RESEARCH WEEKLY MUCH ADO ABOUT VERY LITTLE · growth rates for August in all the big a solidly positive month -on month 12 October FOMC Minutes The minutes of the Federal Open Market

Julius Baer Research | Please find important legal information at the end of this document.

MONDAY, 10 OCTOBER 2016; 17:15 CET 1/19

RESEARCH WEEKLY MUCH ADO ABOUT VERY LITTLE

CONTENT

Stories of the week

Eurozone: Growth surprises trigger

tapering speculation Brexit: Political capital-building

drives pound lower Q3 2016 earnings season: Flat

outlook Nominal risks in the bond market Gold: Sell-off reveals vulnerability

Ideas of the week

• Stock of the week: RELX (Buy)

• Bonds: Latest issues of Societe

Generale (Buy)

• Technical idea: Valeo (Buy)

Number of the week

72

Number of months in a row with

positive totals of new US non-farm

payrolls created, from October 2010

to September 2016.

Finance Talk

Next Generation

Click on image to access video stream

www.juliusbaer.com/podcasts

EDITORIAL

• US presidential elections and “hard Brexit” concerns over-

shadow the kick-off of the Q3 earnings season.

• We recommend to ignore the political noise and to focus on

fundamentals, which in our view remain rather supportive

for risky assets.

In Europe politicians continue to work on an appropriate exit

of Britain from the EU. “Hard Brexit”, “soft Brexit” or some-

thing half-baked? Prime Minister May clearly signalled last

week that she prefers a clean break from the single market in

favour of independence in immigration matters, rather than

the reverse. Consequently she announced that Article 50 of

the Lisbon treaty will be triggered in March next year, which

will mark the starting point of the two-year exit negotiation

process. Against this background German Chancellor Merkel

has warned against undermining the EU’s fundamental prin-

ciples and ruled out any “comfortable” deals for the UK. We

recognise the increased risk of a “hard Brexit” and adjust our

short-term pound outlook downward.

Over in the US, all eyes were on the second presidential de-

bate, which was characterised by fierce personal attacks and

little substance. Elaborating on further details would be a

waste of time. The bottom line is that Clinton remains the

favourite for the presidency. Meanwhile, equity markets

continue to climb the wall of worry and regardless of the

outcome of the US election and Brexit, we see little reason

why this should change anytime soon. We recommend to

ignore the political background music and focus on funda-

mentals, which continue to be relatively encouraging. Tues-

day afternoon, Alcoa will kick off the US earnings season. The

market is looking for -2% earnings erosion against the same

period last year (after -3% in Q2 and -7% in Q1). Stripping

out energy stocks and currency headwinds, the market is

looking for a mid-single-digit earnings increase. In light of

the positive earnings revisions we have seen so far this year,

we would not be surprised to see an even better growth rate.

For Q4 we expect a further growth acceleration, which should

also continue next year.

Against this background, we continue to warm up for cyclical

stocks. Last week, we upgraded the auto sector to Over-

weight. Our chartists recommend Valeo and based on fun-

damentals we have upgraded Daimler from Hold to Buy.

Patrik Lang, CFA

KEY DATES 11 October

Start of the earnings season Q3’16

Alcoa will start, as usual, the reporting

of US earnings for the past quarter

among the listed major corporations.

Find our earnings season outlook on

p.5.

12 October

Eurozone industrial production

After strongly rebounding monthly

growth rates for August in all the big

four eurozone economies, we expect

overall industrial production to report

a solidly positive month-on-month

growth rate of at least 1.5%.

12 October

FOMC Minutes

The minutes of the Federal Open

Market Committee (FOMC) are

expected to offer more insights on the

three dissenters to the 21 September

‘hold’ stance and what is needed for a

rate hike.

13 &14 October

Chinese macro data

The first part of the September data

should confirm a fragile economic

stability with weaker trade data but

also ample credit supply. Higher

producer prices bode well for corpo-

rate earnings.

14 October

US consumer data

Retail sales and producer prices of

final demand for September are

expected higher by 0.6% month on

month. Preliminary Consumer Senti-

ment by the University of Michigan

for October should remain firm again,

signalling an ongoing strong con-

sumption momentum.

http://www.juliusbaer.com/podcasts

http://www.juliusbaer.com/financetalk

http://www.juliusbaer.com/futuretalk

RESEARCH WEEKLY | MONDAY, 10 OCTOBER 2016; 17:15 CET 2/19

MARKETS AT A GLANCE

Asset allocation (latest changes)

Currencies Bonds Equities Commodities

Views (3 months)

US dollar bullish High grade (USD) neutral United States neutral Crude oil neutral

Euro neutral Low grade (USD) bullish Eurozone neutral Cyclical metals bearish

Swiss franc neutral High yield (USD) bullish Switzerland neutral Gold neutral

British pound neutral Inflation protected neutral Japan neutral Agriculture neutral

Yen neutral EM hard currency bullish Emerging markets Asia bullish

Renminbi neutral EM local currency neutral EM Latam & EMEA neutral

Forecasts (closing price as at 09/08/2016, technical view/arrow1 and 3-month forecast)

EUR/USD 1.12 1.10 Treasuries (10y) 1.72 1.80 S&P 500 2154 2160 Crude oil 51.9 45.0

EUR/CHF 1.09 1.09 Bunds (10y) 0.02 0.20 Eurostoxx 50 3001 3025 Natural gas 3.19 2.50

USD/CHF 0.98 0.99 Swiss (10y) -0.47 -0.25 DAX 30 10491 10750 Aluminium 1670 1450

EUR/GBP 0.90 0.89 Japan (10) -0.06 0.00 CAC 40 4450 4500 Copper 4758 4600

USD/JPY 103.0 106.0 Corporate BBB* 175 175 FTSE 100 7044 7100 Gold 1257 1275

USD/CNY 6.67 6.75 Corp. high yield* 477 450 SMI 8125 8250 Silver 17.5 15.5

USD/BRL 3.22 3.55 JPM EMBI* 339 320 Nikkei 225 16860 16900 Platinum 970 1075

AUD/USD 0.76 0.76 JPM GBI-EM* 319 340 MSCI EM’s 915 950 Palladium 669 650

Review (1 month and 6-month performance)

-0.5%

-2%

1.04

1.06

1.08

1.10

1.12

1.14

1.16

Oct 15 Apr 16 Oct 16

EUR/USD

-0.1%0.7%

1.25

1.50

1.75

2.00

2.25

2.50


Treasury (10-year, %) **

1.2%

5.2%

1'800

1'900

2'000

2'100

2'200


S&P 500

2.1%

12.4%

250

275

300

325

350


Bloomberg Commodity Index

-0.1%

0.7%

1.07

1.08

1.09

1.10

1.11

1.12


EUR/CHF

0%1.2%

-0.4

0.0

0.4

0.8

1.2


Bunds (10-year, %) **

-0.8%

9%

8'000

9'000

10'000

11'000

12'000


DAX 30

7%

22.8%

20

30

40

50

60


Crude oil (USD/barrel)

0.4%

-4.6%

90

100

110

120

130


USD/JPY

0.6%0.6%

-0.8

-0.6

-0.4

-0.2

0.0

0.2


Swiss (10-year, %) **

-1.7%

3.9%

7000

7500

8000

8500

9000

9500


SMI

-4.9%

1.9%

1000

1100

1200

1300

1400


Gold (USD/ounce)

0.2%

3.7%

6.2

6.3

6.4

6.5

6.6

6.7

6.8


USD/CNY

0.5%

5.4%

135

140

145

150

155


US Corporates BBB

0.6%

12%

600

700

800

900

1000


MSCI Emerging Markets

-4.6%

-1.6%

900

1000

1100

1200

1300


US REITs

Sources: Bloomberg Finance L.P., Julius Baer (˄/˅: upward/downward revision in the past two weeks, *in basis points, ** returns depict investment yield)

1: Technical Analysis may be inconsistent with and reach different conclusions to fundamental analysis. = negative, = neutral, = positive.

4

4248

6Money market (confirmed)

Equities (confirmed)

Alternatives (confirmed)

Profile ‘Balanced’, in %

Bonds (confirmed)


MATTERS OF DEBATE

Economic outlook

Risk positioning*

Market sentiment

pressure points

Economic cycle

Source: Julius Baer

• Leading indicators recovered in September, signalling that the

August slump in global momentum was only temporary.

• Weakness prevails among structurally or politically burdened

emerging markets.

• Abating drag from the USD is brightening the US outlook. The

door is open for a Federal Reserve rate hike after the elections.

• Eurozone growth looks to be more robust in late 2016 and 2017.

The European Central Bank could nevertheless stick to its bias

towards further policy easing until deflation risks fully ebb off.

• The Brexit roadmap, with negotiations to begin as of March

2017, suggests postponed weakness to hit the UK in mid 2017.

• The Bank of Japan’s new yield curve targeting rolls out the

carpet for new fiscal measures to boost consumption.

• China’s intensified fiscal stimulus successfully revived momen-

tum, expanding stability into H2 2016.

• Switzerland continues to shrug off recession risks stemming

from a strong franc, allowing growth to remain positive.

• Overcapacities and low commodity prices keep reflation con-

tained, limiting the recovery of inflation rates in 2016 and 2017.

• Accommodative monetary policies continue to prevail and rate-

hike expectations remain scaled back in most economies.

