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Investment management services provided by City National Bank through its wholly-owned subsidiary City National Rochdale, LLC, a registered investment advisor.

Market UpdateMay 6, 2020

2

TABLE OF CONTENTS Weekly Update

Market Outlook

COVID-19 Outbreak

Economic Impact and Policy Response

Portfolio Positioning

3

Major Developments This Week

WEEKLY UPDATE

Source: CNR Research.

Key states starting to implement reopening plans

Fed puts more money in support of businesses, state and local gov’ts

Sentiment: 0.05 vs. reality: 0.0001

Earnings not as bad as feared, but significant uncertainty remains

4

CNR Coronavirus Crisis Playbook

MARKET OUTLOOK

Investment Committee considering:

Equity market ahead of the fundamentals

Company updates: 40% of companies reporting with little confidence in guidance

Highly selective on a few companies we see as attractive now

New stimulus to be limited if states reopen

“Out of the Crisis”: investment strategy focused on agile and resistant companies

Legacy of the coronavirus on the U.S. standard of living in the future

Massive one-time debt impact – limited inflation risk

5

Testing Levels Open For Scientific and Behavioral Debate

Federal Reserve focused on helping businesses and municipalities

Some states more ready than others for testing, tracking, tracing

New York is the worst affected and the center of reopening attention

COVID-19 OUTBREAK

Source: CNR Research, dotted line represents the position of the indicator 1 week ago.

COVID-19 Spread and Mortality

COVID-19 Testing

Policy Response

6

Phased return to more normalcy starting in MayU.S. Has Passed the Peak

COVID-19 OUTBREAK

Source: The COVID Tracking Project, calmatters.org.

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Hospitalizations across states

New York

California

WashingtonOregon

7

How Has The West Coast Fared? Outbreaks in California, Washington, and Oregon have been relatively contained

Size of outbreaks in these states is much more manageable than in New York

COVID-19 OUTBREAK

Source: The COVID Tracking Project.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

California Washington Oregon New York

Hospitalizations at Peak

8

How Has The West Coast Fared? Outbreaks in California, Washington, and Oregon have been relatively contained

Size of outbreaks in these states is much more manageable than in New York

COVID-19 OUTBREAK

Source: The COVID Tracking Project.

0

5,000

10,000

15,000

20,000

25,000

California Washington Oregon New York

Total Fatalies

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0

2

4

6

8

10

12

14

Daily New Cases Per Million (Rolling 7 Day Average)

China South Korea

Can We Manage a Second Wave? Evidence From Asia

COVID-19 OUTBREAK

Source: Bloomberg.

Both China and South Korea have seen no significant resurgence

Testing, track and trace, enable by technology, have played a major role

10

Keys to Managing a Surge

COVID-19 OUTBREAK

Source: Bloomberg.

Once the spread has been contained to a low number of cases, other aspects become important

Effective reopening boosted by adequate testing, contact tracing, and hospital capacity

Testing Contact Tracing

Hospital Capacity

Contained Spread

11

West Coast Reopening Status

COVID-19 OUTBREAK

Source: Governor press briefings, IHME, state government websites, the COVID Tracking Project.

Oregon: Reopening parts of state starting May 15

Washington: Stay-at-home through May 31; phased reopening of some activities starting May 5

California: Reopening parts of state starting May 8

Tests/WeekStated Goal:Tests/Week

HospitalizedAvailable

Hospital Beds (approx.)

Contact Tracer Target

California 194,465 175,000 4,616 68,000 10,000

Oregon 12,259 15,000 207 2,000 600

Washington 36,528 140,000 263 5,000 1,500

12

Companies Are Starting to Reopen…With Precautions

COVID-19 OUTBREAK

Boeing Starbucks

Reopen Date April 20 May 4

Locations Seattle, Philadelphia Various

Protocols

• Enhanced facility cleaning

• Staggered shifts

• Distancing where possible

• Face coverings & protective gear

• Wellness & temperature checks

• Remote work where possible

Service:

• Drive-thru service

• Mobile order, contact-less pick-up

• At-home delivery

Work:

• Isolate higher-risk

• Increased pay

• Pay to cover illness

Source: Boeing, Starbucks. The information provided is intended to illustrate the manner in which companies are addressing the COVID-19 outbreak and should not be viewed as an investment recommendation.

