europe and the U.S. has spilled
over to emerging markets during 2012, leading us
emerging markets
to mark down our growth forecasts for 2012 and
2013.
― Over the last decade emerging and developed
market economic cycles have become
increasingly coupled.
― Globalization, and the opening up of several
emerging countries to international trade, has
seen increased interdependence.
― Going forward, we expect growth in the emerging
markets to continue to outpace that of developed
markets. However, we expect growth rates lower
than those experienced in the previous decade.
Deutsche Bank 7
Private Wealth Management

8. Fixed income
Deutsche Bank
Private Wealth Management

9. Credit should continue to outperform Treasuries
Real yields on Treasuries are negative
― Treasury yields are likely to remain capped,
while credit should continue to outperform as
yield-oriented investors are increasingly willing
to assume more credit risk.
― As the Fed absorbs an increasing share of the
mortgage and Treasury markets, investors will
be effectively forced to move into higher-yielding
spread product.
― Additionally, we believe they will continue to
migrate into foreign markets, both developed
and emerging, looking for foreign currency gains
and higher-yielding bond markets.
10-Year Barclays Barclays Capital Merrill Lynch Credit Suisse JP Morgan
U.S. Capital U.S. Credit/ BBB Leveraged Domestic
Treasury U.S. Corporate Municipal Loan High
Aggregate Investment Bond Index Index* Yield Index
Bond Index Grade
Bond Index
*Implied yield calculated by adding the index option-adjusted spread to d-month LIBOR rate. Source: Barclays Capital, FactSet, Credit Suisse and JPMorgan 8/31/12. CPI as of 7/31/12.
Deutsche Bank 9
Private Wealth Management

10. Are high yield bonds compensating investors for the
additional risk?
Spreads on high yield bonds have come down ― Investors have been large buyers of high
yield bonds, driving prices up and yields
to more normal levels
below 7%.
2,000
1,800 ― The spread between the yield on junk bonds
1,600 and those on Treasuries is currently 5.61
percentage points, below its 15-year
1,400
average.1
1,200
1,000 ― However, with the Federal Reserve buying
800 bonds and pushing down yields on all fixed
income investments, high yield might
600
continue to do well, even if the opportunity for
400
price appreciation is limited.
200
0
Sep-97 Mar-00 Sep-02 Mar-05 Sep-07 Mar-10 Sep-12
U.S. High Yield Spreads (OAS) (15 YR Avg) U.S. High Yield Spreads (OAS)
1Bloomberg Finance LP 10/11/2012. Chart source: Factset as of 10/16/12.
Deutsche Bank 10
Private Wealth Management

11. Emerging market bonds remain attractive
USD denominated versus local currency ― Emerging market bond markets remain
denominated emerging market bonds attractive, even after strong performance
year-to-date.
― The major driver of EM local bond markets in
the first half of this year, declining interest
rates, is gradually fading. We expect currency
appreciation versus the USD to be the larger
contributor to returns for the remainder of the
year.
― However, even with no further interest rate
cuts, EM local bonds offer yields 4% higher
than U.S. Treasuries, with improving credit
quality.
Source: Thomson Reuters Datastream, JP Morgan Indices. Data as of 10/3/12.
Deutsche Bank 11
Private Wealth Management

12. Equities
Deutsche Bank
Private Wealth Management

13. U.S. equities: what is the appropriate P/E multiple
Economic growth and the impact on P/Es P/E versus “real” interest rates
25
18
Average P/E Given GDP 16.2 Average P/E Given Real 10 Year
16.0
16 Scenario Treasury Yields 19.9
20 18.4
13.9
14 13.4 13.1 17.0
12.3
12 14.5
15
Average P/E
12.9
12.0
Average P/E
10
10.9
8 10
6
4 5
2
0
0 Less than 0-1% 1-2% 2-3% 3-4% 4-5% 5% or
Less than - -2% to 0% 0% to 2% 2% to 4% 4% - 6% 6% or More
2%
0% More
Real GDP (YoY) Real 10 Year Treasury Yield
Footnotes: Time period reflects 1Q48 to 2Q12. Footnotes: Time period reflects 1Q62 to 3Q12 using PCE Deflator.
Data Source: FactSet, Bureau of Economic Analysis Data Source: Bloomberg Finance LP, FactSet
― Historically, growth in the range of 0-2% suggests a P/ ― With 10-year Treasury yields hovering near negative
E of 14x. Using this multiple, we have set out year-end territory, history would suggest that there is limited
target for the S&P at 1425. In order to see meaningful room for P/E expansion.
P/E expansion, growth would have to be between
2-6%.
Deutsche Bank 13
Private Wealth Management