David A. Meier

Forecasts Real growth Inflation

(year-on-year, %) 2015 2016E 2017E 2015 2016E 2017E

World 3.2 2.9 3.3 2.8 2.9 3.0

United States 2.6 1.5 1.8 0.1 1.1 1.5

Eurozone 1.9 1.7 1.6 0.0 0.2 1.5

Germany 1.7 2.0 1.5 0.1 0.4 1.9

United Kingdom 2.2 1.9 0.7 0.1 0.7 1.5

Switzerland 0.8 1.7 1.5 -1.1 -0.4 0.2

Japan 0.5 0.7 1.1 0.8 -0.4 0.0

China 6.9 6.4 6.2 1.4 2.0 2.0

Brazil -3.8 -3.5 0.0 9.3 8.5 6.0

Source: Julius Baer, E = Estimates

* The risk positioning illustrates our general stance towards risk assets such

as equities and corporate bonds within an investment portfolio based on

our assessment of the economic outlook and market sentiment.

Central bank exit strategies

The US central bank (Fed) is shifting to a brisker rhetoric regard-

ing interest-rate normalisation as US economic data continues to

beat expectations. Rate-hike expectations have moved consider-

ably forward, with the market anticipating the next hike already in

December 2016. Other major central banks have little choice than

to keep an accommodative stance for longer. The Bank of Eng-

land has loosened monetary policy in response to the Brexit refer-

endum. Negative interest rates in the eurozone, Japan and Swit-

zerland suggest that any exit from loose monetary policy is far

away.

David Kohl

Fiscal reflation on the rise

The combination of central banks running out of options to

stimulate growth and governments simultaneously imposing

fiscal austerity measures has fuelled concerns over globalisation

pressure in more and more economies. Frustration levels among

private households are rising, which is challenging the legitimacy

of the ruling political parties and spurring radical factions. Instead

of prioritising structural reforms, which tend to hurt many in the

short term, the ruling authorities are increasingly eroding fiscal

austerity for deficit and even debt-financed spending. Major

examples are China and Japan. Both US presidential candidates

argue for additional fiscal stimulus and the new British govern-

ment is expected to implement fiscal reflation measures to allevi-

ate negative post-Brexit impacts. Even in the eurozone periphery

and in France, facing presidential elections next year, the pres-

sure is on to undo the fiscal stability pact constraints.

Janwillem Acket

Chinese growth and reforms

Slowing productivity growth and resulting necessary reforms have

led to lower economic growth, leaving the property and manufac-

turing sectors most affected. The envisioned 6.5% yearly growth

over the next five years appear very ambitious and will come at

the cost of increasing the existing high debt burden further.

Reaching 6.5%-7% growth this year will require constant fiscal

and monetary support as headwinds from overcapacity remain

strong. Reform momentum will be maintained in H2 2016, with

gradual progress particularly in the areas of financial liberalisation

and the internationalisation of the renminbi, financial regulation

and consolidation of state-owned enterprises.

Susan Joho

Other financial market pressure points

Middle East and diminishing petrodollar flows:

The outlook of low oil prices for longer is a challenging one for

most petro nations. Pledged economic reforms and the opening

to global capital markets only partially rein in ballooning budget

deficits.

Norbert Rücker

Risk-off(cautious)

Risk-on (constructive)

World

US

Eurozone

China

Germany

Japan

UK

Brazil

Switzerland

businesscycle

potentialgrowth rate

regions

countries

Emerging Asia

Advanced Economies

Emerging EuropeEmerging Americas


STORIES OF THE WEEK

Eurozone: Growth surprises trigger tapering speculation

• Better eurozone growth and inflation data allows speculation

about tapering of asset purchases, lifting Bund yields out of

negative territory and supporting the euro.

• While tapering speculation will continue, we expect the ECB to

continue its asset purchases beyond March 2017, since out-

come-based guidance has been given.

Eurozone economic data has been encouraging lately, giving the

European Central bank (ECB) leeway with its unconventional

monetary policy. As a result, speculation about tapering of the

ECB asset purchasing programme is underway and should last for

some time. But does this mean that the ECB will actually reduce

the monthly volume of asset purchases in the next 6-9 months?

We do not think so. So far the central bank assured to keep buy-

ing EUR80bn of bonds per month until March 2017, giving a

calendar-based guidance. While everybody is waiting for an ex-

tension of the date, the ECB continues to focus on its outcome-

based guidance given as a commitment to buying bonds “in any

case until the Governing Council sees a sustained adjustment in

the path of inflation consistent with its inflation aim.” Even with

the most recent pickup in inflation this might be the case only in

2018. Base effects and the uptick in oil prices will help keep infla-

tion rates above zero, but it will take time and a recovery of wage

growth until inflation will reach the desired level of close to 2%.

The tapering speculation has lifted 10-year Bund yields out of

negative territory and keeps the EUR/USD above 1.10. We ad-

justed our 3-month forecast for EUR/USD to 1.10 from 1.08, as

the euro will withstand Fed rate-hiking speculation better than

previously assumed. The ECB might use its leeway for more flexi-

bility, when it comes to unconventional monetary policy to exit its

negative interest-rate policy, which seems to have undesirable

side effects on credit activity by weakening banks’ profitability.

We would welcome such a policy shift, but have to admit that the

ECB has so far given very limited clues in this direction.

David Kohl

ECB inflation forecast suggests an extension of asset purchases

*SPF: Survey of Professional Forecasters, GDP: Gross Domestic Product

Source: ECB, Julius Baer

Brexit: Political capital-building drives pound lower

• Currency markets priced in the threat of a “hard Brexit”, which

we rather see now, as Prime Minister May is adopting a decisive

position ahead of the negotiations with the EU.

• With the worst economic outcome of negotiations anticipated,

further short-term pound weakening is now less likely and we

thus adjust our pound forecast to a neutral 3-months outlook.

Following the Tories’ party conference last week, market’s anxiety

with regard to a “hard Brexit” caused further pound weakening,

culminating in a “flash crash” of -10% within a few minutes of

Asian trading during the night to Friday. The pound made up

some of the losses, but has now remained with a lower EUR/GBP

pair at 0.90 ever since, versus the USD even at a new record low

since 1985.

Prime Minister (PM) Theresa May verbally pushed towards secur-

ing independence on immigration matters, seemingly willing to

sacrifice the EU single market access as a consequence. Such a

scenario is described as “hard Brexit”, whereas a “soft Brexit”

would mean securing the EU single market access, in turn having

to make concessions on the immigration front. However, we have

our doubts that the UK government really believes in what it is

signalling. A hard Brexit with the loss of the single market access

would severely damage the economy and cause many firms to

relocate into the EU market. We therefore think that PM May is

simply rattling her sabre against the EU, trying to make it clear

that the UK is pushing for maximum independence in immigra-

tion matters, building up political capital to secure a resolute

starting point for negotiations with the EU.

In doing so, PM May has anticipated what is probably the worst-

possible economic outcome of the upcoming Brexit negotiations.

This means that, until these negotiations evolve from March 2017

onward, no worse “surprises” seem possible from PM May and

that FX markets have now priced in the elevated risks of a hard

Brexit. On the contrary: The hefty pound devaluation and loosen-

ing monetary conditions are resulting in surprisingly strong ex-

port-related economic momentum, which could motivate the

Bank of England (BoE) to call off its indicated rate cut for later

this year. This is also in May’s interest, as she harshly criticised

the side effects of ultra-low interest rates. A hold decision of the

BoE could offer further short-term stabilisation for the pound

sterling.

Prime Minister May is rattling her sabre against the EU.

______

We acknowledge the fact that markets see increased risks of a

“hard Brexit “ and therefore adjust our 3-months’ forecast down-

ward to EUR/GBP at 0.89, in order to maintain a neutral outlook.

We also stick to a bearish long-term outlook, revised slightly to

EUR/GBP at 0.94 to reflect the turn of the month, assuming that,

in a year from now, Brexit-related outflows of foreign direct in-

vestments will be the single major driver to weaken the pound

further.

David A. Meier

1.71.6 1.6

1.71.6

1.3

1.51.4

1.6

0.2

1.2

1.6

0.2

1.5

1.7

0.3

1.2

1.5

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

GDP '16 GDP '17 GDP '18 Inflation'16

Inflation'17

Inflation'18

% Y/Y

ECB Julius Baer SPF* ECB Julius Baer SPF*


Q3 2016 earnings season: Flat outlook

Broadly spoken the outcome for the Q3 2016 will be relatively

flat in the US as well as in Europe.

These results support our view of non-growth in 2016. For

2017 earnings growth can be in the mid single-digit area.

Today the US earnings season for Q3 2016 starts with the results

of Alcoa (Hold, Price/Target: USD10.14/10.50). As can be seen

in the chart below, weeks two to four are the most intense ones in

the US. Consensus forecasts expect sales for the S&P 500 to grow

by 2.2% while earnings should decline by 2.5% (all growth figures

are compared to Q3 2015). It is important to note that energy still

sees a decline of more than 60% (which is a base effect) although

earnings growth has turned to the better again lately. As a conse-

quence, the S&P 500 ex energy should see flat earnings growth in

Q3. This fits into the prevailing picture of flat trailing earnings in

the US. Sector patterns remain mixed as most positive earnings

growth contributions come from materials and consumer staples

while negative drivers include energy and industrials. At this

stage, we also want to refer to our publication upgrading the

global auto sector to Overweight last week.

A flat earnings outlook in Q3 confirms our overall forecast for

earnings growth in 2016.

______

In Europe, the picture is slightly better but not that different from

the US. Stoxx 600 companies can grow their sales by 1.2% and

earnings by 1.7% according to consensus. However, it is im-

portant to note that only roughly half of the companies in ques-

tion contribute to this forecast which certainly has some impact

on the data quality.

