before the bell€¦ · 8/27/2019 · • as the last bca research chart demonstrates, china’s...

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. ____________________________________________________________________________________________________________________________ © 2019 Ameriprise Financial, Inc. All rights reserved. of 12

Before the Bell Morning Market Brief

August 27, 2019

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

MORNING MARKET COMMENTARY: Anthony M. Saglimbene, Global Market Strategist

• Quick Take: U.S. futures are pointing to a modestly positive open; European markets are trading higher; Asia ended in the green overnight; West Texas Intermediate (WTI) oil trading at $54.27; 10-year U.S. Treasury yield at 1.52%.

• Can The U.S. & China Still Find Common Ground On Trade? Piling onto Monday’s discussion, which highlighted the fast-evolving U.S./China trade events over recent days, we wanted to share a few additional points investors should consider:

• First, it’s impossible to get inside the head of President Trump or China’s President Xi Jinping, so consider what is said here as ‘our best effort’ to evaluate possible intentions.

• As we discussed yesterday, there is very little incentive for Trump and Xi to push their economies into a recession through taxing global trade and growth.

• For President Trump, a U.S. recession would be a difficult hurdle to overcome during a presidential reelection cycle and one that his Democratic counterparts would be happy to blame on his trade policies.

• As the BCA Research chart at the right shows, the U.S. economy’s growth rate is losing momentum. Economic growth is decelerating at a pace very much different than initial estimates and slowing more than President Trump cares to admit publicly. Despite a consumer-driven U.S. economy, which is more insulated to global trade -- manufacturing, private investment, and business sentiment have weakened. GDP growth was revised lower for 2018, and even with a surge in budget deficit projections above $1 trillion. Note: A recession does not need to develop for consumers to retrench. If they feel as if their personal situation is at risk, they could reduce spending over time or even quickly, which would dent growth further based on the magnitude of change in their behavior.

• The second BCA Research chart below shows an inverted S&P 500 Relative Strength Index that is weakening, as talk of a U.S. recession is growing. Trump has shown over recent weeks he is sensitive to the growing chorus of recession calls. He has increased his rhetoric against the Federal Reserve (i.e., placing blame on Mr. Powell and company for the slowdown) and openly discussed the possibility of further stimulus options. Along with his approval ratings, which have lost momentum, the president may become more sensitive to maintaining a balance between

Before The Bell August 27, 2019 ____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________ © 2019 Ameriprise Financial, Inc. All rights reserved. of 12

pressuring China and not forcing the U.S. into a more pronounced downturn. From a market perspective, this could be a modest positive for risk assets over time, all else equal (e.g., corporate profits don’t deteriorate more than expected).

• From China’s perspective, it would be extremely difficult for Xi to offer concessions to the U.S. that could be perceived as he is bending to a foreign country’s will. Xi is facing tariff hikes, persistent social unrest in Hong Kong, a weakening economy, critical elections in Taiwan, and building political frictions with the U.S. According to BCA Research, it is very unlikely Xi would show any weakness or concessions ahead of the 70th anniversary of the People’s Republic of China on October 1st. Some expect the theme will be a nationalist rally against unjust western powers. Ahead of October, investors should expect little material trade breaks from China without significant U.S. concessions on tariffs to match.

• However, after China’s anniversary celebration, Xi may be willing through more private avenues to strike a deal with Trump on trade. In the past, China has offered concessions on large commodity purchases, minor adjustments to tariffs and foreign ownership rules, unverifiable promises to boost protections for technology transfers and intellectual property rights as well as provide strategic cooperation on Iran and North Korea. All these past offers have been rolled back, however, as President Trump has applied more tariff pressures on Beijing.

• Importantly, China, as a communist country that imposes restrictions on citizen rights, cannot afford a high degree of social unrest, particularly as economic growth is slowing. Citizens that are employed, comfortable, and working are much less likely to challenge government rules or status quo policies, the Hong Kong situation aside.

• As the last BCA Research chart demonstrates, China’s unemployment rate is rising, and employment trends in the manufacturing and non-manufacturing sectors of its economy are in contraction (i.e., below the 50-level marking expansion). Per BCA, China’s economy is still trying to recover from the deleveraging campaign Xi ran in 2017-2018. Bottom line: China may have a high pain threshold and willing to suffer through more economic malaise over the intermediate-term blunted with the support of additional stimulus, but its tolerance for pain is not unlimited.



