Before the Bell · 2020-06-15 · Morning Market Brief June 15, 2020 MONDAY MORNING MARKET STRATEGY: David M. Joy, Chief Market Strategist The three week rally in cyclical stocks

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Before the Bell Morning Market Brief

June 15, 2020

MONDAY MORNING MARKET STRATEGY: David M. Joy, Chief Market Strategist The three week rally in cyclical stocks came to a sudden stop last week. The S&P 500 had climbed 12 percent between May 15th and June 5th. Leading the way were industrials, financials, and energy, each with gains in excess of 25 percent, in what was a dramatic shift in leadership for sectors that had been largely laggards throughout much of the recovery. Whether driven by in part by speculative fever, monetary and fiscal largess, reawakening economies, a weaker dollar, or something else entirely, it all came to screeching halt last week. These same three sectors led stocks on the way down last week, bringing an end to the S&P 500s three week winning streak. Small stocks, which had outperformed large with a gain of 20 percent over the previous three weeks, also underperformed with a decline of 8 percent. Bond yields fell, credit spreads widened, and volatility rose, as the VIX index climbed back up to 36 after three straight weeks of decline had taken it from 32 to 25. And after rising by more than $10 a barrel in three weeks, WTI crude oil fell by more than $3 last week.

Last week’s reversal was variously attributed to reports of rising coronavirus infections in more than twenty states, a dour economic outlook from the Fed, and perhaps the realization that a 43 percent rise from the March low in the S&P 500 was a touch excessive. But in fairness to the Fed, it is difficult to describe the current state of the economy in terms that are anything other than dour. Yes, activity is beginning to improve, but from extraordinarily low levels. And while it offered little insight into its next move, that was not expected to come until September anyway. And it did reaffirm the size of its QE program for the near-term and indicated its expectation of no interest rate increases for three years. As for the virus, it should not come as a surprise that the early opening of certain state economies, in combination with the relaxation of social distancing discipline, should result in a rise in infections. The healthcare community had been warning of such an outcome for some time. If the economy’s recovery is going to be slow, with a great deal of uncertainty, then it becomes a tougher case to make that cyclical stocks should be the leaders. Maybe the previous three weeks were a leap of faith that a V-shaped recovery was a real possibility. If so, the agnostics reasserted themselves last week. But if they did, they also failed to reassert their faith in the previous leadership of growth stocks, as all eleven sectors of the index declined. It is worth noting that the S&P 500 did seem to find support at its 200 day moving average at 3013. After closing slightly below it at 3002 on Thursday, the index managed to fight back and end the week at 3041.

Stocks in the Eurozone followed a similar path, only last week’s selloff was more severe following a sharper rise over the previous three weeks. The EuroStoxx 50 index fell 6.8 percent last week in euro terms, after having risen 22 percent over the previous three. And last week the euro edged lower versus the dollar after having surged higher by more than 4 percent over the previous three.

Part of the, so far, short-lived cyclical story was a rise in bond yields and a steepening of the yield curve. Also part of it was some expectation that the Fed would to say something about possibly initiating some form of yield curve control,

Before The Bell June 15, 2020 ____________________________________________________________________________________________________________________________

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such as employed by the Bank of Japan. The ten-year treasury note yield had climbed from 0.64 percent to 0.90 percent during cyclical’s three week outperformance, and the slope of the 2-10 year curve widened from 49 to 68 basis points. But last week the air came out of that balloon. The yield on the ten-year fell back to 0.70 percent last week, and the 2-10 year curve flattened back to 49 basis points, and the Fed downplayed any talk of yield curve controls. Over that same three week interim, high yield spreads had narrowed by 228 basis points, but reversed course and rose 78 last week.

This week’s economic calendar will provide a little more insight into how quickly the economy is rebounding, and whether the cyclical story has any basis in actual results. Retail sales for May are expected to rise 8 percent after having declined by 16 percent in April. Industrial production is forecast to rise by 3 percent following an 11 percent decline in April. Building permits, housing starts, and home builder sentiment are all expected to rise sharply as well. The index of leading indicators is expected to show its for increase in four months. And both weekly and continuing jobless claims are expected to show some ongoing moderation. And Fed Chairman Powell testifies before both houses of Congress in his semi-annual monetary policy report.

On Monday, China reported its May readings for retail sales, industrial production, and fixed-investment, all of which showed modest sequential improvement but ongoing weakness on a year-over-year basis. And EU members will meet on Friday to discuss the Commissions proposed recovery fund.

