DISCLOSUREAPPENDIXATTHEBACKOFTHISREPORTCONTAINSIMPORTANTDISCLOSURESAND ANALYST CERTIFICATIONS. CREDIT SUISSE SECURITIES RESEARCH & ANALYTICSBEYOND INFORMATION Client-Driven Solutions, Insights, and Access European Economics Greece: Driving blind towards the exit ThechancesofadisorderlyGreekexitfromtheeurohaverisenmateriallyin thepastcoupleofweeks,inourview.Andaftertheweekend's"No"vote,we now think the chances of that happening are slightly more than 50%. So it is still a close call. At this stage, we'd emphasise the uncertainty, rather than absolute probabilities. That may not be ideal, but it is realistic. There is still a chance of a deal between Greece and its creditors. And, even in the event of failure, a Greek exit from the euro would not be definite, even if mightbe the likely outcome. In this note we lay out the various turnings from which Greece, its creditors, or theECBcouldswerveawayfromthemorenegativeoutturns,aswellas examine the short- and medium-term risks of economic and financial contagion.Given the erosion of trust between the creditors and Greece, if there were to be alastminutedeal, itwould needtobe craftedextremelysensitively.Andeven then,it isbynomeansclearitwouldbeacceptabletothegovernmentsand some parliaments of euro area member states. But there is still a chance. The lifeline that is keeping Greece in the single currency (or indeed, the single currency in Greece) is the ECB's provision of Emergency Liquidity Assistance to the Greek banks. While it remains capped, the banks will need to remain closed. Butwhileitremainsinplace,they'llatleastremaingoingconcerns.Although yesterday's increase of collateral haircuts should have no material impact, we'd read it as a strong signal that the ECB would have no compunction withdrawing support of Greek defaults to the ECB on 20 July.As we discussed last week, if ELA were to be withdrawn, the consequences for theGreekbankingsystemwouldbegrave,andoftheoptionsavailabletothe Greekgovernmentatthatpoint,aswitchtoanewcurrencythough challenging would be the most likely outcome.Finally, we revisit the possible channels of contagion. In the near term, the main vulnerabilitycouldbebusinessconfidence.Uncertaintyhasrisenmaterially, sufficienttodampencorporateanimalspirits.Sotherearematerialdownside risks to our growth forecasts.Financialcontagionhas,sofar,beenlimited.Butitmayjustbedormant.In particular,we'dworrythatthecorrelationbetweentheelectionofaradical governmentandthecollapseofitsbankingsystemmeansmarketswillbe acutely sensitive to rising support for radical parties left and right elsewhere in the euro area. Research Analysts Christel Aranda-Hassel 44 20 7888 1383 christel.aranda-hassel@credit-suisse.com Mirco Bulega +44 20 7883 9315 mirco.bulega@credit-suisse.com Neville Hill 44 20 7888 1334 neville.hill@credit-suisse.com Sonali Punhani 44 20 7883 4297 sonali.punhani@credit-suisse.com Giovanni Zanni +44 20 7888 6827 giovanni.zanni@credit-suisse.com 07 July 2015 Economics Research

07 July 2015 European Economics2 A new hope after the referendum. Can a deal be made?Timeisshort,withpoliticalandimplementationhurdlesstillhigh,butadealcouldbe reachednonetheless.Welaydownbelowtheconditionsandtentativetimetablefora possible positive outcome in the negotiations. Pre-conditionforadeal. For a compromise to be reached, the first necessary, but not sufficientconditionwastobringtothenegotiationtableaproposaloftheGreek governmentthatcouldbeseenascredibleandacceptablebytheEurogroup,firstlyas the latter needs to validate the request for any ESM support and then by the institutions, which need to check the technical viability of the proposal.United Parties of Greece. This proposal has apparently only been delivered orally to euro areapartnerstodayinBrussels,whichisnotidealwiththepromisetoprovideamore formaldocumenttomorrow.ThefactthatGreekPMTsiprasgotthebackingfor