Wealth and Investment Management Title Slide JUN 8 – 10, 2015 Global Market Outlook

Wealth and Investment Management

Title Slide

JUN 8 – 10, 2015

www.bermudacaptive.bm

Global Market Outlook

Wealth and Investment Management

Markets and the Global Economy

Barclays Research, Economics and Strategy

June 2015

Henk Potts

Performance of our asset classes

3

Source: FactSet, Datastream, Barclays; graph based on asset class indices as published in Compass February 2013.

Alternative Trading Strategies*

Real Estate

Commodities

Emerging Markets Equities

Developed Markets Equities

High Yield and Emerging Markets Bonds

Investment Grade Bonds

Developed Government Bonds

Cash & Short-maturity Bonds

2.6%

0.8%

-3.2%

5.7%

5.1%

1.8%

1.1%

0.6%

0.0%

-0.6%

15.0%

-17.0%

-2.2%

4.9%

1.3%

7.6%

8.1%

0.1%

2014 2015 (through end of May)

US forecasts in a nutshell

4

% y-o-y except where stated

2013 2014E 2015F 2016F

GDP2.2 2.4 2.4 2.5

CPI1.5 1.6 0.3 1.9

Official interest rate (%)

0-0.25 0-0.25 0.5-0.75

NA

Future forecasts are not a reliable indicator of future performance

US Interest rates have been close to zero since Dec 2008

5

Data source: Datastream, Barclays

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-150

1

2

3

4

5

6

FED Target Rate 25 year average

Yield (%)

The slow normalisation of US policy will start in Sept 2015

6


Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-160

1

2

3

4

5

6

Forward curve 25 year average

US Libor forward curve implied by swap rates (%)

Source: Bloomberg, Datastream, Barclays

More than 200k new jobs each monthThe unemployment rate has steadily declined

US labour market has rapidly recovered

7

Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-144

5

6

7

8

9

10

US Unemployment ...

Unemployment (%)

Apr-12 Apr-13 Apr-14 Apr-150

50

100

150

200

250

300

350

400

450

Month-on-Month Change

Change in Nonfarm Payrolls (000s)

Source: Datastream, Bloomberg, Barclays

And debt affordability remains high

Strong equity performance is driving higher net worth

Consumer confidence

Consumer confidence near multi-year highs

8

Dec-05 Dec-07 Dec-09 Dec-11 Dec-1320

30

40

50

60

70

80

90

100

110

120

Conference Board

U. of Michigan

Index Value

Dec-99 Dec-03 Dec-07 Dec-110

500

1000

1500

2000

0

20

40

60

80

100

S&P 500 Index (lhs)Household Net Worth (rhs)

Index Value Trillions, USD

9

10

11

12

13

14

Household debt service ra-tio (% disposable income)

Average

Ratio

US Housing Market recovery has cooled

9

Source: Datastream, Barclays

-20

-15

-10

-5

0

5

10

15

20

US S&P/Case-Shiller home price index 20 city composite (...

Year-on-Year Change (%)

The US Deficit is decreasing rapidly

10


-4

-2

0

2

4

6

8

10

12

US

US Government Deficit as % of GDP (1 year moving average)

Restructuring Europe is slow, but markets remain calm

11


0

5

10

15

20

25

30

35

40

45

Spain

Italy

Ireland

Greece

Portugal

10 year Government Bonds, Spread vs. Ger-many(%)

The European Crisis isn't over….still plenty of risk in 2015

12

Data source: Eurostat, Datastream, Barclays

Germany Austria Ireland France Italy Portugal Spain Greece0

5

10

15

20

25

30

Unemployment Rate

Percent (%)

Greek government debt

13


Dec-90 Dec-93 Dec-96 Dec-99 Dec-02 Dec-05 Dec-08 Dec-11 Dec-1450

60

70

80

90

100

110

120

130

140

150

160

170

180

Greece Euro zone

Gross Government Debt as % of GDP

Inflation in the Euro area turned negative in Dec

14


Dec-9

9

Dec-0

3

Dec-0

7

Dec-1

1

Dec-1

5

Dec-1

9

Dec-2

3

Dec-2

7

Dec-3

1

Dec-3

5

Dec-3

9

Dec-4

3

Dec-4

7

Dec-5

1

Dec-5

5

Dec-5

9

Dec-6

3

Dec-6

7

Dec-7

1

Dec-7

5

Dec-7

9

Dec-8

3

Dec-8

7

Dec-9

1

Dec-9

5

Dec-9

9

Dec-0

3

Dec-0

7

Dec-1

1-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5CPI inflation (% y-o-y)