MORNING MARKET COMMENTARY: Anthony M. Saglimbene, Global Market Strategist Quick Take: U.S. futures are pointing to a lower open; European markets are trading mostly in the red; Asia

ended lower overnight; West Texas Intermediate (WTI) oil trading up to $35.45; 10-year U.S. Treasury yield at 0.67%.

What Could A Second Wave Mean For The Market? On Friday, we noted a few more clues into the pace and durability of the economic recovery currently underway. Data on mobility patterns, employee time management trends, and declining unemployment claims suggest a steady rebound is underway, but there is a wide disparity between states. Per Reuters, citing Homebase data, employment is back to pre-shutdown levels at many firms that opened quickly. Nevertheless, on a national level, firms unable to reopen are weighing on the overall average. Also, retail foot traffic is back within 20% of 2019 levels, but roughly only a third of states have seen a full recovery. Along with a pickup in infection rates in some areas of the country, more data is suggesting an uneven recovery pattern.

As more states reopen for business, people move around more, and the effects from each begin to show-up in COVID-19 trends, we expect markets could see choppier trading over the near-term. Rising infection rates across several areas of the country have investors nervous, and stock prices have reacted poorly to the news over recent days. Investors should keep these key points in mind as we move through the next few months:

Any lasting rise in coronavirus infection rates is likely due to the combination of more testing "and" increasing activity levels across the country.

If a second wave of COVID-19 cases emerges across the country, we believe the Federal government and state governors will take a more targeted approach to combat the disease. In our view, this means the mass shutdown of the country in March and April is unlikely to be duplicated a second time. However, some local and state governements could choose to reimpose stiff restrictions for a period, which would add to an uneven recovery across the country.

While stock prices could react negatively to a second wave of infections over the near-to-intermediate-term, we believe fiscal and monetary stimulus efforts could provide a supportive longer-term environment for risk assets, such as equities.

There is an enormous amount of cash on the sidelines, and some investors missed the opportunity to take advantage of the large melt-up in stock prices since the March 23rd lows. If a second wave of virus infections causes stock prices to dislocate temporarily, we believe several investors could use the opportunity to reallocate toward stocks. In our view, a sudden drop in equity prices, due to COVID-19 concerns, could eventually be greeted with increased buying interest.

But the rubber hits the road for the market and economy when one boils all this down to consumer's behavior and expectations for their safety. In our view, if a second wave of infections emerges more



systemically across the country, social distancing behaviors would likely turn sharply higher. Thus, economic activity could slow, and corporate profit trends darken. Depending on the duration of consumer's caution, we believe this is one of the most significant risks to growth and stock prices over the coming months. Simply put, how willing will consumers be to go out into the world and spend if they believe their odds of contracting COVID-19 are increasing? Today, we believe attitudes about the disease are softening — right or wrong. If that changes for the worse, the V-shaped recovery stock prices have assumed may be inaccurate.

Much of the next few months is uncertain, with a still wide disparity in potential outcomes for the market and economy. Indeed, economic, market and consumer trends have shown signs of life recently, but for the economy, at least, the improvement is coming off historically low levels. Also, stock valuations in the U.S. currently look stretched, mainly if you believe analysts' earnings expectations for the next few quarters are accurate. A small note of caution on that point: Since companies themselves can't figure out what profits look like over the next few quarters, analyst expectations have become abundantly cautious, and in some cases, too dire.

However, we'll end on a point we referenced earlier, which is accompanied by the BCA Research chart above — the fiscal stimulus response to COVID-19 is historic and dwarfs the efforts governments took during the financial crisis. In significantly important developed economies, like the U.S., governments acted aggressively and swiftly. As BCA recently noted, if governments are too quick to tighten fiscal policies this time around, and like they did during the Great Recession, then a recovery could be sluggish. But in our view, there is broad agreement today across large developed countries fiscal stimulus efforts are needed to bridge the gap between contraction and recovery. Increased fiscal efforts in Germany, long considered a fiscally conservative country, is an example of the sea change the world has seen when it comes to this crisis. The combination of massive fiscal and monetary support truly is different this time and relative to past economic contractions.

Though markets could gyrate and possibly react negatively to a potential second wave of COVID-19 infections over a shorter period, the dynamics described above, combined with massive stimulus efforts, could provide needed support for asset prices over time. Meaning, we believe investors should remain cautious but avoid becoming overly bearish based on worsening virus trends.

