before the bell · 2021. 3. 8. · volatility in the bond market remained el evated last week. the...

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Before the Bell Morning Market Brief

March 8, 2021

MONDAY MORNING MARKET STRATEGY: David M. Joy, Chief Market Strategist Volatility in the bond market remained elevated last week. The MOVE index of treasury volatility began its recent ascent three weeks ago, rising from an average reading to start the year of 47 to an average of 69 over the past three weeks. During that time, the yield on the ten-year note has climbed from 1.21 to 1.57 percent. That same nervousness was on display in the market’s reaction to Fed Chairman Powell’s comments in a Thursday interview, which sent the ten-year yield higher by 10 basis points and sent stocks plunging intraday, despite Powell’s seemingly innocuous reaffirmation of the Fed’s accommodative policy stance.

The concern for investors is that yields will rise to levels, and at a pace, that will prove problematic, causing the Fed to react by adjusting its policy sooner than anticipated. That fear stems from a combination of concerns of rising inflation and a flood of treasury supply, given the massive degree of fiscal stimulus, the price tag for which surged higher over the weekend with the Senate’s passage of the President’s $1.9T stimulus package. The Fed has consistently pushed back on such fears, viewing an anticipated increase in inflationary pressure in the months ahead as likely being transitory. Markets are less certain, although bonds stabilized on Friday and stocks rallied sharply. There is little disagreement that the amount of ongoing stimulus, in combination with the accelerating vaccine rollout, will deliver a robust reflation of the economy, absent a setback from virus mutations. The question is whether that can happen without also triggering a structural rise in inflation that the Fed doesn’t see.

Friday’s powerful rally was enough to prevent the S&P 500 from posting its third straight week of losses, as the index climbed 0.8 percent. The Nasdaq Composite was less fortunate, dropping 2.1 percent for the week, its third straight loss. Populated by both comparatively expensive and longer duration growth stocks, the Nasdaq has shed 8.3 percent over the past three weeks in the face of rising bond yields. The S&P 500 is lower by 2.4 percent during that same interim.

Friday’s rally followed the February jobs report, which saw the creation of 379,000 new non-farm jobs, almost twice the expected total. The leisure and hospitality sector accounted for most of the jobs as the economy slowly reopens. Job growth was also strong in healthcare and retail, while government jobs declined. Although the jobless rate edged lower to 6.2 percent, total employment remains 9.5 million below its year-ago level.

Once again last week it was the cyclical groups within the market that fared the best. The energy sector soared by 10 percent after OPEC+ unexpectedly agreed to extend most of its production cuts. And over the weekend, a Saudi facility suffered a drone attack, although no production capacity was reportedly impacted. The energy sector is now higher on the year by 40 percent. At $66 a barrel, WTI crude is trading at its highest level since October, 2018, and will no doubt contribute to inflation fears as the year-over-year comparisons are factored into the calculation of headline prices. Financials, industrials, and materials were strong as well. Falling were consumer discretionary, technology, and real estate.

Before The Bell March 8, 2021 ____________________________________________________________________________________________________________________________

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The dollar was stronger on the week. Defying some expectations of a generally weaker outlook, since the start of the year the DXY index has climbed 2.5 percent. And while that represents a headwind for unhedged overseas positions, a stronger dollar is a tailwind for export sensitive overseas economies. The Japanese yen in particular has weakened by 5 percent against the dollar since the start of the year, and the euro has fallen 3 percent. In local currency terms, the Nikkei index is higher year-to-date by 4.7 percent, and the EuroStoxx 50 is higher by 4.3 percent. In dollar terms, however, those gains slip to -0.4 and +1.3 percent respectively.

The ISM manufacturing report for February provided further evidence of economic firming, rising to 60.8, its highest in three years. Not to be overlooked, however, the prices paid index rose to its highest level since 2008. Somewhat surprisingly, however, given the strength in the jobs report, the service sector component came in weaker than expected. This week’s calendar includes both the PPI and CPI reports for February, both of which will receive even more scrutiny than normal, given the market’s heightened price sensitivity.

