#1Investor Advisory Committee on Financial Markets Member Presentation Materials October 19, 2023#2G Discussion Materials October 2023 Pershing Square#3Overview of Current Economic Conditions Real interest rates are at clearly restrictive levels (~250bps across the yield curve) Inflation is showing encouraging signs of moderating from peak levels On a trailing three-month average basis, Core CPI is run-rating ~3% & Core PCE ~2% Supply-demand imbalance in the labor market is improving ■ Slowing wage growth should point to further easing in core services inflation Economic growth has been resilient; however, growth is likely to slow going forward Income growth is decelerating; excess household savings are being depleted; consumer loan supply & demand are weakening with deteriorating credit quality Low-income consumer is under stress and facing fiscal headwinds from the end of pandemic- era relief programs and student loan repayments Recent rapid rise in long-end rates will further tighten financial conditions ■ Beginning to see early signs of slowing consumer spend Emerging risks: heightened geopolitical uncertainty, financial system instability We believe the current macroeconomic backdrop calls for more balanced monetary policy that is attentive to two-sided risks to growth and inflation 2#4Real Rates are At Clearly Restrictive Levels Across the yield curve, real interest rates are ~2.5%, a level that has rarely been sustained for any significant period of time since the 1990s Real interest rates (nominal interest rates less inflation compensation): 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% (1.0%) 93 (2.0%) (3.0%) (4.0%) (5.0%) (6.0%) Oct-95 Oct-97 Oct-99 Oct-01 Oct-03 FFR Less Trailing 6M Avg. Core PCE Inflation Source: Bloomberg, as of October 19, 2023 (at approximately 9AM) Oct-05 Oct-07 Oct-09 Oct- Oct-15 Oct-19 Oct-21 Oct-23 5YR TIPS-Implied Real Yields 10YR TIPS-Implied Real Yields 3 2.6% 2.5% 2.4%#5Inflation is Moderating from Peak Levels On a trailing three-month average basis, Core PCE inflation is run-rating at approximately 2% and Core CPI inflation is run-rating at approximately 3%, down from 4% to 5% inflation seen earlier in the year Core PCE & Core CPI Inflation, Annualized Trailing 3M Average: 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Core PCE - Annualized Trailing 3M Average Source: Bureau of Labor Statistics (CPI) and Bureau of Economic Analysis (PCE) Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Core CPI - Annualized Trailing 3M Average Jul-23 Aug-23 Sep-23 2.2% 3.1% 4#6Labor Supply-Demand Imbalance is Improving: Decline in Job Openings The number of job openings has declined 20% from its peak of 12.0 million in March 2022 to 9.6 million as of August 2023 Number of Job Openings and Total Unemployed Persons in Labor Force | Figures in millions: 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2: 2.0 0.0 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 -Unemployed Persons (Household Survey) Aug-18 Aug-19 Aug-20 Aug-21 Aug-22 Aug-23 -Job Openings (JOLTS Survey) Source: Bureau of Labor Statistics (Job Openings and Labor Turnover Survey, Employment Report Household Survey) 9.6 6.4 5#7Labor Supply-Demand Imbalance is Improving: Normalization in Voluntary Quits & Job Layoffs Voluntary quits and job layoffs, as a percentage of nonfarm payrolls, are normalizing to their pre-pandemic levels Monthly job quits and job layoffs as % of nonfarm payrolls: 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 им мими Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 -Job quits as % of nonfarm payrolls Source: Bureau of Labor Statistics (Job Openings and Labor Turnover Survey) Aug-16 Aug-17 Aug-18 Aug-19 Aug-20 Aug-21 Aug-22 -Job layoffs as % of nonfarm payrolls Aug-23 1.1% 6 2.3%#8Labor Supply-Demand Imbalance is Improving: Moderating Wage Growth | Atlanta Fed Tracker The Atlanta Fed's Wage Tracker, which measures year-over-year wage growth, is showing a marked deceleration in wage increases, particularly for job switchers Atlanta Fed Wage Tracker | Year-over-Year Wage Growth: 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Dec-14 Jun-15 Dec-15 Jun-16 Source: Federal Reserve Bank of Atlanta -Overall Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 -Job Switchers Jun-21 Dec-21 -Job Stayers Jun-22 Dec-22 Jun-23 7 5.6% 5.2% 5.0%#9Labor Supply-Demand Imbalance is Improving: Moderating Wage Growth | Average Hourly Earnings More timely measures of run-rate wage growth, such as Average Hourly Earnings ("AHE”) from the Bureau of Labor Statistics' Employment Report, also highlight a normalization in wage increases back to pre-pandemic levels Average Hourly Earnings (“AHE”) Growth | Annualized Trailing 