Asia-Pacific: Asian equities finished lower on Monday. China's government shutdown Beijing's largest fruit and vegetable market as well as the surrounding housing district after dozens of people associated with the wholesale market tested positive for coronavirus, per Bloomberg. China also reported its largest daily increase in cases since mid-April over the weekend.

Industrial production in China rose +4.4% y/y in May, lower than the +5.0% expected but better than the +3.9% in April. Autos and tech output were a bright spot in the manufacturing data. Also, retail sales declined 2.8% last month,



narrowing April's 7.5% drop. Some areas of retail have stabilized in China, while other areas like jewelry remain depressed. Lastly, fixed asset investment declines narrowed in May and reflected a steady improvement in commercial sales. Bottom line: the recovery in China remains uneven amid a backdrop of global recession.

Europe: Markets across the region are trading mostly in the red at midday. According to the Financial Times, French President Emmanuel Macron lifted most of the country's remaining coronavirus lockdown measures and said schools would return to standard rules starting on June 22nd. Mr. Macron also said he would spend the remaining two years of his term rebuilding the French economy.

Per Bloomberg, UK Prime Minister Boris Johnson will tell European Union leaders today they must conclude Brexit talks by autumn to give companies more certainty in Britain's exit. Concerns over timing in discussions and agreement ratification have some concerned a delay could lead to a no-deal Brexit.

U.S.: Equity futures are pointing to a lower open. Here's a quick news rundown to start your morning: Coronavirus cases spiked over the weekend, and as a result, markets look to extend their recent

trek lower. New coronavirus cases and hospitalizations swept through Florida and Texas over the weekend. According to FactSet, Alabama reported a record number of new cases for the fourth day in a row on Sunday. Alaska, Arizona, Arkansas, California, North Carolina, Oklahoma, and South Carolina all hit record case counts during the past three days. Many health officials attribute the increase to gatherings during Memorial Day. Last week, the S&P 500 Index fell 4.8%, while the Dow Jones Industrials Average declined by 5.6%. With the number of coronavirus cases moving up, markets this morning are again throwing more cold water on the idea of a V-shaped recovery. The S&P 500 looks set to open below the 3,000 mark, with stocks tied heavily to America's reopening seeing the most significant pre-market pressure.

Federal Reserve Chair Jerome Powell heads to Capitol Hill. Mr. Powell will testify before Congress on Tuesday and Wednesday this week and is expected to deliver a sober tone on the economy. In his semi-annual Monetary Policy Report, Mr. Powell is scheduled to deliver a similar message laid out in last week's FOMC policy statement. However, we expect a more nuanced message to Congress on the Fed's commitment to further stimulus, its generally gloomier growth outlook, and the hardships millions of out-of-work Americans face at the moment.

Is the $600-a-week boost to unemployment benefits a disincentive to work? White House economic advisor Larry Kudlow told CNN over the weekend he thinks so. The additional unemployment benefit was designed to replace most of the income employees lost during the pandemic and is scheduled to expire in July. Mr. Kudlow said the White House is currently weighing potential reforms to the benefit and suggested any additional stimulus on this front would likely not be as robust moving forward.

What's on the economic docket this week? May retail sales (Tuesday), industrial production (Tuesday), housing starts (Wednesday), and leading indicators (Thursday).

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WORLD CAPITAL MARKETS 6/15/2020 As of: 8:30 AM ET

Americas % chg. % YTD Value Europe (Intra-day) % chg. %YTD Value Asia/Pacific (Last Night) % chg. %YTD ValueS&P 500 1.31% -4.98% 3,041.3 DJSTOXX 50 (Europe) -1.20% -15.50% 3,115.9 Nikkei 225 (Japan) -3.47% -8.08% 21,531.0 Dow Jones 1.90% -9.20% 25,605.5 FTSE 100 (U.K.) -1.08% -18.57% 6,039.0 Hang Seng (Hong Kong) -2.16% -14.54% 23,777.0 NASDAQ Composite 1.01% 7.44% 9,588.8 DAX Index (Germany) -1.07% -10.78% 11,821.0 Korea Kospi 100 -4.76% -7.36% 2,030.8 Russell 2000 2.32% -16.28% 1,387.7 CAC 40 (France) -0.92% -18.79% 4,794.6 Singapore STI -2.64% -16.94% 2,613.9 Brazil Bovespa -2.00% -19.76% 92,795 FTSE MIB (Italy) -0.72% -20.23% 18,752.1 Shanghai Comp. (China) -1.02% -5.25% 2,890.0 S&P/TSX Comp. (Canada) 1.37% -9.18% 15,256.6 IBEX 35 (Spain) -1.57% -24.08% 7,177.9 Bombay Sensex (India) -1.63% -19.10% 33,228.8 Mexico IPC 2.31% -12.98% 37,679.2 MOEX Index (Russia) -1.73% -10.32% 2,696.3 S&P/ASX 200 (Australia) -2.19% -12.86% 5,719.8

