RBCCM Global Research June 24, 2016 All values in USD unless otherwise noted. Priced as of prior trading day’s market close, ET Brexit: macro and sector implications (unless otherwise stated). In light of the victory for the Leave constituency in the UK’s EU referendum, RBC Capital For Required Non-U.S. Markets’ Global Research Department has analyzed the potential impacts of the Leave Analyst and Conflicts victory on the breadth of its coverage universe. In this report, you will find a compilation Disclosures, please see of these views, our global strategists and analysts’ examination of the consequences of page 120. the Brexit vote for equities, fixed income, commodities and the broader economy. We hope you find this report helpful, and as always, we encourage you to reach out to our Research team for further dialogue. For Required Fixed Income & Currency Strategy Disclosures, please see page 122. Table of contents European macro and sector implications ............................................................................ 3 UK economics: Brexit update ................................................................................................... 4 Brexit and the impact on the euro area: Beware the peripherals! .......................................... 5 European Banks ........................................................................................................................ 7 UK/EU asset managers: ............................................................................................................ 8 EU/UK diversified financial ....................................................................................................... 9 EU/UK Insurance .................................................................................................................... 10 EU/UK Insurance .................................................................................................................... 12 Global A+D .............................................................................................................................. 13 European Consumer Staples .................................................................................................. 14 UK General Retail: .................................................................................................................. 15 Luxury sector / stocks ............................................................................................................. 17 European Energy: ................................................................................................................... 18 European Health Care: ........................................................................................................... 19 European miners .................................................................................................................... 23 European steels: ..................................................................................................................... 24 European Support Services .................................................................................................... 25 European Telcos ..................................................................................................................... 26 UK Transport .......................................................................................................................... 27 Euro Utilities ........................................................................................................................... 28 Brexit: macro and sector implications Table of contents (cont’d) North American macro implication .................................................................................... 29 US Investment Strategy ............................................................................................................ 30 US Technical Research ............................................................................................................. 35 Commodity Strategy ................................................................................................................ 44 Canadian Macro Musings ......................................................................................................... 46 Canadian Investment Strategy ................................................................................................. 47 FIC Technical Strategy - Lines in the Sand ................................................................................ 52 RBC Economics ......................................................................................................................... 66 Weekly Dashboard ................................................................................................................... 70 North American sector implications ................................................................................... 72 Airfreight & Surface Transportation ......................................................................................... 73 Asset Managers ........................................................................................................................ 73 Autos ........................................................................................................................................ 74 Biotechnology .......................................................................................................................... 75 Business & Information Services .............................................................................................. 75 Canadian Consumer Stocks ...................................................................................................... 77 Canadian Contracted IPPs and Chemicals ................................................................................ 78 Canadian Dealerships ............................................................................................................... 78 Canadian Engineering & Construction ..................................................................................... 79 Canadian infrastructure ........................................................................................................... 79 Chemicals/Packaging ................................................................................................................ 79 Consumer Staples ..................................................................................................................... 80 Global Gold ............................................................................................................................... 81 Global Oilfield Services ............................................................................................................. 85 Hardlines/Broadlines ................................................................................................................ 86 Healthcare IT ............................................................................................................................ 87 Healthcare Services .................................................................................................................. 87 Homebuilders & Building Products .......................................................................................... 88 Infrastructure, data center and analytic software ................................................................... 88 IT Hardware/Large Cap Semiconductor ................................................................................... 89 Internet .................................................................................................................................... 90 Machinery ................................................................................................................................ 90 Media ....................................................................................................................................... 91 Medtech ................................................................................................................................... 92 Multi-Industry .......................................................................................................................... 92 Networking Equipment and Small/Mid Cap Semiconductor ................................................... 93 Non-precious metals mining .................................................................................................... 94 P&C Insurance sector ............................................................................................................... 95 Payments, Processors & IT Services ......................................................................................... 96 Powersports ............................................................................................................................. 96 Specialty Finance ...................................................................................................................... 97 Specialty Retail & Department Stores ...................................................................................... 98 Software ................................................................................................................................... 98 Telecom Services / Specialized REITS / Internet ...................................................................... 99 U.S. Banking Sector .................................................................................................................