negotiationsfromthemainpro-EuropeanGreekoppositionleadersreinforcesatthe marginitspoliticalappealforthecreditors,inourview,aswellasinsuringthe parliamentaryapprovalofafinalagreement,ifandwhenitisconcluded.Indeed,it suggeststo us that the country as a whole is behind the negotiations, in a move towards national responsibility that is a first since the start of the crisis. Restart negotiations from where they left off before the referendum Although at the timeofwritingwedonthavethedetailsoftheGreekproposal,thecontoursshouldbe close to the draft sent by Tsipras to the Institutions on 1 July at least in spirit, given that the economy has deteriorated over the past few weeks and a new economic scenario has to be taken into account to make sensible fiscal projections. Thatdraftproposallargelymimickedtheonepresentedacoupleofdaysbeforebythe Institutionswithidenticaltargetsforprimarysurplusesover2015-2018,matchingVAT ratesandimportantconcessionsfromtheGreekgovernmentonpensionswithonly minor remaining differences (see Exhibit 4 below).Inaddition,PMTsipras isasking forsomemoreexplicitdebtrelief,albeitina'soft' form. Indeed, the Greek parties' joint statement asks for: a commitment to the start of an essential discussion as regards tackling the problem of the sustainability of Greek public debt. The debt question. Debt relief, in that 'soft version', could be discussed in the Eurogroup, inourview. Someformof conditionalrelief shouldbeacceptable for creditors,asit was moreorlessexplicitlypromisedinNovember2012bytheEurogroupitself.Thekey conditionsfordebtrelieftobeincludedinnegotiationsare:(1)theabsenceofoutright (nominal) debt cut requests, and (2) that any maturity extension or lower interest payments are conditional on the implementation of the programme. We would also argue that debt relief is not, in our view, a key relevant financial issue see the box below although it is clearly a strong political one for Greece, that could constitute a deal breaker if formulated sensitively. Closedbanksandadeterioratedeconomicbackdropwillrequirenewfunds.More relevant than the debt question is the fact that the economy is now in recession and that banksareclosed.Cyprussawasharpfallinactivityinthequarterthatimmediately followed the instauration of capital controls, although it can be showed that it was also the trough in momentum for that economy (Exhibit 1). 07 July 2015 European Economics3 Exhibit 1: Cyprus saw a sharp fall in activity in the quarter that immediately followed the instauration of capital controls GDP level and growth y/y%. Vertical line shows the introduction of capital controls 6065707580859095100105110-8-6-4-20246896 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15y/y%, lhsGDP (Introduction of capital = 100), rhs Source: Eurostat, Credit Suisse Exhibit 2: The Greek downturn has been broad-based afterlast year's improvement -2-10122006 2007 2008 2009 2010 2011 2012 2013 2014 2015Economic sentimentIndustrial ConfidenceRetail CondfidenceServices ConfidenceConstruction Confidence Source: Thomson Reuters DataStream, Credit Suisse ForGreece, itmeans that additional resources would likely be needed to recapitalise the banksandtodealwiththecyclicaldeteriorationanditsimpactonfiscaldynamics.That means additional austerity, or more money from the creditors, which some members might bereluctanttoprovide,especiallyintheabsenceofaverystrongcommitmentfromthe current government to enact the program's action points in full.Bothsidesneedtomovetoreachapositiveoutcome. Overall, if Greece is willing to start afresh and be both more conciliatory and committed, helped by the backing ofa very largemajorityintheParliament,andifthecreditorsarewillingonthatbasistoconsider providing additional support, then we believe a deal remains possible in the coming days.TimetableforapotentialdealTheEurogroupmustfirstagreetorestartnegotiations