Global % chg. % YTD Value Developed International % chg. %YTD Value Emerging International % chg. %YTD ValueMSCI All-Country World Idx 0.33% -7.57% 516.6 MSCI EAFE -1.18% -11.79% 1,768.1 MSCI Emerging Mkts -0.66% -10.64% 987.0

Note: International market returns shown on a local currency basis. The equity index data shown above is on a total return basis, inclusive of div idends.

S&P 500 Sectors % chg. % YTD Value Commodities Communication Services 0.88% -0.27% 180.0 Equity Income Indices % chg. % YTD Value Futures & Spot (Intra-day) % chg. % YTD ValueConsumer Discretionary 0.73% 3.66% 1,016.5 JPM Alerian MLP Index 0.39% -34.25% 143.5 CRB Raw Industrials -0.20% -7.13% 419.59 Consumer Staples -0.18% -7.23% 592.0 FTSE NAREIT Comp. TR 3.64% -11.85% 18,822.2 NYMEX WTI Crude (p/bbl.) -3.23% -42.53% 35.09 Energy 2.71% -32.69% 299.3 DJ US Select Dividend 1.25% -20.46% 1,821.6 ICE Brent Crude (p/bbl.) -2.01% -42.50% 37.95 Financials 3.01% -21.99% 394.1 DJ Global Select Dividend -1.74% -24.21% 175.0 NYMEX Nat Gas (mmBtu) -0.29% -21.15% 1.73 Health Care 0.70% -3.70% 1,134.5 S&P Div. Aristocrats 1.37% -10.63% 2,741.5 Spot Gold (troy oz.) -1.21% 12.69% 1,709.77 Industrials 1.95% -14.91% 579.5 Spot Silver (troy oz.) -2.33% -4.30% 17.08

Materials 1.94% -9.59% 345.0 LME Copper (per ton) 0.35% -6.30% 5,761.50 Real Estate 3.16% -7.36% 219.8 Bond Indices % chg. % YTD Value LME Aluminum (per ton) -0.99% -12.38% 1,560.75 Technology 1.34% 8.99% 1,745.1 Barclays US Agg. Bond -0.17% 5.71% 2,352.0 CBOT Corn (cents p/bushel) -0.37% -16.90% 333.25 Utilities -0.22% -8.37% 296.0 Barclays HY Bond 0.19% -3.15% 2,114.1 CBOT Wheat (cents p/bushel) -0.34% -11.03% 506.00

Foreign Exchange (Intra-day) % chg. % YTD Value % chg. % YTD Value % chg. % YTD ValueEuro (€/$) -0.05% 0.33% 1.13 Japanese Yen ($/¥) 0.00% 1.15% 107.38 Canadian Dollar ($/C$) -0.39% -4.78% 1.36British Pound (£/$) 0.02% -5.39% 1.25 Australian Dollar (A$/$) -0.52% -2.72% 0.68 Swiss Franc ($/CHF) 0.32% 1.81% 0.95Data/Price Source: Bloomberg. Equity Index data is total return, inclusive of dividends, where applicable.

Ameriprise Global Asset Allocation Committee U.S. Equity Sector - Tactical View

S&P 500 GAAC GAAC S&P 500 GAAC GAAC

Index GAAC Tactical Recommended Index GAAC Tactical RecommendedSector Weight Tactical View Overlay Weight Sector Weight Tactical View Overlay Weight

1) Communication Services 10.7% Underweight - 2.0% 8.7% 6) Health Care 14.9% Overweight +3.0% 17.9%

2) Consumer Discretionary 9.9% Overweight +2.0% 11.9% 7) Industrials 8.4% Equalweight - 8.4%

3) Consumer Staples 7.6% Equalweight - 7.6% 8) Information Technology 25.7% Equalweight - 25.7%

4) Energy 2.7% Equalweight - 2.7% 9) Materials 2.4% Equalweight - 2.4%

5) Financials 11.2% Underweight - 3.0% 8.2% 10) Real Estate 3.0% Overweight +1.0% 4.0%

11) Utilities 3.5% Underweight - 1.0% 2.5%As of: March 31, 2020

Ameriprise Global Asset Allocation Committee Global Equity Region - Tactical View