While earnings season results certainly have some impact on

short-term developments (surprise factor) we strongly believe

that applying a longer-term perspective makes more sense for

investors. However, the expected outcome of the Q3 earnings

season supports our view of basically no growth in 2016. On

aggregate, we have 1% earnings growth for 2016 in our models.

Going into 2017 the outlook remains brighter. We currently cal-

culate with global earnings growth of roughly 7% which is roughly

half of consensus expectations.

Christoph Riniker, CEFA

Earnings season reporting schedule starting this week

Source: Datastream, Julius Baer

Nominal risks in the bond market

• Increasing nominal risks as well as an improving economic out-

look call for a transition plan in the bond market.

• Credit instead of rate risk is preferred and TIPS could turn out

to be a valuable alternative to nominal counterparts.

We increasingly see signs of an upward pressure on yields, espe-

cially in the US. Beside the change in central bank rhetoric, the

ongoing money market reform exacerbates volatility in short-

term interest rates (see Research Weekly of 3 October 2016).

Furthermore, the possibility of an end of austerity exhibits two-

fold upward pressure on Treasury yields: first of all, there would

be a debt increase, and secondly, outstanding Treasury debt held

by the Fed would decline compared to privately held debt on a

relative basis. Hence, we stick to our positive stance on US high

yield and continue to prefer credit risk to rate risk amid an eco-

nomically improving and resilient environment as well as stabilis-

ing energy prices.

The other side of the coin within the nominal risk story is that of

inflation and inflation expectations. Clearly, in the last few years

there were several inflation warnings that never materialised.

However, stabilising energy prices and the resulting positive base

effect on a year-on-year basis could trigger a change in people’s

perception of realised inflation which, assuming adaptive inflation

expectations, should lead to an actual increase in inflation expec-

tations. Furthermore, the fiscal stimulus ‘risk’, combined with a

still extremely accommodative monetary environment, would

clearly be a game changer for inflation.

Consequently, combining the two nominal risks mentioned

above, we see Treasury inflation protected securities (TIPS) as a

valuable alternative to the nominal counterparts by overcoming

the nominal transition phase and being mainly exposed to chang-

es in real conditions. From a valuation perspective, we currently

see rather cheap inflation protection as the 5-year break-even

inflation rate is still low, signalling that there are no excessive

inflation expectations in the TIPS market present.

Dario Messi

5-year break-even inflation rate low but picking up

Source: Datastream, Julius Baer

0

20

40

60

80

100

120

140

160

1 2 3 4 5 6 7 8 9 10

Number

Number of companies reporting: S&P 500 Stoxx 600

-1

0

1

2

3

4

97 99 01 03 05 07 09 11 13 15

%

5-year break-even inflation rate

Average 5-year break-even inflation rate

Average 5-year inflation


Gold: Sell-off reveals vulnerability

• Gold’s sell-off last week is no buying opportunity.

• The drying-up of safe-haven demand, the risk of profit-taking

and the outlook for a stronger US dollar suggest further pres-

sure on prices. The US elections are the wild card to watch.

Gold’s sell-off last week caught attention and left many strug-

gling to find its root cause. The correction was most likely trig-

gered by a strengthening US dollar and extended by technical

selling in the futures market. Speculative futures positions were

on excessive levels for quite some time and a further unwinding

as well as a spill-over into the physical market are key downside

risks to watch. We believe the gold market has returned to a pat-

tern that characterised price swings prior to the rally in the first

half of 2016. In the longer term, prices are on a gradual down-

trend reflecting the fading of safe-haven demand on the back of

slowly receding growth risks and contained inflationary pressures.

In the short term prices fluctuate with the US dollar and shifting

expectations about the next interest-rate hike. Inflows into physi-

cally backed products have been drying up as of late. The lack of

safe-haven buying, the risk of profit taking on futures markets

and the outlook for a stronger US dollar suggest further pressure

on gold and we thus maintain a cautious view.

The upcoming US elections are a smaller-than-perceived wild

card for gold. Our current view reflects our base-case scenario of

a Clinton presidency. The uncertainty coming with a Trump win is

a bullish element that however should be more than offset by the

positive US dollar impacts his election would most likely come

with. Only if Trump turned into an ‘unguided missile’, a marked

pick-up in safe-haven demand could turn into lasting support to

gold. That said, our analysis shows that historically politics do not

have a lasting impact on gold. For more information, please refer

to our Research Focus “Gold: Not time to buy” published last

Friday. Elsewhere, we closed our short Silver position at a profit

with the recent sell-off in prices.

Norbert Rücker

Gold and non-commercial futures market positioning

Source: Bloomberg Finance L.P., Julius Baer

-10

0

10

20

30

40

50

60

1'000

1'050

1'100

1'150

1'200

1'250

1'300

1'350

1'400

Jan 15 May 15 Sep 15 Jan 16 May 16 Sep 16 Jan 17

Gold price Non-commercial net-length (r.h.s.)

% of open interestUSD per ounce


INVESTMENT IDEAS

short term

medium term

long term

Trading ideas Key ideas Thematic ideas

• Stock of the week: RELX (Buy)

• Bonds: Latest issues of Societe Generale (Buy)

• Technical idea: Valeo (Buy)

• Equities: Grandvision, Daimler (both Buy)

• Equities: Brexit beneficiaries (Buy)

• Equities: Quality (Buy)

• Equities: Focus on Asia (Buy)

• Equities: Infrastructure (Buy)

• Bonds: US high yield (Buy)

• Currencies: Hedge GBP exposure

• Arising Asia: Asia Tourism (Buy)

• Feeding the World: Animal Health (Buy)

• Digital Disruption: FinTech (Buy)

• Arising Asia: Asia’s youth (Buy)

• Shifting Lifestyles: Genomics 2.0 (Buy)

• Digital Disruption: Automation & Robotics

(Buy)

• Shifting Lifestyles: Digital Health (Buy)

Stock of the week

RELX: Accelerating organic revenue growth trends

We see accelerating organic revenue growth trends as the major

driver for RELX’s share price performance (Buy, Price/Target:

EUR15.34/17.50). The uptick in organic revenue growth is driven

by strong performance in its Risk and Business Analytics division,

where RELX is well-positioned given its data service products for

usage in various industries. The high proportion of subscription-

based revenues underpins the defensive nature of RELX’s busi-

ness, which we view as a key characteristic for the stock. The

company’s balance sheet supports dividend growth in line with

EPS growth in the mid-to-high single-digit range and leaves scope

for share buybacks. With a P/E 2017E of 17.1x the stock is trad-

ing at a 12% premium compared to peers in the professional

publishers’ space, which we see as well-justified given the more

attractive risk/return profile. Valuation does not reflect the im-

proving growth outlook, in our view.

Barbara Elbel


Equities

Grandvision: Well-positioned for growth

We have initiated coverage on Grandvision (GVNV, Buy,

Price/Target: EUR24.35/28.5) with a Buy rating. Grandvision, a

leader in optical retail, has a strong position in emerging markets,

where it should benefit from secular growth drivers such as a

growing middle-class population and demand for high-value

products. Its cash-generative business model, operational effi-

ciency measures, organic store expansions and acquisitions

should support top and bottom-line growth resulting in double-

digit EPS growth going forward. The shares of Grandvision trade

at a discount of ca. 20% vs. Fielmann (Buy, Price/Target:

EUR72.55/78), which we regard as unjustified considering the

group’s strong track record and growth outlook. We expect

Grandvision to continue to benefit from favourable underlying

trends, which should result in double-digit EPS growth going

forward.

Patrick Jnglin, CFA

Equities

Daimler (Buy, Price/Target: EUR63.87/70): Upgrade to Buy

Daimler is one of the strongest bottom-up momentum stories in

the sector. We expect market share gains to continue into 2017

and an EBIT margin of over 10% for Mercedes. The earnings

momentum is expected to be driven by the launch of the new E-

Class, strong demand for sport utility vehicles (SUVs), currency

tailwinds and the absence of major launch costs. In our view,

consensus expectations do not fully reflect these drivers. We

believe the valuation of the stock is highly attractive, both rela-

tive to the auto sector and to the stock’s own trading history

(20%-30% discount based on P/E and P/BV [book value]). Free

cash flow (around 10%) and dividend yield (5%) are also attrac-

tive, in our view.

Patrik Lang, CFA

5

7

9

11

13

15

17

Oct 11 Oct 12 Oct 13 Oct 14 Oct 15 Oct 16

EUR


Strategic equity calls

North America Europe Rest of the World

Energy overweight Chevron, Hess Eni, Royal Dutch Shell

Materials neutral PPG Industries, Sherwin-Williams

Company

Smurfit Kappa Toray Industries

Industrials underweight Ingersoll-Rand, Stanley Black & Decker,

United Technologies

Assa Abloy, Schneider Electric China Everbright International, China

State Construction International, CK

Hutchison, Sydney Airport

Consumer

discretionary

neutral Comcast, Home Depot Compass Group, WPP Group Ctrip.com, Fuyao Glass, Sony Corpora-

tion

Consumer

staples

underweight CVS Health Corporation, Kroger,

PepsiCo

Ahold Delhaize, Associated British

Foods, Danone

Dairy Farm International

Healthcare overweight Celgene, Eli Lilly, Incyte, Medtronic,

Pfizer, Zimmer Biomet

Fresenius Medical Care, Sanofi, Smith

& Nephew

CSPC Pharmaceutical, Shanghai Fosun

Pharmaceuticals-H

Financials neutral Affiliated Managers Group, Marsh &

McLennan, Morgan Stanley, S&P

Global, Wells Fargo

Axa, Helvetia, Munich Re, Societe

Generale

AIA Group, Ping An Insurance-H

Real estate neutral Simon Property Unibail-Rodamco

Information

technology

overweight Adobe Systems, Akamai Technologies,

Alphabet Inc., Cognizant Technology

Solutions, Facebook, Visa

SAP Baidu, Broadcom Limited, Tencent

Holdings

Telecom neutral Deutsche Telekom, Orange China Mobile

Utilities underweight American Water Works , NextEra

Energy

Beijing Enterprises Water, China Re-

sources Gas

Changes as per

10 October 2016

Additions: Eni

Deletions: Honeywell, Anthem

Fixed Income

Fixed Income: Latest bonds of covered issuers

Last week, Paris-based Electricité de France (EDF), one of the

largest integrated utility companies in Europe with the French

government as major shareholder (over 80%), raised new debt in

different currencies and maturities: a total of EUR2.5bn and

smaller amounts of CHF550m and USD491m. Staying with French

companies, Societe Generale issued a relatively small amount of

AUD150m subordinated debt.

