before the bell€¦ · 22/6/2020 · but remained elevated. smaller stocks fared better, as the...

FOR IMPORTANT DISCLOSURES PLEASE SEE THE DISCLOSURE PAGES AT THE END OF THIS DOCUMENT Notations:

For further information on any of the topics mentioned, please contact your Financial Advisor. Unless specifically stated otherwise, comments contained in this document should not be construed as an investment opinion or

recommendation of any securities mentioned. Charts depicted are from FactSet unless otherwise noted. ____________________________________________________________________________________________________________________________ © 2020 Ameriprise Financial, Inc. All rights reserved. of 12

Before the Bell Morning Market Brief

June 22, 2020

MONDAY MORNING MARKET STRATEGY: David M. Joy, Chief Market Strategist Last week’s data releases offered further evidence that the U.S. economy is beginning to recover. Retail sales in May rose far more than was expected, as consumers were increasingly free to spend amid the easing of virus related lockdowns. Particularly strong were vehicle sales and restaurant receipts. This rise comes on the heels of the far better than expected May jobs report. And while housing starts and building permits in May fell short of expectations, they did rise, and the National Association of Homebuilders index saw a record increase in June. And the index of leading economic indicators rose for the first time in four months, and just the third time in the past ten.

The economy is by no means out of the woods, however. While the May retail sales report was welcome, it came after an almost 15 percent decline in April, which amplified the magnitude of the rebound, and it remained approximately six percent below the level of last May. And the Department of Labor reported that continuing jobless claims remained above 20 million for the seventh straight week. Industrial production did rise in May for the first time in three months, but by less than expected, and the gain was mostly attributable to the restart of motor vehicle production, which nevertheless remained approximately 60 percent below its level in February.

The National Bureau of Economic Research has determined that the U.S. economy entered a recession in February. It will be some time before it determines when the next expansion officially began, but evidence is mounting that it might have begun in May. Even though the data is more impressive from a sequential perspective rather than in absolute terms, it is increasingly clear that activity has turned higher. But, of course, there are risks to the sustainability of the nascent upturn. It remains unclear just how active consumers will be and how responsive office workers will be to reopened workplaces as long as the virus poses a risk. Also unclear is how many jobs will be lost permanently. The enhanced unemployment provision of the CARES Act is set to expire at the end of July. Reports of rising infections in a number of states is a warning that the virus has not gone away and has already prompted some initial commercial response as evidenced by Apple’s decision to close some of its stores in four states and scattered reports of restaurant closures. And manufacturing in general remains weak. The Federal reserve reports that despite a 3.8 percent increase in May, manufacturing activity remains 17 percent below its pre-pandemic level in February. And the energy sector remains under pressure, as the index for oil and gas drilling fell another 37 percent in May after a 28 percent decline in April. CEO confidence remains weak and companies are husbanding cash.

Additional stimulus from Washington is being debated, and some legislation seems likely, but when and of what size, and structured how, remains to be seen. Fed Chairman Powell has urged Congress to act, saying in testimony last week, “The economy is just now beginning to recover. It’s a critical phase and I think that support would be well-placed at this time.” The week ahead will provide additional insight into the state of the economy. On the calendar are reports on new and existing home sales, flash PMIs, durable goods orders, and personal income and spending.

Before The Bell June 22, 2020 ____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________ © 2020 Ameriprise Financial, Inc. All rights reserved. of 12

Last week, U.S. equities rebounded from the sharp selloff the previous week. The S&P 500 rose 1.9 percent, led by an eclectic mix of healthcare, communications services, consumer staples, and materials. The VIX index fell fractionally but remained elevated. Smaller stocks fared better, as the Russell 2000 climbed 2.2 percent, but still trail the S&P 500 by 11 percent year-to-date. The EuroStoxx 600 index rose 3.2 percent in local currency, but that gain was trimmed to 2.8 percent in dollar terms. The MSCI EM index climbed 1.5 percent in dollars. Overall, the MSCI all-Country Ex-U.S. index rose 1.8 percent in dollar terms. The ten-year U.S. treasury fell one basis point to 0.69 percent, and credit spreads narrowed slightly.