MSCI All-Country GAAC GAAC MSCI All-Country GAAC GAAC

World Index GAAC Tactical Recommended World Index GAAC Tactical RecommendedRegion Weight Tactical View Overlay Weight Region Weight Tactical View Overlay Weight

1) United States 55.7% Overweight +7.1% 62.8% 5) Latin America 1.0% Equalweight - 1.0%

2) Canada 2.7% Equalweight - 2.7% 6) Asia-Pacific ex Japan 14.4% Equalweight - 14.4%

3) United Kingdom 4.2% Underweight - 2.0% 2.2% 7) Japan 7.2% Underweight - 2.0% 5.2%

4) Europe ex U.K. 13.7% Underweight - 2.0% 11.7% 8) Middle East / Africa 1.1% Underweight - 1.1% -

As of: March 31, 2020



THE WEEK AHEAD: Russell T. Price, CFA, Chief Economist Have we seen the worst of EPS estimate cuts? Market volatility picked up considerably last week as economic

reopening efforts finally resulted in a growing number of new coronavirus cases in some areas of the country. An increase in new cases was long-forecast to happen as restrictions were lifted, but a false sense of optimism seemed to take hold as case numbers remained on an encouraging path through most of May.

Virus related trends will remain key to market sentiment and the pace of economic recovery. Absent a major, health-care system stressing outbreak in a local area, however, the reimplementation of widespread economic shutdowns appears unlikely, in our view. Relatively small outbreaks, however, could curtail production at key facilities that result in supply chain disruptions for certain industries.

The pace of earnings estimate cuts has also slowed significantly over recent weeks suggesting that analysts may have also grown more encouraged by virus-related trends. Last week, the full-year EPS estimate for S&P 500 companies actually increased for the first time in months, although the increase was only $0.06 and was entirely due to an increase in the actual number for Q1. Estimates for Q2 through Q4 experienced a further cut of $0.11. In our view, the current full-year EPS estimate of $125.52 likely still has downside but as the pace of cuts slows a “real” estimate may at least be coming into focus.

All numbers mentioned here, as well as those depicted in the chart at right are sourced from FactSet. There are a few potentially market-moving reports on the Economic Calendar this week. Tuesday’s report on May Retail Sales is likely to carry the most weight with investors. Forecasters as surveyed by

Bloomberg expect the report to show an 8.0% increase in total sales following a 16.4% plunge in April and an 8.4% decline in March. Sharply lower gasoline prices offered material downward pressure on retail sales results in recent months, a trend that should partially reverse in May amid higher purchase volumes and stabilizing prices. Automobile purchases also improved considerably in May, according to Wards Automotive, to a seasonally adjusted annualized rate (SAAR) of 12.2 million vehicles from April’s low of 8.6 million. New car sales, however, are still well below their pre-virus levels of 16 to 17 million units on an annualized basis and may not fully recover for several quarters.

May’s Industrial Production report will also of notable interest on Tuesday. Much like retail sales, the report is expected to show a rebound, but off of a very low base. Total Industrial production is forecast to grow by a moderate 3.0%, according to the Bloomberg consensus. The headline measure is expected to be remain under pressure from a further decline in energy extraction activity related to reduced crude oil pumping amid the recent demand plunge. Overall, mining activity accounts for just under 15% of the Index. Manufacturing output, which accounts for 75% of the Index, is expected to see a 5.0% month-over-month increase, which would still leave it about 15% below year-ago levels. Given the situation, however, investors should remain most interested in manufacturing recovery trends rather than absolute year-over-year comparisons.

June 15 16 17 18 19Empire Manufacuring Index Retail Sales Housing Starts Initial Jobless Claims Retail Sales - Canada

Retail Sales - China Industrial Production Building Permits Philly Fed Index Retail Sales - U.K.

Industrial Production - China Business Inventories Inflation - Eurozone Leading Economic Index Home Prices - Canada

Fixed Investment - China Capacity Utilization Monetary Policy - Brazil Monetary Policy - U.K. Trade - Japan

Trade - Eurozone NAHB Housing Index Employment - Canada

Trade - India Unemployment - U.K. Inflation - Japan

Retail Sales - Japan



Where Market Fundamentals Stand Heading into The Week:

S&P 500 Trailing and Forward P/E valuations: Source: FactSet Please note: Although we try to maintain consistency as much as possible, Price to Earnings (P/E) ratios may differ modestly from once source to another. Most notably, P/E numbers can often show their most notable differences during an earnings release season as some sources may still use the last full ‘actual’ earnings number (for instance, currently Q4 trailing 12-month earnings per share) while others use earnings per share that are updated for Q1 using a combination of actual and estimated earnings per share. The calculation of earnings (operating earnings versus ‘as reported’ or GAAP) also often differs modestly from one data source to another due to the proprietary use of calculation methodologies. The “average” shown in the charts below represent averages for the period shown.

