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Economic and Market Webcast:
Investment Analysis and Strategy
September 14, 2020
2 Source: FactSet. As of 9/14/20
Market Performance
0
20
40
60
80
100
120
140
160
S&P Nasdaq Russell 2000 MSCI EAFE MSCI EM
Index YTD % Change
S&P 500 5.1%
Nasdaq 23.7%
Russell 2000 -8.8%
MSCI EAFE -5.2%
MSCI EM -0.2%
3
30
40
50
60
70
80
90
09 10 11 12 13 14 15 16 17 18 19 20
Cro
wd S
entim
ent
Indic
ato
r
Year
NDR Crowd Sentiment Poll
Optimism
64.9
Investor Sentiment
As of 9/8/20. Source: Ned Davis Research.
*12/1/95 – 9/8/20.
11.1
22.3
-0.1
-3.3-5
0
5
10
15
20
25
Below 57.0 57.0-66.0 FromBelow
57.0-66.0 FromAbove
Above 66.0
Perc
ent
Crowd Sentiment Indicator
S&P 500 % Gain per Annum*
Pessimism
4
Cash on the Sidelines Still Elevated
Source: Federal Reserve Board. As of 9/10/20.
M153407
* Includes Retail and Institutional Money Funds
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Liquid Assets*
5
Preparing for Increased Volatility Ahead of Election
As of 9/14/2020. Source: FactSet.
Year
# of +/- 1%
Market
Moves
% of
trading
days
2020 83 47%
2019 38 15%
2018 64 25%
2017 8 4%
6
Source; Dr. Fauci presentation to Harvard Medical School- Grand Rounds 9/10/20. https://masscpr.hms.harvard.edu/event/harvard-medical-school-grand-rounds-featuring-dr-
anthony-s-fauci
Daily Case Trends in U.S. and Europe
7 Source: Covidtracking.com. As of 9/12/20.
U.S. Looking Better On All Measures
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
3/16 3/30 4/13 4/27 5/11 5/25 6/8 6/22 7/6 7/20 8/3 8/17 8/31
U.S. Daily New Cases
0
500
1000
1500
2000
2500
3000
3/1 3/15 3/29 4/12 4/26 5/10 5/24 6/7 6/21 7/5 7/19 8/2 8/16 8/30
U.S. Daily COVID Deaths
0
10000
20000
30000
40000
50000
60000
70000
3/17 3/31 4/14 4/28 5/12 5/26 6/9 6/23 7/7 7/21 8/4 8/18 9/1
U.S. Current Hospitalizations
0%
5%
10%
15%
20%
25%
30%
4/1 4/15 4/29 5/13 5/27 6/10 6/24 7/8 7/22 8/5 8/19 9/2
U.S. Test Positivity Rate
8
Southern States Decline- Texas, Florida
Covidtracking.com as of 9/12/20.
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
3/5 3/19 4/2 4/16 4/30 5/14 5/28 6/11 6/25 7/9 7/23 8/6 8/20 9/3
Florida Daily New Cases
0
50
100
150
200
250
300
3/18 4/1 4/15 4/29 5/13 5/27 6/10 6/24 7/8 7/22 8/5 8/19 9/2
Florida Daily Deaths
0
2000
4000
6000
8000
10000
12000
14000
16000
3/6 3/20 4/3 4/17 5/1 5/15 5/29 6/12 6/26 7/10 7/24 8/7 8/21 9/4
Texas Daily New Cases
0
100
200
300
400
500
600
700
800
3/18 4/1 4/15 4/29 5/13 5/27 6/10 6/24 7/8 7/22 8/5 8/19 9/2
Texas Daily Deaths
9 Source: Covidtracking.com. As of 9/12/20.
Coastal States Decline
0
500
1000
1500
2000
2500
3000
3500
4000
4500
3/5 3/19 4/2 4/16 4/30 5/14 5/28 6/11 6/25 7/9 7/23 8/6 8/20 9/3
MA Daily New Cases
0
50
100
150
200
250
300
3/23 4/6 4/20 5/4 5/18 6/1 6/15 6/29 7/13 7/27 8/10 8/24 9/7
Massachusetts Daily Deaths
0
50
100
150
200
250
3/14 3/28 4/11 4/25 5/9 5/23 6/6 6/20 7/4 7/18 8/1 8/15 8/29 9/12
CA Daily Deaths
0
2000
4000
6000
8000
10000
12000
14000
3/6 3/20 4/3 4/17 5/1 5/15 5/29 6/12 6/26 7/10 7/24 8/7 8/21 9/4
CA Daily New Cases
10 Dr. Fauci, Harvard Medical School Grand Rounds Presentation: https://masscpr.hms.harvard.edu/event/harvard-medical-school-grand-rounds-featuring-dr-anthony-s-fauci
Vaccine Update
Moderna
BioNTech
AstraZeneca
Janssen
Merck
Novavax
Sanofi
11 Source
Vaccine Rollout
Phase 1 Phase 2 Phase 3 Phase 4
1a: Jumpstart Phase
• High-risk workers in health
care facilities
• First responders
1b:
• People of all ages with
comorbid and underlying
conditions that put them at
significantly higher risk
• Older adults living in
congregate or overcrowded
settings
• Critical risk workers-who are
both in industries essential to
the functioning of society and
at substantially high risk of
exposure
• Teachers and school staff
• People of all ages with
comorbid and underlying
conditions that put them at
moderately higher risk
• All older adults not included in
Phase 1
• People in homeless shelters
or group homes for
individuals with physical or
mental disabilities or in
recovery
• People in prisons, jails,
detention centers and similar
faculties and staff with work in
such settings
• Young adults
• Children
• Workers in industries
essential to the functioning
of society and at increased
risk of exposure not
included in Phase 1 or 2
• Everyone residing in the
United States who did not
receive the vaccine in
previous phases
Equity is a crosscutting
consideration
• In each population group, vaccine access should be prioritized for geographic areas identified
through CDCs Social Vulnerability Index.