withGreece.ThatrequiresaformalrequestforenteringaprogrammefromGreece,and unanimityofthefinanceministerstheymustallbeconvincedthatTsipras'proposalis seriousandthathewantstocrediblyengageinanegotiationprocess.Ifthat'sthe case, andgiventhataformalrequestwasstillnotprovidedtodaybytheGreekgovernment, tomorrow is the earliest possible date for such a first step, although it might instead come after further negotiations (and other extraordinary Eurogroup meetings) in the coming days. 07 July 2015 European Economics4 Oncethisisdone,theinstitutionswillneedtoworkonthetechnicalaspectsofan agreement,inorderforittobecompatiblewiththetargetsinthecontextofarevised (deteriorated) economic and financial outlook. A final version of the proposal, with the approval from the Institutions, should pave the way foranESMprogrammethatwouldthenbeapprovedbytheGreekparliament,withswift implementationoftheso-called"prioractions",followedbytheapprovalfromtheESM (and from the relevant national parliaments as well, seeExhibit 3) of the agreement. The ESMwouldthenbeinthepositionto releasefundsinthefollowingdays(technically,it wouldbepossibletodisbursefundsinonlyafewhoursafterapositivedecisionto proceed with a programme) hopefully in time for the repayment of the ECB-held GGBs, maturing on 20 July. That date might be a stretch, but possible if all proceeds according to the optimistic plan we have discussed above.Evenunderthispositivescenario,however,bankswillremainundercapitalcontrolsfor several months, we believe, with probably only a progressive relaxation of the restrictions, as in the case of Cyprus in 2013. Exhibit 3: ESM capital share and parliament approval required for new aid programme Country% of Capital ShareApproval for new aid programmes Germany27.15Simple Majority in the Bundestag France20.39Only report to parliament Italy17.91Government by decree. Requires approval by both chambers after 60 days Spain11.90None Netherlands5.72Only report to parliament Belgium3.48Only report to parliament Greece2.82Simple Majority Portugal2.78Simple Majority Finland2.51Absolute Majority in parliament Ireland1.80Only report to parliament Slovakia1.59Only report to parliament Slovenia0.82Simple Majority Luxembourg0.43Notification to budget committee Cyprus0.25None Estonia0.19Absolute Majority in parliament Malta0.07Case by case Source: Credit Suisse 07 July 2015 European Economics5 Exhibit 4: Programme comparisons Remaining differences Based on the latest creditors proposal and the latest Greek proposal CreditorsGreek government VAT reformEliminate discounts on VAT, including on islands.30% discount on islands. Fiscal structural measures Require 100% advance payments for individual business income tax by end-2016. Gradually increase the advance payment of individual business income tax to 100%. Eliminate the preferential tax treatment of farmersand abolish subsidies for excise on diesel oil. Phase out the preferential tax treatment for farmers (including the subsidies for excise on diesel oil) by end-17. Reduce the expenditure ceiling for militaryspending by 400mn. Reduce the expenditure ceiling for military spending by 200mn in 2016 and 400mn in 2017. Pension reformImplement in full or replace/adjust the sustainability factors for supplementary and lump-sum pensions from the 2012 reform to achieve equivalent savings. The 2012 reform (sustainability factor) will be postponed until [] October 2015. Gradually phase out the solidarity grant (EKAS) forall pensioners by end-Dec 2019. This shall start immediately as regards the top 20% of beneficiaries. EKAS will be phased-out by end-2019 but without any immediate action on the top 20% of beneficiaries. Abolish all nuisance charges financing pensions [] to take effect from October 31, 2015. All nuisance charges will be phased out by end-2017, starting from October 31, 2015. Labour markets Review the existing frameworks of collective