Please note: The consensus earnings estimates shown below should not be fully relied upon. In this very dynamic and rapidly changing environment, forecasts have more uncertainty than usual.

Consensus Earnings Estimates: Source: FactSet

S&P 500 Earnings Estimates 2015 2016 2017 2021

6/15/2020 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Est. Est. Est. Est.Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Quarterly $$ amount $38.72 $41.13 $42.88 $41.32 $38.80 $41.59 $42.21 $41.78 $33.33 $23.57 $31.97 $36.65

change over last week $0.18 -$0.09 -$0.01 -$0.02

yr/yr 25.4% 25.4% 27.8% 13.7% 0.2% 1.1% -1.6% 1.1% -14.1% -43.3% -24.3% -12.3%

qtr/qtr -1% 6% 4% -4% -6% 7% 1% -1% -20% -29% 36% 15%

Trailing 4 quarters $$ $118.67 $119.64 $133.50 $141.41 $149.74 $159.07 $164.05 $164.13 $164.59 $163.92 $164.38 $158.91 $140.89 $130.65 $125.52 $164.18

yr/yr -0.3% 0.8% 11.6% 22.9% 0.2% -23.6% 30.8%

Implied P/E based on a S&P 500 level of: 3041 18.5 19.1 21.6 23.3 24.2 18.5

2019 20202018



BY THE NUMBERS: ECONOMIC ACTUALS AND FORECAST:

ECONOMIC NEWS OUT TODAY: Economic Releases for Monday, June 15, 2020. All times Eastern. Consensus estimates via Bloomberg. Time Period Release Consensus Est. Actual Prior Revised to 8:30 AM JUN Empire Manufacturing Index _29.6 -0.2 -48.5

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Ameriprise Investment Research Group Ameriprise Financial 1441 West Long Lake Road, Suite 250, Troy, MI 48098 [email protected] For additional information or to locate your nearest branch office, visit ameriprise.com RESEARCH & DUE DILIGENCE LEADER

Lyle B. Schonberger - Vice President Business Unit Compliance Liaison (BUCL) Jeff Carlson, CLU, ChFC – Sr. Manager Investment Research Coordinator Kimberly K. Shores Sr. Administrative Assistant Jillian Willis STRATEGISTS Chief Market Strategist David M. Joy – Vice President Global Market Strategist Anthony M. Saglimbene – Vice President

Thomas Crandall, CFA, CMT, CAIA – Sr. Director, Asset Allocation Cedric Buermann Jr., CFA – Analyst – Quantitative, Asset Allocation

Gaurav Sawhney – Research Analyst

Amit Tiwari – Sr. Research Associate Chief Economist Russell T. Price, CFA – Vice President Retirement Research Jay C. Untiedt, CFA, CAIA, RICP – Vice President EQUITY RESEARCH Equity Research Director Justin H. Burgin – Vice President

Consumer Goods and Services Patrick S. Diedrickson, CFA – Director

Energy/Utilities William Foley, ASIP – Director

Financial Services/REITs Lori Wilking-Przekop – Sr Director

Health Care Daniel Garofalo – Director

Industrials/Materials Frederick M. Schultz – Director

Technology/Telecommunication Open

MANAGER RESEARCH

Michael V. Jastrow, CFA – Vice President

Mark Phelps, CFA – Director – Multi-Asset Solutions ETFs, CEFs, UITs Jeffrey R. Lindell, CFA – Director

James P. Johnson, CFA, CFP® – Sr Analyst Alternatives Justin E. Bell, CFA – Vice President – Head of Quantitative Research and Alternatives

Kay S. Nachampassak – Director - Alternatives Quantitative Research Kurt J. Merkle, CFA, CFP®, CAIA – Sr Director

Peter W. LaFontaine – Sr Analyst

David Hauge, CFA – Analyst

Blake Hockert – Sr Associate

Bishnu Dhar – Sr Research Analyst

Parveen Vedi – Sr Research Associate

Darakshan Ali – Research Process Trainee Equities Christine A. Pederson, CAIA, CIMA – Sr Director – Growth Equity, Infrastructure & REIT

