DB Today -Global/Macro:Monday 27th June 2016

　　Europe Strategy - Special Report - Francis Yared

　　At the time of writing, the market response to the UK referendum has beenrelatively orderly. The initial market reaction was in line with the levels we hadexpected in case of a Leave with the exception of 10Y BTPs which sold off lessthan anticipated. Political contagion to the Eurozone is the key transmissionchannel for a more sustained and significant risk off at a global level. However,the direct economic impact outside of the UK should be relatively limited andcentral bank support should mitigate the risks of contagion via the financialsystem. The market is pricing BoE cuts of 18bp cut by September and 23bp byDecember while there is also expectation of additional measures includingpossibly QE. Details on page 08

　　Europe - Focus Europe - Mark Wall

　　The UK’s momentous decision to leave the EU is just the beginning of a longprocess. First, following the UK Prime Minister’s decision to step down therewill be a leadership contest, to be completed probably in mid-September.

　　Article 50 (to formally leave the EU) would then be triggered by the new leadertowards the end of the year. The Bank of England is likely to respond toweaker economic growth (we have cut our growth view by over 1pp in 2017)as opposed to any spike in inflation induced by a fall in the currency byloosening policy, though not until its August/September meetings. Details onpage 09

　　Commodities – Special Report - Grant Sporre

　　The Brexit vote will likely heighten investor risk perceptions for some time tocome given that market predictions so clearly favored the opposite result asrecently as yesterday evening. It may well be that perceived uncertaintyaround other related outcomes, including economic growth and central bankpolicy, heralds intervals of higher market volatility. Details on page 10

　　Global Strategy - Consensus Earnings Trends - Wolf Rotberg

　　The slowdown in global earnings downgrades continues. 1m downgrades for2016E declined to -0.5% over the past month (vs -0.6% the previous month),supported by further stabilising US EPS (-0.1% over the past month) and aslowdown in Stoxx 600 EPS downward revisions (-0.8% vs. -1.1% over theprevious month). After solid upgrades over the previous month (+1.0%), EMearnings failed to support global earnings at the margin, as they were reviseddown by -0.4%. Among global sectors, only energy and materials sawupgrades (+1.3% and +0.5% respectively) while consumer discretionary andfinancials witnessed strong downgrades (-1.3% and -0.8% respectively).

　　Details on page 11