Dario Messi

Corporate rating summary

EDF (Hold/Opportunistic)

Societe Generale (Buy/Opportunistic)

Equities Idea initiation: July 2016

Brexit beneficiaries

The referendum decision to leave the European Union may heavi-

ly impact the growth perspectives of the UK. Nevertheless, the

impact on the majority of stocks we cover and on their growth

prospects should be limited given that many UK companies have

a globally well-diversified footprint and derive only a low-to-mid-

single-digit percentage of their sales from the UK. With many of

these companies also having a disproportionately high cost base

in the UK, they should benefit from a positive impact on their

GBP-denominated sales and earnings. By sector, we particularly

see no major negative impact in general for UK consumer staples,

healthcare, business services and utilities equities we cover.

Britta Simon, CEFA


British American Tobacco (Buy, Price/Target: GBp4,873.5/5,300)

Compass Group (Buy, Price/Target: GBp1,493/1,600)

Experian (Buy, Price/Target: GBp1,587/1,600)

InterContinental (Buy, Price/Target: GBp3,250/3,400)

Intertek (Buy, Price/Target: GBp3,710/3,830)

Pennon Group (Buy, Price/Target: GBp829.5/960)

Shire (Buy, Price/Target: GBp5,196/5,750)

Smith & Nephew (Buy, Price/Target: GBp1,241/1,385)

Vodafone Group (Buy, Price/Target: GBp223.55/260)

WPP Group (Buy, Price/Target: GBp1,806/,2000)


Fixed Income Idea initiation: September 2015

US high-yield bonds: Still adequate spread compensation

The US high-yield market with its strong bias towards commodi-

ty-related issuers has rebounded strongly since mid-February,

albeit from exceptionally low levels. Fears over the growth slow-

down in China and its negative impact on commodity prices have

abated and led to strong short covering of traders’ positions.

Also, reassuring data in regard to the overall economic environ-

ment in the US have helped the segment to perform well over the

past months. The segment has been quite resilient and the result

of the Brexit referendum and fluctuations in the price of oil have

led to only limited spread widening, keeping investors well-

compensated for a potential surge of defaults. Although leverage

has increased, sector outlooks remain stable. We maintain our

expectations for acceleration of nominal growth and higher reve-

nues in the segment.

Eirini Tsekeridou

Equity Strategy Idea initiation: August 2014

Infrastructure

Infrastructure is an international necessity, typically involving e.g.

the movement of goods and people, water processing and pro-

vision, energy generation and supply and communication sys-

tems. It is not just an emerging market issue as the developed

world also needs to maintain and develop new infrastructure to

accommodate its growing population. Consequently both US

presidential candidates want to further increase federal infra-

structure spending by USD275bn over five years in the case of

Hillary Clinton and “substantially” in the wording of Donald

Trump (“one of the biggest projects this country has ever

undertaken”).



American Electric Power (Buy, Price/Target: USD61.79/76)

Ingersoll-Rand (Buy, Price/Target: USD67.45/74)

PPG Industries (Buy, Price/Target: USD93.73/125)

Equity Strategy Idea initiation: February 2016

Quality

Quality as an investment style started to outperform the overall

market again a few months ago. On the back of increased

investor uncertainty and elevated volatility, this completely

makes sense. As we have outlined previously, the current market

environment calls for further adding quality to equity portfolios.

Furthermore, we believe that from a European perspective a

constructive outlook for the USD calls for more international sales

exposure. Overall our view of a muted but volatile outlook still

persists. Against this backdrop we have implemented a number of

rating changes, combining the various aspects of influence.


Currencies Idea initiation: March 2016

GBP: Maintain pound exposure hedged after Brexit

After the surprising acceptance of the UK’s Brexit referendum,

first shock reactions have caused record-high pound losses, re-

warding investors which had hedged pound exposure. After the

referendum, we expect the pound sterling to continue to suffer

gradually beyond the initial reactions. While political uncertain-

ties will keep volatility elevated, fundamentals will clearly turn

pound negative ahead. Crumbling foreign direct investments will

shift the markets focus on the UK’s twin deficit, in particular the

huge current account deficit. We revised our GBP forecast to

EUR/GBP 0.92 for the 3-months horizon and would not be sur-

prised to see parity within the 12-months horizon. Obviously, as

further pound losses remain our baseline scenario, we recommend

keeping pound exposure hedged.

David A. Meier

Equity Strategy Idea initiation: March 2016

Emerging markets: Focus on Asia

The time has come to be tactically more optimistic and we have

upgraded emerging markets from neutral to overweight. Our top-

down investment rationale is that first, the US central bank will

not raise rates for the time being, second, more funds will flow

from Europe to emerging markets and third, the earnings recov-

ery in emerging markets will continue while valuations are attrac-

tive. We expect the MSCI Emerging Markets and in particular

emerging Asia to perform well over the next six months. We rec-

ommend investors buy into either a broad-based emerging Asia

investment vehicle or into one of our Asia overweight calls, which

are Taiwan*, China, Indonesia, Malaysia, India and Vietnam**.

Heinz Rüttimann, CAIA

* Taiwan: Julius Baer’s offering in local markets is restricted

** Vietnam: Julius Baer makes no offering in local markets

NEXT GENERATION Idea initiation: May 2016

Digital Disruption: Automation & robotics

Advances in robotics technology are supporting increased auto-

mation outside the automotive industry, with robots becoming

increasingly affordable, flexible, smart and interconnected. In

addition, rising labour costs and quality requirements in emerging

economies are driving a transition to automation systems over

raw manpower, with China emerging as the market to watch for

industrial robots. To gain exposure to this trend, we favour the

large, global incumbent players in the automation space (to the

detriment of local upstarts) as well as niche leaders in automation

software and robo-surgery.

Alberto Perucchini, Fabiano Vallesi


Intuitive Surgical (Buy, Price/Target: USD718.04/765)

Hitachi (Buy, Price/Target: JPY524.5/500)

Honeywell (Buy, Price/Target: USD106.94/128)


NEXT GENERATION Initiation: January 2014/Update

Arising Asia: Asian tourism: New destinations

Chinese tourism growth remains the key story of the global travel

market, despite short-term headwinds. Chinese travellers are

shifting focus across geographies and segments, owing to evolv-

ing tastes. We therefore favour beneficiaries of this shift to re-

gional Asian and domestic Chinese travel. We see regional Asian

and domestic Chinese plays in infrastructure (particularly air-

ports), accommodation (hotels), consumer goods retailers and

online travel portals as well as medical tourism, which should all

benefit from this continued growth in Chinese tourism spending.



Ctrip.com (Buy, Price/Target: USD47.08/50)

Japan Airport Terminal (Buy, Price/Target: JPY3805/4600)

Treasury Wine Estates (Buy, Price/Target: AUD11.32/1,2)

NEXT GENERATION Idea initiation: August 2016

Feeding the World: Animal Health

The structural growth in animal health is underpinned by a global

middle class’s increasing appetite for proteins such as meat and

dairy products. Intensifying production methods are heightening

the economic, environmental and social sensitivities to animal

health. For producers, healthier livestock boost profitability by

increasing feed efficiency which also lessens the ecological im-

pacts through reducing animal headcounts, resource inputs and

waste outputs. Given that several demand drivers are propelling

the growth in animal health solutions, the sector enjoys very

attractive industry dynamics with the dominant players exhibiting

strong competitive advantages and high barriers to entry.

Warren Kreyzig, Terence McManus, PhD


Eli Lilly (Buy, Price/Target: USD82.09/94)

Merck (Hold, Price/Target: USD62.77/65)

Sanofi (Buy, Price/Target: EUR68.8/81)

Zoetis (Buy, Price/Target: USD51.85/57)

NEXT GENERATION Idea initiation: August 2016

Digital Disruption: FinTech

The global financial industry is embarking on a new cycle of inno-

vation. We believe the continuing co-evolution of finance and

technology is providing an opportunity-filled investment land-

scape, with ‘FinTech’ (financial technology) evolving quickly.

From a risk/return perspective, we favour payment networks,

payments processors, and solutions providers (software & infor-

mation) to financial companies, which we see as benefiting from

the underlying structural drivers. Avoid marketplace lenders for

now.

Fabiano Vallesi


MSCI (Buy, Price/Target: USD82.66/95)

MasterCard (Buy, Price/Target: USD102.25/110)

Worldpay Group (Hold, Price/Target: GBp297.5/310)

NEXT GENERATION Idea initiation: July 2016

Arising Asia: Asia’s youth

Emerging Asia’s working-age population, particularly the millen-

nials born between 1980 and the late 1990s, will contribute 26%

of global consumption growth over the next 15 years. With close

to 800 million increasingly affluent millennials living in China and

India today, it is evident that the tastes and preferences of these

digital natives will matter enormously in shaping the future of

consumption. We highlight six key trends for investors to focus

on in order to benefit from their enhanced expenditure: 1) premi-

um goods, 2) digital commerce, 3) media & entertainment, 4)

travel & tourism, 5) digital finance, and 6) fitness & sportswear.