Benjamin L. Becker, CFA – Director – International/Global Equity

Cynthia Tupy, CFA – Director – Value and Equity Income Equity

Alex Zachman, CFA – Analyst – Core Equity Fixed Income Steven T. Pope, CFA, CFP® – Sr Director – Non-Core Fixed Income

Douglas D. Noah, CFA – Sr Analyst – Core Taxable & Tax-Exempt Fixed Income

FIXED INCOME RESEARCH & STRATEGY

Fixed Income Research Brian M. Erickson, CFA – Vice President High Yield and Investment Grade Credit Jon Kyle Cartwright – Sr. Director

Stephen Tufo – Director

RETIREMENT RESEARCH

Jay C. Untiedt, CFA, CAIA, RICP – Vice President

Nidhi Khandelwal – Director

Matt Morgan – Sr. Manager



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issuers may reduce or eliminate dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer. Should a company be unable to pay interest on a timely basis a default may occur and interruption or reduction of interest and principal occur. Investments in a narrowly focused sector may exhibit higher volatility than investments with broader objectives and is subject to market risk and economic risk. Income Risk: We note that dividends are declared solely at the discretion of the companies’ boards of directors. Dividend cuts or eliminations will likely negatively impact underlying company valuations. Published dividend yields are calculated before fees and taxes. Dividends paid by foreign companies to ADR holders may be subject to a withholding tax which could adversely affect the realized dividend yield. In certain circumstances, investors in ADR shares have the option to receive dividends in the form of cash payments, rights shares or ADR shares. Each form of dividend payment will have different tax consequences and therefore generate a different yield. In some instances, ADR holders are eligible to reclaim a portion of the withholding tax. International investing involves increased risk and volatility due to political and economic instability, currency fluctuations, and differences in financial reporting and accounting standards and oversight. Risks are particularly significant in emerging markets. Market Risk: Equity markets in general could sustain significant volatility due to several factors. As we have seen recently, both economic and geopolitical issues could have a material impact on this model portfolio and the equity market as a whole. Quantitative Strategy Risk: Stock selection and portfolio maintenance strategies based on quantitative analytics carry a unique set of risks. Quantitative strategies rely on comprehensive, accurate and thorough historical data. The Ameriprise Investment Research Group utilizes current and historical data provided by third-party data vendors. Material errors in database construction and maintenance could have an adverse effect on quantitative research and the resulting stock selection strategies. PRODUCT RISK DISCLOSURES Exchange Traded Funds (ETF) trade like stocks, are subject to investment risk and will fluctuate in market value.



For additional information on individual ETFs, see available third-party research which provides additional investment highlights. SEC filings may be viewed at sec.gov All fixed income securities are subject to a series of risks which may include, but are not limited to: interest rate risk, call risk, refunding risk, default risk, inflations risk, liquidity risk and event risk. Please review these risks with your financial advisor to better understand how these risks may affect your investment choices. In general, bond prices rise when interest rates fall and vice versa. This effect is usually more pronounced for longer-term securities. This means you may lose money if you sell a bond prior to maturity as a result of interest rate or other market movement. Any information relating to the income or capital gains tax treatment of financial instruments or strategies discussed herein is not intended to provide specific tax advice or to be used by anyone to provide tax advice. Investors are urged to seek tax advice based on their particular circumstances from an independent tax professional. A real estate investment trust or REIT is a company that owns and operates income-producing real estate. In addition, some REITs participate in the financing of real estate. To qualify as a REIT, a company must: I) invest at least 75% of its total assets in real estate assets, II) generate at least 75% of its gross income from real property or interest, and III) pay at least 90% of its taxable income to shareholders in the form of distributions. A company that qualifies as a REIT is permitted to deduct the distributions paid to shareholders from its corporate taxes. Consequently, many REITs target to payout at least 100% of taxable income, resulting in virtually no corporate taxes. An investment in a REIT is subject to many of the same risks as a direct investment in real estate including, but not limited to: Illiquidity and valuation complexities, redemption restrictions, distribution and diversification limits, tax consequences, fees, defaults by borrowers or tenants, market saturation, balloon payments, refinancing, bankruptcy, decreases in market rates for rents and other economic, political, or regulatory occurrences affecting the real estate industry. Ratings are provided by Moody’s Investors Services and Standard & Poor’s. Non-Investment grade securities, commonly known as "high-yield" or "junk" bonds, are historically subject to greater risk of default, including the loss of principal and interest, than higher-rated bonds, which may result in greater price volatility than experienced with a higher-rated issue. Securities offered through AFSI may not be suitable for all investors. Consult with your financial advisor for more information regarding the suitability of a particular investment. For further information on fixed income securities please refer to FINRA’s Smart Bond Investing at FINRA.org, MSRB’s Electronic Municipal Market Access at emma.msrb.org, or Investing in Bonds at investinginbonds.com.

