Record, 2015-11-04

Deutsche Bank Global Public Affairs Global Political and Regulatory Risk in 2015 and 2016: What to Watch November 4, 2015 Francis J. Kelly Managing Director & Global Coordinator, Public Affairs 11/10/2015 2010 DB Blue template “There cannot be a crisis next week. My schedule is already full.”¶

Former US Secretary of State Henry Kissinger “Any idiot can face a crisis. It’s day to day living that wears you out.”
Anton Chekhov “Formula for success: rise early, work hard, strike oil.”
J. Paul Getty, US businessman Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 1 11/10/2015 2010 DB Blue template The world is moving rapidly from the model we have lived within for 25 years. The where, why and what… LONG TERM OUTLOOK:
Geopolitical events are increasingly pressuring global markets and will continue to do so for the remainder of 2015 and well into 2016.
Middle East serves as locus for key uncertainty and chaos. We continue to believe the region is at risk of remaining in turmoil for 30+ years .
We continue to see NAFTA nations as being seen as economic and political “safe havens” in large part to “Energy Renaissance.”
China is going through intense political, economic and societal transformation – all of which could potentially overwhelm the chances of a successful outcome. SHORT TERM (3-10 month) OUTLOOK:
In the coming three to six months, three key events will likely happen and have a long term positive impact on markets: ‣ Approval and implementation of Iran nuclear negotiations ‣ Congressional approval of Trans-Pacific Partnership (TPP) ‣ US will approve repeal ban on export of crude oil/natural gas Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 2 11/10/2015 2010 DB Blue template The US: Washington’s 2015-2016 agenda - what to expect and why it will be important • Despite the contrary and dramatic press accounts, Washington has been getting things done, a positive for the political process and the nation. It may have been messy but here is what they have gotten done so far this year: o Trade Promotion Authority (TPA) o A federal budget o Iran nuclear deal o Debt ceiling o Medicare Payment & CHIP funding o Homeland Security funding o Debt ceiling raise But big policy items are unfinished: o Appropriations (by December 11 th ) o Repealing oil export ban o Highway bill o Corporate Tax reform o The Trans Pacific Partnership (TPP) Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 3 11/10/2015 2010 DB Blue template US corporate tax reform: have the seeds been planted and is there a deal to be done?
The US Senate has worked on a possible tax package since January. But no clear consensus has emerged on a larger package.
The real focus is on corporate tax reform, spurred on by the inversion debate.
In the Senate, a bipartisan bill was offered to encourage corporate profits abroad to repatriate at a significantly lower rate (the Portman- Schumer bill).
In the House, a plan was offered in late July that would allow corporations to repatriate at a lower rate if they invested in “research and development” (the Boustany-Neal bill). The revenue from the deal would pay for the Highway Trust Fund – which needs money.
What is interesting for both bills is what did not happen: The White House remained silent.
Could Congress (in league with US Treasury) slip a major corporate tax report into the appropriations bill using the “Reconciliation” process? Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com Source: OMB 4 11/10/2015 2010 DB Blue template Should hedge funds and private equity funds be worried about Washington? No.
There continues to be chatter about dealing with carried interest. But chatter does not mean action and we see little actual movement toward raising the rates on carried interest through 2016.
The new “tax reform” focused on hedge funds is projected to raise $11 billion a year. Somehow this gets done by allowing the IRS to audit hedge funds and find this amount of unreported revenue annually. Good luck with that.
Private Equity has also been a focus of political chatter – maybe we see new regulation on the burgeoning “Shadow Banking” sector? Again, chatter is not action. There is little chance Congress or regulators will move aggressively in this space through 2016.
But “Big Banks” continue to take it on the chin: In an effort to raise revenue for the Highway Trust Fund, Republicans have legislation moving forward that would drop the guaranteed interest rate banks receive for “investing” in the Federal Reserve – which they are required to do by law - from 6 percent to 1.5 percent. This will result in a significant drop in revenues for some of the biggest banks in the US. Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 5 11/10/2015 2010 DB Blue template Can US banks get some regulatory relief? Taking care of small- and mid-sized banks and reforming the Fed Senator Richard Shelby (R-AL), chair of the US Senate Banking Committee, has put forward a regulatory relief bill which:
Raises the “Systemically Important” bar from $50 billion to $500 billion; Re-define small banks from $10 billion to $50 billion;
Provides an exemption for banks under $10 billion of assets from the Volcker Rule;
Requires the Federal Open Market Committee to release quarterly reports on economic conditions around the country, though the Fed chair would still testify before Congress semiannually;
Creates an independent commission to evaluate the structure of the Federal Reserve Board system, including a review of the number and structure of the Fed’s 12 districts and requires the Federal Reserve to publish a study every two years on its regulation and oversight of nonbanks;
Requires the Government Accountability Office (GAO) to study the Federal Reserve’s regulation of systemically important institutions (SIFIs);
Requires the President of the Federal Reserve Bank of New York to be nominated by the President and confirmed by the Senate. Also require3 the Fed to speed up the release of Fed minutes. Some observers have suggested this bill will go nowhere; but we would not write it off so fast. Shelby is the master of the legislative process and there is some bipartisan support already for parts of his bill. Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 6 11/10/2015 2010 DB Blue template Housing reform: 2015 be the year of GSE reform?
After initial movement on bi-partisan legislation last year, this is a dead effort as indicated by Banking Committee member and advocate for GSE reform, Senator Bob Corker (R-TN): “Congress will ignore GSE overhaul for next 16 months.”
Meanwhile, the housing market is moving on a number of fronts (we’ve seen this horror movie before): � � Fannie Mae launched their “HomeReady Mortgage” program: You can (again) use the income from non-borrower household members. Freddie and Fannie are working on a common Securitization Platform. Just for them (for now) but will eventually allow other participants. Question as to whether this is a transition to something new or simply securing the monopoly/duopoly of the GSE’s. Existing Home Sales has increased 53.9% from its lowest level of 3.45 million in July 2010. Source: Deutsche Bank Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 7 11/10/2015 2010 DB Blue template The “Americas Decades” - The energy revolution keeps moving forward, the implications are enormous
The NAFTA Bloc (US, Canada, Mexico) is emerging as a new “Super Bloc” for business, finance and energy.
Combined, the NAFTA Bloc is comprised of more than 500 million people, a $19 trillion economy and the largest energy capability in the world. Not to mention US and Canadian military superiority and reach globally.
Mexican government “got it” and amended their constitution; Canada has “gotten it” for quite some time (i.e. oil sands, Keystone Pipeline, etc.). US Congress now seeing strategic imperative (not to mention massive federal revenues).
