Core Viewpoint - Deutsche Bank predicts that the US dollar will weaken further by 2026, with a projected decline of 10% in the trade-weighted dollar by the end of next year, indicating the end of a long dollar bull market cycle this decade [1] Group 1: Dollar Weakness Forecast - Analysts, including George Saravelos and Tim Baker, expect a slower pace of dollar weakening compared to this year [1] - The impact of former President Trump's return in early 2025 is believed to have ended, but factors such as valuation, international balance of payments dynamics, and relative monetary policy cycles support continued gradual dollar weakness [1] Group 2: Impact of AI on Dollar - The report discusses the influence of the AI boom on the dollar, identifying it as a variable that could drive bilateral risks for the currency [1] - On the optimistic side, sustained progress in AI could lead to higher growth rates and capital inflows, supporting the dollar [1] - Conversely, if the benefits of AI are realized outside the US, it could enhance global productivity and exert pressure on the dollar [1] Group 3: Potential Leadership Changes - The possibility of Kevin Hassett, an economic advisor inclined towards aggressive rate cuts, becoming the next Federal Reserve Chair could also put pressure on the dollar [1]

Core Viewpoint - The US stock market rally may be shifting, with earnings growth expanding beyond major tech companies, potentially leading the S&P 500 to reach 8,000 by the end of 2026, supported by improving earnings, steady investor interest, and ongoing corporate buybacks [1][8]. Earnings Growth - The S&P 500 has experienced a 22.7% annual growth rate since 2021, but this growth has been uneven, primarily driven by mega-cap tech companies, while other sectors have faced challenges [2]. - In Q3, S&P 500 earnings increased by 14%, with approximately two-thirds of this growth coming from companies outside the mega-cap tech sector, indicating a broadening of market gains [3]. - Earnings growth abroad reached 7.8%, the fastest in three years, although forecasts for Q4 suggest a potential earnings dip, which Deutsche Bank believes is overly pessimistic [4]. Earnings and Valuations - Deutsche Bank projects S&P 500 earnings per share to reach $320 in 2026, reflecting a 14% increase after a 10% rise in 2025 [5]. - Current valuations are around 25 times trailing earnings, which are above long-term averages, but Deutsche Bank argues that structural changes justify these elevated multiples [6]. Demand and Supply Dynamics - The demand-supply model indicates continued support for equity prices through 2026, with investor positioning allowing for increased exposure and ongoing buyback commitments from companies [7]. Sector Outlook - Deutsche Bank is overweight on Financials, Industrials, and Healthcare, citing favorable conditions for loan growth, secular demand, and priced-in risks [10]. - The bank maintains a neutral stance on mega-cap growth and tech, as well as on Energy, Materials, Consumer Cyclicals, and Utilities, due to various market conditions [11]. - On the defensive side, Deutsche Bank is underweight on REITs, Telecom, Consumer Staples, and Restaurants, highlighting concerns over risk profiles and margin pressures [12]. Conclusion - The outlook suggests that while the previous years were characterized by a narrow set of winners, 2026 could see broader market participation, alleviating concerns about a top-heavy bull market [13].

Core Viewpoint - The European Central Bank (ECB) is investigating allegations that Deutsche Bank understated balance sheet risks and misrepresented its financial stability, based on claims from a former employee regarding the bank's netting practices [1][2]. Group 1: Allegations and Investigations - Dario Schiraldi, a former Deutsche Bank employee, has made claims that the bank's balance sheet was significantly impacted by aggressive netting and off-balance-sheet accounting techniques, which inflated capital and leverage ratios, misleading regulators and markets [3]. - The ECB has initiated a review of specific allegations made by Schiraldi in a letter sent in May, focusing on how Deutsche Bank applies capital regulations and manages collateral [2][4]. - Schiraldi's letter asserts that Deutsche Bank's netting practices led to an understatement of leverage exposures by over €200 billion ($231.5 billion) in its 2024 financial statements [3]. Group 2: Deutsche Bank's Response and Legal Context - Deutsche Bank has stated that it applies netting in accordance with relevant accounting standards and aligns with common industry practices [4]. - Schiraldi is also pursuing legal action against Deutsche Bank for €152 million related to a probe that contributed to his criminal conviction in Italy [4]. - The scrutiny of Deutsche Bank comes amid ongoing legal disputes involving Schiraldi and other former employees, who were previously convicted for false accounting and market manipulation but later acquitted [5]. Group 3: Internal Audit and Leadership Scrutiny - In a civil case in Frankfurt, Schiraldi claimed that Deutsche Bank's CEO, Christian Sewing, oversaw a flawed internal audit that was pivotal in the evidence leading to his conviction [6]. - Schiraldi has requested the ECB to investigate Sewing's role in the oversight of the audit report [6].