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

lower overnight; West Texas Intermediate (WTI) oil trading at $65.97; 10-year U.S. Treasury yield at 1.60%.

Additional Stimulus Set To Fuel The Economy & Stocks: Last Friday’s nonfarm payrolls report showed the U.S. economy added 379,000 new jobs in February, and further fuels reflationary tailwinds, in our view. Inflation pressures are rising, and interest rates are resetting to what will likely be a strong year of growth in 2021.

Recently, stock prices, particularly in high-growth/high-momentum areas, have struggled to adapt to rising interest rates. However, we believe investors should look through the volatility and focus on the positive metrics that could drive stock prices higher over time. At least here at home, a more significant percentage of Americans will be vaccinated against COVID-19 and returning to regular activity over the coming months. Notably, further job gains and spending should help the economy and corporate profit growth accelerate.

On Saturday, Senate Democrats passed President Biden’s $1.9 trillion stimulus package. The Senate approved the COVID-19 relief bill 50-49 — along party lines and through the budget reconciliation process, which did not require Republican support. The bill now heads to the House of Representatives for a final review and vote early this week. The stimulus bill s expected to arrive on President Biden’s desk before unemployment aid programs expire on March 14th.

Highlights in the new stimulus bill include: $1,400 direct payments to qualifying Americans. A $300 a week boost to state unemployment benefits through September 6th. An expansion of the child tax credit for one year. $160 billion for COVID-19 vaccine distribution and testing. $350 billion for state and local governments. Funding to help K-12 schools reopen. $14 billion in payroll support for domestic airlines.

In our view, the new stimulus package should provide quarters worth of fuel for the economy to expand. As Goldman Sachs Asset Management (GSAM) recently noted, U.S. stocks have a history of performing well during economic expansions. The early innings of an economic expansion (which we believe we are now in) are often bullish for equity returns, as the first chart below shows, sourced from GSAM.

We believe recovering fundamentals and growing profits often overshadow valuations during the early part of expansion, with the S&P 500 Index higher 87% of the time when the economy is growing. Given the size and scale of the new stimulus package, we are likely to see 2021 full-year GDP growth of +4.0% or greater.



Lastly, the second GSAM chart above shows stocks may still have gas left in the tank when it comes to further upside. Based on history, the S&P 500 returns seen thus far since the March 23rd 2020 bottom are low relative to other trough-to-peak periods in history. In fact, the current gains represent roughly just 20% of the median S&P 500 price gain seen during the last four expansionary cycles. The median length of expansion has been 109 months in the previous four economic expansions per GSAM. Considering we believe the economy is only in the early innings of growth/recovery, investors should use temporary dislocations in the market to reallocate cash or rebalance back to strategic/tactical targets.

Asia-Pacific: Asian equities finished lower on Monday. China exports surged over the January/February period and far above consensus estimates. While the data was broadly positive and points to strengthening conditions in Asia, base effects and the Lunar New Year holiday were also factors that led to higher export activity in China.

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S&P 500 Price Return from Trough to Next Recession (%) (Source: Goldman Sachs Asset Management)



According to Bloomberg, China’s top diplomat warned the White House to stop “crossing lines and playing with fire” over Taiwan. He also said there is no room for compromise or concessions in Beijing’s sovereignty claim over the island. The U.S. Defense Secretary later suggested the U.S. would boost support of APAC allies in the face of “very aggressive” actions by China.

Europe: Markets across the region are trading mostly higher at midday. Reuters noted investor sentiment in the Eurozone showed confidence at its highest level in over a year — driven by positive views of the current situation. Sentix highlighted 80% of the gap in sentiment created by the coronavirus in February 2020 had been closed. Like in the U.S., improving virus trends, vaccine availability, and pent-up demand has driven investor sentiment higher.