dismissals, industrial action, and collective bargaining, taking into account best practices elsewhere in Europe. The new framework will be legislated inautumn 2015. Product marketsOpen the restricted professions of engineers, notaries, actuaries, and bailiffs, and liberalize the market for tourist rentals and ferry transportation. Open the restricted professions of notaries, actuaries, and court bailiffs, liberalize the market for gyms. Eliminate non-reciprocal nuisance charges andalign the reciprocal nuisance charges to the services provided. Eliminate significant portion of nuisance charges. Source: Credit Suisse 07 July 2015 European Economics6 The debt question Debt relief was not seen as necessary last year. The Greek economy was recovering, the existingdebthadalreadybeenrestructured,withanextensionofmaturitiesanda loweringoftheinterestpaymentsonthatdebtsuchthattheserviceofthedebtwas containedandthegrossborrowingrequirementsofthecountrymanageable.Indeed, despite the large debt/GDPratio, Greecemanaged to issue GGBs at affordable interest rates in mid-2014. Since then, the situation has deteriorated significantly, due to political problems, renewed uncertainty and lack of reforms.Inasense,theneedfordebtreliefthatissuggestedbytheIMFinitslatestDebt SustainabilityAnalysis(DSA)isadirectconsequenceoftheinabilityofthecountryto follow through with its programme.ifthekeyprogramtargetshadremainedachievable,Greecesmedium-termdebt profilewouldhave improvedbyupto13percentofGDP.Greecesdebt-to-GDPratioprojectedat127.7percentin2020and117.2percentin2022duringthelastreviewwould have declined to 116.5 percent in 2020 and 104.4 percent in 2022. No further relief would, therefore, have been needed under the November 2012 framework. Moreover,wewouldarguethatthedefinitionofdebtsustainabilityundertheNovember 2012 framework a debt/GDP ratioof less than 120% by 2020 was already arbitrary and in some respects too stringent. The IMF recognises it in its most recent DSA, writing that"Given the extraordinarily concessional terms that now apply to the bulk of Greeces debt, thedebt/GDPratioisnotaverymeaningfulproxyfortheforward-lookingdebt burden.(). It makes sense to focus directly on the future path of gross financing needs, anduse()thebenchmarksof1520percentofGDPforthatratiotodefinea sustainable path". Using this alternative measure, debt sustainability was assured for the foreseeable future. Moreover, it can be argued that the estimates of 50bn (or 28% of Greek's GDP) funding requirements for Greece in the next three years the latest estimate of the IMF in terms ofborrowingrequirementswouldstillfitwithintheboundariesofdebtsustainability under the alternative measure.Overall,debtreliefisnotanimmediaterequirementfromafinancialperspective,we believe, and although it might make sense on some other grounds, it should be provided to Greece only on a conditional basis, in exchange for reforms. On that basis, we believe thatadealthatincludes(thistypeof)debtreliefessentiallythroughafurtherre-profiling/longermaturitiesispossible.However,morethanondebtrelief,webelieve Greece should focus on growth measures to be implemented in the country: reforms that freebarrierstoactivityandinvestment,alargerandfasteruseofEuropeaninvestment and structural funds. The "Empire Strikes Back". The ECB and the ELA The ECB is likely to continue providing a lifeline to Greekbanks in the near term. Although the ECB's cap of the ELA at 89bn forced the ongoing bank holiday and capital controls, that assistance remains in place, allowing the banks to remain as going concerns for now.Withdrawal of that support, as we discussed in "Grexit: You don't leave the euro; it leaves you",wouldpushthosebanksintorecoveryandresolution.SotheECBistheinstitution thathasthepowertoeffectivelycauseGreecetochoosetoleavetheeuro.Endingthe ELA lifeline to Greek banks would need to be agreed by a two-thirds majority on the ECB GoverningCouncil.Thatwouldbeadrasticstep.AndtheECBisunlikelytopre-empt political negotiations as long as these are progressing. 