2 October 2015 US Equity Insights 3Q results will once again highlight a divergence between a sharp profit recession at Energy, Industrials, Materials, but decent EPS growth elsewhere. 3Q won't be great for Banks ex. litigation. But Health Care, most of Consumer Discretionary and consumer exposed Tech will be good. Because of this ongoing divergence in EPS growth and also shareholder distribution coverage, we advocate a LIFO strategy, meaning that stocks last into the correction will ikely be first out, as opposed to a FIFO or YTD momentum reversal strategy. Figure 5: S&P 500 quarterly EPS & Sales growth and Net Margins by sector (3Q15 is blended with actual tor reported and consensus for the rest) Las 0 3$7,497 OH I 1 XS/ 1 4 :ra 7•4'1 :44 4.1.4970•• 14. .. a SIM 940ar Fn F. 44.19C0a. 4.... 10 4% 113% 17.9% 09% 10,46 Oft 3 311 71% 51% SS 50% V I% 83% 074 108% 4.714 30% 11% 44% .70% 33% 40% 144. 0. **Ad scv. 9. 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IlIet 310% : t UPS 1.4%.... . rim .” 3- 33 3•1' 373.:' .44 " 120% 11441 .41X44 030 00004B0 Deutsche Bank Securities Inc. Page 3 CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) CONFIDENTIAL DB-SDNY-0118498 SDNY_GM_00264682 EFTA01458538