The ECB’s QE program dwarfs the programs of all other central banks

15

Source: Gavekal, Barclays

Fed QE3 Fed QE2 BoE QE2 BoJ 2013 BoE QE1 BoJ 2014 ECB QE0.0

0.5

1.0

1.5

2.0

2.5

3.0Ratio of central banks' government bond purchase to net supply of gvt bonds

Euro-area forecasts in a nutshell

16


2013 2014E2015

F 2016F

GDP -0.4 0.9 1.4 1.7

CPI 1.4 0.4 0.2 1.1

Official interest rate (%) 0.25 0.05 0.05 NA


UK forecasts in a nutshell

17


2013 2014E 2015F 2016F

GDP 1.7 2.8 2.2 2.1

CPI 2.6 1.5 0.2 1.6

Official interest rate (%) 0.5 0.5 0.5 NA


Implied interest rate United Kingdom

18


Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-180.0

1.0

2.0

3.0

4.0

5.0

6.0

Implied 3-month rate United Kingdom

25 year average

Percent

Japan - Real GDP and Inflation

19


-10

-8

-6

-4

-2

0

2

4

6

Inflation Real GDP

Change Y-o-Y (%)

Chinese GDP growth has slowed, but remains at a respectable level

20


-4

-2

0

2

4

6

8

10

12

14

16

World

Real GDP Growth Y-o-Y (%)

GDP growth in India

21

Source: Oxford Economics, Datastream, Barclays

0

2

4

6

8

10

12

14

India

Real GDP Growth Y-o-Y (%)

Long term asset class performance

22

Data source: Barclays Equity Gilt Study

18991900190119021903190419051906190719081909191019111912191319141915191619171918191919201921192219231924192519261927192819291930193119321933193419351936193719381939194019411942194319441945194619471948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014 10.00

100.00

1,000.00

10,000.00

100,000.00

1,000,000.00

10,000,000.00

Equity Gilts T-Bills

UK Indexed Performance (1899=100)

US Equities - S&P 500

23


Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14600

800

1000

1200

1400

1600

1800

2000

S&P 500 Price index

Price index

Expected earnings growth

24

Data source: IBES, Datastream, Barclays

2015 F 2016 F0

2

4

6

8

10

12

14

16

18

S&P 500 Euro Stoxx

Earnings Growth (%)

S&P 500 Trailing Price/Earnings Ratio with Historical Median

25


Jan-68 Jan-73 Jan-78 Jan-83 Jan-88 Jan-93 Jan-98 Jan-03 Jan-08 Jan-130

5

10

15

20

25

30

S&P 500 trailing P...

Bargains

Undervalued

Median

Overvalued

Very Overval-ued

S&P 500 and Eurofirst 300

26


Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-1590

140

190

240

290

S&P 500 Eurofirst 300

Performance index (USD, Mar-09=100)

Equity performance 2015 year-to-date by region

27

Source: FactSet, Barclays

USA

Developed

Emerging

United Kingdom

Europe ex UK

Japan

0.0% 5.0% 10.0% 15.0% 20.0%

3.4%

7.3%

8.1%

8.1%

15.1%

19.6%

Net return year-to-date in local currency(%)

S&P 500 and Euro STOXX - Forward Price/Earnings ratio

28


Nov-99 Nov-01 Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-135

10

15

20

25

30

S&P 500 Euro STOXX

Forward Price/Earnings ratio (x)

S&P 500 and Euro STOXX - Trailing Dividend Yield

29

Source: Datastream, Bloomberg, Barclays

Jun-99 Jun-01 Jun-03 Jun-05 Jun-07 Jun-09 Jun-11 Jun-131.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

S&P 500 Euro STOXX

Trailing Dividend Yield (%)

Selected equity markets


Developed Markets Equities have outperformed Emerging Markets Equities in the years after the financial crisis

30

US Large and SMID cap companies have had the highest returns since end of 2012

Dec-12 Mar-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-1582

91

100

109

118

127

136

145

154S&P 500 Index

Russell 2500 Index

Euro Stoxx 50 Index

Nikkei 225 Index

MSCI EM Index

Price Indices (USD, Dec-12=100)

Forward PE - Developed and Emerging Markets

31

Data source: MSCI, Barclays

Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-149

10

11

12

13

14

15

16

17

Developed Markets

Forward PE (x)

Government bond yields: selected markets

32

Data source: FactSet, Barclays

Series10.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

± one standard deviation Current

Nominal Yield Level (%)

Bond represented by respective Barclays indices. Source: FactSet, Barclays

High Yield nominal yieldsInvestment Grade Bonds nominal yield

Investment Grade and High Yield Bond yields

33

Investment grade credit is still expensive and vulnerable to rising issuance: we are tactically underweight

Expensive, but less interest rate risk. The majority of the recent changes in spreads has been driven by moves within the energy space. We remain tactically underweight

Jan-73 Jan-83 Jan-93 Jan-03 Jan-132

4

6

8

10

12

14

16 Investment Grade

10-year moving av-erage

± one standard de-viation


Jan-87 Jan-92 Jan-97 Jan-02 Jan-07 Jan-125

7

9

11

13

15

17

19

21 High Yield10-year moving av-erage± one standard de-viation


Oil price - Brent Crude Oil

34


Dec-08 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-1535

45

55

65

75

85

95

105

115

125

135

Brent Crud...