U.S.: Equity futures are pointing to a lower open. Here is a quick news rundown to start your morning: Stocks look set to open lower after last week’s mixed results. In the previous five trading sessions,

major U.S. indexes are lower, with the NASDAQ Composite off nearly 5.0% on a price basis and the S&P 500 Index down 1.5%. Month-to-date, the cyclical value exposure in the Dow Jones Industrials Average has helped the 30-stock index climb higher by +1.8%. Coming into trading today, the higher rate backdrop continues to be the go-to excuse for stock pressure. With the 10-year U.S. Treasury yield at 1.6% this morning, Tech/growth stocks are seeing very weak pre-market activity. The lack of pushback from the Federal Reserve on higher rates is helping propel the Value over Growth trade as well. In March, the S&P 500 Value Index is outperforming the S&P 500 Growth Index by over 400 basis points. Over the last month, Value is beating Growth by over 900 basis points.

Dr. Fauci is concerned about plateauing new coronavirus cases. Leading infectious disease Dr. Anthony Fauci told CBS’ Face the Nation on Sunday he is worried about coronavirus cases plateauing at 60K - 70K. Fauci pointed to Europe, which saw a similar trend before cases rose roughly 9% over the past week. He expressed concern about relaxing mitigation measures and stressed the need to mask and social distance. On the bright side, the U.S. is currently administering over 2 million COVID-19 vaccine doses per day. At the end of May, officials expect there will be enough doses to vaccinate the U.S. population.

Oil prices little changed after a drone attack on Saudi’s oil infrastructure. Sunday’s missile strike in Saudi Arabia, attacking an oil infrastructure facility, seems to have had little effect on Brent and West Texas Intermediate (WTI) crude prices this morning. The drone strike on a Saudi oil facility is the first in 14 months. However, production capacity was not affected by the attack. Iran-backed Houthi rebels claimed responsibility. Press reports suggest the attack could complicate the Biden administration’s efforts to negotiate a nuclear deal with Iran.

On the week: On Tuesday, the February NFIB Small Business Index is released, with February consumer price inflation (CPI) data hitting Wednesday. Thursday brings the January JOLTS job openings report and initial jobless claims, while the week wraps up with producer price inflation (PPI) data on Friday.

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WORLD CAPITAL MARKETS 3/8/2021 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 1.95% 2.57% 3,841.9 DJSTOXX 50 (Europe) 0.98% 4.65% 3,705.4 Nikkei 225 (Japan) -0.42% 4.78% 28,743.3 Dow Jones 1.85% 3.29% 31,496.3 FTSE 100 (U.K.) -0.19% 3.12% 6,618.2 Hang Seng (Hong Kong) -1.92% 4.85% 28,540.8 NASDAQ Composite 1.55% 0.37% 12,920.2 DAX Index (Germany) 1.34% 2.83% 14,106.6 Korea Kospi 100 -1.00% 4.27% 2,996.1 Russell 2000 2.11% 11.15% 2,192.2 CAC 40 (France) 0.76% 5.11% 5,826.4 Singapore STI 1.90% 8.19% 3,071.2 Brazil Bovespa -0.02% -3.22% 115,185 FTSE MIB (Italy) 1.93% 5.29% 23,409.0 Shanghai Comp. (China) -2.30% -1.49% 3,421.4 S&P/TSX Comp. (Canada) 1.41% 5.92% 18,381.0 IBEX 35 (Spain) 0.34% 3.33% 8,315.1 Bombay Sensex (India) 0.07% 5.81% 50,441.1 Mexico IPC 0.74% 5.34% 46,342.5 MOEX Index (Russia) 0.49% 3.94% 3,414.1 S&P/ASX 200 (Australia) 0.43% 3.76% 6,739.6

Global % chg. % YTD Value Developed International % chg. %YTD Value Emerging International % chg. %YTD ValueMSCI All-Country World Idx 0.63% 2.02% 657.5 MSCI EAFE -1.37% 0.74% 2,155.5 MSCI Emerging Mkts -0.52% 3.84% 1,339.3