13

Magnitude is difficult to comprehend

Economic Toll Has Been Staggering

ECONOMIC IMPACT AND POLICY RESPONSE

25 million+ lost jobs nationwide, nearly 5 million on the west coast

More than 50% of small businesses closed

Major decline in investment

Source: Bloomberg, Homebase, CNR Research.

14


Small Businesses and Hourly Works Hurt Most Lockdowns have resulted in major small business closures and millions of job losses

Economic toll is staggering across states

Source: Homebase.

-60% -61%

-47%

-59% -60%

-46%

-57%-60%

-47%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

Employees Working vs. January 2020 Hours Worked vs. January 2020 Locations Open vs. January 2020

California Oregon Washington

15

Meaningful Aid For Small Businesses


Source: Small Business Administration

Paycheck Protection Program was part of the CARES Act passed by congress

More than $500 billion of potentially forgivable loans

Incentivized small businesses to retain employees

Approved Loans Approved Dollars Avg. Loan Size

California 375,078 $54,075,351,664 $144,171

Oregon 9,508 $5,454,354,436 $573,659

Washington 18,906 $9,970,254,564 $527,359

Total United States 3,873,158 $518,021,247,011 $133,746

16

Sustaining 5 Million Unemployed on the West CoastECONOMIC IMPACT AND POLICY RESPONSE

Source: Bureau of Labor Statistics, fileunemployment.org. Unemployment benefits for California, Washington, and Oregon based on worker earning $936 per week.

• Unemployment benefits in the CARES Act could replace 100% of income for many• Extra $600/week persists through July 2020

$600/week(CARES Act)

$385/week(Pre-Crisis)

$936/week(Q4 2019)

$-

$200

$400

$600

$800

$1,000

$1,200

California UnemploymentBenefit

Oregon UnemploymentBenefit

Washington UnemploymentBenefit

Median Weekly Earnings (US)

Chart Title

$936/week

$468/week

$600/weekCARES Act

$600/weekCARES Act$600/week

CARES Act

$538/week$450/week

17

Default Risk Elevated, but Not Near 2008 LevelsECONOMIC IMPACT AND POLICY RESPONSE

Source: Bloomberg.

• Market does not appear to fear defaults of blue-chip companies• Monetary and fiscal policy responses have helped

$600/week(CARES Act)

$385/week(Pre-Crisis)

$936/week(Q4 2019)

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Default RiskCredit Default Swap Spreads Over Time

JPMorgan Chase Apple Home Depot Johnson & Johnson Disney Walmart

Economic and Financial Indicators

City National Rochdale indicators are signaling short but significant recession over the next two quarters.

ECONOMIC & MARKET OUTLOOK

Indicators Are Forward-Looking Three to Six Months

Source: City National Rochdale. As of April 2020.

19

GDP Potential Scenarios

PORTFOLIO POSITIONING


GDP Q2 GDP Q3 GDP Q4

Potential Range of Quarterly GDP Growth in 2020

-27% +13% +10%

-43% +31% +17%

Percent Change From Preceding Period, Seasonally adjusted at annual rates

to to to

2.1%

-6.2%

4.5%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

2019 2020 est 2021 est

Full Year Estimates

20

Our current outlook suggests full recovery in approximately 2 yearsWhen Will GDP Fully Recover?



Q42019

Q12020

Q22020

Q32020

Q42020

Q12021

Q22021

Q32021

Q42021

Q12022

Q22022

Q32022

Q42022

Potential US GDP Path

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Significant Impact Across Industries

Source: Womply, data as of 5/5/2020.