US Dollar/Barrel

Commodity prices

35


Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15150

200

250

300

350

400

450

500

550

Bloomberg Commodity Index

Spot Price

Gold has slumped

36

Source: Datastream, BarclaysPast performance is not a guide to future performance

1100

1200

1300

1400

1500

1600

1700

1800

Gold

USD/Troy Ounce

Divergence in growth rate and policy suggests the dollar will continue to strengthen

37


Dec-13 Mar-14 Jul-14 Oct-14 Jan-15 Apr-1585.0

90.0

95.0

100.0

105.0

USD trade wei...

Trade weighted index

FX Forecasts

38

Spot Price Performance Forecasts Forecasts vs Forward Spot at forecast Cross Spot 1 Week YTD 5Yr Ann. Q2 15 Q3 15 Q1 16 Q2 15 Q3 15 Q1 16

EUR/ USD 1.09 -0.9 -9.9 -2.4 1.05 1.00 0.95 -3.8% -8.5% -13.5% 1.10 USD/ JPY 125 3.3 4.2 6.6 121 121 118 -2.7% -2.5% -4.5% 120 GBP/ USD 1.52 -1.9 -2.6 0.7 1.48 1.43 1.40 -2.6% -5.9% -7.8% 1.55 USD/ CHF 0.95 1.1 -4.0 -3.7 1.03 1.07 1.11 9.3% 14.0% 19.4% 0.96 USD/ CAD 1.25 1.6 7.8 3.5 1.28 1.30 1.36 1.9% 3.4% 8.1% 1.25 AUD/ USD 0.76 -2.6 -7.3 -2.0 0.77 0.73 0.72 1.6% -3.2% -3.8% 0.79 NZD/ USD 0.71 -2.7 -9.0 0.9 0.73 0.70 0.67 3.6% 0.1% -2.8% 0.76

EUR/ JPY 136 1.5 -6.2 4.0 127 121 112 -6.4% -10.8% -17.4% 131 EUR/ GBP 0.72 1.4 -7.7 -3.0 0.71 0.70 0.68 -1.1% -2.7% -5.9% 0.71 EUR/ CHF 1.03 -1.0 -14.2 -6.2 1.08 1.07 1.05 5.0% 4.3% 2.9% 1.05 EUR/ SEK 9.36 1.3 -1.2 -0.4 9.50 9.30 8.90 1.6% -0.5% -4.7% 9.31 EUR/ NOK 8.69 3.3 -4.2 1.9 9.00 8.90 8.70 3.1% 1.7% -1.2% 8.60

GBP/ JPY 189 0.5 1.1 7.1 179 173 165 -5.3% -8.3% -12.0% 186 GBP/ AUD 2.00 1.0 4.7 2.7 1.92 1.96 1.94 -4.3% -2.7% -4.4% 1.96 GBP/ NZD 2.14 0.9 7.5 -0.1 2.03 2.04 2.09 -5.9% -6.1% -5.1% 2.04 GBP/ CAD 1.91 0.5 5.5 4.4 1.89 1.86 1.90 -1.0% -2.6% -0.6% 1.94 GBP/ CHF 1.44 -1.4 -7.1 -3.2 1.52 1.53 1.55 6.1% 7.3% 9.8% 1.49

Latest forecasts dated 21st May 2015. These forecasts represent our current views of the FX rates shown. These views may change in the future and may not accurately reflect actual future FX rate movements. All data as cob 1st June 2015 unless stated otherwise.

Selected US equity performance statistics since 1925

39

Source: Barclays Equity Gilt Study 2015, Barclays; All investments can fall in value. You may lose capital. Please note that past performance is not a guide to future performance.

Number of consecutive years

2 3 4 5 10 18

Outperform cash 66 68 63 67 68 72

Underperform cash 22 19 23 18 12 0

Total number of years

88 87 86 85 80 72

Probability of equity outperformance

75% 78% 73% 79% 85% 100%

Outperform bonds 61 58 57 59 63 66

Underperform bonds

27 29 29 26 17 6

Total number of years

88 87 86 85 80 72

Probability of equity outperformance

69% 67% 66% 69% 79% 92%

40

Disclaimer

This document has been issued and approved by Barclays Bank PLC. Although information in this document has been obtained from sources believed to be reliable, we do not represent or warrant its accuracy, and such information may be incomplete or condensed. This document does not constitute a prospectus, offer, invitation or solicitation to buy or sell securities and is not intended to provide the sole basis for any evaluation of the securities or any other instrument, which may be discussed in it. All estimates and opinions included in this document constitute our judgement as of the date of the document and may be subject to change without notice. This document is not a personal recommendation and you should consider whether you can rely upon any opinion or statement contained in this document without seeking further advice tailored for your own circumstances. This document is confidential and is being submitted to selected recipients only. It may not be reproduced or disclosed (in whole or in part) to any other person without our prior written permission. Law or regulation in certain countries may restrict the manner of distribution of this document and persons who come into possession of this document are required to inform themselves of and observe such restrictions. We or our affiliates may have acted upon or have made use of material in this document prior to its publication. You should seek advice concerning any impact this investment may have on your personal tax position from your own tax adviser.

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Wealth and Investment Management Title Slide JUN 8 – 10, 2015 Global Market Outlook