14. An improved outlook for European equities
European equity valuations ― The outlook for European equities is improving as
Eurozone fears are receding and risks appear
largely priced in.
MSCI Europe ex-UK P/E (NTM)
― Government bonds of core countries offer
negative real yields so the impetus to rotate into
stocks in Europe, as the outlook stabilizes,
should be supportive.
― Doubts over issues such as a slowdown in
economic growth in China and the political
situation in the United States would prompt
investors to stay cautious on Europe near term,
but the longer-term outlook remains somewhat
positive.
.
Source: FactSet 10/23/12
Deutsche Bank 14
Private Wealth Management

15. Chinese equities becoming more attractive
Inflation pressure in China remains in check ― The Chinese economy appears to be heading
toward a soft landing. With the possibility for
additional monetary policy easing and further
CPI YoY% stimulus, we expect a rebound as we head into
2013.
― Inflation levels remained above 2% since
February 2010 and peaked in July 2011 at 6.5%.
― China’s equity markets lagged broad emerging
and developed markets through 3Q12. Improved
growth and policy easing have made China more
attractive from an investment perspective.
Source: FactSet
Deutsche Bank 15
Private Wealth Management

16. FX and Commodities
Deutsche Bank
Private Wealth Management

17. Is China a currency manipulator?
U.S. dollar / Yuan 2004-2012 ― A number of economists have questioned
Yuan is pegged
whether China's exchange rate policies versus
8.5 at 8.3 the U.S. and its use of U.S. dollar reserves
per dollar
can be considered "predatory"—designed to
8 depress the value of the Yuan and push cheap
Yuan Chinese goods into U.S. markets.
depegged /
7.5 +/- 0.3%
trading band ― Many U.S. policymakers have called for China
to wean itself off export dependence and build
7
up domestic consumption to correct the global
Trading band
widened to +/- imbalances that drew so many U.S. dollars to
6.5 0.5% China in the first place.
Trading band
6 widened to +/-
1.0%
5.5
Oct-04 Oct-06 Oct-08 Oct-10 Oct-12
Source: Deutsche Bank Global Markets
Deutsche Bank 17
Private Wealth Management

18. Precious metals should continue to perform well
Global gold mine supply by country (2011) ― We expect gold prices to strengthen further.
Extreme monetary ease in the developed
economies should provide strong support.
― In addition, we expect inflows into physically
backed ETFs to accelerate again as the U.S.
dollar tends to display seasonal weakness in
December.
― Supply constraints are becoming a larger
issue for the gold mining industry, particularly
given the labor disruptions which have been
growing in South Africa. As of the end of Q3
2012, the country had closed down
approximately 39% of its gold mines.
Source: Deutsche Bank Global Markets
Deutsche Bank 18
Private Wealth Management

