INVESTMENT PERSPECTIVES

ClearPath Capital Partners Brendan Connaughton

Chief Investment Officer

brendan@clearpathcapital.com

ClearPath Capital Partners

222 Front St., Third Floor

San Francisco, CA 94111

www.clearpathcapital.com

US ECONOMIC SCENARIOS

Avg. Recovery 10%

Subpar Recovery 60%

Stagflation 30%

Severe Recession 0%

ECONOMICS (Data from consensus est.) 2017

Full

Year

Full

Year

Forecasts 2016 Q1 Q2 Q3 Q4 2017 2018

Global GDP YOY 2.90% 2.25% 3.25% 3.10% 3.20% 3.10% 3.25%

Global CPI YOY 3.10% 2.90% 2.90% 3.00% 3.20% 3.00% 3.25%

U.S. GDP YOY 1.50% 2.10% 2.30% 2.20% 2.20% 2.20% 2.50%

U.S. CPI YOY 1.30% 2.40% 2.40% 2.60% 2.50% 2.50% 2.60%

Fed Funds 0.56% 0.75% 1.00% 1.00% 1.25% 1.00% 1.50%

10 Yr. Treas. 1.31% 2.45% 2.48% 2.51% 2.54% 2.50% 2.66%

0.53% 0.62% 0.79%

1.16% 1.43%

1.86%

2.19% 2.42% 2.76%

3.05%

0.65%

1.01% 1.19% 1.33%

1.74% 2.16%

2.62%

3.08%

3.86%

4.47%

0.53% 0.61%

0.80% 0.92%

1.21% 1.50%

1.96%

2.42%

3.40%

3.71%

0.82%

0.94%

1.23% 1.42%

1.86%

2.31%

3.02%

3.72%

5.23% 5.71%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

3 mos 6 mos 1 yr. 2 yr. 3 yr. 5 yr. 7 yr. 10 yr. 20 yr. 30 yr.

US Treas.

US Ind. AA Bds

Nat'l Muni GOs

Tax Adjusted Nat'l Muni

Index Last Price Last 5 Days Last Month YTD

London Gold $ 1,237.50 1.36% 4.47% 7.39%

West Tex Oil $ 53.72 0.71% 0.53% - 2.99%

DB Commodity $ 15.63 0.96% 1.28% - 0.32%

US / EUR $ 1.0746 0.41% 2.38% 1.96%

US / Yen $ 111.73 - 0.59% - 3.85% - 3.12%

Current Yields

Feb 6th, 2017

Monday Feb. 6, 2017

ClearPath Capital Partners | 1

ECONOMIC RELEASES

1/30/17 US: Trade Balance

1/31/17 RUS: Inflation (CPI)

1/31/17 US: Federal Budget

1/31/17 UK: Industrial Production

2/1/17 MEX: Industrial Production

CAPITAL

MARKETS DATA (Capital market & ETF data as of 2/03/17)

Index Last 5

Days

Last

Month

Tot.

Rt.

YTD

Tot.

Rt.

TTM

NTM

P/E

NTM

Earning

Yld.

TTM

P/B

DIV

%

MSCI AW 0.61% 1.46% 3.30% 21.08% 16.01x 6.24% 2.64x 2.41%

S&P 500 0.16% 1.04% 2.76% 22.77% 17.23x 5.80% 2.96x 2.06%

DJIA - 0.09% 0.83% 1.69% 26.17% 16.55x 6.04% 3.47x 2.20%

NASDAQ 0.13% 2.38% 5.33% 27.39% 21.19x 4.71% 3.59x 0.95%

Russell 2000 0.54% 0.68% 1.59% 38.46% 23.71x 4.21% 2.15x 1.51%

MSCI EAFE 0.04% 1.27% 3.49% 14.72% 14.64x 6.83% 1.60x 3.13%

MSCI EM 0.33% 4.87% 6.60% 30.85% 12.11x 8.25% 1.54x 2.52%

(data as of 2/06/17)

Bond Market Commentary: The 10-Year Treas.

yields fell by a modest 5 basis points (0.05%) to 2.49%

with the Federal Reserve on Weds. delivering an “as

expected” report and labor market data on Fri. revealing

solid job gains but muted wage growth. In Europe,

monetary policy still appears to be impacting rates

markets, with spreads relative to the US continuing to

tighten. In peripheral Europe, interest rates tracked

higher in response to the IMF’s warning that Greek debt

is on an unsustainable path.

EQUITY COMMENTARY:

Investors last week focused on central bank decisions

and the Trump administration’s executive orders, as global

policymakers try to assess the impact of new US leadership

on the markets. The S&P 500 fell in a four-day slide, the

longest since Nov.’s election, to end the week flat following

the release of Friday’s mixed jobs report. In Europe, stocks

bounced back in a broad-based rally, although the Europe

Stoxx 600 ended down 0.6%.

In its first drop below 11 since the summer of 2014, the VIX

closed at 10.6 last Friday. Policy uncertainty remains elevated

and we believe volatility will rise in the coming months.

Reporting EPS this week: Archer-Daniels, BP, Cardinal Health,

Emerson, General Mts, Akamai Tech,

Walt Disney, Zillow, Prudential, Whole

Foods, World Wrestling, Yum! Brands,

NVIDIA, Buckeye Partners

ClearPath Capital Partners | 2

Where the Stock Market is & how we got here: S&P 500 Index: daily close from 10/9/2007 to present

Employment

The Market and the Unemployment Rate Jobs surged to start 2017, rising

by 227,000 jobs in January with

broadly-based private sector

strength.