The local, national, regional and broader geopolitical implications of greater hemispheric energy independence are extraordinary and are already creating significant policy changes – and ruptures globally (i.e. Russia, Middle East, Venezuela, China, Iran). ‣ Case in point: If the Ukrainian crisis has done anything, it has intensely focused Washington (and Mexico City and Ottawa) on the need to rapidly build out natural gas and crude oil development and export capabilities. ‣ And, in the near future, can tariffs and fees on overseas sales help deal with the US deficit? There are a growing number of members of Congress who think it can. And will. Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 8 11/10/2015 2010 DB Blue template The 2016 US election campaigns have begun… Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 9 11/10/2015 2010 DB Blue template Yes, of course, we are already talking about the 2016 presidential elections…. A multi-billion dollar race? Republican Ex-Gov. Jeb Bush (R-FL) Gov. Scott Walker (R-WI) Senator Rand Paul (R-KY) Dr. Ben Carson Senator Ted Cruz (R-TX) Gov. Chris Christie (R-NJ) Gov. John Kasich (R-OH) Senator Marco Rubio (R-FL) Senator Lindsey Graham (R-SC) Ex-Gov. George Pataki (R-NY) ex-Senator Rick Santorum (R-PA) Ex-HP CEO Carly Fiorina Ex-Gov. Bobby Jindal (R-LA) Donald Trump Ex-Gov. Jim Gilmore (R-VA Ex-Gov. Rick Perry (R-TX) Democrat Hillary Clinton Senator Bernie Sanders (D-VT) Ex-Gov. Martin O’Malley (D-MD) Harvard Professor Lawrence Lessig Sen. Elizabeth Warren (D-MA) Ex-Senator Jim Webb (D-VA) Ex-Governor Lincoln Chaffee (D-RI) Vice President Joe Biden (?) Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 10 11/10/2015 2010 DB Blue template So who would win if the general election were held today? Strangely, closer than you might think. The November 4 th RCP* average of major polls shows a surprisingly tight race between various Republican candidates and Democratic frontrunner Hillary Clinton. GOP Candidate vs. Hillary Clinton Marco Rubio Clinton +0.4 (45.0 - 44.6%) Jeb Bush Bush +1% (44.6 – 43.6%) Donald Trump Clinton +2.2% (46 – 43.8%) Ben Carson Carson +5.2% (48.6-43.4%) Carly Fiorina Fiorina +1% (43.5-42.5%) *RCP = Real Clear Politics Aggregate Poll of major polls Source: Realclearpolitics.com Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 11 11/10/2015 2010 DB Blue template How does Clinton do vs. Republican opponents? And, please, tell me what you really think of Mr. Trump Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com Source: Quinnipiac College 12 11/10/2015 2010 DB Blue template Whipsawed! Democrats may be poised to regain control of the Senate in 2016
23 seats have Republican incumbents, 7 seats with Democratic incumbents
There are 4 open seats: California, Maryland, Indiana and Nevada Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com Source: National Journal 13 11/10/2015 2010 DB Blue template And remember: The primaries are six months away… State Iowa Caucuses New Hampshire Colorado/Minnesota/New York/Utah Nevada South Carolina North Carolina Michigan Florida/Massachusetts/ Oklahoma/Tennessee/ Texas/Vermont/Virginia Louisiana Alabama/Mississippi/ Ohio Illinois/Missouri Arizona Date January 18 th January 26 th February 2 nd February 6 th February 13 th February 16 th February 23 rd March 1 st March 5 th March 8 th March 15 th March 22 nd Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 14 11/10/2015 2010 DB Blue template The geopolitical outlook: Growing regional tensions will not get any better in 2016 Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 15 11/10/2015 2010 DB Blue template Iran: US Congress will not stop nuclear deal; EU already moving forward – fast. What’s next?
P5+1 and Iran reached a deal. Big obstacle has been overcome: Enough US Senators support to ensure it can move forward.
Saudi Arabia “supports” the deal. The Saudi king was in DC last month. US has quietly promised nuclear protection and massive weapons sales.
Market implications of a deal are significant, especially for European corporates eager to get back into Iran marketplace (i.e. Italian PM Renzi already visited Tehran as has German FM).
Iran wants to build 400 four & five star hotels in next five to ten years.
But do not expect any significant oil export increase and/or sales into Iran for at least 8 – 10 months. Iran must first comply and set up systems for inspections. Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com Source: IIF; IMF 16 11/10/2015 2010 DB Blue template Yemen in crisis: a new global choke-point? -13 percent of world’s oil travels through Gulf of Aden as it travels up through Suez Canal – almost all of it heading to Europe.
Almost 8 percent of all world trade via shipping goes through Suez Canal.
Iran is seen to be trying to build a “Shia Crescent.”
Iran sees/fears being encircled by “Sunni Crescent.”
If Yemen falls completely to Houthi tribal control – de facto, becoming an Iranian satellite – what threat does it pose to Saudi Arabia?
Question: will a nuclear deal with Iran empower them regionally? Or will it further spur the Sunni nations to increase their defense efforts? Yemen: Iran Backing the Houthi rebels Somalia’s Al Shabab Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 17 11/10/2015 2010 DB Blue template Libya: Is there any hope for peace or will it become a hub for regional instability and violence? No and yes -The US/EU/NATO toppling of long-time strongman Muammar Gaddafi has led to a cycle of instability and continuous violence.
It has also led to severe cuts in oil production and loss of significant revenue.
More importantly, Gaddafi’s massive weapons stocks have directly flowed to Boko Haram in Nigeria, terrorist groups in Mali and to arm other movements in Tunisia – as well as financing them via the sales and trading of these weapons.
The US and EU seem to have no strategy to deal with the situation. White House sources tell us “it has literally fallen off the table” as an issue of focus. Is this now Egypt’s problem through which the US will send money/weapons? Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 18 Conflict in Ukraine: is it all over but for the shooting?
Moscow got what it wanted: securing the naval port in Sevastopol and creating a buffer state between Ukraine and Russia as well as keeping Kiev weak and unstable.
But there has been a cost: Sanctions are crushing the Russian economy and Crimea has become a giant money pit for Putin to pour rubles into. A complete economic mess.
However, do not exclude possibility of more violence in Ukraine or elsewhere in the region.
Still waiting for any significant financial aid or military relief from EU or US. Word to the wise: do not hold your breath.
One other conflict is now drawing in Russian troops: Syria. Russian pilots are now flying missions with Syrian Air Force. Ukraine Lines of Withdrawal Russian vs. Ukrainian Speakers in Ukraine Deutsche Bank Global Public Affairs 11/10/2015 2010 DB Blue template Francis J. Kelly francis.j.kelly@db.com Source: Washington Post; IIF, National Bank of Ukraine 19 11/10/2015 2010 DB Blue template Russia: Return of the empire or death of a nation?
Russia covers nine time zones and almost 7,000 miles end to end. -The current Russian population:143 million. With the annexation of Crimea: 146 million.
By 2030, the Russian population will have shrunk to136 million.
By 2050, it will likely have shrunk to below 120 million and perhaps as low as 115 million (roughly the size of Mexico or Philippines today).
Putin has also promised to increase military spending by $770 billion between now and 2020.
Putin has also overseen the building or reconstruction of 23,000 Russian Orthodox Churches. And urged Russians to have lots of children (offering financial incentives). Natural population growth of Russia since 1950 Birth rate Death rate Natural growth Sources: United Nations; American Enterprise Institute; Globe & Mail Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 20 11/10/2015 2010 DB Blue template Washington is watching this deal: A Sino-Russian oil and gas alliance? Russian President Putin inked a $400 billion deal with China in May 2014 Source: Gazprom Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 21 11/10/2015 2010 DB Blue template China’s Siberian energy plans: 7,000 km of new pipe Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com Source: Chatham House Paper: Through the Dragons Gate? 12/13 22 11/10/2015 2010 DB Blue template China goes big in Pakistan… $46 billion big…