3M Average: 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 - AHE All Employees Source: Bureau of Labor Statistics (Employment Report Establishment Survey) Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 AHE - Production & Non-supervisory Dec-22 Jun-23 3.4% 3.4% 8#10Economic Growth Has Been Resilient To-Date Despite a decline in residential investment and volatile contributions from change in inventories, real GDP growth over the last few quarters has remained stable at >2%, driven by resilient personal consumption and government spending Nonfarm Payroll Job Additions (new jobs in millions): Real GDP Growth Atlanta Fed GDPNow Q3 2022 Q4 2022 Q1 2023 2.7% 2.6% 2.2% Q2 2023 2.1% Forecast Q3E 2023 5.1% % of Contribution from: GDP Personal Consumption Expenditures 69% 1.1% 0.8% 2.5% 0.6% 2.5% Goods 24% (0.2%) (0.0%) 1.1% 0.1% Services 45% 1.2% 0.8% 1.4% 0.4% Gross private domestic investment 18% (1.5%) 0.6% (1.7%) 0.9% 1.2% Nonresidential 15% 0.6% 0.2% 0.8% 1.0% 0.2% Residential 3% (1.4%) (1.2%) (0.2%) (0.1%) 0.2% Change in Private Inventories Net Exports 0% (0.7%) 1.6% (2.2%) 0.0% 0.7% (4%) 2.6% 0.3% 0.6% 0.0% 0.9% Government Spending 17% 0.5% 0.9% 0.8% 0.6% | 0.5% Robust estimates for Q3 2023 Real GDP growth of approximately 4% to 5% include a nearly 2% contribution from net exports and change in private inventories, categories which are unlikely to persist at the same level of contribution going forward Source: Bureau of Economic Analysis, Federal Reserve Bank of Atlanta 9#11Growth is Likely to Decelerate Going Forward Looking ahead, we believe economic growth will likely decelerate as the tailwinds fueling personal consumption, which accounts for ~70% of GDP, gradually recede and downside risks emerge 1 Slowing income growth as job & wage growth moderate 2 Excess savings are being depleted 3 Weakening consumer loan supply/demand and detoriating credit quality 4 Low-income consumer, who has the highest propensity to drive incremental spend, is under stress 5 Resumption of student loan payments 6 Early signs of broader consumer spending slowdown 7 Rising long-end interest rates further tighten financial conditions 8 Emerging geopolitical and financial stability risks 10 10#121 Pace of Job Growth is Slowing While job growth remains robust, at nearly double the baseline rate implied by population growth alone, it has materially decelerated from a pace of ~350K monthly job additions in the beginning of the year to ~200K monthly job additions today Nonfarm Payroll Job Additions (new jobs in millions): 900 800 700 600 500 400 300 200 100 0 Sep-21 Nov-21 234 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Monthly Nonfarm Payroll Job Additions Source: Bureau of Labor Statistics (Employment Report Establishment Survey) Trailing 6 Month Average 11#131 Wage Increases Likely to Slow Over Time A recent survey of CFOs conducted by Evercore ISI, and corroborated by other broad surveys (regional Federal Reserve, S&P & ISM PMIs), suggests wage growth is likely to decelerate meaningfully over the next few months Corporate Expectations of Wage Growth: Evercore ISI Company Surveys CFO Next 12 Mos. Expectation of the Growth Rate on Wages Paid to Employees % Increase minus % Decrease Oct 13 -6% 80% 70% 60% 50% 40% 30% 20% 10% 0% -10% + + + + + 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 "Many contacts suggested "the second half of the year will be different" when describing wage growth. Growth in labor cost pressures was elevated in most Districts, often exceeding expectations during the first half of the year. But nearly all Districts indicated businesses renewed their previously unfulfilled expectations that wage growth will slow broadly in the near term." - Federal Reserve Beige Book, September 6, 2023 Source: Evercore ISI, Company Survey Report (October 13, 2023); Federal Reserve 12#141 Nominal Income Growth Likely to Decelerate The combination of moderating job growth and wage growth should lead to aggregate nominal income growth continuing to decelerate Aggregate Nominal Income Growth for Nonfarm Private Employees | Annualized Trailing 6M Average: 13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Job Growth: Private Nonfarm Payrolls Mar-22 Source: Bureau of Labor Statistics (Employment Report Establishment Survey) Apr-22 May-22 Jun-22 Jul-22 Aug-22 Wage Growth: Average Weekly Earnings Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aggregate Nominal Income Growth Aug-23 5.2% 3.7% 1.5% 13#151 Slowing Income Growth Will Constrain Spending Consumer spending is, in large part, driven by nominal income growth and as income growth slows, we would expect personal consumption to decelerate Personal Consumption & Nominal Income Growth | Annualized Trailing 6M Average: 13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 5.2% 4.8% Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 - Nominal Personal Consumption (PCE) Growth - Aggregate Nominal Income Growth (Private Nonfarm Employees) Source: Bureau of Economic Analysis (Personal Income & Outlays), Bureau of Labor Statistics (Employment Report Establishment Survey) Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 14#162 Household Excess Savings Are Normalizing Household cash balances, in real terms¹, are nearly back to their pre- pandemic trend after reaching levels that were nearly 20% in "excess" of trendline savings in 2021 Real Household Cash and Cash-like Deposits (Chained Q4 2019 $, Deflated by Core PCE): $17.0 $16.0 $15.0 $14.0 $13.0 $12.0 $11.0 $10.0 $15.5 $15.2 Q2 2023: ~2% above trendline savings Jun-23 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Real Household Cash Balances Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Source: Federal Reserve Z.1 Financial Accounts. Household cash and cash-like deposits includes investments in money market funds. (1) Adjusted for inflation using the Core PCE price index Jun-20 Dec-20 Jun-21 Q1 2021: ~20% above trendline savings -Trendline Real Household Cash Balances @ 3.4% '14-'19 CAGR Dec-21 Jun-22 Dec-22 1 15#173 Consumer Loan Supply & Demand Has Weakened Consumer loan supply and demand has weakened significantly over the last few months, reducing consumers' ability to finance spending from borrowing Federal Reserve Senior Loan Officer Opinion Survey (SLOOS) | July 31, 2023: Net Percent of Domestic Respondents Reporting Increased Willingness to Make Consumer Installment Loans Net percent 60 البشلالالالالالالالاليينليييالبييل 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 Apr. survey 40 20 0 -20 -40 -60 60 Net Percent of Domestic Respondents Reporting Stronger Demand for Consumer Loans Net percent 80 All consumer loans Credit card Auto Other consumer зриви Apr. 60 survey 40 20 0 -20 -40 -60 الليالي -80 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 "Just more broadly on credit, we've said now for probably the last 4 or 5 quarters, we've been kind of incrementally tightening the credit box on the consumer side for a while. Whether it's really across the board in home lending, auto, card, personal loans, really every single one of them had some credit tightening." - Michael Santomassimo, CFO, Wells Fargo October 13, 2023 Source: Federal Reserve, Company Transcripts 16#183 Consumer Credit Quality is Normalizing Delinquency rates for all consumer loans, and in particular, credit cards, have normalized to their pre-pandemic levels 30-Day Delinquency Rates | All Consumer Loans and Credit Cards: 3.0% 2.5% 2.0% 1.5% 2.8% 2.4% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 2022 2023 2023 30-Day Delinquency Rates - All Consumer Loans 30-Day Delinquency Rates - Credit Cards 1.0% Q4 Source: Federal Reserve 17 11#194 Stress at the Low-Income Consumer Segment Companies are calling attention to increasing stress amongst low-income consumers, who generally have the highest marginal propensity to drive incremental consumption across the economy "Consumer spend growth has now reverted to pre-pandemic trends with nominal spend for customer stable and relatively flat year-on- year. Cash buffers continue to normalize to pre-pandemic levels with lower income groups normalizing faster." - Jeremy Barnum, J.P. Morgan CFO, Q3 2023 Earnings Call (October 13, 2023) "Our customer has household income around $35,000 ... but she -- certainly in 2023, she's under some challenge. We talked about this in our first quarter call. It really showed up in mid-March where the SNAP reductions and the tax refund lowering -- or in some cases, didn't get one at all, really had a pressure -- put pressure on our consumer. As she's still battling the inflationary pressures, even though it's moderating, it's certainly on a 2-year stack, is still significant for our consumer." - Jeffrey Owen, CEO, Dollar General, Goldman Sachs Retailing Conference (September 12, 2023) "Budget-conscious households are facing external spending pressures. These customers are buying smaller pack sizes and, at times, prioritizing the lowest shelf price. These customers are building smaller baskets and switching to lower-priced items to stretch their budgets. They are also exhibiting spending patterns that ebb and flow with payroll periods and SNAP benefit distributions. We expect these broader economic headwinds to continue pressuring customer spending in the second half of the year" - Rodney McMullen, CEO, Kroger, Q2 2024 Earnings Call (September 8, 2023) Moreover, we expect the resumption of student