https://www.nap.edu/read/25914/chapter/4#56
12 Source: Strategas. As of 9/14/20
Global Leading Economic Indicators Rebounding
93
94
95
96
97
98
99
100
101
102
103
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
U.S. LEI
85
90
95
100
105
110
'97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21
China LEI
90
92
94
96
98
100
102
104
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
U.K. LEI
90
92
94
96
98
100
102
104
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
Germany LEI
13 Source: Federal Reserve Bank of St. Louis. As of 9/5/20
Improving Employment Data
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
Weekly Initial Claims
125,000
130,000
135,000
140,000
145,000
150,000
155,000
Total Nonfarm Payrolls
14 Source: FactSet, Bloomberg. As of 9/11/20
Monitoring Inflation
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Consumer Price Index
0
10
20
30
40
50
60
70
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
10-Year TIPS Oil ($)
Oil P
rice
Pe
rce
nt Oil vs. 10-Year TIPS Breakeven
15
Treasury Yields at Historic Lows
As of 9/11/2020. Source: Bloomberg
0.13
0.67
1.42
0.0
0.5
1.0
1.5
2.0
2.5
Yie
ld
2-Year Treasury 10-Year Treasury 30-Year Treasury
16 As of 9/11/2020. Source: Bloomberg/Barclays Live
Credit Spreads Stabilize
493
131
0
200
400
600
800
1,000
1,200
01/01/2020 02/01/2020 03/01/2020 04/01/2020 05/01/2020 06/01/2020 07/01/2020 08/01/2020 09/01/2020
Op
tio
n A
dju
ste
d S
pre
ad
(B
PS
)
U.S. Corporate High Yield U.S. Corporate Investment Grade
17
0
200
400
600
800
1000
1200
1400
1600
1800
2015 2016 2017 2018 2019 2020 YTD
U.S. Municipal U.S. Investment Grade Corporate U.S. High Yield Corporate
As of 9/11/2020. Source: Bloomberg League Tables, Merrill Lynch Tax-Exempt: Refinitiv; BofA Global Research as of 9/9/20.
Fixed Income Supply
18
U.S. Corporate Investment Grade Duration
As of 9/11/2020. Source: Bloomberg/Barclays Live
6.2
6.4
6.6
6.8
7
7.2
7.4
7.6
7.8
8
8.2
8.4
8.6
8.8
9
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Dura
tion
19
Corporations Leveraging Up
As of 9/11/2020. Source: Bloomberg/Barclays Live
0
10
20
30
40
50
60
BBB A AA
Perc
ent
Ratings
2010 2020
0
500
1000
1500
2000
2500
3000
3500
Baa Corporate A Corporate Aa Corporate
Mill
ions
Amount Outstanding
2010 2020
20
Municipal SupplyTax-Exempt and Taxable Supply
As of 9/9/2020. Source: The Bond Buyer and Merrill Lynch: Refinitiv; BofA Global Research
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
2016 2017 2018 2019 2020
Tax-Exempt Taxable
$ B
illio
ns
21
Municipal Weekly Inflows, $B
As of 9/9/2020. Source: Refinitiv, JP Morgan Note: YTD cumulative fund flows show 2009, 2019, and 2020
22 Source: 2020 The PEW Charitable Trusts: Fiscal 50: State Trends and Analysis
Fund Balance as Percentage of Expenses
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%A
laba
ma
Ala
ska
Ari
zon
a
Ark
an
sa
s
Ca
lifo
rnia
Co
lora
do
Co
nne
cticu
t
De
law
are
Flo
rid
a
Ge
org
ia
Ha
wa
ii
Ida
ho
Illin
ois
Ind
iana
Iow
a
Ka
nsa
s
Ke
ntu
cky
Lou
isia
na
Ma
ine
Ma
ryla
nd
Ma
ssa
ch
usett
s
Mic
hig
an
Min
neso
ta
Mis
sis
sip
pi
Mis
so
uri
Mo
nta
na
Nebra
ska
Ne
vad
a
Ne
w H
am
pshir
e
Ne
w J
ers
ey
Ne
w M
exic
o
New
York
No
rth
Ca
rolin
a
No
rth
Da
ko
ta
Oh
io
Okla
hom
a
Ore
gon
Pe
nnsylv
ania
Rh
ode
Isla
nd
So
uth
Ca
rolin
a
So
uth
Da
kota
Te
nne
ssee
Te
xa
s
Uta
h
Ve
rmo
nt
Vir
gin
ia
Wash
ingto
n
West
Vir
gin
ia
Wis
con
sin
Wyo
min
g
50-s
tate
me
dia
n
FY 2009 FY 2019
23 Source: Moodys Investor Service
Moodys Update: Special Tax Debt Payments
Selected Issuer Pledge Revenues
Bond
Ratings
Scheduled
P&I
(in $000)
P&I
Payment
Date
Special
Liquidity
Utilized?