• Today, the trade situation looks bleaker than it did a week ago. And there is a real probability that the White House may further ramp-up tariffs on China, which would create a response from China that could destabilize markets heading into and through the fall. A ‘grand deal’ also seems less likely going forward. Nevertheless, we still believe there is a strong incentive for both sides to come back to the table and negotiate. As long as those incentives remain strong, we believe there is hope cooler heads will prevail. Trade is but one issue that we believe the two economic superpowers are likely to clash over during the years to come. However, it is in both countries interest to find common ground and seek solutions to issues that promote economic development across the globe.

• Asia-Pacific: Asian equities finished higher on Tuesday. For the second day, Beijing continues to avoid confirming that trade discussions took place with the U.S. over the weekend and as President Trump claims. According to Bloomberg, Trump may be overestimating China’s willingness to strike a deal with the White House. Particularly, reports suggest trade officials on Beijing’s side are reluctant to resume talks over the draft text that led to the breakdown in trade negotiations in May. Importantly, Beijing has not fully committed to face-to-face negotiations in Washington in September, per FactSet.

• Per CNBC, China released measures on Tuesday to help boost consumption, which includes possibly removing restrictions on automobile purchases. The State Council said that local governments that have auto restrictions in place should consider relaxing or removing the restrictions to encourage sales.

• Industrial profits in China grew +2.6% y/y in July, following a 3.1% decline in June. China’s industrial profit bounce was the first positive y/y growth number since May and pared the year-to-date decline to 1.7% from 2.4%.

• Although the trade war has hurt most global regions over the last year or so, we believe the effects could be more lasting for China. As U.S. companies look to relocate supply chains and production over time, regardless of ‘Trump tweets,’ Beijing stands to lose the most if supply trends continue to shift toward a strategy of production near the area of sales.

• Europe: Markets across the region are trading up at mid-day. According to FactSet, Five Star Movement canceled a meeting with the Democratic Party (PD) after the two sides could not agree on a 2020 budget or ministerial positions. Five Star leader Di Maio said it was pointless talking unless PD can agree to reinstate Prime Minster Conte, while PD said Di Maio is too ambitious. As we said yesterday, new elections, possibly as soon as November, could be the most likely path forward if Rome can’t form a coalition government.

• Leaders of opposition parties in the UK and rebel Ministers of Parliament (MPs) are meeting today to discuss plans to stop a no-deal Brexit. Labour leader Jeremy Corbyn said he would support UK Prime Minister Boris Johnson in an effort to call an October 17th vote before asking Brussel’s for concessions. Over recent weeks, odds of a no-deal Brexit scenario have grown, and little progress has been made between the European Union and the UK in finding a workable solution.



• U.S.: Equity futures are pointing to a modestly stronger open this morning. The start of trading today looks uneventful, with domestic news flow light on the macro front. The S&P 500 Index is down roughly 3.5% in August, with Energy (lower by nearly 11.0%), and Financials (down 7.0%) the worst performers on the month. Utilities (+4.0%) and Real Estate (up almost +4.0% as well) are the sector leaders in August. Defensive sectors are insulating investors the best over the last few weeks, and most are also outperforming the broader S&P 500 over the last three months.

• Except for Information Technology and Consumer Discretionary, most cyclical sectors have underperformed this summer. Moving down the market-cap spectrum, small-cap stocks remain in a correction and are more than 15% off their 8/31/2018 high. The DJ Transportation Average is also more than 15% off it 9/14/2018 high. In our view, this is a clear message to investors the market remains risk-averse and is concerned about domestic growth and profits. If the investors felt better about the domestic outlook, we believe small-caps and transportation stocks would be performing better.

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WORLD CAPITAL MARKETS (all data as of approximately 8:00 AM ET)

Americas % chg. % YTD Value Europe (Intra-day) % chg. %YTD Value Asia/Pacific (Last Night) % chg. %YTD Value