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

mixed overnight; West Texas Intermediate (WTI) oil trading up to $39.50; 10-year U.S. Treasury yield at 0.69%.

The $4.7 Trillion Question: Nearly $4.7 trillion currently sits in money market mutual funds, after soaring higher by over $1.0 trillion from early March levels due to the spread of coronavirus in the U.S. As the FactSet chart below clearly demonstrates, investors in mass were quick to move to the sidelines during the early days of the pandemic, raising record levels of cash in safe-haven money market mutual funds. Even after considering the swift stock rally off the March 23rd bottom, cash levels remain extremely elevated today. In our view, the record levels of cash on the sidelines suggest investors are not convinced asset prices appropriately reflect economic conditions and/or a continued recovery will not be as robust as the market anticipates. More recently, the record high levels of sidelined cash have become a potential signal/catalyst for where stock prices might head next — leading to the question: Will record-high cash levels become the source of funds for the market's next leg higher?

In our view, answering that question depends on your perspective of timing. As the chart above shows, cash levels in money market mutual funds swelled leading up to and through the 2008/2009 financial crisis. However, over time, money market mutual fund assets steadily declined as economic activity improved, and asset prices began to trend higher. We have little doubt the record-high levels of cash today will be put back to work in stocks, bonds, and other higher-risk assets over time. The sharp increase in money market mutual fund assets this year is an expected reaction to the exceptionally high, and out of the ordinary levels of uncertainty



investors face. But as time marches on and economic and market conditions improve, the $1 trillion-plus in new sidelined cash this year will most likely be the dry powder for future market gains.

Yet over the near-to-intermediate-term, record-high levels of money market mutual fund cash by itself is not a reason to become more bullish on future stock gains. Investors are cautious and appear worried about virus trends, near-term economic conditions, and possibly stretched equity valuations. Unless there is a sudden change in the macro landscape (e.g., faster development/availability of a COVID-19 vaccine or treatment), the sudden spike in cash-like assets could be greeted with a more gradual decline.

Also, investors have become more comfortable holding higher levels of cash for protection, which in or view, has only been reinforced during the last two significant market drawdowns. Importantly, money market mutual fund assets leveled off at a higher "steady-state" post-financial crisis compared to where they stood before the crisis. While that may not be the case this time around, it also wouldn't be unreasonable to assume investors may carry a higher cash level coming out of the COVID-19 crisis than they did coming into the pandemic.

Bottom line: Longer-term, we are confident cash levels will decline over time, help stabilize asset prices, and could add fuel to future market gains. Over the near-term, however, we expect money market mutual fund assets to remain elevated and wouldn't necessarily expect a sea-change in investor's appetite for putting more cash to work any time soon.

Asia-Pacific: Asian equities finished mixed on Monday. According to Bloomberg, citing drafted language released by Xinhua, China's proposed national security law would allow Beijing to override Hong Kong's independent legal system. Per the report, China will establish a new bureau in Hong Kong to analyze the security situation, collect intelligence, and "lawfully handle national security cases." While the new law has not gone into effect yet, the turn of events in Hong Kong most likely gives foreign companies operating there more pause. It remains to be seen if Hong Kong's extensive global financial system will be materially affected. But reports of a potential talent drain as younger workers flee the once independent city is a growing longer-term concern.

Europe: Markets across the region are trading mostly lower at midday. According to Bloomberg, German coronavirus infection rates have now risen above the level needed to contain the disease longer-term. However, growing case counts of the virus have been concentrated in hospitals, nursing homes, refugee centers, and meat processing plants. In Spain and France, the reopening of each country appears to be going well in the early stages, as case counts remain in check. Per Reuters, U.K. Prime Minister Boris Johnson is set to announce a relaxing of social distancing policies and as a means to help restaurants, leisure, and hospitality industries reopen.