Group 1 - Wall Street is increasingly optimistic about the stock market's potential for growth in 2026, with predictions suggesting the S&P 500 could reach 8000 points driven by the AI boom [2][3] - Deutsche Bank has set a target of 8000 points for the S&P 500 by the end of 2026, citing strong capital inflows, stock buybacks, and sustained earnings growth as key drivers [2] - The S&P 500 companies reported a 13.4% earnings growth in Q3, indicating robust performance that supports the bullish outlook for 2026 [2] Group 2 - Wells Fargo anticipates a double-digit increase in the stock market over the next 12 months, with a target of 7800 points for 2026, expecting a two-phase rebound driven by AI [3] - Morgan Stanley also predicts a strong year ahead, forecasting the S&P 500 to close at 7800 points in 2026, with the end of a rolling recession and continued policy support [2][3] - JPMorgan's baseline forecast for 2026 is 7500 points, but they believe that improved inflation prospects could push the index above 8000 points [3] Group 3 - The market is pricing in an 83% chance of a rate cut by the Federal Reserve in December, a significant increase from the previous week's 30% probability [4] - JPMorgan's chief equity strategist highlights that current high multiples reflect expectations for above-trend earnings growth and increased shareholder returns, despite concerns about an AI bubble [4] - HSBC shares a similar outlook, projecting a target of 7500 points for 2026, indicating a potential for double-digit growth akin to the late 1990s market boom [4]

Core Viewpoint - The gold market is experiencing a complex interplay of bullish and bearish factors, leading to price fluctuations at high levels, with expectations of interest rate cuts from the Federal Reserve providing core support for gold prices [1][2]. Group 1: Market Dynamics - The market's expectation for a 25 basis point rate cut by the Federal Reserve in December has risen significantly from approximately 30%-40% to over 80% due to supportive comments from key officials [1]. - Geopolitical developments, such as progress in Russia-Ukraine negotiations, have diminished gold's appeal as a safe-haven asset, contrasting with the dovish shift in the Federal Reserve's monetary policy [1]. - Despite short-term adjustments, the long-term drivers for gold and silver prices remain robust, supported by macroeconomic factors such as sovereign debt issues and central bank gold purchases [2]. Group 2: Price Predictions - Goldman Sachs forecasts that gold prices could reach $4,900 per ounce next year, driven by sustained demand from central banks and ETFs, as well as a potential influx of retail investors seeking diversification [3]. - Deutsche Bank has raised its gold price forecast for 2026 from $4,000 to $4,450 per ounce, citing stable investor flows and strong central bank demand, while also noting that total demand continues to exceed supply [4]. - The bank predicts that ETF inflows will help maintain a price floor of $3,900 for gold in the coming year, although risks remain regarding the correlation between gold and risk assets [4].

Core Insights - Gold prices have surged by 58.5% since the beginning of 2025, reaching $4159.9 per ounce, with expectations for continued growth into 2026 [1] - Deutsche Bank has raised its 2026 gold price forecast from $4000 to $4450 per ounce, suggesting potential for prices to approach $5000 due to tightening structural factors in the market [1] - The demand for gold is being supported by central bank purchases and ETF investments, which are diverting supply from the jewelry market, leading to overall demand growth outpacing supply [1] Group 1: Market Dynamics - The investment flow and technical indicators indicate that position adjustments have been completed, supporting a stable demand outlook [1] - The third-quarter supply and demand data continues to bolster central bank gold purchases, reflecting a resilient demand environment [1] - Gold is breaking historical patterns, with its trading range in 2025 being the widest since 1980, despite a strong dollar performance [1] Group 2: Supply Challenges - Mining supply recovery remains slow, with record quarterly production overshadowed by stronger official and investment demand [2] - Production disruptions at the Grasberg mine in Indonesia cast uncertainty on next year's output prospects [2] - Recycled supply has only seen a mild recovery from previous highs, influenced by a moderate macro environment and consumer expectations of rising gold prices [2]

Currency Trading Strategy - Deutsche Bank provides a trading guide for the British pound in light of the UK fiscal budget event [1] Market Focus - The report centers on the GBP (British Pound) and its potential movements related to fiscal policy [1]

Group 1 - The core message emphasizes the importance of strengthening cooperation between China and Germany, with both sides expressing a strong willingness to enhance collaboration in various sectors [1][4][8] - The recent high-level financial dialogue resulted in 27 substantive agreements, indicating a serious commitment to addressing mutual concerns and enhancing market access [4][8] - There is a notable increase in foreign direct investment (FDI) from Germany to China, reflecting a robust bilateral trade relationship despite geopolitical considerations [1][2] Group 2 - The dialogue highlighted the significance of long-term perspectives in economic development and diplomatic relations, which are crucial in the current global context [1][2] - The potential for growth in bilateral trade is optimistic, with expectations that trade corridors, particularly between Asia and Europe, will continue to expand [5][8] - The evolving trade dynamics include a shift in product structures, with Chinese companies increasingly establishing production bases in Central and Eastern Europe [6][7] Group 3 - The European Union is actively working on structural reforms to enhance its industrial competitiveness, focusing on reducing bureaucratic burdens and simplifying regulations [9][10] - Germany's recent fiscal initiatives, including a €500 billion plan for infrastructure and defense, are expected to stimulate economic growth and positively impact trade-related economies [11][12] - There is a surge in investment interest from Asian companies, particularly in sectors like infrastructure and energy transition, indicating a growing appetite for opportunities in Germany [12][14] Group 4 - China is positioned as a central player in the evolving global trade landscape, with opportunities to diversify its business and strengthen global cooperation [13][14] - The internationalization of the Renminbi is progressing, with its status as a major trade financing currency and increasing use in global transactions [15]

Core Viewpoint - Deutsche Bank predicts that the S&P 500 index will reach 8,000 points by the end of 2026, representing an 18% upside from Tuesday's closing price, driven by strong corporate earnings, ongoing cross-asset capital inflows, and profit growth fueling stock buybacks [1] Sector Analysis - The bank is overweight on the financial, industrial, and healthcare sectors [1] - The bank is underweight on real estate investment trusts, telecommunications, and consumer staples sectors [1]

Interest Rate Outlook - Deutsche Bank anticipates the Federal Reserve to reduce interest rates by 25 basis points (0.25%) in December [1]