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An Update on Global Financial Markets
Welcome
Friday, May 15th 12pm CDT
Altair Advisers
2
Speakers
Jason M. Laurie, CFA, CFP®Managing Director & CIO
Altair Advisers
David J. Lin, CFADirector of Investment Research
Altair Advisers
2,000
2,200
2,400
2,600
2,800
3,000
3,200
3,400
3,600
January February March April May
Stocks Stabilize Following Plunge4
See disclosures at end of document. Sources: Morningstar, Altair Advisers
January 1, 2020 – May 14, 2020
S&P 500 hits all-time high
First COVID-19 death reported in the U.S.
S&
P 50
0 In
dex
Leve
l
U.S. passes $2T stimulus package
Fed unveils additional $2.3T stimulus package
Additional $484B fiscal stimulus package signed
by President Trump
Fed announces unlimited monetary support
5
See disclosures at end of document. Sources: Morningstar, Altair Advisers
Recovery Has Been Uneven
YTD PerformanceJanuary 1, 2020 – May 14, 2020
Asset Class (ETF) YTD (%)
U.S. Large Cap (S&P 500) -11.1
U.S. Small Cap (Russell 2000) -25.4
International Developed Equities (MSCI EAFE)
-21.2
Emerging Markets Equities (MSCI Emerging Markets)
-18.9
U.S. REITs (Vanguard REIT Index Fund)
-25.0
U.S. Taxable Bonds (Vanguard Total Bond Market)
5.0
Municipal Bonds (National Muni Bond) -0.1
As of 5/14/20
-50.0
-40.0
-30.0
-20.0
-10.0
0.0
10.0
1/1 1/15 1/29 2/12 2/26 3/11 3/25 4/8 4/22 5/6
Tota
l Ret
urn
(%)
U.S. Large Cap U.S. Small Cap International DevelopedEmerging Markets U.S. REITs U.S. Taxable BondsMunicipal Bonds
0% 10% 20% 30% 40%
All Other Categories
Local government
Professional andbusiness services
Manufacturing
Health care
Other services
Arts, entertainment,and recreation
Retail trade
Accommodation andfood services
Pain Most Prevalent in Job Market6
Tota
l Em
ploy
ees,
Non
farm
Pay
rolls
(Mill
ions
)
April 2010 – April 2020
See disclosures at end of document. Sources: St. Louis Federal Reserve, Altair Advisers
120
125
130
135
140
145
150
155
160A
pr-1
0D
ec-1
0A
ug-1
1A
pr-1
2D
ec-1
2A
ug-1
3A
pr-1
4D
ec-1
4A
ug-1
5A
pr-1
6D
ec-1
6A
ug-1
7A
pr-1
8D
ec-1
8A
ug-1
9A
pr-2
0
Composition of April Job Losses
54% of losses directly tied to shutdown of consumer
activity
-35.0
-30.0
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
Q1'15
Q2'15
Q3'15
Q4'15
Q1'16
Q2'16
Q3'16
Q4'16
Q1'17
Q2'17
Q3'17
Q4'17
Q1'18
Q2'18
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
7
GDP Drawdown Will Be Drastic
See disclosures at end of document. Sources: St. Louis Federal Reserve, New York Federal Reserve, Atlanta Federal Reserve
Q1 2015 – Q2 2020
Ann
ualiz
ed P
erce
nt C
hang
e in
Rea
l GD
P
Fed GDP estimates
8
See disclosures at end of document. Source: Noah Kroese Illustration for Altair Advisers
A Bridge to Recovery
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2008 2020
Fede
ral R
eser
ve B
alan
ce S
heet
Gro
wth
as
% o
f GD
P P
er Y
ear
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2008 2020
Fisc
al S
timul
us a
s %
of
GD
P P
er Y
ear
9
Stimulus Dwarfs 2008 Amount
See disclosures at end of document. Sources: Strategas, Altair Advisers
Global Financial Crisis COVID-19 Pandemic
1.1%
9.9%
4.5%
12.3%
26.5%
Fiscal Response Monetary Response
Projected Balance Sheet Growth For
Remainder of 2020
10
See disclosures at end of document. Source: St. Louis Federal Reserve
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Consumer Price Index2000 – 2020
No Near-Term Inflation ConcernYe
ar o
ver y
ear p
erce
nt c
hang
e, m
onth
ly
11
Largest Sectors Drive Market
See disclosures at end of document. Sources: Standard & Poor’s, Morningstar, Altair Advisers
Tech + Health Care + Communication Services
= 52% of Index
S&P 500 Sector PerformanceJanuary 1, 2020 – May 14, 2020
S&P 500 Sector WeightsAs of April 30th
-40.0 -30.0 -20.0 -10.0 0.0 10.0
Energy
Financials
Industrials
Real Estate
Materials
Utilities
Consumer Staples
Consumer Discretionary
Communication Services
Health Care
Information Technology
Total Return (%)
Energy
Materials
Industrials
Utilities
Consumer Staples
Financials
Health Care
Information Technology
Communication Services
Consumer Discretionary
Real Estate
12
Top Holdings Outperform
See disclosures at end of document. Sources: Morningstar, Altair Advisers
S&P 500 Top 5 PositionsJanuary 1, 2020 – May 14, 2020
5.8% 5.5% 4.2% 3.4% 2.1%Weight in S&P 500
= 21%
14.8
6.0
29.3
1.4 0.80.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Microsoft Apple Amazon Alphabet Facebook
Tota
l Ret
urn
(%)
13
See disclosures at end of document. Source: St. Louis Federal Reserve
Corporate Credit Spreads
Developing Opportunities
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
AA Corporates BBB Corporates High Yield CCC & Unrated
December 31 March 23 May 13
Yiel
d sp
read
ove
r Tre
asur
ies
(%)
14
Economic data should bottom in a historically bad second quarter and then begin improving as stay-at-home restrictions ease.
U.S. monetary and fiscal aid far exceeds the government’s 2008 response and can bridge the economic gap temporarily.
The disconnect between markets and the economy represents investors’ longer-term optimism; the near term hinges on COVID-19 trends and the success of re-openings.
A handful of giant tech companies have driven the market higher this spring and some longer-term trends also are taking shape.
We have no near-term concern with inflation and it may not present a risk longer-term despite unprecedented debt levels.
Continuing fallout of the pandemic is creating additional opportunities, including dislocation in corporate credit.
Key Takeaways
15
Thank You!
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10.22 9a
© 2020 Altair Advisers LLC 5-14
The material shown is for informational purposes only. Past performance is not indicative of future performance, and all investments are subject to the risk of loss. Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, and actual results may differ materially from those anticipated in forward-looking statements. As a practical matter, no entity is able to accurately and consistently predict future market activities. Information presented herein may incorporate Altair Advisers' opinions as of the date of this publication, is subject to change without notice and should not be considered as a solicitation to buy or sell any security. While efforts are made to ensure information contained herein is accurate, Altair Advisers cannot guarantee the accuracy of all such information presented. Material contained in this publication should not be construed as accounting, legal, or tax advice.
ETFs selected by Altair are intended to approximate performance of respective asset class in lieu of an established index. Altair has no relationship with the ETFs selected.
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© 2020 Altair Advisers LLC. All Rights Reserved.
Disclosures17
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