U.S.: Equity futures are pointing to a stronger open. Here's a quick news rundown to start your morning: Competing views on the type of U.S. recovery may take center stage this week. While almost

everyone agrees the economy has begun to see an improvement considering the fiscal and monetary relief that has been put in place, the shape/arch of the recovery is up for debate. Some see a gradual recovery over time with fits and starts along the way, while others see a V-shaped snapback as more of the economy reopens and stays open. The tug of war between these two competing views, and everything in-between, could have stocks oscillate back-and-forth through the summer as incoming data confirms or refutes each outlook. This week, May existing and new home sales data (Monday and Tuesday), May durable goods orders (Thursday), and June preliminary U of M sentiment will provide another window into the health and pace of recovery. As the market begins to see more evidence of the recovery in May and June, stock prices most likely will start to build in the outlook for the back half of the year.

The U.S. sees more than 30,000 new coronavirus cases on Friday and Saturday. The two-day level marks the highest number of new virus cases since May 1st, according to John Hopkins University. Seven states hit record case counts on Saturday, including Florida and South Carolina. New cases are rising across the South, West, and Midwest, including states that closed late and reopened early. The Centers for Disease Control and Prevention (CDC) expanded the number of states where coronavirus related deaths are expected to accelerate over the next four weeks.

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WORLD CAPITAL MARKETS 6/22/2020 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 -0.56% -3.19% 3,097.7 DJSTOXX 50 (Europe) -0.53% -11.59% 3,251.7 Nikkei 225 (Japan) -0.18% -4.21% 22,437.3 Dow Jones -0.80% -8.22% 25,871.5 FTSE 100 (U.K.) -0.18% -15.30% 6,281.2 Hang Seng (Hong Kong) -0.54% -11.61% 24,511.3 NASDAQ Composite 0.03% 11.46% 9,946.1 DAX Index (Germany) -0.32% -7.23% 12,291.6 Korea Kospi 100 -0.68% -2.99% 2,126.7 Russell 2000 -0.59% -14.41% 1,418.6 CAC 40 (France) -0.35% -15.96% 4,961.9 Singapore STI -0.20% -16.49% 2,629.7 Brazil Bovespa 0.46% -16.49% 96,572 FTSE MIB (Italy) -0.40% -16.87% 19,541.4 Shanghai Comp. (China) -0.08% -2.78% 2,965.3 S&P/TSX Comp. (Canada) -0.04% -7.86% 15,474.2 IBEX 35 (Spain) -0.93% -21.95% 7,345.5 Bombay Sensex (India) 0.52% -14.98% 34,911.3 Mexico IPC 2.05% -11.25% 38,404.6 MOEX Index (Russia) -0.31% -8.40% 2,750.2 S&P/ASX 200 (Australia) 0.03% -9.44% 5,944.5

Global % chg. % YTD Value Developed International % chg. %YTD Value Emerging International % chg. %YTD ValueMSCI All-Country World Idx -0.19% -5.69% 526.8 MSCI EAFE 0.13% -9.94% 1,803.7 MSCI Emerging Mkts 0.62% -9.22% 1,001.4

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 -0.32% 1.69% 183.6 Equity Income Indices % chg. % YTD Value Futures & Spot (Intra-day) % chg. % YTD ValueConsumer Discretionary -0.45% 6.04% 1,039.8 JPM Alerian MLP Index -1.64% -33.08% 146.0 CRB Raw Industrials -0.23% -7.69% 417.05 Consumer Staples -0.64% -4.95% 606.0 FTSE NAREIT Comp. TR -1.34% -12.42% 18,700.7 NYMEX WTI Crude (p/bbl.) -1.26% -35.72% 39.25 Energy -1.67% -33.34% 296.4 DJ US Select Dividend -1.00% -20.17% 1,828.3 ICE Brent Crude (p/bbl.) -0.69% -36.52% 41.90 Financials -0.67% -21.46% 396.7 DJ Global Select Dividend -0.49% -22.87% 178.0 NYMEX Nat Gas (mmBtu) 1.32% -22.75% 1.69 Health Care 0.87% -0.66% 1,170.0 S&P Div. Aristocrats -0.74% -9.25% 2,784.0 Spot Gold (troy oz.) 0.18% 15.15% 1,747.09 Industrials -1.27% -14.41% 582.8 Spot Silver (troy oz.) 1.25% -0.04% 17.84