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 2.38% 7.37% 237.7 Equity Income Indices % chg. % YTD Value Futures & Spot (Intra-day) % chg. % YTD ValueConsumer Discretionary 0.72% -3.33% 1,257.9 JPM Alerian MLP Index 1.11% 23.42% 171.2 CRB Raw Industrials 1.75% 9.67% 560.13 Consumer Staples 2.15% -4.67% 661.4 FTSE NAREIT Comp. TR 1.20% 1.73% 20,608.4 NYMEX WTI Crude (p/bbl.) -0.41% 35.66% 65.82 Energy 3.87% 40.16% 396.5 DJ US Select Dividend 2.71% 14.78% 2,508.8 ICE Brent Crude (p/bbl.) -0.42% 33.34% 69.07 Financials 1.91% 14.34% 558.6 DJ Global Select Dividend 0.44% 12.48% 242.3 NYMEX Nat Gas (mmBtu) -1.96% 4.29% 2.65 Health Care 2.02% -0.42% 1,315.1 S&P Div. Aristocrats 2.72% 3.70% 3,457.1 Spot Gold (troy oz.) -0.52% -10.88% 1,691.81 Industrials 2.39% 5.47% 788.1 Spot Silver (troy oz.) -0.46% -4.82% 25.13

Materials 2.35% 3.89% 471.7 LME Copper (per ton) -0.22% 15.02% 8,913.20 Real Estate 1.15% 0.71% 229.1 Bond Indices % chg. % YTD Value LME Aluminum (per ton) 1.11% 10.34% 2,177.75 Technology 1.97% -1.07% 2,262.3 Barclays US Agg. Bond -0.09% -2.93% 2,321.9 CBOT Corn (cents p/bushel) 0.73% 13.71% 549.50 Utilities 1.59% -4.83% 301.6 Barclays HY Bond -0.13% 0.54% 2,350.7 CBOT Wheat (cents p/bushel) 0.80% 2.93% 658.25

Foreign Exchange (Intra-day) % chg. % YTD Value % chg. % YTD Value % chg. % YTD ValueEuro (€/$) -0.42% -2.87% 1.19 Japanese Yen ($/¥) -0.27% -4.93% 108.60 Canadian Dollar ($/C$) -0.09% 0.43% 1.27British Pound (£/$) 0.01% 1.27% 1.38 Australian Dollar (A$/$) -0.35% -0.45% 0.77 Swiss Franc ($/CHF) -0.55% -5.26% 0.93Data/Price Source: Bloomberg. Equity Index data is total return, inclusive of dividends, where applicable.



THE WEEK AHEAD: Russell T. Price, CFA, Chief Economist Earnings season update: Through last Friday, approximately 98.6% of S&P 500’s 505 constituents had reported

their results for Q4-2020. Overall, S&P 500 companies posted y/y earnings per share (EPS) growth of 3.9% on sales growth of 3.2%. Both top and bottom-line results were much better than expected and broadly so. On January 19th, analyst consensus estimates looked for S&P 500 EPS for the period to be down 6.9% y/y on a +0.4% increase in sales.

Additionally, if just the 24 companies comprising the Energy sector, the nation’s 5 domestic airlines, and the results of Boeing are removed from the mix, aggregate S&P 500 earnings per share growth for Q4-2020 would stand at +12.0% on sales growth of +7.3%. – both well above long-term historical trend rates All numbers mentioned relative to corporate results is sourced from FactSet.

The economic calendar is thin this week but not without potential market moving reports. Inflation data lies prominently on the schedule both here and abroad. Markets have been increasingly concerned over the intermediate-term path of inflation (rightly so, in our view) and this week’s data is unlikely to quell those fears, in our view. Prices are starting to accelerate, and y/y price comparisons are very likely to shift markedly higher in the months ahead as price levels are compared against the depressed price levels of a year-ago. We currently expect the headline CPI to peak at +3.7% in May (when year-ago comparisons are at their lowest). However, we currently believe the headline CPI could still end the year at about 3%, a lingering rate that could provide some lingering anxiety for investors and central bankers alike (as if we need more anxiety).