07 July 2015 European Economics7 WethinktheECB'sdecisionyesterdaytochangethehaircutsonthecollateralGreek banksprovideinexchangeforthatliquiditysupportwassignificant.Itkeptthecapon liquidity support unchanged so any tightening in haircuts would be immaterial. But it was a strong signal of intent, we think.In particular, it suggests to us that the ECB would have few compunctions in withdrawing that liquidity support if Greece defaulted on the 3.5bn maturing bonds held by the ECB on 20July.ItalsosuggeststhatanyincreaseintheELAandGreekbanks'capacityto borrow on it would be dependent on a deal. Without that, the banks will remain shut, in our view.As such, the hard deadline remains 20 July. If Greece were to default on those bonds, we believe both the capital and collateral of Greek banks would be put into question and the ECB would be unwilling and unable to provide that liquidity.Inthosecircumstances,aswediscussedlastweek,thewithdrawalofliquiditywould requirefinancingfromelsewhere.WethinkthechoicesfacingtheGreekgovernment would be as follows:1.Bankruptcy.Banksarewounddown;assetssold;creditors(includingdepositors) face haircuts.2.Europeanrecapitalisation.Europeanfunds(ESM)injectcapitalintoGreekbanks directly.Greekbankseffectivelysupra-nationalised.Greekbanksowned, consolidated and operated by the EU. 3.Greekrecapitalisation,nationalisationandredenomination.BankofGreece nationalisedbyGreekgovernment;cancelsintra-Eurosystemliabilities(default);all euro contracts redenominated to new currency; Greek banks nationalised, re-liquefied and recapitalised in new currency.Allthreewouldbeunpalatable,butwesuspectthethirdchoiceanewcurrencyand departure from the euro would be the one the Greek government would choose.Contagion, or lack thereof TheconsequencesforGreeceofanegativeoutcomewhichlooksincreasinglylikely would be unfortunate in the short run.Atlessthan2%ofeuroareaGDP,apurelyidiosyncraticGreekfailurewouldhavea limited effect on growth in the euro area. But to what extent will it be? We think there are four inter-related vectors of contagion economic, sovereign, banking and political. In the shortterm,themostseriousmaywellbeeconomic.Inthemediumterm,themost destructive could prove to be the interaction between the final two political and banking.Economic contagion We think the risk of Grexit will start to have economic consequences, especially the longer theprocessanduncertaintydragon.Theprolongednegotiationsanduncertaintyhave alreadyhadanimpactoneuroareabusinesssentiment,andthisislikelytodeteriorate further the more prolonged the uncertainty.Wehavelookedatperiods ofuncertaintyapproximatedbytheVDAXstayingforatleast twomonthsaboveitslong-termaverage.Thatcapturesthevariouscrisestheeuroarea hashadto face sincethelate1990s.Ifoexpectations,ourpreferredleadingindicatorfor turns in euro area production trend, euro area business confidence and the composite PMI have tended to decline for almost a year after such spikes in uncertainty.07 July 2015 European Economics8 Exhibit 5: Uncertainty shocks since 1998 Exhibit 6: Path of German Ifo expectations after uncertainty shocks VDAX indexIfo expectations (t=beginning of a period where VDAX at least 8% above the average over the past 12 months, normalised to 100 at time t, shaded area: +/- 1 std dev) 01020304050607092 94 96 98 00 02 04 06 08 10 12 14Period of high VDAX VDAX 859095100105110115t-12t-10t-8t-6t-4t-2tt+2t+4t+6t+8t+10t+12t+14t+16t+18t+20t+22t+242015AverageMedian Source: Thomson Reuters DataStream, Credit SuisseSource: Thomson Reuters DataStream, Credit Suisse Exhibit 7: Path of euro area business sentiment after uncertainty shocks Exhibit 8: Path of euro area composite PMI after uncertainty shocks Euro area business confidence (t=beginning