Materials -0.31% -7.76% 351.9 LME Copper (per ton) 0.79% -5.20% 5,829.25 Real Estate -1.03% -7.92% 218.1 Bond Indices % chg. % YTD Value LME Aluminum (per ton) -1.04% -11.69% 1,573.00 Technology -0.76% 12.05% 1,793.7 Barclays US Agg. Bond 0.01% 5.92% 2,356.8 CBOT Corn (cents p/bushel) -0.82% -16.58% 334.50 Utilities -3.10% -10.56% 288.9 Barclays HY Bond -0.03% -2.30% 2,132.5 CBOT Wheat (cents p/bushel) -0.57% -15.16% 482.50

Foreign Exchange (Intra-day) % chg. % YTD Value % chg. % YTD Value % chg. % YTD ValueEuro (€/$) 0.31% 0.00% 1.12 Japanese Yen ($/¥) -0.05% 1.58% 106.92 Canadian Dollar ($/C$) 0.29% -4.26% 1.36British Pound (£/$) 0.49% -6.39% 1.24 Australian Dollar (A$/$) 0.69% -1.98% 0.69 Swiss Franc ($/CHF) 0.23% 1.74% 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 New and Existing Home Sales for the month of May and Personal Income and Spending for April, highlight the

economic calendar this week. As has been the case over the last few months however, Thursday’s Initial Jobless Claims report could be the most closely watched report on the docket. This week’s Continuing Claims number will be for the week-ending June 13th (continuing claim results lag initial claims by one week) which was the survey week for the Labor Department’s June Employment Report. Little to no improvement in continuing claims would bode poorly for June nonfarm payrolls and the unemployment rate, in our view. Since dropping by 4.1 million in the May survey week, continuing claims have basically stalled at levels just over 20.5 million.

On Monday, the National Association of Realtors reports Existing Home Sales for the month of May. Forecasters as surveyed by Bloomberg expect the report to show a decline of 5 to 6% in the month after having declined by 18% month-over-month in April. Home sales were considered a non-essential activity in many areas during respective lockdown periods. And although ancillary reports suggest that housing demand returned in a strong way as restrictions were lifted, existing home sales are not recorded until the transaction is closed – which often takes a month or two after a purchase agreement is signed. Overall, sales for the month are expected to be down about 24% from year-ago levels.

Tuesday’s report on New Home Sales should fare much better. New home sales are registered at the time of contract signing, thus no delay in the figures. Sales for the month are thus expected to see a 2% month-over-month increase. But what’s really surprising is that the consensus sales forecast as measured by Bloomberg would represent a 6% increase over year-ago levels. The further decline in mortgage loan rates over the last few months, combined with reports of many inner-city residents being spurred to move out of the close-quarters of the city given the now highlighted pandemic risks, appear to have stimulated demand in the sector.

On Friday, the Commerce Department will report on May Personal Income and Spending. Once again, the numbers should see notable fluctuations given the background situation. Income is expected to drop by 6% according to the Bloomberg consensus, after jumping a record 10.5% in April. In April, a $740 billion drop in wages and salaries (all numbers for the report are based on annualized figures) was more than offset by government stimulus payments. Unemployment insurance payments jumped $360 billion in April, while the government’s one-time payments under the CARES act (i.e., largely the $1,200 to adults normally earning $75,000 or less, and others) boosted total income by an amazing $2.6 trillion.

Personal spending, meanwhile, is expected to grow by 8.8% after falling a record 13.6% in April. As a reminder, total retail sales jumped a much stronger than expected 17.7% in May after falling 14.7% in April, according to the Commerce Department.


