incorporates this view, as we are neutral on the Exhibit 71: US Dollar Real Effective Exchange Rate euro, yen and pound versus the US dollar, but Dollar valuations are near their long-term average but below remain bearish on the Chinese renminbi. levels reached in past bull cycles. We discuss our view on the broader US dollar, P&nore as well as each of these currencies, next. 4 US Dollar : Following three consecutive years of dollar 24 outperformance, it would be reasonable to assume the up-cycle is nearing an end. After all, dollar 06 valuation is now close to its historic average level 0 Map} OV —__fft relative to the currencies of US trade partners, after adjusting for inflation. Moreover, the length of this | dollar bull market is approaching that of the two 2 prior episodes shown in Exhibit 71 and shares a 8.3 Years 6.8 Years 5.4 Years similar underlying driver—tighter monetary policy on 1978 «=«1983.—S's«étg88~=Ss«s1993'=Sté=s«‘éi998~=Ss«20038~=S «2008 )~— 2013 in the US relative to its global peer group. . Data through November 30, 2016. But while we expect the pace of US dollar Note: Z-score is calculated on data since 1973 and represents the number of standard deviations appreciation to slow, there are many reasons —_—_—[0" we haaniyo to believe the greenback’s outperformance can continue this year. Dollar valuation remains below the peaks reached in the 1985 and 2002 effectively supporting US goods by making them bull cycles, suggesting it is not yet prohibitively more competitive. Economic theory suggests that expensive. The dollar should also benefit from free-floating currencies such as the US dollar solid US macroeconomic fundamentals relative to would need to adjust higher by the amount of other developed economies. President-elect Trump the tax to create equilibrium with similar goods ran on a platform that includes fiscal expansion sourced across foreign borders. Taken at face and corporate tax reform. Although his economic value, this implies a 20%