China, in an effort to counter India, build additional shipping points and expand trade, has just arranged for a $46 billion investment in pipelines from one end of Pakistan to the coastal city of Gwadar.
India is not happy and we suspect al-Qaeda and ISIS in the northern region are not happy about this, either.
Will China build a naval port, too? We believe so. Where the bad guys live… Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 23 11/10/2015 2010 DB Blue template China and the evolution of revolution: Rise of radical Muslims in China’s western provinces
China now has a rapidly growing radical Islam problem: Ethnic Uyghur’s – who are Turkic speaking – feel badly repressed and left out of the Chinese economic growth.
They have become increasingly radicalized. Uyghur’s are fighting with ISIS and al- Qaeda. More importantly, they are conducting more and more terrorist strikes within China. China now is seeking to engage in Afghanistan. And they have become a key partner to Pakistan in recent years. Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 24 11/10/2015 2010 DB Blue template The new frontier: Drilling in the Arctic and race with Russia and China
Once cold and forbidding, climate change has allowed multiple countries to see it as a massive new and untapped region for natural resources and critically important geopolitical/military vantage point.
President Obama visited this week and both called for renewed climate strategy as well as ramping up Coast Guard capabilities to operate in the Arctic.
Russian President Putin has placed great emphasis on Russian military presence in the Arctic. China is also trying to lay claim to region as part of their never-ending search for oil. Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 25 11/10/2015 2010 DB Blue template Cuba: we showed you the love, now show us the money
President Obama’s historic re-opening of diplomatic relations has set the stage for potentially significant new investment opportunities in Cuba. But we stress “potentially” as the Castro Brothers now seem to be slowing considerably with respect to any reforms.
Meanwhile, the US Congress is going to make sure there is no funding of the US Embassy and will be vigilant on any new business licenses granted by US Treasury for banking or foreign trade with Cuba.
What to watch for: Pope Francis – who was critical to the success of the negotiations – just finished visit to Cuba and US. Will there be further agreements to hasten better relations. “That hoard of capitalist investor’s should be arriving…just… about… now.” Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 26 11/10/2015 2010 DB Blue template Argentina: Elections in October bring little clarity to future
The August 9 th mandatory open primaries (PASO) brought little clarity as to who will succeed President Cristina Kirchner in the October 25 th elections. She has held office since 2007 and, before that, her husband held the presidency from 2003-06.
Kirchner’s handpicked successor, current governor of Buenos Aires province, Daniel Scioli (of the Peronist faction) leads in the elections held last week. But the 2 nd and 3 rd place finishers could band together to pull off a victory.
The Argentine economy has seen zero growth this year. FDI has declined 41 percent and inflation stands at 30 percent. Voters remain deeply divided over which candidate and which economic policy to support. We expect continued problems for the foreseeable future. “You’re only going to get this much back…” Inflation and recession are clobbering the average Argentinean. Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com Source: Straftor 27 11/10/2015 2010 DB Blue template Venezuela: The spiral widens and intensifies… but there is some good news
The Venezuelan legislative elections are only one month away (December 6 th ) and the country continues to be wracked by dysfunction, corruption and shortages of food, toilet paper, medicines, etc.
The government has also banned a number of leading opposition figures from running for office and/or has placed them under house arrest.
In the first half of 2105, their were reports of 132 lootings of stores and 2,800 protests*.
Inflation is now estimated at over 800 percent, making it the highest in the world.
Meanwhile, President Maduro has revived old border disputes with Guyana and closed the border with Columbia, causing significant social unrest.
So what is the good news? There is a new and serious dialogue underway between the United States and Venezuela. Multiple high-level diplomatic visits have been undertaken in the last six months. A by-product of the US- Cuba rapprochement? *source: Venezuelan Observatory for Social Conflict Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 28 11/10/2015 2010 DB Blue template Contact: Francis J. Kelly Managing Director & Global Coordinator, Public Affairs Deutsche Bank 801 17 th Street, N.W. Suite 300 Washington, DC 20006 DC Office: 202-626-7022 NY Office: 212-250-7253 Email: francis.j.kelly@db.com This material is provided to you for informational purposes only and absent written consent from Deutsche Bank, may not be transmitted in whole or in part in any format to any other party. This material was prepared by Corporate Communications and Public Affairs within Deutsche Bank AG or one of its affiliates (collectively “Deutsche Bank”). No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the materials. This material is based upon information that Deutsche Bank considers reliable as of the date hereof. Assumptions, estimates and opinions contained in this document constitute our judgment as of the date of the document and are subject to change without notice. Deutsche Bank is not responsible for updating any of the information contained herein. This material is intended for your personal use and Deutsche Bank Is not soliciting the purchase or sale of any security or transaction, or participation in any particular trading strategy. 022545 111015 Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 29 11/10/2015 2010 DB Blue template Francis J. Kelly Managing Director & Global Coordinator, Public Affairs Head, Government & Public Affairs – North and South America Frank Kelly is Global Coordinator for Public Affairs as well as head of Government & Public Affairs for North and Latin Americas. In this role, he manages and coordinates relationships with elected officials and political and legislative bodies globally. Additionally, he heads up the Bank’s U.S. Direct Investment Advisory Group (DIAG) providing strategic counsel to non-US companies engaged in cross-border mergers and acquisitions requiring regulatory and political approvals. Mr. Kelly also serves as the Bank’s Chief Political Risk Strategist advising clients on geopolitical and domestic risk issues and their impact on markets and industry sectors. Previously, he was Head of Communications & Public Affairs – Americas overseeing legislative and regulatory matters, corporate and internal communications, branding and advertising and conferences and events for Deutsche Bank in the Western Hemisphere. Prior to joining Deutsche Bank, Mr. Kelly held senior positions at both Charles Schwab & Co. and Merrill Lynch & Co, Inc. Before joining the private sector, Mr. Kelly served at the U.S. Securities and Exchange Commission as Chief Spokesman as well as the US Department of Justice as Assistant to the Director for Policy Development. Prior to these posts, he served in both the George H. W. Bush and, earlier, the Reagan White House where he started as a writer for President Reagan. Mr. Kelly is a member of the Council on Foreign Relations and the International Institute of Strategic Studies. He serves as a member of the Board of Directors of the American Council on Germany and the Atlantic Council of the United States. Mr. Kelly, his wife, Maura, and their two living children resides in Great Falls, Virginia. Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 30