19. Economic and asset class forecasts
Deutsche Bank
Private Wealth Management

20. Global Investment Committee Forecasts
as of December 2012*
GDP Growth Key Interest Rates Current* 3-Month 12-Month
2012 2013 2014
in % Forecast Forecast
World 2.9% 3.1% 3.8% USA (Fed funds) 0.25% 0.25% 0.25%
USA 2.1% 1.9% 3.1% Euroland (Refi rate) 0.75% 0.50% 0.50%
Euroland -0.4% -0.2% 1.1% UK (Repo rate) 0.50% 0.50% 0.50%
UK -0.3% 1.0% 1.8% Japan (Money market rate) 0.10% 0.10% 0.10%
Japan 1.6% 0.2% 0.3%
Asia ex Japan 6.1% 6.7% 6.9%
Latin America 2.9% 3.9% 4.0% Currencies Current* 3-Month 12-Month
EMEA 3.0% 3.6% 4.0% Forecast Forecast
EUR/USD 1.30 1.32 1.25
Inflation (CPI) USD/JPY 82.12 83.00 86.00
2012 2013 2014
in % EUR/CHF 1.20 1.20 1.20
USA 2.1% 2.4% 2.6% GBP/USD 1.60 1.60 1.57
Euroland 2.5% 1.8% 1.7% EUR/GBP 0.81 0.83 0.80
UK 2.8% 2.3% 1.9%
Japan -0.1% -0.6% 1.7%
Asia ex Japan 3.9% 4.0% 4.0% Commodities Current* 3-Month 12-Month
Latin America 7.8% 7.8% 8.2% Forecast Forecast
EMEA 5.2% 5.7% 5.2% Oil (WTI) in USD 88 100 100
Gold in USD 1750 1800 1900
Current Account Balance
2012 2013 2014
in % of GDP
USA -3.2% -3.5% -3.6% Equities Current* Dividend P/E 3-Month 12-Month
Euroland 0.4% 0.5% 0.7% Yield (LTM)** Forecast Forecast
UK -2.3% -2.1% -1.8% USA (S&P 500) 1406 2.2% 13.0 1445 1500
Japan 1.0% 1.2% 1.6% Euroland (Euro Stoxx 50) 2543 4.4% 10.1 2550 2700
Asia ex Japan 1.7% 1.1% 0.7% Germany (DAX) 7292 3.5% 10.3 7350 8050
Latin America -1.1% -1.3% -1.4% UK (FTSE 100) 5787 3.8% 10.7 5930 6060
EMEA 1.8% 1.4% 0.4% Japan (Nikkei) 9389 2.0% 16.0 9400 10000
Asia ex Japan (MSCI in USD) 522 2.6% 11.0 535 595
Latin America (MSCI in USD) 3582 3.3% 11.8 3810 3960
Fiscal Balance
2012 2013 2014
in % of GDP Sovereign Rates Country 3-Month 12-Month
Current*
USA -7.2% -6.3% -5.3% CDS Forecast Forecast
Euroland -3.2% -2.6% -2.0% USA 1.67% 38.9 1.75% 2.25%
UK -7.1% -7.2% -5.4% Euroland (German Bund) 1.41% 54.7 1.60% 2.00%
Japan -10.0% -9.8% -7.8% UK 1.84% 51.7 1.75% 2.40%
Asia ex Japan -2.9% -2.8% -2.3% Japan 0.74% 79.5 0.75% 1.25%
Latin America -2.2% -1.9% -1.9%
EMEA -0.7% -0.7% -0.7%
Data Source: FactSet, Bloomberg Finance LP, Deutsche Bank Global Investment Committee forecasts as of GIC meeting on November 26, 2012.
*Current as of November 26, 2012. **LTM stands for last 12 months.
20

21. Benjamin A. Pace III
Managing Director
Benjamin Pace is Chief Investment Officer and Head of Global Investment Solutions for
Deutsche Bank Private Wealth Management in the U.S. In his role as CIO, he sits on the
PWM Global Investment Committee, providing input on the U.S. economy and capital
markets. He oversees the investment strategy and asset allocation for PWM clients in the
U.S. As Head of Global Investment Solutions, he brings together PWM’s capital markets
and investment capabilities in an effort to provide an effective and consistent experience
for clients. Mr. Pace is a member of the PWM – U.S. Executive Committee.
Mr. Pace has more than 25 years of experience in investment management. Prior to
joining Deutsche Bank in 1994, he managed equity income funds for two investment
organizations. During his tenure with those institutions, he also served as a securities
analyst with particular emphasis on the financial services and healthcare industries.
Mr. Pace earned his B.A. in economics from Columbia University and M.B.A. in finance
from New York University.
He can be reached at (212) 454-7815 or e-mailed at benjamin.pace@db.com.
Deutsche Bank 21
Private Wealth Management