loan payments to pose further headwinds to an already strained consumer segment Source: Company transcripts 18#205 Resumption of Student Loan Payments Resumption of student loan payments in October is estimated to deduct ~50bps from Q4 GDP growth and will pose further headwinds to consumer spending Student Loan Repayments Estimated Impact | Goldman Sachs Research: Billions of dollars (annualized) 100 90 80 70 60 Billions of dollars (annualized) 100 90 80 70 60 50 40 Student loan payments 30 Pre-pandemic trend 20 All borrowers restart payments 10 0 -70% of borrowers restart payments, 15% restart over 12 months 70% of borrowers restart and enroll in IBR 50 40 30 20 10 2 8 9 8 2 2 0 2017 2018 2019 2020 2021 2022 2023 2024 "We expect the resumption of student loan payments—which officially starts in October—to subtract 0.5pp from quarterly annualized GDP growth in Q4. The resumption of payments in full would be equal to roughly $70bn, or around 0.3% of disposable personal income. Assuming that two-thirds of this hit comes out of spending and the impact builds over a few months, the impact on quarterly annualized consumption growth is -0.8pp." - Goldman Sachs Research, September 12, 2023 Source: Goldman Sachs Research, "The Q4 Pothole: Student Loans, Shutdown, and Strikes (Walker/Phillips)", September 12, 2023 19#2114.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Sep-21 6 Slowing Spend: High-Frequency Credit Card Data The Bureau of Economic Analysis's high-frequency credit card data, which tracks spend levels relative to their pre-pandemic baseline, has shown a meaningful deceleration over the last two months Total Retail & Food Service Spend vs Pre-Pandemic Trend | BEA High Frequency Credit Card Data: 18.0% 16.0% Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Source: Bureau of Economic Analysis (Near Real Time Spending Study) Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 m Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 20 20 4.1%#226 Slowing Spend: Bank of America Transaction Data Bank of America's most recent transaction data, which covers ~$4 trillion of annual spend, shows payment dollar-volume growth decelerating from 12% in 2022 year-to-date to 4% in 2023 year-to-date Bank of America Consumer Payment Spend Data | October 17, 2023:1 Payment Spend¹ ($ Volume) and YoY % Growth Payment Spend¹ ($ and Transaction Volume) Quarterly YoY % Growth $3.0T $3.1T 50% $2.7T $2.2T 25% 21% 12% 0% 4% 0% (25)% 2020 YTD 2021 YTD 2022 YTD 2023 YTD $ Volume Transaction # 4% 3% 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 19 20 21 22 23 Source: Bank of America Q3 2023 Earnings Presentation (October 17, 2023) (1) Total payments represent payments made from Bank of America accounts using credit card, debit card, ACH, wires, billpay, person-to-person, cash, and checks 21 21#236 Slowing Spend: Recent Company Commentary Large banks and retailers, who observe a broad swath of economic activity, have begun highlighting a slowdown in consumer spend "But when I look out at the market, I talked to our corporate clients, that's where we tend to see them be more nervous about the softness in the consumer. And just -- I call it, they're much more mindful about where they're spending, right? So you're seeing them moving down within a category. They're certainly looking more on the bargain front. We've been hearing that from our retail partners. We've been hearing that across the board." - Jane Fraser, CE, Citigroup, Q3 2023 Earnings Call (October 13, 2023) "And I do think over the next 2 to 4 quarters, the impact of that tightening will be more evident and will create slowdowns in some areas. I am hearing, as I interact with CEOs, particularly around consumer businesses, some softness, particularly in the last 8 weeks in certain consumer behaviors. I don't want to overamplify that because I think the economy and the consumer has been more resilient. But I think that gears some watching closely." - David Solomon, CEO, Goldman Sachs, Q3 2023 Earnings Call (October 17, 2023) "The Federal Reserve's campaign to hike interest rates with the goal of fighting inflation has successfully slowed US consumer spending, said Bank of America Corp. Chief Executive Officer Brian Moynihan. "Frankly, the Fed has won the battle of the American consumer- - they are slowing down," Moynihan said in a Bloomberg Television interview Tuesday. "And the question is what happens - Brian Moynihan, CEO, Bank of America, Bloomberg TV Interview, (October 17, 2023) next.' " Source: Company transcripts 22 22#247 Rising Long-End Yields Further Tighten Conditions The recent rapid rise in long-end U.S. treasury yields has a substantial impact on household and corporate financing costs 