/ “There cannot be a crisis next week. My schedule is already full.”¶

Former US Secretary of State Henry Kissinger “Any idiot can face a crisis. It’s day to day living that wears you out.”
Anton Chekhov “Formula for success: rise early, work hard, strike oil.”
J. Paul Getty, US businessman Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 1 HOUSE_OVERSIGHT_026795

The world is moving rapidly from the model we have lived within for 25 years. The where, why and what… LONG TERM OUTLOOK:¶

Geopolitical events are increasingly pressuring global markets and will continue to do so for the remainder of 2015 and well into 2016.
Middle East serves as locus for key uncertainty and chaos. We continue to believe the region is at risk of remaining in turmoil for 30+ years.
We continue to see NAFTA nations as being seen as economic and political “safe havens” in large part to “Energy Renaissance.”
China is going through intense political, economic and societal transformation - all of which could potentially overwhelm the chances of a successful outcome. SHORT TERM (3-10 month) OUTLOOK:
In the coming three to six months, three key events will likely happen and have a long term positive impact on markets: • Approval and implementation of Iran nuclear negotiations • Congressional approval of Trans-Pacific Partnership (TPP) • US will approve repeal ban on export of crude oil/natural gas Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 2 HOUSE_OVERSIGHT_026796

The US: Washington’s 2015-2016 agenda - what to expect and why it will be important • Despite the contrary and dramatic press accounts, Washington has been getting things done, a positive for the political process and the nation. It may have been messy but here is what they have gotten done so far this year: Trade Promotion Authority (TPA) A federal budget Iran nuclear deal Debt ceiling Medicare Payment & CHIP funding Homeland Security funding Debt ceiling raise But big policy items are unfinished: Appropriations (by December 11th) Repealing oil export ban Highway bill Corporate Tax reform The Trans Pacific Partnership (TPP) / Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 3 HOUSE_OVERSIGHT_026797¶

US corporate tax reform: have the seeds been planted and is there a deal to be done?¶

The US Senate has worked on a possible tax package since January. But no clear consensus has emerged on a larger package.
The real focus is on corporate tax reform, spurred on by the inversion debate.
In the Senate, a bipartisan bill was offered to encourage corporate profits abroad to repatriate at a significantly lower rate (the Portman- Schumer bill).
In the House, a plan was offered in late July that would allow corporations to repatriate at a lower rate if they invested in “research and development” (the Boustany-Neal bill). The revenue from the deal would pay for the Highway Trust Fund - which needs money.
What is interesting for both bills is what did not happen: The White House remained silent.
Could Congress (in league with US Treasury) slip a major corporate tax report into the appropriations bill using the “Reconciliation” process? Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com Projected Tax Revenue (Fiscal Year 2015) Excise Taxes 3% Customs Duties 1% MIsc. -—% Corporate Income - Taxes 13% Payroll Taxes / 32% /
Individual Income Taxes 46% Source: OMB 4 HOUSE_OVERSIGHT_026798

Should hedge funds and private equity funds be worried about Washington? No.¶

There continues to be chatter about dealing with carried interest. But chatter does not mean action and we see little actual movement toward raising the rates on carried interest through 2016.
The new “tax reform” focused on hedge funds is projected to raise $11 billion a year. Somehow this gets done by allowing the IRS to audit hedge funds and find this amount of unreported revenue annually. Good luck with that.
Private Equity has also been a focus of political chatter - maybe we see new regulation on the burgeoning “Shadow Banking” sector? Again, chatter is not action. There is little chance Congress or regulators will move aggressively in this space through 2016.
But “Big Banks” continue to take it on the chin: In an effort to raise revenue for the Highway Trust Fund, Republicans have legislation moving forward that would drop the guaranteed interest rate banks receive for “investing” in the Federal Reserve - which they are required to do by law - from 6 percent to 1.5 percent. This will result in a significant drop in revenues for some of the biggest banks in the US. Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 5 HOUSE_OVERSIGHT_026799

Can US banks get some regulatory relief? Taking care of small- and mid-sized banks and reforming the Fed Senator Richard Shelby (R-AL), chair of the US Senate Banking Committee, has put forward a regulatory relief bill which:¶

Raises the “Systemically Important” bar from $50 billion to $500 billion; Re-define small banks from $10 billion to $50 billion;
Provides an exemption for banks under $10 billion of assets from the Volcker Rule;
Requires the Federal Open Market Committee to release quarterly reports on economic conditions around the country, though the Fed chair would still testify before Congress semiannually;
Creates an independent commission to evaluate the structure of the Federal Reserve Board system, including a review of the number and structure of the Fed’s 12 districts and requires the Federal Reserve to publish a study every two years on its regulation and oversight of nonbanks;
Requires the Government Accountability Office (GAO) to study the Federal Reserve’s regulation of systemically important institutions (SIFls);
Requires the President of the Federal Reserve Bank of New York to be nominated by the President and confirmed by the Senate. Also require3 the Fed to speed up the release of Fed minutes. Some observers have suggested this bill will go nowhere; but we would not write it off so fast. Shelby is the master of the legislative process and there is some bipartisan support already for parts of his bill. Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 6 HOUSE_OVERSIGHT_026800