S&P 500 1.10% 16.35% 2,878.4 DJSTOXX 50 (Europe) 0.48% 15.73% 3,364.9 Nikkei 225 (Japan) 0.96% 3.41% 20,456.1 Dow Jones 1.05% 12.84% 25,898.8 FTSE 100 (U.K.) -0.14% 9.03% 7,085.1 HK Hang Seng ( H. Kong) -0.06% 2.02% 25,664.1 NASDAQ 1.32% 19.23% 7,853.7 DAX Index (Germany) 0.58% 11.05% 11,726.1 Korea Kospi 100 0.43% -5.29% 1,924.6 Russell 2000 1.13% 10.38% 1,476.0 CAC 40 (France) 0.39% 16.87% 5,371.7 Singapore STI 0.07% 3.48% 3,067.5 Brazil Bovespa -1.27% 9.72% 96,429.6 FTSE MIB (Italy) 1.29% 14.29% 20,943.4 Shanghai Comp. (China) 1.35% 19.06% 2,902.2 S&P/TSX Comp. (Canada) 0.38% 14.58% 16,098.8 IBEX 35 (Spain) 0.83% 5.44% 8,751.3 Bombay Sensex (India) 0.39% 5.41% 37,641.3 Mexico IPC 0.55% -1.70% 40,081.7 Russia TI 0.07% 15.31% 4,581.9 S&P/ASX 200 (Australia) 0.48% 18.76% 6,471.2

Global % chg. % YTD Value Developed International % chg. %YTD Value Emerging International % chg. %YTD Value

MSCI All-Country World Idx 0.30% 12.35% 502.4 MSCI EAFE -0.57% 8.61% 1,816.3 MSCI Emerging Mkts -1.32% 1.62% 960.8 Note: International market returns shown on a local currency basis. Equity index data is total return, inclusive of dividends.

S&P 500 Sectors % chg. % YTD Value Equity Income Indices % chg. % YTD Value Commodities Consumer Discretionary 1.02% 19.44% 925.7 JPM Alerian MLP Index -0.23% 2.95% 22.9 Futures & Spot (Intra-day) % chg. % YTD ValueConsumer Staples 1.13% 20.60% 618.3 FTSE NAREIT Comp. 0.92% 25.08% 20,758.2 CRB Raw Industrials 0.00% -7.53% 444.3 Energy 0.45% -0.17% 412.5 DJ US Select Dividend 0.81% 10.23% 2,050.7 NYMEX WTI Crude (p/bbl.) 1.08% 19.40% 54.2 Financials 1.08% 11.91% 436.5 DJ Global Select Dividend 0.67% -1.28% 204.1 ICE Brent Crude (p/bbl.) 0.66% 9.83% 59.1 Real Estate 1.02% 27.49% 240.6 S&P Div. Aristocrats 0.83% 14.11% 2,735.3 NYMEX Nat Gas (mmBtu) 0.00% -24.15% 2.2 Health Care 0.97% 4.66% 1,035.4 Spot Gold (troy oz.) 0.15% 19.26% 1,529.5 Industrials 0.74% 15.60% 618.7 Spot Silver (troy oz.) 1.62% 15.87% 18.0 Materials 0.29% 10.22% 344.5 Bond Indices % chg. % YTD Value LME Copper (per ton) -0.84% -5.65% 5,613.0 Technology 1.39% 27.24% 1,370.0 Barclays US Agg. Bond -0.12% 8.74% 2,225.5 LME Aluminum (per ton) 0.22% -6.36% 1,744.3 Communication Services 1.53% 18.98% 163.5 Barclays HY Bond 0.13% 10.60% 2,111.8 CBOT Corn (cents p/bushel) -0.34% -7.67% 367.0 Utilities 1.18% 19.50% 314.2 CBOT Wheat (cents p/bushel) -0.16% -12.53% 474.5

Foreign Exchange (Intra-day) % chg. % YTD Value % chg. % YTD Value % chg. % YTD ValueEuro (€/$) 0.0% -3.2% 1.11 Japanese Yen ($/¥) 0.26% 3.64% 105.84 Canadian Dollar ($/C$) 0.2% 3.1% 1.32 British Pound (£/$) 0.5% -3.7% 1.23 Australian Dollar (A$/$) -0.07% -3.96% 0.68 Swiss Franc ($/CHF) -0.2% 0.1% 0.98 Data/Price Source: Bloomberg; Equity Index data is total return, inclusive of dividends where applicable.