59%

50%

40%

-21%

-24%

-29%

-36%

-36%

-44%

-49%

-64%

-80%

-88%

-100% -80% -60% -40% -20% 0% 20% 40% 60% 80%

Public Services and Government

Food and Beverage Shops

Retail and Wholesale Businesses

Religious Organizations

Online Businesses

Sports and Recreation Places

Educational Institutions

Bars and Lounges

Restaurants

Arts and Entertainment Businesses

Lodging Places

Parking Businesses

Transportation Businesses

Industry RevenuesYear-over-year % Change

22

West Coast Municipal Bond Outlook



West Coast Outlook

Tax baseCalifornia and Washington rely on personal income taxes (more volatile),while Oregon relies more on sales taxes

ReservesAll 3 states had ample reserves pre-crisis with good cash management; near-term cash flows should be manageable

Budgetary impact Significant cuts likely absent Federal aid to replace lost revenues

Local gov’tsPressure from regional weakness and mandates imposed by states; however all three states provide a degree of support to local funding, such as schools

What we favor inCA, WA, and OR

Emphasizing quality and prefer essential service revenue bonds

23


The largest stocks now make up more than 17% of the S&P 500. Highly Concentrated Market

Source: FactSet, CNR Research. 2020 data reflects the end of April 2020.

10%

11%

12%

13%

14%

15%

16%

17%

18%

19%

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Weight of Largest 5 Companies in the S&P 500

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We have not seen a market nearly this concentrated in 20 years. Assessing Concentrated Markets

Source: FactSet, Bloomberg. Weight in S&P 500 during in top chart reflects average weight between Sept 1997 and March 2000. Weight in S&P 500 in bottom chart reflects avg. weight between March 23 and May 4, 2020.

Weight in S&P 500

Returns P/E Ratio ReturnSept 1998 -Mar 2000

March 30, 2000

Mar 2000 -July 2002

Microsoft Corporation 4% 88% 65x -54%General Electric Company 3% 103% 47x -37%Intel Corporation 2% 197% 55x -70%Cisco Systems, Inc. 2% 376% 364x -82%Walmart Inc. 2% 117% 46x -16%

Company Weigh in the S&P 500Returns

March 23 - May 4, 2020P/E Ratio

May 4, 2020

Microsoft Corporation 6% 32% 32x

Apple Inc. 5% 31% 23x

Amazon.com, Inc. 4% 22% 111x

Alphabet, Inc. 3% 25% 28x

Facebook, Inc. 2% 39% 25x

1998 – 2002:

2020:


25


Stocks Appear Highly Valued After the Recent Rally

S&P 500 Forward Price/Earnings Ratio

Overvalued

Fairly Priced

Attractive

Very Attractive

Source: FactSet, CNR Research.

2.47

2.57

2.67

2.77

2.87

2.97

3.07

1992 1994 1996 1998 1999 2001 2003 2005 2006 2008 2010 2012 2013 2015 2017 2019 2020

18

24

16

14

10

26

Stocks Rally, but Economic Fundamentals Remain Uncertain


Source: Bloomberg, CNR Research. Data reflects S&P 500 Index price returns, which does not reflect the deduction of investment management fees.

Bear Market Peak to Trough Biggest RallyRally Peak to

Market Bottom

1966 -22% +7% -9%

1968-1970 -36% +6% -23%

1973-1974 -48% +8% -38%

1980-1982 -27% +11% -14%

1987 -33% +15% -13%

2000-2002 -49% +21% -32%

2007-2009 -57% +18% -33%

2020 -34% +28% ?

27

IMPORTANT INFORMATION

The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. This presentation is not an offer to buy or sell, or a solicitation of any offer to buy or sell any of the securities mentioned herein.

The material contains forward-looking statements regarding intent, beliefs, or current expectations which are used for informational purposes only. Readers are cautioned that such forward-looking statements are not a guarantee of future performance, involve risks and uncertainties, and actual results may differ materially from those statements as a result of various factors. The views expressed are also subject to change based on market and other conditions. Furthermore, the opinions and information presented do not involve the rendering of personalized investment, financial, legal, or tax advice.

Certain information has been provided by third-party sources and, although believed to be reliable, it has not been independently verified and its accuracy or completeness cannot be guaranteed

Adjustments to portfolio strategies are based on guidelines set forth by City National Rochdale’s Asset Allocation Committee. Individual client allocations among strategies, asset classes, portfolio weightings may be higher or lower given differences in portfolio holdings, client imposed restrictions, and/or the customized strategy implemented by each client’s portfolio manager. These differences may have a material impact on individual client’s performance returns.