Alibaba (Buy, Price/Target: USD106/108)

China Mobile (Buy, Price/Target: HKD96.45/110)

Hengan International (Hold, Price/Target: HKD63.85/71)

NEXT GENERATION Idea initiation: June 2016

Shifting lifestyles: Genomics 2.0

Genomics 2.0: Understanding the source of life. We believe we

are at the start of a potential paradigm shift for healthcare inno-

vation in terms of diagnostics, drug discovery, and precision

medicine. Genome sequencing technologies are leading this

change, which are becoming much more rapid and affordable. In

this transition phase, we have identified several structural growth

areas where genomics will have a large impact such as oncology,

rare diseases, reproductive health and consumer genomics. How-

ever, many barriers need to be overcome: the Big Data challenge,

regulation, and the reimbursement framework. Early in this race,

we favour key genomics technology players and early adopters.



Illumina (Buy, Price/Target: USD184.49/170)

Laboratory Corporation of America (Buy, Price/Target: USD138.87/155)

Qiagen (Buy, Price/Target: USD27.38/30)

NEXT GENERATION Idea initiation: January 2016

Shifting Lifestyles: Digital Health

Throughout the world, a significant and growing portion of GDP

is spent on healthcare. Some of many drivers of this relentless

growth in spending come from the mounting occurrence of

chronic diseases and shift to ageing demographic triggering

increased demand for healthcare. Digital health, though still in

early stages of development, has the potential to wedge itself into

a static system that has been averse to change potentially im-

proving the quality of medical care while reducing costs. We see

tangible growth potential in the fields of healthcare IT, remote

patient monitoring, telehealth and genomics applications.

Fabiano Vallesi


Cerner (Buy, Price/Target: USD61.13/75)

Cognizant Technology Solutions (Buy, Price/Target: USD50.35/67)

Medtronic (Buy, Price/Target: USD85.96/94)


Technical idea*

Buy Valeo: Bull market resumes

Although European equities continue to struggle, we find inter-

esting single stocks which resume their bull market. Valeo has

ended a consolidation of more than 15 months. As seen on the

chart, long-term momentum is flashing a buy signal. Thus, Valeo

is resuming its long-term bull market and we recommend inves-

tors buy the stock with a possible target of 68.

Mensur Pocinci, MFTA

Valeo (FR FP) – Monthly bar chart


* Technical Analysis may be inconsistent with and reach different conclu-

sions to fundamental analysis.

2012 2013 2014 2015 2016 2017

50

100

10

20

30

40

50

^7

Valeo

Momentum


IMPORTANT LEGAL INFORMATION

This publication has been produced by Bank Julius Baer & Co. Ltd., Zurich, which is authorised and regulated by the Swiss Financial Market

Supervisory Authority (FINMA). This publication series is issued regularly. Information on financial instruments and issuers is updated irregu-

larly or in response to important events.

IMPRINT

Authors Janwillem Acket, Chief Economist, [email protected] 1)

Susan Joho, Economic Research, [email protected] 1)

David Kohl, Head of Currency Research, [email protected] 2)

David A. Meier, Economic Research, [email protected] 1)

Christoph Riniker, Head of Strategy Research, [email protected] 1)

Alberto Perucchini, Strategy Research, [email protected] 1)

Heinz Rüttimann, Strategy Research, [email protected] 1)

Fabiano Vallesi, Strategy Research & Next Generation, [email protected] 1)

Dario Messi, Fixed Income Research, [email protected] 1)

Eirini Tsekeridou, Fixed Income Research, [email protected] 1)

Patrik Lang, Head of Equity Research, [email protected] 1)

Barbara Elbel, Equity Research, [email protected] 1)

Patrick Jnglin, Equity Research, [email protected] 1)

Terence McManus, Equity Research, [email protected] 1)

Britta Simon, Equity Research, [email protected] 1)

Norbert Rücker, Head of Commodity Research, [email protected] 1)

Warren Kreyzig, Commodity Research, [email protected] 1)

Mensur Pocinci, Head of Technical Analysis, [email protected] 1)

1) This analyst is employed by Bank Julius Baer & Co. Ltd., Zurich, which is authorised and regulated by the Swiss Financial Market Supervisory Authority

(FINMA).

2) This analyst is employed by Bank Julius Bär Europe AG, which is authorised and regulated by the German Federal Supervisory Authority (BaFin).

APPENDIX

Analyst certification The analysts hereby certify that views about the companies discussed in this report accurately reflect their personal view about the companies and securi-

ties. They further certify that no part of their compensation was, is, or will be directly or indirectly linked to the specific recommendations or views in this

report.

Methodology Please refer to the following link for more information on the research methodology used by Julius Baer analysts:

www.juliusbaer.com/research-methodology

Structure

References in this publication to Julius Baer include subsidiaries and affiliates. For additional information on our structure, please refer to the following

link:

www.juliusbaer.com/structure

Price information Unless otherwise stated, the price information reflects the closing price of the previous trading day.

Disclosure No specific disclosures

Equity research

Frequently used abbreviations

CAGR Compound annual growth

rate

EPS Earnings per share P/B Price-to-book value

DCF Discounted cash flow EV Enterprise value P/E Price-to-earnings ratio

EBIT Earnings before interest and

taxes

FCF Free cash flow PEG P/E divided by year-on-year EPS

growth

EBITDA Earnings before interest, taxes,

depreciation and amortisation

MV Market value ROE Return on equity


Consensus

rating

Consensus rating indicates the

analysts' opinions on the security.

It shows the number of analysts

covering the security and the

breakdown between Buy, Hold

and Sell ratings.

Consensus

target

The consensus target is the

average price to which analysts

expect the security to rise.

FY Fiscal year

Equity rating allocation as of 10/10/2016

Buy 32.1% Hold 63.7% Reduce 4.2%

Julius Baer does not provide investment banking services to the companies covered by Research.

Equity rating history as of 10/10/2016

Company Rating History

Adobe Systems Buy (initiation of coverage) Since 19/12/2012

Affiliated Managers Group Buy (initiation of coverage) Since 24/04/2015

Ahold Delhaize Buy (initiation of coverage) Since 03/08/2016

AIA Group Buy Since 19/03/2013

Akamai Technologies Buy Since 15/03/2016

Hold (initiation of coverage) Since 23/02/2015

Alcoa Hold (initiation of coverage) Since 23/04/2015

Alibaba Buy (initiation of coverage) Since 18/06/2015

Alphabet Inc. Buy (initiation of coverage) Since 18/10/2010

American Electric Power Buy (initiation of coverage) Since 16/06/2016

American Water Works Buy (initiation of coverage) Since 21/12/2015

Anthem Buy (initiation of coverage) Since 12/04/2016

Assa Abloy Buy Since 17/07/2015

Associated British Foods Buy (initiation of coverage) Since 19/09/2012

Axa Buy Since 18/06/2007

Baidu Buy (initiation of coverage) Since 13/12/2013

Beijing Enterprises Water Buy Since 06/04/2015

British American Tobacco Buy (initiation of coverage) Since 09/10/2014

Broadcom Limited Buy (initiation of coverage) Since 26/06/2014

Celgene Buy (initiation of coverage) Since 06/02/2012

Cerner Buy (initiation of coverage) Since 28/06/2016

Chevron Buy Since 01/07/2016

Hold Since 05/02/2013

China Everbright International Buy (initiation of coverage) Since 31/03/2014

China Mobile Buy Since 21/08/2015

China Resources Gas Buy Since 19/04/2013

China State Construction International Buy (initiation of coverage) Since 18/12/2015