Housing reform: 2015 be the year of GSE reform? /¶

After initial movement on bi-partisan legislation last year, this is a dead effort as indicated by Banking Committee member and advocate for GSE reform, Senator Bob Corker (R-TN): “Congress will ignore GSE overhaul for next 16 months.
Meanwhile, the housing market is moving on a number of fronts (we’ve seen this horror movie before:

Fannie Mae launched their “HomeReady Mortgage” program: You can (again) use the income from non-borrower household members.
Freddie and Fannie are working on a common Securitization Platform. Just for them (for now) but will eventually allow other participants. Question as to whether this is a transition to something new or simply securing the monopoly/duopoly of the GSE’s. Existing Home Sales (in millions) Existing Home Sales has increased 53.9% from its lowest level of 3.45 million in July 2010. Deutsche Bank Global Public Affairs Francis J. Kelly /2/1/2005 francis.j.kelly@db.com 8/1/2005 2/1/2006 2/1/2007 8/1/2007 2/1/2008 8/1/2008 8/1/2009 2/1/2010 8/1/2010 2/1/2011 8/1/2011 2/1/2012 8/3/2012 8/1/2013 2/1/2014 8/1/2014 2/2/2015 8/3/2015 Source: Deutsche Bank 7 HOUSE_OVERSIGHT_026801

The “Americas Decades” - The energy revolution keeps moving forward, the implications are enormous /¶

The NAFTA Bloc (US, Canada, Mexico) is emerging as a new “Super Bloc” for business, finance and energy.
Combined, the NAFTA Bloc is comprised of more than 500 million people, a $19 trillion economy and the largest energy capability in the world. Not to mention Us and Canadian military superiority and reach globally.
Mexican government “got it” and amended their constitution; Canada has “gotten it” for quite some time (i.e. oil sands, Keystone Pipeline, etc.). US Congress now seeing strategic imperative (not to mention massive federal revenues).
The local, , national, regional and broader geopolitical implications of greater hemispheric energy independence are extraordinary and are already creating significant policy changes - and ruptures globally (i.e. Russia, Middle East, Venezuela, China, Iran). Case in point: If the Ukrainian crisis has done anything, it has intensely focused Washington and Mexico City and Ottawa) on the need to rapidly build out natural gas and crude oil development and export capabilities. • And, in the near future, can tariffs and fees on overseas sales help deal with the US deficit? There are a growing number of members of Congress who think it can. And will. Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 8 HOUSE_OVERSIGHT_026802

The 2016 US election campaigns have begun… Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 9 HOUSE_OVERSIGHT_026803¶

Yes, of course, we are already talking about the 2016 presidential elections… A multi-billion dollar race? REPUBLICAN Ex-Gov. Jeb Bush (R-FL) Gov. Scott Walker (R-WI) Senator Rand Paul (R-KY) Dr. Ben Carson Senator Ted Cruz (R-TX) Gov. Chris Christie (R-NJ) Gov. John Kasich (R-OH) Senator Marco Rubio (R-FL) Senator Lindsey Graham (R-SC) Ex-Gov. George Pataki (R-NY) ex-Senator Rick Santorum (R-PA) Ex-HP CEO Carly Fiorina Ex-Gov. Bobby Jindal (R-LA) Donald Trump Ex-Gov. Jim Gilmore (R-VA Ex-Gov. Rick Perry (R-TX) Deutsche Bank Francis J. Kelly Global Public Affairs francis.j.kelly@db.com DEMOCRAT Hillary Clinton Senator Bernie Sanders (D-VT) Ex-Gov. Martin O’Malley (D-MD) Harvard Professor Lawrence Lessig Sen. Elizabeth Warren (D-MA) Ex-Senator Jim Webb (D-VA) Ex-Governor Lincoln Chaffee (D-RI) Vice President Joe Biden (?) 2016¶

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So who would win if the general election were held today? Strangely, closer than you might think. The November 4th RCP* average of major polls shows a surprisingly tight race between various Republican candidates and Democratic frontrunner Hillary Clinton. GOP Candidate Marco Rubio Jeb Bush Donald Trump Ben Carson Carly Fiorina vs. Hillary Clinton Clinton +0.4 (45.0 - 44.6%) Bush +1% (44.6 - 43.6%) Clinton +2.2% (46 - 43.8%) Carson +5.2% (48.6-43.4%) Fiorina +1% (43.5-42.5%) *RCP = Real Clear Politics Aggregate Poll of major polls Source: Realclearpolitics.com Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 11 HOUSE_OVERSIGHT_026805¶

How does Clinton do vs. Republican opponents? And, please, tell me what you really think of Mr. Trump Quinnipiac National Poll Released August 27, 2015 What is the first word that come to mind when you think of sname?? Clinton Bush 1 liar Bush 2 dishonest family 3 untrustworthy honest 4 experience weak 5 strong brother 6 Bill dynasty 7 woman experience 8 smart Florida 9 Crook politician 10 untruthful republican Trump arrogant blowhard idiot businessman clown honest ego money outspoken crazy Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com Quinnipiac Swing State Poll General Election Spreads Released August 20, 2015 Florida Clinton Biden Sanders Bush 11 13 19 Rubio 12 6 16 Ohio Clinton Biden Sanders Bush 2 3 6 Rubio 2 1 8 Pennsylvania Clinton Biden Sanders Bush 3 1 8 Rubio 7 3 12 Trump 2 3 Trump 5 10 2 Trump 5 8 3 Red/blue numbers indicate R/D candidate lead by that number of points. For example, the poll showed Bush leading Clinton by 11% in Florida Source: Quinnipiac College 12 HOUSE_OVERSIGHT_026806¶

Whipsawed! Democrats may be poised to regain control of the Senate in 2016 Republican-Held Seats Democratic-Held Seats Open Seats No Election in 2016 WA MT ND VT ME OR MN ID SD WI NY WY MI NH MA CT RI IA NE NV UT IL OH IN WV CO CA PA VA NJ SIL DE MD KS MO KY AZ TN NC OK NM AR SC MS AL GA AK TX LA HI FL¶