DEFINITIONS OF TERMS Agency – Agency bonds are issued by Government Sponsored Enterprises (GSE), but are NOT direct obligations of the U.S. government. Common GSE’s are the Federal Home Loan Mortgage Corp. (Freddie Mac) Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Bank (FHLB). Beta: A measure of the risk arising from exposure to general market movements as opposed to company-specific factors. Betas in this report, unless otherwise noted, use the S&P 500 as the market benchmark and result from calculations over historic periods. A beta below 1.0, for example, can suggest the equity has tended to move with lower volatility than the broader market or, due to company-specific factors, has had higher volatility but generally low correlations with the overall market. Corporate Bonds – Are debt instruments issued by a private corporation. Non-Investment grade securities, commonly known as “high-yield” or “junk” bonds, are historically subject to greater risk of default, including the loss of principal and interest, than higher-rated bonds, which may result in greater price volatility than experienced with a higher-rated issue. Mortgage Backed Securities – Bonds are subject to prepayment risk. Yield and average lives shown consider prepayment assumptions that may not be met. Changes in payments may significantly affect yield and average life. Please contact your financial advisor for information on CMOs and how they react to different market conditions. Municipal Bonds – Interest income may be subject to state and/or local income taxes and/or the alternative minimum tax (AMT). Municipal securities subject to AMT assume a “nontaxable” status for yield calculations. Certain municipal bond income may be subject to federal income tax and are identified as “taxable”. Gains on sales/redemptions of municipal bonds may be taxed as capital gains. If the bonds are insured, the insurance pertains to the timely payment of principal (at maturity) and interest by the insurer of the underlying securities and not to the price of the bond, which will fluctuate prior to maturity. The guarantees are backed by the claims-paying ability of the listed insurance company. Treasury Securities – There is no guarantee as to the market value of these securities if they are sold prior to maturity or redemption. Price/Book: A financial ratio used to compare a company’s market share price, as of a certain date, to its book value per share. Book value relates to the accounting value of assets and liabilities in a company’s balance sheet. It is generally not a direct reflection of future earnings prospects or hard to value intangibles, such as brand, that could help generate those earnings. Price/Earnings: An equity valuation multiple calculated by dividing the market share price, as of a certain date, by earnings per share. Trailing P/E uses the share price divided by the past four-quarters’ earnings per share. Forward P/E uses the share price as of a certain date divided by the consensus estimate of the future four-quarters’ EPS.



Price/Sales: An equity valuation multiple calculated by dividing the market share price, as of a certain date, by the company’s sales per share over the most recent year. INDEX DEFINITIONS An index is a statistical composite that is not managed. It is not possible to invest directly in an index. Definitions of individual indices mentioned in this report are available on our website at ameriprise.com/legal/disclosures in the Additional Ameriprise research disclosures section, or through your Ameriprise financial advisor. DISCLAIMER SECTION Except for the historical information contained herein, certain matters in this report are forward-looking statements or projections that are dependent upon certain risks and uncertainties, including but not limited to, such factors and considerations as general market volatility, global economic and geopolitical impacts, fiscal and monetary policy, liquidity, the level of interest rates, historical sector performance relationships as they relate to the business and economic cycle, consumer preferences, foreign currency exchange rates, litigation risk, competitive positioning, the ability to successfully integrate acquisitions, the ability to develop and commercialize new products and services, legislative risks, the pricing environment for products and services, and compliance with various local, state, and federal health care laws. See latest third-party research reports and updates for risks pertaining to a particular security. This summary is based upon financial information and statistical data obtained from sources deemed reliable, but in no way is warranted by Ameriprise Financial, Inc. as to accuracy or completeness. This is not a solicitation by Ameriprise Financial Services, Inc. of any order to buy or sell securities. This summary is based exclusively on an analysis of general current market conditions, rather than the suitability of a specific proposed securities transaction. We will not advise you as to any change in figures or our views. Past performance is not a guarantee of future results. Investment products are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. AFSI and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation. Ameriprise Financial Services, Inc. Member FINRA and SIPC.

Documents

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