CK Hutchison Buy Since 05/08/2014

Cognizant Technology Solutions Buy (initiation of coverage) Since 23/06/2014

Comcast Buy (initiation of coverage) Since 01/04/2015

Compass Group Buy (initiation of coverage) Since 01/10/2015

CSPC Pharmaceutical Buy Since 29/08/2016


Ctrip.com Buy (initiation of coverage) Since 15/12/2013

CVS Health Corporation Buy Since 18/02/2015

Daimler Buy Since 07/10/2016


Buy Since 15/02/2007

Dairy Farm International Buy (initiation of coverage) Since 06/06/2016

Danone Buy Since 17/10/2014

Deutsche Telekom Buy Since 18/11/2014

Eli Lilly Buy Since 26/10/2015


Eni Buy Since 03/10/2016


Experian Buy (initiation of coverage) Since 17/06/2016

Facebook Buy (initiation of coverage) Since 23/09/2015

Fresenius Medical Care Buy (initiation of coverage) Since 24/02/2006

Fuyao Glass Hold (initiation of coverage) Since 04/05/2016

GrandVision Buy (initiation of coverage) Since 04/10/2016

Helvetia Buy (initiation of coverage) Since 26/09/2007

Hengan International Hold Since 01/09/2016

Buy (initiation of coverage) Since 28/11/2012


Hess Buy Since 01/07/2016


Hitachi Buy (initiation of coverage) Since 17/12/2014

Home Depot Buy Since 25/02/2010

Honeywell Buy Since 20/10/2014

Illumina Buy (initiation of coverage) Since 01/04/2015

Incyte Buy Since 22/07/2016


Ingersoll-Rand Buy (initiation of coverage) Since 25/09/2015

InterContinental Buy (initiation of coverage) Since 22/03/2016

Intertek Buy (initiation of coverage) Since 10/06/2016

Intuitive Surgical Buy Since 01/05/2015

Japan Airport Terminal Buy (initiation of coverage) Since 17/03/2016

Kroger Buy (initiation of coverage) Since 07/12/2015

Laboratory Corporation of America Buy (initiation of coverage) Since 02/06/2016

Marsh & McLennan Buy (initiation of coverage) Since 21/06/2016

Mastercard Buy (initiation of coverage) Since 04/05/2011

Medtronic Buy Since 08/09/2014

Merck Hold Since 22/12/2015

Buy Since 11/05/2010

Morgan Stanley Buy Since 22/01/2016


MSCI Buy (initiation of coverage) Since 30/03/2016

Munich Re Buy Since 19/11/2013

NextEra Energy Buy (initiation of coverage) Since 11/01/2016

Orange Buy Since 29/04/2015

Pennon Group Buy (initiation of coverage) Since 29/01/2016

PepsiCo Buy (initiation of coverage) Since 09/12/2014

Pfizer Buy Since 18/09/2008

Ping An Insurance-H Buy Since 07/09/2015

PPG Industries Buy (initiation of coverage) Since 28/04/2015

QIAGEN Buy Since 02/06/2016


Relx Buy Since 05/08/2016


Royal Dutch Shell Buy (initiation of coverage) Since 05/02/2013

S&P Global Buy (initiation of coverage) Since 24/05/2016

Sanofi Buy Since 03/11/2015


SAP Buy Since 06/01/2006

Schneider Electric Buy Since 30/10/2015


Shanghai Fosun Pharmaceuticals-H Buy (initiation of coverage) Since 27/03/2014

Sherwin-Williams Company Buy Since 17/07/2015

Shire Buy Since 30/10/2014

Simon Property Buy (initiation of coverage) Since 08/10/2012

Smith & Nephew Buy Since 05/02/2016


Smurfit Kappa Buy (initiation of coverage) Since 24/12/2015

Societe Generale Buy Since 19/12/2012

Sony Corporation Buy (initiation of coverage) Since 17/12/2014

Stanley Black & Decker Buy (initiation of coverage) Since 11/11/2015

Sydney Airport Buy Since 21/09/2016


Tencent Holdings Buy Since 27/09/2013

Toray Industries Buy (initiation of coverage) Since 22/01/2016

Treasury Wine Estates Buy (initiation of coverage) Since 13/04/2016

Unibail-Rodamco Buy (initiation of coverage) Since 28/06/2010

United Technologies Buy Since 23/09/2009

Visa Buy (initiation of coverage) Since 02/12/2014

Vodafone Group Buy Since 26/02/2016


Wells Fargo Buy Since 27/10/2010

Worldpay Group Hold Since 07/10/2016

Buy (initiation of coverage) Since 30/05/2016

WPP Group Buy (initiation of coverage) Since 08/08/2007

Zimmer Biomet Buy Since 29/01/2016



Zoetis Buy (initiation of coverage) Since 11/03/2016

Rating system for global equity research (stock rating)

Buy Expected to outperform the regional industry group by at least 5% in the coming 9-12 months, unless otherwise stated.

Hold Expected to perform in line (±5%) with the regional industry group in the coming 9-12 months, unless otherwise stated.

Reduce Expected to underperform the regional industry group by at least 5% in the coming 9-12 months, unless otherwise

stated.

Frequency of equity rating updates An update on Buy-rated equities will be provided on a quarterly basis. An update for Hold and Reduce-rated equities will be provided semi-annually or on

an ad-hoc basis.

Risk rating systerm for global equity research (stock rating) The risk rating (High/Medium/Low) is a measure of a stock’s expected volatility and risk of losses in case of negative news f low. This non-quantitative

rating is based on criteria such as historical volatility, industry, earnings risk, valuation and balance sheet strength.

Strategy research

Countries, sectors and investment styles are rated “overweight”, “neutral” or “underweight”. These ratings are based on our expectations for relative

performance versus regional and global benchmark indices.

Overweight Expected to outperform regional or global benchmark indices in the coming 9-12 months, unless otherwise stated.

Neutral Expected to perform in line with regional or global benchmark indices in the coming 9-12 months, unless otherwise

stated.

Underweight Expected to underperform regional or global benchmark indices in the coming 9-12 months, unless otherwise stated.

Equity investments are divided into three different risk segments. Risk here is defined as the historical five-year volatility based on

monthly returns in CHF. Based on the data of all segments considered (developed markets, emerging markets, global sectors, investment styles) the

following distinction is made:

Conservative Investments whose historical volatility is in the bottom quartile of the universe described above.

Medium Investments whose historical volatility is in the middle two quartiles of the universe described above.

Opportunistic Investments whose historical volatility is in the top quartile of the universe described above.

Fixed income research


FCF Free cash flow CFI Cash flow from investing EBIT Earnings before interest and

taxes

CFO Cash flow from operation FFO Funds from operation EBITDA Earnings before interest, taxes,

depreciation and amortisation

CFF Cash flow from financing RCF Retained cash flow EM Emerging Markets

Issuer rating allocation as of 10/10/2016

Buy 53.4% Hold 42.7% Sell 3.9%

Julius Baer does not provide investment banking services to the companies covered by Research.

Issuer rating history as of 10/10/2016

Issuer Rating History

EDF Hold (initiation of coverage) Since 27/03/2015

Societe Generale Buy (initiation of coverage) Since 22/07/2009

Rating system for fixed income research

Buy Within its risk category, the issuer is highly recommended due to its financial and business condition (strong balance sheet, income

statement, cash flow and good position in the industry). Debt instruments of the issuer are regarded as an attractive investment from a

risk/return perspective.

Hold Maintain position based on stable credit fundamentals and/or average expected return characteristics within peer group.

Sell The rating is changed to Sell, depending on a significant deterioration in the fundamental data of the issuer in relation to the industry

peers. The investment is no longer justified from a risk/return perspective for the relevant category.

Frequency of issuer rating updates An update on each issuer will be provided semi-annually, on a rating change or on an ad-hoc basis.

Fixed income market segment ratings

Attractive Segments that are expected to yield a return that is above the ten-year historical average.

Neutral Segments that are expected to yield a return that is in line with the ten-year historical average.

Unattractive Segments that are expected to yield a return that is below the ten-year historical average.


Risk categories for fixed income research

Conservative Supranational issuers, top-rated sovereign issuers and bodies that are directly and fully guaranteed by these institu-

tions. These issuers are most likely to preserve their top rating throughout the business cycle.

Quality Sovereigns and corporate issuers that are very likely to service and repay debt within a five-year credit scenario. They

are likely to preserve their investment-grade rating throughout a normal business cycle.

Opportunistic Issuers that are quite likely to service and repay debt within the five-year credit scenario. Such issuers have an attractive

risk/return profile in the current credit scenario but are subject to rating downgrade risk and, thus, might be exchanged

periodically.

Speculative Sub-investment-grade issuers in Europe and the USA as well as local issuers in emerging markets. Issuers are likely to

service and repay debt in the current credit scenario. Investors must note that these issuers are subject to a higher

downgrade and default frequency and that an active management of these positions is crucial.

Credit rating definition Credit ratings used in our publications follow the definitions and systematic of Moody's (www.moodys.com).

Moody’s Standard &

Poor's Fitch/IBCA Credit rating definition

Aaa AAA AAA Obligations rated Aaa are judged to be of the highest quality, with minimal credit

risk.

Aa1

Aa2

Aa3

AA+

AA

AA-

AA

AA-

Obligations rated Aa are judged to be of high quality and are subject to very low

credit risk.

Investment-

grade

A1

A2

A3

A+

A

A-

A+

A

A-

Obligations rated A are considered upper-medium grade and are subject to low credit

risk.

Baa1

Baa2

Baa3

BBB+

BBB

BBB-

BBB+

BBB

BBB-

Obligations rated Baa are subject to moderate credit risk. They are considered medi-

um-grade and as such may possess certain speculative characteristics.

Ba1

Ba2

Ba3

BB+

BB

BB-

BB+

BB

BB-

Obligations rated Ba are judged to have speculative elements and are subject to

substantial credit risk.

Non-

B1

B2

B3

B+

B

B-

B+

B

B-

Obligations rated B are considered speculative and are subject to high credit risk.

investment-

grade

Caa1

Caa2

Caa3

CCC+

CCC

CCC-

CCC+

CCC

CCC-

Obligations rated Caa are judged to be of poor standing and are subject to very high

credit risk.

Ca CC

C

CC+

CC

CC-

Obligations rated Ca are highly speculative and are likely in, or very near, default,

with some prospect of recovery of principal and interest.

C D DDD Obligations rated C are the lowest rated class of bonds and are typically in default,

with little prospect for recovery of principal or interest.

Technical analysis

The information and opinions expressed were produced by Julius Baer Technical Analysis as of date of writing and are subject to change without notice.

Julius Baer conducts primary technical analysis aimed at creating value through investment recommendations. Technical Analysis uses historic market

prices in order to assess market conditions. The historic data is analysed by chart reading i.e. by following chart patterns and interpreting indicators calcu-

lated from historic price movements. Technical Analysis may be inconsistent with and reach different conclusions to fundamental analysis. It may

vary at any time due to the different tools used to assess market conditions and recommendations. Besides individual investment recommendations,

Technical Analysis also publishes technical indicator readings, which are mechanically calculated and only provide additional information to large sets of

data, and are not intended as investment recommendations. These tables show current trends on an absolute price or relative basis using up, flat and

downward pointing arrows. At the same time, support and resistance levels might be displayed which are calculated using Bollinger Bands.