23 seats have Republican incumbents, 7 seats with Democratic incumbents
There are 4 open seats: California, Maryland, Indiana and Nevada Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com Source: National Journal 13 HOUSE_OVERSIGHT_026807

And remember: The primaries are six months away… / State lowa Caucuses New Hampshire Colorado/Minnesota/New York/Utah Nevada South Carolina North Carolina Michigan Florida/Massachusetts/ Oklahoma/Tennessee/ Texas/Vermont/Virginia Louisiana Alabama/Mississippi/ Ohio Illinois/Missouri Arizona Date January 18th January 26th February 2nd February 6th February 13th February 16th February 23rd March 1st March 5th March 8th March 15th March 22nd Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 14 HOUSE_OVERSIGHT_026808¶

The geopolitical outlook: Growing regional tensions will not get any better in 2016 THE SECTARIAN BALANCE OF POWER IN THE MIDDLE EAST MOROCCO JORDAN- LTPT SUDAN TURKEY SYRIA IRAO IRAN KUWAIT- BAHRAIN_ QATAR UAE SAUDI ARABIA YEMEN PAY Saudi-led Arab camp Iran-led Shiite camp Non-Arab Sunni states Battlegrounds Copyright BASTA DUAS - CARAS ORVO QUER WEACHMENT. LA DILMAL FERA DILM Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 15 HOUSE_OVERSIGHT_026809¶

Iran: US Congress will not stop nuclear deal; EU already moving forward - fast. What’s next? Real GDP Growth¶

P5+1 and Iran reached a deal. Big percent obstacle has been overcome: Enough US 0- Senators support to ensure it can move forward.
Saudi Arabia “supports” the deal. The Ian. Saudi king was in DC last month. US has quietly promised nuclear protection and massive weapons sales.
Market implications of a deal are -6 -7 2006/07 2008/09 2010/11 significant, especially for European corporates eager to get back into Iran exports in $ billion 140 marketplace (i.e. Italian PM Renzi already visited Tehran as has German FM).
Iran wants to build 400 four & five star hotels in next five to ten years.
But do not expect any significant oil export increase and/or sales into Iran for at least 8 - 10 months. Iran must first comply and set up systems for inspections. 120 100 80 60 40 20 • MENA • Others • Turkey • Japan & Korea • China & India • EU 0 IIF Forecast Agreement No Agreement 2012/13 2014/15 2016/17 T 2007 2008 2009 2010’ 2011 Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 2012 2013’ 2014 Source: IIF; IMF 16 HOUSE_OVERSIGHT_026810

Yemen in crisis: a new global choke-point? -13 percent of world’s oil travels through Gulf of Aden as it travels up through Suez Canal - almost all of it heading to Europe.¶

Almost 8 percent of all world trade via shipping goes through Suez Canal.
Iran is seen to be trying to build a “Shia Crescent.”
Iran sees/fears being encircled by “Sunni Crescent.”
If Yemen falls completely to Houthi tribal control - de facto, becoming an Iranian satellite - what threat does it pose to Saudi Arabia?
Question: will a nuclear deal with Iran empower them regionally? Or will it further spur the Sunni nations to increase their defense efforts? Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com Syria Lebanon Alexandria few l Israel Jordan Cairo Iraq Egypt Jeddah Fled Sea Sudan Eritrea Sane Djibouti Ethiopia uth Sudan Uganda Mashhad Estahan Afgl dasrah Iran Saudi Arabia Yemen Gulf of United Arab Emirates Muscat Oman Yemen: Iran Backing the Houthi rebels Arab Somalia’s Al Shabab Somalia 17 HOUSE_OVERSIGHT_026811

Libya: Is there any hope for peace or will it become a hub for regional instability and violence? No and yes Mediterranean Sea Al Jurf EPSO, relacian basin TUNISIA Tripoli -The US/EU/NATO toppling of long-time strongman Muammar Gaddafi has led to a cycle of instability and continuous violence.¶

It has also led to severe cuts in oil production and loss of significant revenue.
More importantly, Gaddafi’s massive weapons stocks have directly flowed to Boko Haram in Nigeria, terrorist groups in Mali and to arm other movements in Tunisia - as well as financing them via the sales and trading of these weapons.
The US and EU seem to have no strategy to deal with the situation. White House sources tell us “it has literally fallen off the table” as an issue of focus. Is this now Egypt’s problem through which the US will send money/weapons? risa el Hariga (Tobruk al As sarah Nakhla EGYPT Elephant Libya oil and natural gas infrastructure — Oil pipeline
Natural aas pipeline Oil and natural gas field • Oil refinery A LNG terminal — Por Libya total oil production (1980-2013) thousand barrels per day 2,000 1,750 1,500 1,250 1.000 750 500 250 1980 1985 1990 eia Source: U.S. Energy Information Administration Murzug basin LIBYA Aouzou Strip CHAD SUDAN 200 Miles 100 200 Kilometers 1995 — total oil production 2000 2005 2010 Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 18 HOUSE_OVERSIGHT_026812

Conflict in Ukraine: is it all over but for the shooting?¶

Moscow got what it wanted: securing the naval port in Sevastopol and creating a buffer state between Ukraine and Russia as well as keeping Kiev weak and unstable.
But there has been a cost: Sanctions are crushing the Russian economy and Crimea has become a giant money pit for Putin to pour rubles into. A complete economic mess.
However, do not exclude possibility of more violence in Ukraine or elsewhere in the region.
Still waiting for any significant financial aid or military relief from EU or US. Word to the wise: do not hold your breath.
One other conflict is now drawing in Russian troops: Syria. Russian pilots are now flying missions with Syrian Air Force. Ukraine Lines of Withdrawal LGLIDE GrEET LION SO TET! Grad multiple rocket dumeriet Tornado, Uragar Tochka artillery rockets and missile systems Stavyansk Severodonetsk Luhansk Debaltseve UKRAINE Mariupol Sea of Azov 2e Un 50 km Copyright Stratfor 2015 umnctrattor.romm esri Russian vs. Ukrainian Speakers in Ukraine Warsaw BELARUS Percentage of population that identified Russian as their native language (2001 census) POLAND 10% 20 30 50% Chernobyl RUSSIA •LVIV