BY THE NUMBERS: ECONOMIC ACTUALS AND FORECAST:

ECONOMIC NEWS OUT TODAY: Economic Releases for Tuesday, August 27, 2019. All times Eastern. Consensus estimates via Bloomberg. Time Period Release Consensus Est. Actual Prior Revised to 9:00 AM JUN *Case-Shiller Home $$ Index (MoM) +0.1% 0.0% +0.14% 9:00 AM JUN *Case-Shiller Home $$ Index (YoY) +2.3% +2.1% +2.4% 10:00 AM AUG Consumer Confidence 129.0 135.37 *S&P CoreLogic Case-Shiller 20-City Home Price Index

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

S&P 500 GAAC GAAC S&P 500 GAAC GAACIndex GAAC Tactical Recommended Index GAAC Tactical Recommended

Sector Weight Tactical View Overlay Weight Sector Weight Tactical View Overlay Weight

1) Communication Services 10.2% Underweight - 2.0% 8.2% 6) Health Care 14.3% Overweight +2.0% 16.3%

2) Consumer Discretionary 10.2% Equalweight - 10.2% 7) Industrials 9.3% Equalweight - 9.3%

3) Consumer Staples 7.3% Equalweight - 7.3% 8) Information Technology 21.6% Overweight +2.0% 23.6%

4) Energy 5.0% Equalweight - 5.0% 9) Materials 2.7% Equalweight - 2.7%

5) Financials 12.9% Underweight - 2.0% 10.9% 10) Real Estate 3.1% Overweight +1.0% 4.1%

11) Utilities 3.4% Underweight - 1.0% 2.4%

Index weighting represents relative weightings based on the regional market capitalization balance of the MSCI All-Country World Index; may not add due to rounding. The GAAC Tactical Overlay, as well as Recommended Tactical Weights, is derived from the Ameriprise Global Asset Allocation Committee (GAAC).Views are expressed relative to the Index and are provided to represent investment conviction in each region. Tactical Allocations are designed to augment Index returns over a 6-12 month time horizon. Index weights as of 6/21/19. Numbers may not add due to rounding.

Ameriprise Global Asset Allocation Committee Global Equity Region - Tactical View

MSCI All-Country GAAC GAAC MSCI All-Country GAAC GAACWorld Index GAAC Tactical Recommended World Index GAAC Tactical Recommended

Region Weight Tactical View Overlay Weight Region Weight Tactical View Overlay Weight

1) United States 55.5% Overweight +4.3% 59.8% 5) Latin America 1.5% Equalweight - 1.5%

2) Canada 3.0% Equalweight - 3.0% 6) Asia-Pacific ex Japan 12.2% Equalweight - 12.2%

3) United Kingdom 5.0% Underweight - 1.0% 4.0% 7) Japan 7.0% Underweight - 1.0% 6.0%

4) Europe ex U.K. 14.5% Underweight - 1.0% 13.5% 8) Middle East / Africa 1.3% Underweight - 1.3% -

Index weighting represents relative weightings based on the regional market capitalization balance of the MSCI All-Country World Index; may not add due to rounding. The GAAC Tactical Overlay, as well as Recommended Tactical Weights, is derived from the Ameriprise Global Asset Allocation Committee (GAAC).Views are expressed relative to the Index and are provided to represent investment conviction in each region. Tactical Allocations are designed to augment Index returns over a 6-12 month time horizon. Index weights as of 6/21/19. Numbers may not add due to rounding.

Current Projections:Actual Actual Actual Actual Actual Est. Est. Actual Actual Est. Est.2014 2015 2016 2017 2018 2019 2020 Q1-2019 Q2-2019 Q3-2019 Q4-2019

Real GDP (YOY) 2.5% 2.9% 1.6% 2.4% 2.9% 2.2% 2.1% 3.1% 2.1% 1.9% 2.2%Unemployment Rate 5.6% 5.0% 4.7% 4.1% 3.9% 3.6% 3.5% 3.8% 3.7% 3.6% 3.6%CPI (YoY) 1.6% 0.1% 1.3% 2.1% 2.4% 2.1% 2.1% 1.6% 1.7% 2.0% 2.2%Core PCE (YoY) 1.6% 1.3% 1.7% 1.6% 1.9% 1.8% 2.0% 1.5% 1.6% 1.7% 1.7%

Sources: Historical data via FactSet. Estimates (Est.) via American Enterprise Investment Services, Inc.