C Closing price H High price L Low price

ST Short-term (2-8 weeks) MT Medium-term (8-26 weeks) LT Long-term (> 26 weeks)

MAV Moving average

Bollinger-band The middle Bollinger band is a 20 day simple moving average, the higher and lower bands are calculated as a 20-day simple moving

average plus or minus two standard deviations on a 20-day period.

Momentum Momentum is derived from different rate of change calculations based on the underlying instrument.

RSI Relative strength index is a leading momentum indicator of prices, showing the strength of a stock by monitoring changes in closing

prices in a 9-day period.

Rating system for global technical analysis (absolute)

Buy Expected to advance by at least 10% in the coming 3-12 months, unless otherwise stated.

Hold Expected to perform in line (±5%) in the coming 3-12 months, unless otherwise stated.


Reduce Expected to decline by at least 10% in the coming 3-12 months, unless otherwise stated.

Rating system for global technical analysis (relative)

Overweight Expected to outperform its benchmark by at least 5% in the coming 3-12 months, unless otherwise stated.

Neutral Expected to perform in line (±5%) against its benchmark in the coming 3-12 months, unless otherwise stated.

Underweight Expected to underperform its benchmark by at least 5% in the coming 3-12 months, unless otherwise stated.

For the history of Technical Analysis equity recommendations over the previous 12 months please view the document at: http://www.juliusbaer.com/tech-analysis-recom-history

DISCLAIMER

General: The information and opinions expressed in this publication were produced as of the date of writing and are subject to change without notice. This

publication is intended for information purposes only and does not constitute an offer or an invitation by, or on behalf of, Julius Baer to buy or sell any

securities or related financial instruments or to participate in any particular trading strategy in any jurisdiction. Opinions and comments of the authors

reflect their current views, but not necessarily of other Julius Baer entities or any other third party. Other Julius Baer entities may have issued, and may in

the future issue, other publications that are inconsistent with, and reach different conclusions from, the information presented in this publication. Julius

Baer assumes no obligation to ensure that such other publications are brought to the attention of any recipient of this publication.

Suitability: Investments in the asset classes mentioned in this publication may not be suitable for all recipients. This publication has been prepared with-

out taking account of the objectives, financial situation or needs of any particular investor. Before entering into any transaction, investors should consider

the suitability of the transaction to individual circumstances and objectives. Any investment or trading or other decision should only be made by the client

after a thorough reading of the relevant product term sheet, subscription agreement, information memorandum, prospectus or other offering document

relating to the issue of the securities or other financial instruments. This publication should not be read in isolation without reference to the full research

report (if available) which may be provided upon request. Nothing in this publication constitutes investment, legal, accounting or tax advice, or a repre-

sentation that any investment or strategy is suitable or appropriate to individual circumstances, or otherwise constitutes a personal recommendation to

any specific investor. Any references to a particular tax treatment depend on the individual circumstances of each investor and may be subject to change

in the future. Julius Baer recommends that investors independently assess, with a professional advisor, the specific financial risks as well as legal, regulato-

ry, credit, tax and accounting consequences.

Information / forecasts referred to: Although the information and data herein are obtained from sources believed to be reliable, no representation is

made that the information is accurate or complete. In particular, the information provided in this publication may not cover all material information on the

financial instruments or issuers of such instruments. Bank Julius Baer & Co. Ltd., its subsidiaries and affiliated companies do not accept liability for any

loss arising from the use of this publication. Important sources for the production of this publication are e.g. national and international media, information

services (e.g. Thomson Reuters, Bloomberg Finance L.P.), publicly available databases, economic journals and newspapers (e.g. Financial Times, Wall

Street Journal), publicly available company information, publications of rating agencies. Ratings and appraisals contained in this publication are clearly

marked as such. All information and data used for this publication relate to past or present circumstances and may change at any time without prior no-

tice. Statements contained in this publication regarding financial instruments or issuers of financial instruments relate to the time of the production of this

publication. Such statements are based on a multitude of factors which are subject to continuous change. A statement contained in this publication may,

thus, become inaccurate without this being published. Potential risk regarding statements and expectations expressed in this publication may result from

issuer specific and general (e.g. political, economic, market, etc.) developments.

Risk: The price and value of, and income from investments in any asset class mentioned in this publication may fall as well as rise and investors may not

get back the amount invested. Risks involved in any asset class mentioned in this publication may include but are not necessarily limited to market risks,

credit risks, currency risks, political risks and economic risks. Investments in emerging markets are speculative and may be considerably more volatile than

investments in established markets. Past performance is not a reliable indicator of future results. Performance forecasts are not a reliable indica-

tor of future performance. The Julius Baer fixed-income ratings apply exclusively to bonds of the specific issuer ranked senior unsecured or

higher. They are therefore not valid for debentures junior to the mentioned ranking unless mentioned explicitly. Particular risks in connection

with specific investments featured in this publication are disclosed prominently hereinabove in the text of this publication. Any investment should only be

made after a thorough reading of the current prospectuses and/or other documentation/information available.

Miscellaneous: We are required to disclose important information about our interests and potential conflicts. In order to prevent conflicts of interest from

adversely affecting the interests of its clients, Julius Baer has implemented the necessary organisational and administrative arrangements to manage

conflicts of interests. Julius Baer's arrangements include putting in place information barriers that ensure the separation of its research departments from

other areas of the business so that no other area of the business will know the contents of any planned research until the research has been distributed to

clients. Adherence to these procedures is monitored by the Julius Baer Compliance Department. Unless explicitly stated in this publication, its information

and analysis has not been disclosed to the issuer of the securities referred to herein or a Julius Baer entity before the publication has been published or

disseminated.

A Julius Baer entity may, to the extent permitted by law, participate or invest in other financing transactions with the issuer of the securities referred to

herein, perform services or solicit business from such issuers, have a position or effect transactions in the securities or options thereof, have any other

significant financial interest regarding the issuers of the securities referred to herein and/or may have done so in the past. For further information about

our interest in the investments featured in this publication, see the company-specific disclosures above.

Important distribution information

This publication may only be distributed in countries where its distribution is legally permitted. This information is not directed to any person in any juris-

diction where (by reason of that person’s nationality, residence or otherwise) such publications are prohibited.


External Asset Managers/External Financial Advisors: In case this research publication is provided to an External Asset Manager or an External Finan-

cial Advisor, Julius Baer expressly prohibits that it is redistributed by the External Asset Manager or the External Financial Advisor and is made available to

their clients and/or third parties. By receiving any research publication the External Asset Managers or the External Financial Advisors confirm that they

will make their own independent analysis and investment decisions, if applicable.

Austria: Julius Baer Investment Advisory GesmbH, authorised and regulated by the Austrian Financial Market Authority (FMA), distributes research to its

clients.

Chile: This publication is for the intended recipient only.

Dubai International Financial Centre: This publication has been distributed by Julius Baer (Middle East) Ltd. It may not be relied upon by or distributed

to Retail Clients. Please note that Julius Baer (Middle East) Ltd. offers financial products or services only to Professional Clients who have sufficient finan-

cial experience and understanding of financial markets, products or transactions and any associated risks. The products or services mentioned will be

available only to Professional Clients in line with the definition of the DFSA Conduct of Business Module. Julius Baer (Middle East) Ltd. is duly licensed and

regulated by Dubai Financial Services Authority (DFSA).

Germany: Bank Julius Bär Europe AG, authorised and regulated by the German Federal Financial Supervisory Authority (BaFin), disseminates research to

its clients.

Guernsey: This publication is distributed by Bank Julius Baer & Co Ltd., Guernsey Branch, which is licensed in Guernsey to provide banking and invest-

ment services and is regulated by the Guernsey Financial Services Commission.

Hong Kong: This publication is distributed in Hong Kong by and on behalf of, and is attributable to, Bank Julius Baer & Co. Ltd., Hong Kong branch, which

holds a full banking licence issued by the Hong Kong Monetary Authority under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong SAR). The

Bank is also a registered institution under the Securities and Futures Ordinance (SFO) (Chapter 571 of the Laws of Hong Kong SAR) to carry on Type 1

(dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities with Central Entity number AUR302. This

document must not be issued, circulated or distributed in Hong Kong other than to ‘professional investors’ as defined in the SFO. The contents of this

publication have not been reviewed by any regulatory authority. If you have any queries concerning this publication, please contact your Hong Kong rela-

tionship manager. Bank Julius Baer & Co. Ltd. is incorporated in Switzerland with limited liability.

India: This is not a publication of Julius Baer Wealth Advisors (India) Private Limited (JBWA) (a group company of Julius Baer, Zurich) or any of its Indian

subsidiaries under the SEBI Research Analyst Regulations, 2014. This publication has been produced by Bank Julius Baer & Co. Ltd. (Julius Baer), a com-

pany incorporated in Switzerland with limited liability and it does not have a banking license in India. This publication should not be construed in any

manner as an offer, solicitation or recommendation by JBWA or any Julius Baer entity globally.

Ireland: Julius Baer International Limited – Ireland Branch is authorised by the Financial Conduct Authority in the UK and regulated by the Central Bank of

Ireland for conduct of business rules and disseminates research to its clients.

