The House ViewDeutsche BankResearchA balancing actmarion.laboure@db.comcassidy.ainsworth-grace@db.comjim.reid@db.comFebruary 2024IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. MCI (P) 041/10/2023. UNTIL 19th MARCH 2021INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.#PositiveImpactDistributed on: 20/02/2024 12:28:08 GMT7T2se3r0Ot6kwoPaMonth ReviewThe views in this publication are informed by Deutsche Bank’s Global Strategy Group, which advises management and clients on broad market risks and global economic and financial developments. The views and forecasts of the group, which consists of senior research staff, may occasionally differ from those disseminated by their research colleagues.Sources: Bloomberg Finance LP, Reuters, Financial Times, Business Insider.Deutsche Bank Research | thehouseview@list.db.com | http://houseview.research.db.com | The House View February 20242The House View, 20 February 2024The views in this publication are informed by Deutsche Bank’s Global Strategy Group, which advises management and clients on broad market risks and global economic and financial developments. The views and forecasts of the group, which consists of senior research staff, may occasionally differ from those disseminated by their research colleagues.AI continues to be one of the most profound developments of our lifetimes, and I continue to believe it has the ability to push US productivity growth comfortably above 3% p.a. by the end of this decade. There will be hiccups along the way, but with Nvidia already up +47% YTD (the best in the entire S&P 500), and now the 3rd largest company in the world, it is clear that the enthusiasm for AI is undimmed.The recent performance of the Magnificent Seven has helped ease financial conditions substantially, and our economists have boosted their US growth forecasts notably in recent weeks. But even with this upgrade, the read through to Europe is not expected to be significant, with Euro Area growth ‘only’ up two-tenths at DB to 0.4% in 2024. In Germany, the weak data so far this year means that had it not been for the US/Europe upgrade, it would have been downgraded further from our below-consensus -0.2% for 2024. The contrast between Germany and the US at the moment is stark. But with US growth surprising on the upside, there remain signs of inflation persistence. 3-month core CPI is running at 4.0% on an annualised basis, which has led investors to push back the timing of rate cuts from the Fed. By contrast in Europe, underlying price pressures appear weaker, and our economists expect the ECB to cut rates at the meeting-after-next in April. Could we have the Fed battling with sticky inflation this year, just as Europe and China are seeking to combat more disinflationary forces? That would have currency implications, and...