22. Important notes
This document has been prepared for informational purposes only and is not an offer, or solicitation of an offer, to buy or sell any security, or a recommendation to enter into any transaction
relating to the products and services described herein. Before entering into any transaction, you should take steps to ensure that you understand and have made an independent
assessment of the appropriateness of the transaction in light of your own particular financial, legal and tax situation, investment objectives and level of risk tolerance, and you should consult
your legal and tax advisers to determine how these products and/or services may affect you.
Investments in Foreign Countries - Such investments may be in countries that prove to be politically or economically unstable. Furthermore, in the case of investments in foreign securities
or other assets, any fluctuations in currency exchange rates will affect the value of the investments and any restrictions imposed to prevent capital flight may make it difficult or impossible to
exchange or repatriate foreign currency.
Emerging Markets - Such markets may be in transitional or formative stages and thus may be significantly less stable than developed markets. Changes in emerging markets government
structures or other political instability may result in nationalization, expropriation, ad hoc regulation, or foreign investment restrictions. Emerging market investments are at risk for currency
devaluation, as well as convertibility, liquidity and transparency constraints. The high volatility and speculative nature of emerging market investments may result in both significant losses or
profits.
Foreign Exchange/Currency - Such transactions involve multiple risks, including currency risk and settlement risk. Economic or financial instability, lack of timely or reliable financial
information or unfavorable political or legal developments may substantially and permanently alter the conditions, terms, marketability or price of a foreign currency. Profits and losses in
transactions in foreign exchange will also be affected by fluctuations in currency where there is a need to convert the product's denomination(s) to another currency. Time zone differences
may cause several hours to elapse between a payment being made in one currency and an offsetting payment in another currency. Relevant movements in currencies during the settlement
period may seriously erode potential profits or significantly increase any losses.
High Yield Fixed Income Securities - Investing in high yield bonds, which tend to be more volatile than investment grade fixed income securities, is speculative. These bonds are affected by
interest rate changes and the creditworthiness of the issuers, and investing in high yield bonds poses additional credit risk, as well as greater risk of default.
Commodities - The risk of loss in trading commodities can be substantial. The price of commodities (e.g., raw industrial materials such as gold, copper and aluminum) may be subject to
substantial fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. Additionally, valuations of commodities may be
susceptible to such adverse global economic, political or regulatory developments. Prospective investors must independently assess the appropriateness of an investment in commodities in
light of their own financial condition and objectives. Not all affiliates or subsidiaries of Deutsche Bank Group offer commodities or commodities-related products and services.
This document contains “forward-looking statements”- that is, statements related to future, not past, events. In this context, forward-looking statements often address expected future
business and financial performance, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” or “will.” Forward-looking statements by their nature address
matters that are, to different degrees, uncertain. Particular uncertainties that could adversely or positively affect future results include: the behavior of financial markets, including fluctuations
in interest and exchange rates, commodity and equity prices and the value of financial assets; continued volatility and further deterioration of the capital markets; the commercial and
consumer credit environment; the impact of regulation and regulatory, investigative and legal actions; strategic actions, including acquisitions and dispositions; future integration of acquired
businesses; future financial performance of major industries; and numerous other matters of national, regional and global scale, including those of a political, economic, business and
competitive nature. These uncertainties may cause actual future results to be materially different than those expressed in our forward-looking statements.
Although this document has been carefully prepared and is based on information from sources believed to be reliable, no representation is made that it is accurate and complete. We have
no obligation to update or amend the information provided herein, and information is subject to change without notice.
Unless you are notified to the contrary, the products and services mentioned are not guaranteed by the FDIC (or by any governmental entity) and are not guaranteed by or obligations of
Deutsche Bank. These products are subject to investment risk, including possible loss of principal. The past performance of a product or service does not guarantee or predict its future
performance.
Deutsche Bank AG, including its subsidiaries and affiliates, does not provide legal, tax, or accounting advice. This communication was prepared solely in connection with the promotion or
marketing, to the extent permitted by applicable law, of the transaction or matter addressed herein, and was not intended or written to be used, and cannot be used or relied upon, by any
taxpayer for purposes of avoiding any U.S. federal tax penalties. The recipient of this communication should seek advice from an independent tax advisor regarding any tax matters
addressed herein based on its particular circumstances.
“Deutsche Bank” means Deutsche Bank AG and its affiliated companies, as the context requires. Deutsche Bank Private Wealth Management refers to Deutsche Bank’s wealth
management activities for high-net-worth clients around the world. 013345.11.08.12
Deutsche Bank 22
Private Wealth Management