YoY = Year-over-year, Unemployment numbers are period ending. GDP: Gross Domestic Product; CPI: Consumer Price Index

PCE: Personal Consumption Expenditures Price Index. Core excludes food and energy Last Updated:

Quarterly

August 14, 2019



Economic Perspective: Russell T. Price, CFA – Chief Economist • Forget the yield curve, recession odds rest on the shoulders of consumer sentiment. Today’s Consumer

Confidence report carries more significance than usual. Confidence is expected to have taken a fairly sharp decline in the month amid the ramp-up of trade turmoil and resulting financial market volatility. Forecasters as surveyed by Bloomberg expect a 6.7 point decline in the Index which would reverse much of the 11.4 point gain posted in July. Since December, the Index has fluctuated notably, bouncing from just under 125 to just over 130 – often based on trade related developments. The chart at right is sourced from FactSet.

• Currently, U.S. economic growth is primarily being supported by consumer spending as business investment has come to a halt amid uncertainty and trade has become a drag on GDP. Although we believe consumer finances are in strong condition, spending could dip should consumers feel that prospects for the broader economy could be at risk. Consumers account for approximately 70% of U.S. economic activity, thus as they go, the economy goes. As such, whether or not the yield curve is ultimately correct in its prediction of a recession within the next two years will ultimately depend on trade-related developments and how U.S. consumes respond to such.

• When is a 13% decline actually an increase? Last Friday, New Home Sales for the month of July were reported as having dropped a very sharp 12.8% relative to June levels. Forecasters, as surveyed by Bloomberg, had been looking for sales to be generally flat month-over-month, at a projected pace of about 645,000 (on an annualized basis).

• Unfortunately, headlines can be misleading, and few people likely delve into the details when it comes to new home sales. Thus, the implication from the headline – that the housing market could be weak and getting weaker, can stick with a person and shape their broader economic view.

• That’s unfortunate in this case because the new home market, though still facing significant supply challenges, is doing quite well. The sharp decline shown for July was entirely due to a very sharp upward revision to the data for June – some reports have even said it was the largest revision ever for the series. July’s sales were reported at 635,000 (annualized) but the Commerce Department revised its estimate for June to 728,000 from an initially reported figure of 646,000.

• This puts the average for the two months at 682,000, versus 646,000 based on the previous actual for June and forecaster’s pre-report estimate for July. The two-month average is 12% above year-ago levels for the same period.

• Separately, despite strong new home sales, median selling prices have been declining. As indicated by the green line in the chart at right (as sourced from FactSet) median selling prices have been easing since early 2018. The pattern is largely reflective of mix and weaker markets in a few key areas along the coasts as foreign demand has been hit by a strong dollar and a sharp drop in interest from potential buyers from China and South America. Median selling prices of existing homes have also been under pressure due to similar factors, but prices have been showing slower price appreciation rather than overall declines.

• Overall, the U.S. housing market remains in an unusual position. Demand remains solid, as it has been for several years, but supply, particularly at middle-market price points and below, remains exceptionally tight. Under normal circumstances, builders would ramp-up construction to satisfy market demand. However, they have been constrained over recent years by a lack of labor availability and other factors; most of which are unlikely to improve anytime soon.



FIXED INCOME NEWS & VIEWS: Brian M. Erickson, CFA, Fixed Income Research & Strategy

• Treasury Update: Treasury prices are moderately higher this morning, sending 10-year Treasury yields to a new three year low of 1.50%. Over the past year, Treasury yields swung from 3.23% in November to a low of 1.50% Monday. We see the swing in rate driven by decelerating global growth and prospects for further monetary stimulus next month.

• The Week Ahead: The U.S. Treasury is scheduled to auction $40 billion 2-year notes, $41 billion 5-year notes, and $32 billion 7-year notes today through Thursday. In addition, $18 billion of a 2-year floating rate note prices tomorrow. Given how sustained Treasury levels have been over the past few weeks, we do not anticipate any big surprises with the latest round of issuance.

Looking Across Credit Sectors, Investor Appear Patient with No Signs of a Significant Dislocation • U.S. credit spreads narrowed from the recent wides this month. Spreads on the Bloomberg Barclay U.S. Investment

Grade Index narrowed to +119 basis points Monday in the lower half for +105 to +157 basis point 12-month range. Spreads on the Bloomberg Barclays U.S. High Yield Index narrowed to +400 basis points Monday; again, close to the lower end of the +303 to +537 basis points one-year range. Overall, we see credit markets as somewhat constructive, and much more selective than seen last year.