Any opinions, projections, forecasts, and forward-looking statements presented herein are valid as on the date of this document and are subject to change.

This material is available to advisory and sub-advised clients, as well as financial professionals working with City National Rochdale, a registered investment advisor and a wholly-owned subsidiary of City National Bank.

Indices are unmanaged and one cannot invest directly in an index. Index returns do not reflect a deduction for fees or expenses.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results.

Important Information

28

IMPORTANT INFORMATION

This presentation is for general information and education only. City National makes no representations or warranties in respect of this presentation and is not responsible for the accuracy, completeness or content of information contained in this presentation. City National is not responsible for, and expressly disclaims all liability for, damages of any kind arising out of use, reference to, or reliance on any information contained in or from the site. The information in this presentation should not be used to obtain credit or for any other commercial purpose nor should it be construed as tax, accounting, regulatory or legal advice. Rules in the areas of law, tax andaccounting are subject to change and open to varying interpretations and you should seek professional advice from your advisor. Nothing in this presentation should be construed as an offer, or solicitation of an offer, to buy or sell any financial instrument. It should not be relied upon as specific investment advice directed to the viewer's specific investment objectives. Any financial instrument discussed in this presentation may not be suitable for the viewer. Each viewer must make his or her own investment decision, using an independent advisor if prudent, based on his or her own investment objective and financial situation. Prices and availability of financial instruments are subject to change without notice. Financial instruments denominated in a foreign currency are subject to exchange rate risk in addition to the risk of the investment. City National Bank (and its clients or associated persons) may, at times, engage in transactions in a manner inconsistent with this presentation and, with respect to particular securities and financial instruments discussed, may buy from or sell to clients or others on a principal basis. Past performance is not necessarily an indication of future results.

Icons used: Open Door by Juan Pablo Bravo from the Noun Project. Bank by IconPai from the Noun Project, questions by GregorCresnar from the Noun Project, Sentiment Analysis by Evangeline White from the Noun Project

Non-Deposit Investment Products:

Are not insured by the FDIC.

Are not deposits or other obligations of or guaranteed by City National Bank.

Are subject to investment risks, including possible loss of the principal amount invested.

Deposit products and services are provided by City National Bank Member FDIC. City National Bank is a subsidiary of Royal Bank of Canada. Redistributed with the permission of City National Rochdale.

Important Information

29

INDEX DEFINITIONS

The Standard and Poor’s 500 Index (S&P 500) is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance.

The Russell 2000 Index is comprised of the smallest 2000 companies in the Russell 3000 Index, representing approximately 8% of the Russell 3000 total market capitalization. The real-time value is calculated with a base value of 135.00 as of December 31, 1986. The end-of-day value is calculated with a base value of 100.00 as of December 29, 1978.

The MSCI Emerging Markets Index is a free-float weighted equity index that captures large and mid cap representation across Emerging Markets countries. The index covers approximately 85% of the free float-adjusted market capitalization in each country.

The MSCI EAFE Index is a free-float weighted equity index. The index was developed with a base value of 100 as of December 31, 1969. The MSCI EAFE region covers developed market countries in Europe, Australasia, Israel, and the Far East.

The Bloomberg Barclays US Treasury Intermediate Index measures US dollar-denominated, fixed-rate, nominal debt issued by the US treasury with maturities of 1 to 9.9999 years to maturity.

The Bloomberg Barclays US Corporate Bond Index Measures the investment grade, fixed-rate, taxable corporate bond markets. It includes USD denominated securities publicly issued by US and non-US industrial, utility and financial issuers.


Index Definitions

30

INDEX DEFINITIONS

The Bloomberg Barclays US Corporate High Yield Bond Index measures the USD-denominated, high yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody’s, Fitch and S&P is Ba1/BB+/BB+ or below. Bonds from issuers with an emerging markets country of risk, based on Barclays EM country definition, are excluded.


Index Definitions

31

For More InformationNew York Headquarters400 Park AvenueNew York, NY 10022212-702-3500

Beverly Hills Headquarters400 North Roxbury DriveBeverly Hills, CA 90210310-888-6000

[email protected]

Documents

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