June 22 23 24 25 26Existing Home Sales Markit Prelim. Mfg. Index Initial Jobless Claims Personal Income

New Home Sales Advance Trade - Goods Personal Spending

Richmond Fed Index Q1 GDP - Third Estimate U of M Consumer Sentiment

Industrial Production - China Q1 Personal Consumption Retail Sales - Spain

Kansas City Fed. Mfg. Index

Employment - Canada

Jobseekers - France

Consumer Sentiment - S. Korea



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

6/22/2020 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 $32.04 $36.67

change over last week $0.00 $0.00 $0.07 $0.02

yr/yr 25.4% 25.4% 27.8% 13.7% 0.2% 1.1% -1.6% 1.1% -14.1% -43.3% -24.1% -12.2%

qtr/qtr -1% 6% 4% -4% -6% 7% 1% -1% -20% -29% 36% 14%

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 $130.72 $125.61 $164.11

yr/yr -0.3% 0.8% 11.6% 22.9% 0.2% -23.6% 30.7%

Implied P/E based on a S&P 500 level of: 3098 18.8 19.5 22.0 23.7 24.7 18.9

2019 20202018



BY THE NUMBERS: ECONOMIC ACTUALS AND FORECAST:

ECONOMIC NEWS OUT TODAY: Economic Releases for Monday, June 22, 2020. All times Eastern. Consensus estimates via Bloomberg. Time Period Release Consensus Est. Actual Prior Revised to 10:00 AM MAY Existing Home Sales (annualized) 4.09m 4.33 10:00 AM MAY Existing Home Sales (mo/mo) -5.6% -17.8% Economic Perspective: Russell T. Price, CFA – Chief Economist Low inventories and resilient demand support the auto industry’s restart. Ford and Fiat Chrysler hope to resume

their pre-pandemic production levels this week, according to announcements made by both companies on Friday. According to Bloomberg, General Motors hopes to be back up to normal production levels by the end of the month.

Maintaining full output levels will very likely remain dependent on virus-related developments over the intermediate-term, at both assemblers and suppliers in the industry.

However, the demand side of the auto market appears to be in strong position to do its part in supporting near-term production prospects. Auto sales generally held-up better than expected over the last few months. Sales in the March/ April/ May period averaged a seasonally adjusted annualized pace (SAAR) of 10.6 million units, according to data from Ward’s Automotive. This was approximately 38% decline from year-ago levels of 17.1 million units, but still better than many forecasters had estimated given the circumstances.

Overall, the industry is unlikely to get back to its prior sales levels on a consistent basis for quite some time. However, near-term restart efforts are also supported by very low inventory levels. The chart below shows aggregate auto inventories as reported by the Bureau of Economic Analysis, through the month of April. Although inventory data is not yet available for May, Ward’s reported auto sales for May at an annualized pace of 12.1 million. The Federal Reserve, meanwhile, reported unit output for the month of just 2.6 million on an annualized basis. The chart below is sourced from the Federal Reserve Bank of St. Louis.



FIXED INCOME NEWS & VIEWS: Brian M. Erickson, CFA, Fixed Income Research & Strategy Curve Opportunities in Treasuries and Corporates Different factors impact the shape of the U.S. Treasury curve. The Fed’s first move in March of cutting the fed funds

target rate sent short maturity Treasury yield to nearly zero, and prospects for a multi-year return of unemployment to lower rates suggests the Fed maintains a lower fed funds target for an extended period. While the Fed anchors the short end of the curve, swelling U.S. Treasury issuance likely lifts longer term Treasury yields in our view. This combination makes for a steeper Treasury curve.

At present, the Fed targets $80 billion Treasuries per month of purchases, but funding needs of the U.S. Treasury appear poised to grow in the second half of the year. With purchases steady and supply growing we believe medium and long-term Tresury yields could lift higher as investors seek greater compensation for absorbing greater supply. The combination of anchored short-term Treasury yields and supply pressure leading longer-term yields higher likely supports curve steepening trades in our view. Investors looking to benefit from the move may consider actively managed core fixed income strategies tracking the Bloomberg Barclays U.S. Aggregate Index or structured products targeting a steepener Treasury curve in our view.

In corporates, Fed purchases through the primary and secondary corporate credit facilities impact bonds with maturities 5-years and shorter. Fed purchases target issuers rated investment grade prior to March 22. Investors may benefit from purchasing corporate bonds in the 5-year to 10-year range that may offer greater spread today, and additional price support when the bonds eventually roll down into the Fed’s 5-years and shorter range. In the near-term, the longer maturities benefit from the ease of refinancing or increasing liquidity provided to issuers supported by the Fed.

U.S. Treasury Curve Comparison

Source: Bloomberg L.P.




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.

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