• Bank Loan Funds – The price of the S&P/LSTA Loan Price Index hovers at $96.29 this morning, with a 0.4% total return for the quarters. Though the rebounding from a year-end 2018 dislocation provided a 6.2% total return year to date, the bulk of the performance was seen January through April, with coupon returns offsetting a descending price since that time. In the context to of the fourth quarter 2018 dislocation, the S&P/LSTA price fell from $98.61 at the end of 3Q18 to $93.82 at yearend. We believe recent price weakness is a combination of moderately wider credit spreads and an expectation for the Fed to further cut rates in the months ahead; lowering coupon returns for the floating rate asset. Overall, a weaker tone remains contained; lacking signs of a broader liquidity pinch.

• The JPMorgan Emerging Market Bond Index provided a 12.0% total return year to date, with the bulk of the return in the first half similar to bank loans. Quarter to date Emerging Market Bonds offered a 1.2% total return.

• Consumer credit segments underperformed year to date with the Credit Card segment of the Bloomberg Barclays U.S. Aggregate Index posting a 4.4% year to date total return. We see underperformance less due to concern, and more due to resiliency through the year-end dislocation providing less of a total return rebound.

• We believe bond markets sit in a holding pattern awaiting the announcement of additional rounds of monetary policy at the next meetings for the European Central Banks, the Bank of England, and the U.S. Federal Reserve. Already we have seen a response central banks in Australia, India, and Thailand to get in front of decelerating growth. Today, with yields once again compressed and risks to the downside, we recommend looking for higher quality assets that are more likely to hold their ground given the risks to the downside such as further deterioration in global trade. Those include consumer segments and Investment Grade Corporate Bonds today, in our view.

300

400

500

600

75

100

125

150

175

Bloomberg Barclay's Index Credit SpreadsOption adjusted spread (OAS), in basis points

IG Corporates (LHS) HY Corporates (RHS)

5.5%

6.5%

7.5%

8.5%

2.5%

3.0%

3.5%

4.0%

4.5%

Bloomberg Barclay's Capital Index YieldsYield to Worst (YTW)

IG Corporates (LHS) HY Corporates (RHS)



Source: Bloomberg L.P., Bloomberg Barclays Indices, and JPMorgan Indices

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250300350400450500550600

Non-Core Spread PremiumsSpread in Basis Points (bps)

JPMorgan EMBI HY Corporates

100

105

110

115

120

125

130

135

Strength of the Dollar US Trade Weighted Broad Dollar Index



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 – Manager

Investment Research Coordinator Kimberly K. Shores Sr Administrative Assistant Jillian Willis 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 Curtis R. Trimble – Director

Quantitative Strategies/International Andrew R. Heaney, CFA – Director

STRATEGISTS CHIEF MARKET STRATEGIST David M. Joy – Vice President GLOBAL MARKET STRATEGIST Anthony M. Saglimbene – Vice President

Thomas Crandall, CFA, CAIA – Sr Director, Asset Allocation

Daniel Balter, CFA – Analyst – Quantitative, Asset Allocation

Gaurav Sawhney – Research Analyst

Amit Tiwari – Sr Research Associate CHIEF ECONOMIST Russell T. Price, CFA – Vice President MANAGER RESEARCH

Michael V. Jastrow, CFA – Vice President

Jeffrey R. Lindell, CFA – Director – ETFs & CEFs

Mark Phelps, CFA – Director – Multi-Asset Solutions Equities Christine A. Pederson, CAIA, CIMA – Sr Director – Growth Equity, Infrastructure & REIT

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

Alex Zachman – Analyst – Core Equity

Cynthia Tupy, CFA – Analyst – Value and Equity Income Equity Fixed Income & Alternatives Jay C. Untiedt, CFA, CAIA – Sr Director – Alternatives

Steven T. Pope, CFA, CFP® – Director – Non-Core Fixed Income

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

Blake Hockert – Associate – Reporting & Analytics

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 INVESTMENT DUE DILIGENCE

Justin E. Bell, CFA – Vice President

Kurt J. Merkle, CFA, CAIA – Sr Director

Kay S. Nachampassak – Director

Peter W. LaFontaine – Sr Analyst

James P. Johnson, CFA, CFP® – Sr Analyst

David Hauge, CFA – Analyst

Bishnu Dhar – Sr Research Analyst

Parveen Vedi – Sr Research Associate

Darakshan Ali – Research Process Trainee



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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

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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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before the bell€¦ · 8/27/2019 · • as the last bca research chart demonstrates, china’s...

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