10Y and 30Y U.S. Treasury Yields: 5.25% 5.03% 4.95% 5.00% 4.75% 4.50% 4.25% 4.00% 3.75% 3.69% 3.50% 3.25% 3.00% Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 10Y US Treasury Yield -30Y US Treasury Yield 10Y and 30Y U.S. Treasury yields have increased ~115bps since mid-July and are up more than 145bps from their 2023 lows Source: Bloomberg, as of October 19, 2023 (at approximately 9AM) 23 23#257 Mortgage Rates Are at Peak Levels Since 1990s Due to rising treasury yields and widening spreads to benchmark yields, current mortgage rates, at ~8%, are at their highest level since the late 1990s BankRate.com 30Y Fixed Mortgage National Average Rate: 8.5% 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% wwww 4.5% 4.0% 3.5% 3.0% 2.5% 8.0% Oct-99 Oct-01 Oct-03 Oct-05 Oct-07 Oct-09 Oct-11 Oct-13 Oct-15 Oct-17 Oct-19 Oct-21 Oct-23 Source: Bloomberg, as of October 18, 2023. 24 24#268 Emerging Risk Factors Heightened geopolitical uncertainty across multiple fronts Israel-Hamas conflict & potential spillover into broader Middle East region Russia-Ukraine war ■China-Taiwan potential escalation ▸ Financial system stability risks BOJ policy normalization & resulting effect on global yields Dislocated commercial real estate capital markets ▸ Impact of higher long-end yields on bank balance sheets and corporate refinancings (higher cost of capital, increased default risk) Risk of a U.S. government shutdown ► Slowing global economic growth China's economic growth momentum has stalled, with potential contagion risk from an overleveraged real estate sector ■Weakness in European manufacturing sector 25#27Conclusion#28FOMC Forecasts Risks Overtightening The Federal Reserve's most recent dot plot anticipates the real FFR, implied by adjusting its forecast for nominal FFR by its own forecast for Core PCE inflation, will increase from 190bps in December 2023 to 250bps by December 2024 FOMC Summary of Economic Projections | September 2023: Fed Funds Rate Projection --Implied Real Fed Funds Rate 5.6% 6.0% 5.4% 5.1% 5.0% 4.0% 3.0% 2.5% 3.9% 2.9% 2.5% 1.9% 2.0% 1.5% 1.6% 0.9% 1.0% 0.5% 0.0% Current Dec-23 Dec-24 Dec-25 Dec-26 Longer-Run Fed Funds Rate 5.4% 5.6% 5.1% 3.9% (-) Core PCE YoY Inflation (3.9%) (3.7%) (2.6%) (2.3%) 2.9% (2.0%) 2.5% (2.0%) Implied Real Fed Funds Rate 1.5% 1.9% 2.5% 1.6% 0.9% 0.5% The Fed dot plot implies a significant risk of unnecessarily overtightening given the meaningful progress on inflation amidst the increasing economic headwinds and emerging risk factors Source: Federal Reserve 27 27#29Balanced Monetary Policy Current economic conditions, characterized by easing inflation, receding growth tailwinds and emerging "black swan" risk factors, require a more balanced monetary policy framework than at any point earlier in the cycle As inflation continues to moderate, simply holding the FFR constant will tighten monetary policy as real rates become more restrictive The Federal Reserve's current policy outlook does not appear to sufficiently consider downside risks to economic growth FOMC's September meeting dot plot forecasts one more rate hike by year-end 2023 and further tightening of the real FFR into 2024 despite expectations of slowing growth and inflation ■ Over-tightening as economic growth slows could inadvertently catalyze a "hard landing" Gradual normalization will still maintain ample policy space to cut rates substantially in response to any economic shocks Given the high starting level of the FFR, the Federal Reserve can begin normalizing the FFR to a less restrictive stance while still preserving sufficient flexibility to ease more rapidly if needed We believe the Federal Reserve should maintain rates at their current level and gradually begin introducing a framework for less restrictive monetary policy (rate cuts) as inflation continues to ease and there is greater uncertainty on economic growth outcomes 28#30Bill Ackman is the CEO of Pershing Square Capital Management, L.P. ("Pershing Square"), a registered investment adviser. Pershing Square considers inflation and increasing interest rates to be material risks to equity markets and has entered into interest rate swaptions to hedge these risks. Pershing Square may buy, sell, or otherwise change the form of its investments at any time and for any reason. Pershing Square hereby disclaims any duty to provide any updates or changes to the information in this presentation or information regarding the manner or type of any Pershing Square investment. All information provided herein is for information purposes only. The information provided in this presentation should not be considered a recommendation to purchase or sell any particular financial instrument. Disclaimer 29 29