Kiev Kharkiv • SLOVAKIA HUNGARY UKRA ROMANIA MOLDOV Dnipropetrovsk Donetsk 100 Sea of Агой MILES UKRAINE RUSSIA
Moscow Odessa Crimea Sevastopol * Sochi, Source: Washington Post; IIF, National Bank of Ukraine Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 19 HOUSE_OVERSIGHT_026813

Russia: Return of the empire or death of a nation?¶

Russia covers nine time zones and almost 7,000 miles end to end. -The current Russian population:143 million. With the annexation of Crimea: 146 million.
By 2030, the Russian population will have shrunk to136 million.
By 2050, it will likely have shrunk to below 120 million and perhaps as low as 115 million (roughly the size of Mexico or Philippines today).
Putin has also promised to increase military spending by $770 billion between now and 2020.
Putin has also overseen the building or reconstruction of 23,000 Russian Orthodox Churches. And urged Russians to have lots of children (offering financial incentives). Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com Natural Population Growth of Russia 30 25 20 births Collapse ofU.S.s.R Per 1.000 Persons 15 Natural Growth Deaths -10 Natural population growth of Russia since 1950 • Birth rate Death rate — Natural growth Sources: United Nations; American Enterprise Institute; Globe & Mail 20 HOUSE_OVERSIGHT_026814

Washington is watching this deal: A Sino-Russian oil and gas alliance? Russian President Putin inked a $400 billion deal with China in May 2014 URENGOY NEVARTOVSK Yurabchen-Tokhorshaye Sakhall - OTOMSK KRASNOYARSK OSIBIRSK O PROSKOKOVO A NOVOKUZNETSK RNAUL C CABAKAN BrYSKI O CORNO-ALTAISK TO GHINA- CHINA Deutsche Bank Global Public Affairs Sobinsko Palginshaye O BOGUCHANY | NIZHNAYA POYMA 1A -O, Koryklinskoye L BALAGANSK IRKUTSKO ULAN-BATOR O MONGOLIA Francis J. Kelly francis.j.kelly@db.com Chayandinskoye (3 CHITA SKOVORODINO KOMSOMOLSK ON-ANUA, Malos tinskoye L UGS Facility LAGOVESHCHENSK -ENROBIDZHAN TO CHINA TO CHINA CHINA KORSAKON KHABARDVSK TO ASH-PACIFIC O DALNERECHENSK ) VLADIVO: TO KOREA A ASIA-PACIFI Operating gas pipelines Pipeline gas supply Gas pipelines under construction • Gas trunkine system from Yakutia and the Irkutsk Region to Vladivostok Gas production centers Krasnoyarsk Yakutia Sakhalin Projected gas processing plants and gas chemical facilities Fields NORTH KOREA Source: Gazprom 21 HOUSE_OVERSIGHT_026815¶

China’s Siberian energy plans: 7,000 km of new pipe KAZAKHSTAN TURKMEN-UZBEK- KAZAKH PIPELINE _KYRGYSTAN Horgos Lunnan XINJIANG : ALTAI PIPELINE Irkutsk MONGOLIA RUSSIA § Urumqi Shanshan Dunhuang Golmud XIZANG INDIA Pipelines • Existing -——• Under construction¶

Planned —*== Proposed
WEP 2 WEP 3 LNG Operating Under construction or planned Deutsche Bank Global Public Affairs XBHUTẦN MYANMAR Francis J. Kelly francis.j.kelly@db.com HEILONGJA Daqing Harbin Shenyang WEST.- EAST PIPELINES NEIMENGGU Tangshan ENG Belling Yinchuan Xining SHANXI QINGHAI Jingbian HEBEL, Dagang ANDONG NORTH KOREA Dalian LNG / Qingdao LNG SOUTH KOREA Lanzhou •GANSU • Xi’an ” SHAANXI Dazhou “Zhengzhou HENAN • Jiangsu LNG Chengdu SICHUAN No Nanjing • Shanghai / Shanghai LNG Wuhan . Chongqing. 1 LIZHOU • Guiyang YUNNAN GUANGX! Kunming VIETNAM ¡LAOS LANG O Zhejiang LNG • Nanchang… Charigsha HAN GX! Fuz hou Fujian LNG /Shaoguan • Nanning FUJIAN Xiamen TAIWAN • Shantou LNG Guangdong LNG Zhuhai LNG Beihai LNG O Hainan LNG Source: Chatham House Paper: Through the Dragons Gate? 12/13 22 HOUSE_OVERSIGHT_026816

China goes big in Pakistan… $46 billion big…¶

China, in an effort to counter India, build additional shipping points and expand trade, has just arranged for a $46 billion investment in pipelines from one end of Pakistan to the coastal city of Gwadar.
India is not happy and we suspect al-Qaeda and ISIS in the northern region are not happy about this, either.
Will China build a naval port, too? We believe so. — Gwadar-Kashgar route 500km 250 miles д Kashgar XINJIANG PAKISTANT ADMINISTERED KASHMIR - Where the bad guys live. Islamabad’ AFGHANISTAN CHINA Lahore o PAKISTAN INDIAN ADMINISTERED KASHMIR BALOCHISTAN INDIA Gwadaro *Karachi Arabian Sea Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 23 HOUSE_OVERSIGHT_026817

China and the evolution of revolution: Rise of radical Muslims in China’s western provinces RUSSIA Lake / Baikal KAZAKHSTAN Beikhash Harbin. / /TURKM MONGOLIA Urumqi, KYR Time Aara Findi IRAN / AFG. Indian claim Lanzhou Ar hual Contoot Comecudra Lhasa NEPAL Chengdu Chongqing INDIA Arabian Sea Shenyang, dinnuanggao BENING * Tianjin Dalian s KOR Qingdao / Yellow Xian, Zhengzhoud Sea Nanjing, Shanghai Wuhan. Ningbo, East China Sea Taipei Guangzhou / Taiwan i long Kang t. A.M.¶

China now has a rapidly growing radical Islam problem: Ethnic Uyghur’s - who are Turkic speaking - feel badly repressed and left out of the Chinese economic growth.
They have become increasingly radicalized. Uyghur’s are fighting with ISIS and al- Qaeda. More importantly, they are conducting more and more terrorist strikes within China. China now is seeking to engage in Afghanistan. And they have become a key partner to Pakistan in recent years. Deutsche Bank Francis J. Kelly Global Public Affairs francis.j.kelly@db.com 24 HOUSE_OVERSIGHT_026818