MADS
Coverage
Bexar County, TXHotel Taxes & Rental
Car FeesA2 $14,915 08/15 No 1.4x
Arlington, TX
Sales Taxes, Hotel
Taxes & Rental Car
Fees
A1 sr/
A3 sub$13,676 08/15 No
1.3x sr/
0.9x sub
Mansfield Economic Dev Corp, TX Sales Taxes Aa3 $2,017 08/01 No 2.0x
Elmore County Board of Education, AL Sales Taxes Aa3 $2,534 08/01 No 1.6x
Benton, ARHotel Taxes, Food &
Beverage TaxesA2 $610 08/01 No 1.8x
Houston, TXHotel Taxes & Parking
FeesA2 $43,670 09/01 No 1.3x
Lexington-Fayette Urban County
Government, KYHotel Taxes
A2 sr/
A3 sub$1,430 09/01 No*
1.3x sr/
1.1x sub
Issuers with elevated payment risk made scheduled debt service payments
*Lexington-Fayette Urban County Government utilized a refunding to extend near-term debt service payment obligations
24
Running Ahead of 2009 Rally
Source: Strategas. As of 9/2/20
100
110
120
130
140
150
160
170
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 105 110 115 120
# of Trading Days Off Low
S&P 500 Performance Off March 2009 Low vs. March 2020 Low
Mar-09 Mar-20
25
Market Leaders
Source: FactSet. As of 9/11/20
80
100
120
140
160
180
200
03/20 04/20 05/20 06/20 07/20 08/20
Growth vs. Value
Russell 1000 Growth Russell 1000 Value
80
100
120
140
160
180
03/20 04/20 05/20 06/20 07/20 08/20
Large Cap vs. Small Cap
Russell 1000 Russell 2000
26 Source: Strategas. As of 9/2/20
Correlation Between Trump Odds and New COVID Cases
37
39
41
43
45
47
49
51
5310000
20000
30000
40000
50000
60000
70000
16-Apr 2-May 18-May 3-Jun 19-Jun 5-Jul 21-Jul 6-Aug 22-Aug
Average New Daily COVID Cases vs. Betting Odds of GOP White House
Odds of GOP winning the presidency
(Right, inverted)
New daily COVID cases (Left, 7-day avg.)
27 Source: Strategas. As of 9/2/20
Swing State Races Beginning to Tighten
-4
-2
0
2
4
6
8
10
12
AZ FL GA MI NC PA TX WI
Biden General Election Polling Lead in Trump 2016 Swing States
1-Jul 27-Aug
28
Asset Class Positioning:
Investment Strategy Committee Recommendations
As of 9/2/20
Underweight Small Underweight Neutral Small Overweight Overweight
Equity u
Large Cap u
Mid Cap u
Small Cap u
International Developed Large Cap u
International Developed Small Cap u
Emerging Markets u
Private Equity u
Private Equity-Real Estate u
Real Estate (REITs) u
Fixed Income u
Treasuries u
Investment-grade Corporate u
Tax-exempt u
High Yield u
Emerging Market Debt u
Diversifiers u
Long/Short Hedge u
Absolute Return Hedge u
Commodities u
Questions
To submit a question click the “Ask a Question” tab
Thank You
31
Disclosure
This material is provided for educational purposes only. This material is not intended to constitute legal, tax, investment or financial advice and may not be used as such. Effort has been made
to assure that the material presented herein is accurate at the time of publication. However, this material is not intended to be a full and exhaustive explanation of the law in any area or of all of
the tax, investment or financial options available. We recommend all individuals consult with their lawyer or tax professional, or their investment or financial advisor for professional assurance
that this material, and the interpretation of it, is accurate and appropriate for their unique situation. The remarks of the presenter during this presentation and in this outline reflect his or her
views and may not reflect the opinion or views of BNY Mellon. BNY Mellon Wealth Management conducts business through various operating subsidiaries of The Bank of New York Mellon
Corporation. Trademarks and logos belong to their respective owners.
Copyright ©2020. All rights reserved.
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