of a period where VDAX at least 8% above the average over the past 12 months, normalised to 100 at time t, shaded area: +/- 1 std dev) Euro area composite PMI (t=beginning of a period where VDAX at least 8% above the average over the past 12 months, normalised to 50 at time t, shaded area: +/- 1 std dev) 7580859095100105110115t-12t-10t-8t-6t-4t-2tt+2t+4t+6t+8t+10t+12t+14t+16t+18t+20t+22t+242015AverageMedian 354045505560t-12t-10t-8t-6t-4t-2tt+2t+4t+6t+8t+10t+12t+14t+16t+18t+20t+22t+242015AverageMedian Source: Thomson Reuters DataStream, Credit SuisseSource: Thomson Reuters DataStream, Credit Suisse, mARKIT The dispersion is wide though, and the length of decline varies and depends on how long crises last and the uncertainty remains at lofty levels.So far and for the last two months the VDAX is back to being above its long-term average and July is likely to be the third consecutive month. So there's a clear risk that confidence declines in coming months. If so, that would point to a deceleration in domestic demand as investmentplansandhiringexpectationsareputonice.Sotheriskstooureuroarea growth forecasts at the moment are to the downside. 07 July 2015 European Economics9 Sovereign contagion Despite an ongoing sell-off in Greek government bonds, the contagion to other peripheral sovereigndebtmarketshasbeenremarkablylimited.SpreadsoverGermanyhave widenedsomewhat,butnotdramatically.Especiallycomparedtothevolatilitythat prevailed in these markets in the early stages of the euro crisis.We'd attribute this stability to two elements of ECB policy OMT and QE which should persist. Crucially, the ECB is now a lender of last resort to euro area sovereigns. That, for us,wasthefundamentalgamechangerthathassuccessfullylimitedcontagionsinceit was announced in the autumn of 2012. As the chart below shows, euro area crisis events werenotjustconfinedtothemonthsandyearsbeforePresidentDraghideclared "whateverittakes".Therewereseveralfollowingit.Yettheintensityofreactionin peripheral debt markets was completely different after OMT.Further to that, the ECB's ongoing QE programme provides a further backstop. Especially as the ECB has signaled in its statements on the ELA that it is prepared to respond to any negativefinancialoreconomicdevelopments.Assuch,bondbuyingincoreand peripheral markets would likely be ramped up. Consequently, we think sovereign bond markets are no longer realistic vectors of financial contagion.Exhibit 9: Peripheral spreads before and after OMT 0100200300400500600700Jan-07Apr-07Jul-07Oct-07Jan-08Apr-08Jul-08Oct-08Jan-09Apr-09Jul-09Oct-09Jan-10Apr-10Jul-10Oct-10Jan-11Apr-11Jul-11Oct-11Jan-12Apr-12Jul-12Oct-12Jan-13Apr-13Jul-13Oct-13Jan-14Apr-14Jul-14Oct-14Jan-15Apr-15Jul-15Oct-1510y spreads to Germany (bp) Italy SpainTurmoil:-Add.3m LTROs- 6m LTROs- USD provid. ops.Crisis intensification:-Fixed-rate full allotment- 1y LTROs- CHF providing ops.- CBPP- CBBP2Phasing outSovereign debt crisis:-3y LTROs- SMP- OMT-ESFS- ESMGreek debacle:.OMTESFSSMPNeg. deposit rateQEDeflation risk:- Neg. depo rate- TLTROs- ABSPP- CBBP3- PSPPQEDeauville: ESMPSISMP inc. Italy & SpainECB hikesGreek electionGreek banks closeCyprus banks close Source: the BLOOMBEG PROFESSIONAL service, Credit Suisse Banking sector contagion One financial avenue we think more capable of transmitting a shock would be the banking sector.Aswehavediscussedbefore,theprecedentofaperipheralcountryimposing capitalcontrolsonitsbankingsectorandpotentiallyseeingthecollapseofitsbanks,for thesecondtime,couldwellconcerndepositorsandinvestorsinbankselsewhereinthe periphery. 