The unemployment peak for the

current cycle was 10.0% in

October 2009. Unemployment

is usually a lagging indicator that

moves inversely with equity

prices. It’s interesting to note

the peaks in unemployment in

1971, 1975, and 1982. The

mirror relationship appears to

be repeating itself with the most

recent and previous bear

markets.

Stock indexes were mostly unchanged on the week, but it took

almost a 1% rally on Friday to get there. A strong jobs report and an

executive order signed by President Trump that aimed to roll back

financial industry regulation pushed stocks higher to end the week.

ClearPath Capital Partners | 3

The U.S. equity market started the year favorably, the S&P 500 Index’s total return is about 2.70%

through February 3rd. Yet many investors should be prepared for market weakness as the year

continues.

Dips,

Pullbacks,

Corrections

and Bears

S&P 500 Index Trading Patterns since 1997

The inauguration of our new Republican

President, combined with Republican majorities

in both houses of Congress, has ushered in a

period of change for all investors. The expected

changes will affect the investment environment;

however, using history as a guide could help

investors during this time of change.

The past has shown us some insights during times

of falling market that can be helpful.

During bull markets since 1945, the S&P 500 has

experienced a “Dip” (a drop of 0-5.0% or a

short period of time) on avg. 3 to 5 times a year.

Markets have experienced a “Pullback” (a

decline of 5.0%-9.9%) once a year, on average,

and a “Correction” (a 10% to 19.9% decline)

every 2.8 years. “Bear Markets” (-20%+) have

shown their claws on avg. every 4.7 years.

Even with all these neg. price movements, its

important to remember there is an upward

biases to stock prices.

Dips: Usually a decline of 0%-5.0% is referred to as a Dip. These can happen

for a variety of reasons often just a quick sentiment change.

Pullbacks: A pullback (weakness of from -5.0%-9.9%) is a falling back of a

price from its trend peak defined in the . This type of price movement might

be seen as a brief reversal of the prevailing upward trend, signaling a slight

pause in upward momentum

Correction: A correction is a reverse movement, usually negative, of at

least 10% in a stock, commodity or index to adjust for an overvaluation.

Corrections are generally temporary price declines interrupting an uptrend in

the market or an asset. A correction has a shorter duration than a bear

market or a recession, but it can be a precursor to either

Bear Markets: A bear market is a condition in which securities prices fall

and widespread pessimism causes the stock market's downward spiral to be

self-sustaining. Investors anticipate losses as pessimism and selling increases.

Although figures vary, a downturn of 20% or more from a peak in multiple

broad market indexes, such as the Dow Jones Industrial Average (DJIA) or

Standard & Poor's 500 Index (S&P 500), over a two-month period is

considered an entry into a bear market.

Bear Markets

Bear Markets

Bear Markets

Corrections

Pullbacks

Dips

Keeping a long-term perspective can help

investors understand and weather expected

periods of stock market weakness.

ABOUT CLEARPATH Founded in 1996, ClearPath Capital is a boutique Investment Advisory firm located in the

heart of the SF Financial District. Through dedication, passion &intellectual curiosity, we craft innovative solutions for

the unique wealth management needs of successful executives, entrepreneurs &high-net-worth clients.

Important Information: This publication is produced by ClearPath Capital Partners. The information &opinions herein are for general information use only. ClearPath does not guarantee

the accuracy or completeness, nor does ClearPath assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Information &

opinions are subject to change without notice, are for general information only & are not intended as an offer or solicitation with respect to the purchase or sales of any security or as

personalized investment advice. No assurance can be given that any forecast or target can be achieved. Forecasts are based on assumptions, estimates, opinions & hypothetical models which

may prove to be incorrect. Past performance is not indicative of future returns & does not guarantee of future results. Research obtained by unaffiliated 3rd party sources deemed reliable by

ClearPath, however, ClearPath does not guarantee accuracy & completeness, &makes no warranties with respect to this data. Certain material in this work may be proprietary to &copyrighted

by Litman Gregory Analytics &may used by ClearPath with permission. Reproduction or distribution of this material is prohibited &all rights are reserved.

The S&P continues to consolidate in a sideways pattern as it digests the huge move higher it

experienced in the month following the election. As of this Friday, the index is trading right about

2½ standard deviations about its 50-day moving avg. – the definition of “overbought”.

Trading

Action

S&P 500 Index: Trading Ranges

The 50-day Moving Avg.

2 Stand. Dev. Below 50-day Moving Avg. 1 Stand. Dev. Below 50-day Moving Avg.

2 Stand. Dev. Above 50-day Moving Avg. 1 Stand. Dev. Below 50-day Moving Avg.

S&P 500 Index

Although prices

have flattened a

bit the S&P 500

remains in long-

term uptrend.

Oh no, the New England Patriots win is not good news for the stock market!

That is according to the Super Bowl Indicator, a fun (but completely

unscientific),predictor, that says stocks will fall if a team from the original

American Football League, or its AFC descendant, wins the Super Bowl. The

Super Bowl indicator was first introduced in 1978 by Leonard Koppett, a

sportswriter for The New York Times.

Though historically speaking the Super Bowl indicator boasts an 80+%

accuracy rate, remember the old maxim: correlation does not imply causation.

In 2008, despite the New York Giants (NFC) winning the Super Bowl

(indicating a Bull Market), the stock market suffered one of the largest

downturns since the Great Depression.

Though the indicator is an interesting take on predicting the stock market, by

no means are we basing our investment decision on this data set. We will

continue to employ our global diversified, multi-asset classes approach – all

fandom and rooting interests aside.

Super Bowl Indicator

Super BowlIndicator Correct

Super BowlIndicator Wrong

84%

16%