Israel: This publication is distributed by Julius Baer Financial Services (Israel) Ltd. (JBFS), licensed by the Israel Securities Authority to provide investment

marketing and portfolio management services. Pursuant to Israeli law, "Investment Marketing" is the provision of advice to clients concerning the merit of

an investment, holding, purchase or sale of securities or financial instruments, when the provider of such advice has an affiliation to the security or finan-

cial instrument. Due to its affiliation to Bank Julius Baer & Co. Ltd., JBFS is considered to be affiliated to certain securities and financial instruments that

may be connected to the services JBFS provides, and therefore any use of the term "investment advice" or any variation thereof, in this publication should

be understood as Investment Marketing, as explained above. A Julius Baer entity, including JBFS, may have an affiliation with certain financial instruments

and/or other financial products. It should be noted that with respect to these financial instruments or products, a Julius Baer entity and/or JBFS may

receive a financial or other benefit as a result of the client's investment, and JBFS may give preference to these financial instruments or products in con-

nection with the services it provides its clients. For further information about our interest in the investments featured in this publication, please contact

your relationship manager.

Kingdom of Bahrain: Julius Baer (Bahrain) B.S.C.(c), an investment business firm, which is licensed and regulated by the Central Bank of Bahrain (CBB),

distributes this publication to its expert and accredited investor clients. Please note that Julius Baer (Bahrain) B.S.C.(c) offers financial products or ser-

vices only to expert and accredited investor clients in line with the definition of the CBB’s rulebook that contains regulations, directives and rules pursuant

to the CBB rulemaking powers under the CBB law. This publication may not be relied upon by or distributed to retail clients. The CBB does not take any

responsibility for the accuracy of the statements and information contained in this publication nor shall it have any liability to any person for any damage

or loss resulting from reliance on any statement or information contained herein.

Lebanon: This publication has been distributed by Julius Baer (Lebanon) S.A.L., which is a duly licensed financial intermediation institution, supervised by

the Lebanon Capital Markets Authority (CMA). It has not been approved or licensed by the Lebanon CMA or any other relevant authority in Lebanon. It is

strictly private and confidential and is being issued to a limited number of individual and institutional investors upon their request and must not be provid-

ed to, or relied upon, by any other person. The information contained herein is as of the date referenced and Julius Baer (Lebanon) S.A.L. shall not be

liable to periodically update said information. The quotes and values provided herein are for indicative purpose only and shall in no way refer to tradable

levels.

Luxembourg: Julius Baer Investment Services S.à r.l., authorised and regulated by the Commission de Surveillance du Secteur Financier (CSSF), dissemi-

nates research to its clients. This publication has not been authorised or reviewed by the CSSF and it is not intended to file it with the CSSF.

Monaco: Bank Julius Baer (Monaco) S.A.M., an institution approved by the Minister of State for Monaco and the Bank of France, distributes this publica-

tion to its clients. Julius Baer Wealth Management (Monaco) S.A.M., an asset management company authorised in Monaco, is distributing to its clients

this publication.

Netherlands: Julius Baer (Netherlands) B.V., authorised and regulated by the Netherlands Authority for the Financial Markets (AFM) and authorised to (i)

receive and transfer orders from clients; and (ii) provide investment advice, disseminates this publication to its clients. Bank Julius Bär Europe AG is au-

thorised and regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and authorised to provide banking and certain investment services

in the Netherlands on a passported basis. This publication has been produced by Bank Julius Baer & Co., which is not authorised to provide regulated

services in the Netherlands. Requirements regarding (i) the independence of investment research and (ii) the prohibition of trading prior to the an-

nouncement of financial analysis are not applicable.

Panama: The relevant services and/or products mentioned in this publication shall only be provided in Panama by a Julius Baer entity authorised to pro-

vide such services/products in Panama. This publication is for the intended recipient only. Financial instruments mentioned in this publication are neither

registered with nor under the supervision of the Superintendence of the Securities Market (formerly the National Securities Commission). The exemption

from registration is based on Article 129 of Decree Law 1 of 8 July 1999 as amended and organised into a single text by Title II of Law 67 of 2011 (the

“Securities Law”). In consequence, the tax treatment established in Articles 334 to 336 of the Securities Law does not apply to them.


Singapore: This publication is available from Bank Julius Baer & Co. Ltd., Singapore branch, for accredited investors only. As Bank Julius Baer & Co. Ltd.,

Singapore branch, has a Unit exemption under Section 100(2) of the Financial Advisers Act, Cap. 110 of Singapore (the FAA), it is exempted from many of

the requirements of the FAA, amongst others, the requirement to disclose any interest in, or any interest in the acquisition or disposal of, any securities or

financial instruments that may be referred to in this publication. Further details of these exemptions are available on request. This publication has not

been reviewed by and is not endorsed by the Monetary Authority of Singapore (MAS). Any document or material relating to the offer or sale, or invitation

for subscription or purchase, of securities or investment funds (i.e. collective investment schemes) may not be circulated or distributed, nor may such

securities or investment funds be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to

persons in Singapore other than (i) to an institutional investor under Section 274 or 304 respectively of the Securities and Futures Act, Cap. 289 of Singa-

pore (the SFA), (ii) to a relevant person (which includes an accredited investor), or any person pursuant to Section 275(1A) or 305(2) respectively, and in

accordance with the conditions, specified in Section 275 or 305 respectively of the SFA, or (iii) otherwise pursuant to, and in accordance with the condi-

tions of, any other applicable provision of the SFA. In particular, for investment funds that are not authorised or recognised by the MAS, units in such

funds are not allowed to be offered to the retail public; any written material issued to persons as aforementioned in connection with an offer is not a pro-

spectus as defined in the SFA and, accordingly, statutory liability under the SFA in relation to the content of prospectuses does not apply, and investors

should consider carefully whether the investment is suitable for them. Please contact a representative of Bank Julius Baer & Co. Ltd., Singapore branch,

with respect to any inquiries concerning this publication. Bank Julius Baer & Co. Ltd. is incorporated in Switzerland.

Spain: Julius Baer Agencia de Valores, S.A.U. and Julius Baer Gestión S.G.I.I.C, S.A., both authorised and regulated by the Comisión Nacional del Mercado

de Valores (CNMV), disseminate research to their clients.

Switzerland: This publication is distributed by Bank Julius Baer & Co. Ltd., Zurich, authorised and regulated by the Swiss Financial Market Supervisory

Authority (FINMA).

The Bahamas: This publication has been distributed by Julius Baer Bank & Trust (Bahamas) Ltd., an entity licensed by the Central Bank of The Bahamas

and also regulated by the Securities Commission of The Bahamas. This publication does not constitute a prospectus or a communication for the purposes

of the Securities Industry Act, 2011 or the Securities Industry Regulations, 2012. In addition, it is only intended for persons who are designated or who are

deemed “non-resident” for the purposes of Bahamian Exchange Control Regulations and rules.

United Arab Emirates: This publication has not been approved or licensed by the UAE Central Bank, the UAE Securities and Commodities Authority or

any other relevant authority in the UAE. It is strictly private and confidential and is being issued to a limited number of sophisticated individual and institu-

tional investors upon their request and must not be provided to, or relied upon, by any other person.

United Kingdom: This publication is a financial promotion for the purposes of Section 21 of the Financial Services and Markets Act 2000 (FSMA) and has

been approved for distribution in the United Kingdom by Julius Baer International Limited, which is authorised and regulated by the Financial Conduct

Authority (FCA). Rules made by the FCA under the FSMA for the protection of retail clients do not apply to services provided by members of the Julius

Baer Group outside the UK and the Financial Services Compensation Scheme will not apply.

Uruguay: In the case this publication is construed as an offer, recommendation or solicitation for the sale or purchase of any securities or other financial

instruments, the same are being placed relying on a private placement exemption (“oferta privada”) pursuant to Section 2 of Law No°18,627 and are not

and will not be registered with the Financial Services Superintendence of the Central Bank of Uruguay to be publicly offered in Uruguay. In the case of any

closed-ended or private equity funds, the relevant securities are not investment funds regulated by Uruguayan Law No.°16,774 dated September 27,

1996, as amended. If you are located in Uruguay, you confirm that you fully understand the language in which this publication and all documents referred

to herein are drafted and you have no need for any document whatsoever to be provided in Spanish or any other language.

United States: NEITHER THIS PUBLICATION NOR ANY COPY THEREOF MAY BE SENT, TAKEN INTO OR DISTRIBUTED IN THE UNITED STATES OR

TO ANY US PERSON.

This publication may contain information obtained from third parties, including ratings from rating agencies such as Standard & Poor’s, Moody’s, Fitch and

other similar rating agencies, and research from research providers such as MSCI ESG Research (MSCI ESG Research is produced by Institutional Share-

holder Services, Inc. (“ISS”) or its subsidiaries. Issuers mentioned or included in any MSCI ESG Research materials may be a client of or affiliated with a

client of MSCI Inc. (“MSCI”), ISS, or another MSCI subsidiary, including ISS Corporate Services, Inc., which provides tools and services to issuers). Repro-

duction and distribution of third-party content in any form is prohibited except with the prior written permission of the related third party. Third-party

content providers do not guarantee the accuracy, completeness, timeliness or availability of any information, including ratings or research, and are not

responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such content. Third-

party content providers give no express or implied warranties, including, but not limited to, any warranties of merchantability or fitness for a particular

purpose or use. Third-party content providers shall not be liable for any direct, indirect, incidental, exemplary, compensatory, punitive, special or conse-

quential damages, costs, expenses, legal fees or losses (including lost income or profits and opportunity costs) in connection with any use of their content,

including ratings or research. Credit and/or research ratings are statements of opinions and are not statements of fact or recommendations to purchase,

hold or sell securities. They do not address the market value of securities or the suitability of securities for investment purposes and should not be relied on

as investment advice.

© Julius Baer Group, 2016

Documents

RESEARCH WEEKLY MUCH ADO ABOUT VERY LITTLE · growth rates for August in all the big a solidly positive month -on month 12 October FOMC Minutes The minutes of the Federal Open Market