07 July 2015 European Economics10 Exhibit 10: Estimates of euro area banks' funding costs % 012345672007 2008 2009 2010 2011 2012 2013 2014 2015Core Periphery Source: the BLOOMBERG PROFESSIONAL service, Credit Suisse, Thomson Reuters DataStream Wehavebeenwatchingmeasuresofbankfundingcostsclosely.Althoughthese measureshaverisenincrementallyinthepastfewweeks,theylookasquiescentas sovereign bond markets. Given the Greek banking crisis is under way, there is good cause to think that contagion will remain limited even if conditions weaken.That said, it's quite possible that this form of contagion could lie dormant until triggered by an economic or political shock.Political contagion SoatpresentitappearsthattheGreekcrisisisidiosyncratic.Financialcontagionhas been minimal. But it has set a precedent: that the election of a government that comes at oddswithEUinstitutionscandeliverabankingcrisis.Assuch,weremainconcerned about the ongoing political changes in many euro area countries.ThelessonfromSyrizahasbeenthatthesepartiesdonottendtobecomesignificantly lessfocusedintheirapproachtotheEUandgovernmentdebtwhentheyarein government.Indeed,theGreekgovernmenthasbeenwillingtoprecipitatearenewed recession for the sake of principle.Supportforothersuchpartiesintheperipheryhasrisen,asthechartbelowshows.But they are not as popular as Syriza in Greece and are far from being in a position to join a government,letaloneformone.AnditspossiblethattheongoingcrisisinGreece undermines support for populist movements in other countries.Our concern is that support for these parties is a function of high levels of unemployment, especiallyamongyoungpeople.AlthoughunemploymentratesoutsideGreeceare starting to fall, they are unlikely to do so sufficiently quickly to undermine support for anti-EU parties in the coming year or so.07 July 2015 European Economics11 Exhibit 11: Support for more populist parties in the periphery % in opinion polls and elections 010203040502010 2011 2012 2013 2014 2015Syriza, Greece5SM, ItalyPodemos, Spain Source: Credit Suisse Exhibit 12: Youth unemployment started to fall, but not sufficiently quickly to undermine support for anti-EU parties in the coming years Youth unemployment rates 010203040506003 04 05 06 07 08 09 10 11 12 13 14 15Germany FranceItaly SpainGreece Source: Credit Suisse, Thomson Reuters DataStream As such, we think a key risk is not so much a bank-sovereign loop but a bank-politics loop wherebysurprisingincreasesinsupportforthesepartieseitherinelectionsoropinion pollshasthecapacitytodeliverfinancialdistress.Thatriskmaynotmanifestitselffor sometime.Butinvestorsshouldbewary,especiallyaroundpoliticaleventssuchasthe Spanish election later this year. * The authors of this report wish to acknowledge the contribution made by Veronika Roharova. GLOBAL FIXED INCOME AND ECONOMIC RESEARCH Ric Deverell Global Head of Fixed Income and Economic Research +1 212 538 8964 ric.deverell@credit-suisse.com GLOBAL ECONOMICS AND STRATEGY James Sweeney, Chief Economist Co-Head of Global Economics and Strategy +1 212 538 4648 james.sweeney@credit-suisse.com Neville Hill Co-Head of Global Economics and Strategy +44 20 7888 1334 neville.hill@credit-suisse.com GLOBAL STRATEGY AND ECONOMICS Zoltan Pozsar +1 212 538 3779zoltan.pozsar@credit-suisse.com Wenzhe Zhao +1 212 325 1798wenzhe.zhao@credit-suisse.com Axel Lang +1 212 538 4530 axel.lang@credit-suisse.com Jeremy Schwartz +1 212 538 6419jeremy.schwartz@credit-suisse.com US ECONOMICS James Sweeney Head of US Economics +1 212 538 4648 james.sweeney@credit-suisse.com Jay Feldman +1 212 325 7634 jay.feldman@credit-suisse.com Dana Saporta +1 212 538 3163 dana.saporta@credit-suisse.com Xiao Cui +1 212 538 2511 xiao.cui@credit-suisse.com LATIN AMERICA (LATAM) ECONOMICS Alonso Cervera Head of Latam Economics +52 55 5283 3845 alonso.cervera@credit-suisse.com Mexico, Chile Casey Reckman +1 212 325 5570 casey.reckman@credit-suisse.com Argentina, Venezuela Daniel Chodos +1 212 325 7708 daniel.chodos@credit-suisse.comLatam Strategy Juan Lorenzo Maldonado +1 212 325 4245 juanlorenzo.maldonado@credit-suisse.comColombia, Ecuador, Peru Alberto J. 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