The new frontier: Drilling in the Arctic and race with Russia and China¶

Once cold and forbidding, climate change has allowed multiple countries to see it as a massive new and untapped region for natural resources and critically important geopolitical/military vantage point.
President Obama visited this week and both called for renewed climate strategy as well as ramping up Coast Guard capabilities to operate in the Arctic.
Russian President Putin has placed great emphasis on Russian military presence in the Arctic. China is also trying to lay claim to region as part of their never-ending search for oil. OBAMA STOP SHELL GREENPEACE ALASKA Prudhoe Bay- oil and gas field Chukchi Sea CANADA ARCTIC CIRCLE Beaufort Area with potentially Sea more than 100 trillion cubic feet of natural gas and over 10 billion barrels of oil. Arctic Ocean Area leased to BP North Pole RUSSIA Tazovskoye: oil and gas field Kara Sea GREENLAND DENMARK ICELAND Source: U.S. Geological Survey Norwegian Sea Areas with potentially more than 100 trillion cubic feet of natural gas and up to 10 billion barrels of oil. Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 25 HOUSE_OVERSIGHT_026819

Cuba: we showed you the love, now show us the money /¶

President Obama’s historic re-opening of diplomatic relations has set the stage for potentially significant new investment opportunities in Cuba. But we stress “potentially” as the Castro Brothers now seem to be slowing considerably with respect to any reforms.
Meanwhile, the US Congress is going to make sure there is no funding of the Us Embassy and will be vigilant on any new business licenses granted by US Treasury for banking or foreign trade with Cuba.
What to watch for: Pope Francis - who was critical to the success of the negotiations - just finished visit to Cuba and US. Will there be further agreements to hasten better relations. R. CASTRO “That hoard of capitalist investor’s should be arriving…just… about… now.” Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 26 HOUSE_OVERSIGHT_026820

Argentina: Elections in October bring little clarity to future¶

The August gth mandatory open primaries (PASO) brought little clarity as to who will succeed President Cristina Kirchner in the October 25th elections. She has held office since 2007 and, before that, her husband held the presidency from 2003-06.
Kirchner’s handpicked successor, current governor of Buenos Aires province, Daniel Scioli (of the Peronist faction) leads in the elections held last week. But the 2nd and 3ra place finishers could band together to pull off a victory.
The Argentine economy has seen zero growth this year. FDI has declined 41 percent and inflation stands at 30 percent. Voters remain deeply divided over which candidate and which economic policy to support. We expect continued problems for the foreseeable future. BILLIONS USD 14 12 10 8 $11.8 $12 $7.3 Repsol Oil Co. Paris Club Multilateral funding organizations Private debt tenants “You’re only going to get this much back…” Inflation and recession are clobbering the average Argentinean. $4.8 0 2014 2015 2016 2017 Source: Straftor Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 27 HOUSE_OVERSIGHT_026821

Venezuela: The spiral widens and intensifies… but there is some good news /¶

The Venezuelan legislative elections are only one month away (December 6th) and the country continues to be wracked by dysfunction, corruption and shortages of food, toilet paper, medicines, etc.
The government has also banned a number of leading opposition figures from running for office and/or has placed them under house arrest.
In the first half of 2105, their were reports of 132 lootings of stores and 2,800 protests*
Inflation is now estimated at over 800 percent, making it the highest in the world.
Meanwhile, President Maduro has revived old border disputes with Guyana and closed the border with Columbia, causing significant social unrest.
So what is the good news? There is a new and serious dialogue underway between the United States and Venezuela. Multiple high-level diplomatic visits have been undertaken in the last six months. A by-product of the US- Cuba rapprochement? *source: Venezuelan Observatory for Social Conflict Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 28 HOUSE_OVERSIGHT_026822

Contact: Francis J. Kelly Managing Director & Global Coordinator, Public Affairs Deutsche Bank 801 17th Street, N.W. Suite 300 Washington, DC 20006 DC Office: 202-626-7022 NY Office: 212-250-7253 Email: francis.j.kelly@db.com This material is provided to you for informational purposes only and absent written consent from Deutsche Bank, may not be transmitted in whole or in part in any format to any other party. This material was prepared by Corporate Communications and Public Affairs within Deutsche Bank AG or one of its affiliates (collectively “Deutsche Bank”). No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the materials. This material is based upon information that Deutsche Bank considers reliable as of the date hereof. Assumptions, estimates and opinions contained in this document constitute our judgment as of the date of the document and are subject to change without notice. Deutsche Bank is not responsible for updating any of the information contained herein. This material is intended for your personal use and Deutsche Bank Is not soliciting the purchase or sale of any security or transaction, or participation in any particular trading strategy. 022545 111015 Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 29 HOUSE_OVERSIGHT_026823¶

Francis J. Kelly Managing Director & Global Coordinator, Public Affairs Head, Government & Public Affairs - North and South America Frank Kelly is Global Coordinator for Public Affairs as well as head of Government & Public Affairs for North and Latin Americas. In this role, he manages and coordinates relationships with elected officials and political and legislative bodies globally. Additionally, he heads up the Bank’s U.S. Direct Investment Advisory Group (DIAG) providing strategic counsel to non-US companies engaged in cross-border mergers and acquisitions requiring regulatory and political approvals. Mr. Kelly also serves as the Bank’s Chief Political Risk Strategist advising clients on geopolitical and domestic risk issues and their impact on markets and industry sectors. Previously, he was Head of Communications & Public Affairs - Americas overseeing legislative and regulatory matters, corporate and internal communications, branding and advertising and conferences and events for Deutsche Bank in the Western Hemisphere. Prior to joining Deutsche Bank, Mr. Kelly held senior positions at both Charles Schwab & Co. and Merrill Lynch & Co, Inc. Before joining the private sector, Mr. Kelly served at the U.S. Securities and Exchange Commission as Chief Spokesman as well as the US Department of Justice as Assistant to the Director for Policy Development. Prior to these posts, he served in both the George H. W. Bush and, earlier, the Reagan White House where he started as a writer for President Reagan. Mr. Kelly is a member of the Council on Foreign Relations and the International Institute of Strategic Studies. He serves as a member of the Board of Directors of the American Council on Germany and the Atlantic Council of the United States. Mr. Kelly, his wife, Maura, and their two living children resides in Great Falls, Virginia. Deutsche Bank Global Public Affairs Francis J. Kelly francis.j.kelly@db.com 30 HOUSE_OVERSIGHT_026824¶

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