Wednesday’s Consumer Price Index (CPI) report: Forecasters as surveyed by Bloomberg expect Wednesday’s headline CPI to show a strong +0.4% month-over-month (m/m) gain, equating to a 1.7% y/y increase. We believe the Index could jump by 0.5% at the headline level (up +1.8% y/y) with a strong boost coming from energy prices. Gasoline prices typically rise in the month of February with a 10-year average in crease of just under 1.0%, according to data from the Energy Information Administration (EIA). This past February, however, national average gasoline prices jumped by more than 7%. Food prices have also been increasing due to much higher grain commodity costs due to challenging weather conditions.

Meanwhile, consumer prices at the core level (excluding the volatile food and energy components) are expected to see a more normalized pace, with a m/m gain of 0.2% expected, equating to a +1.4% rate on a y/y basis. Although still appearing to be modest, we believe core prices at the consumer level are also very likely to accelerate in the months ahead. Comparisons, of course, are an important factor here as well (a factor that should aid comparisons over the course of the second-half of the year, thus providing some downward pressure on y/y rates).

Friday’s Producer Price Index (PPI) report should not be expected to offer any relief from inflation fears. The Bloomberg consensus currently looks for the report to show a 0.4% gain at the headline level which follows a reported 1.3% m/m jump in January. If the numbers come-in as expected, the headline Index would be 2.7% above year-ago levels. We believe the Index could show a +0.6% m/m gain (+2.9% y/y) with a +2.8% rise in the y/y core rate.

March 8 9 10 11 12Wholesale Inventories NFIB Small Business Index Consumer Price Index Initial Jobless Claims Producer Price Index

GDP - Japan Inflation - China Industrial Production - France JOLTS / Job Openings UofM Consumer Sentiment

Industrial Production - Germany GDP - Eurozone Employment - Brazil Monetary Policy - Eurozone Industrial Production - India

Industrial Production - Spain Industrial Production - Italy Monetary Policy - Canada Inflation - Brazil Industrial Production - Eurozone

Inflation - Mexico Inflation - Germany

Inflation - Spain

Employment - Canada



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.

Consensus Earnings Estimates: Source: FactSet

Please note: The consensus earnings estimates shown below should viewed cautiously. The business environment remains very dynamic given virus conditions, thus leaving current estimates with greater uncertainty than usual, in our view.

S&P 500 Earnings Estimates 2016 2017 2018 2022

3/8/2021 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Est. Est. Est. Est. Est.Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY

Quarterly $$ amount $38.80 $41.59 $42.21 $41.78 $33.32 $28.22 $39.41 $42.32 $39.60 $41.58 $45.41 $48.07

change over last week $0.00 $0.08 $0.05 $0.13 $0.16 $0.53

yr/yr 0.2% 1.1% -1.6% 1.1% -14.1% -32.1% -6.6% 1.3% 18.8% 47.3% 15.2% 13.6%

qtr/qtr -6% 7% 1% -1% -20% -15% 40% 7% -6% 5% 9% 6%

Trailing 4 quarters $$ $119.64 $133.50 $164.05 $164.13 $164.59 $163.92 $164.38 $158.90 $145.53 $142.73 $143.27 $149.55 $162.91 $168.91 $174.66 $201.34

yr/yr 0.8% 11.6% 22.9% 0.2% -12.8% 21.9% 15.3%

Implied P/E based on a S&P 500 level of: 3845 26.8 25.7 23.6 22.8 22.0 19.1

2020 20212019



BY THE NUMBERS: ECONOMIC ACTUALS AND FORECAST:

ECONOMIC NEWS OUT TODAY: Economic Releases for Monday, March 8, 2021. All times Eastern. Consensus estimates via Bloomberg. Time Period Release Consensus Est. Actual Prior Revised to 10:00 AM JAN Wholesale Inventories +1.3% +1.3% FIXED INCOME COMMENTARY: Brian M. Erickson, CFA, Fixed Income Research & Strategy

Central Bank Policy Tweaks Ahead, Yet Fully Accommodative It’s that time again when G7 central bank policy meetings grab the headlines. Though fiscal stimulus provided a

dominant driver over the past ten weeks, we see the rate and bond-buying central banks' programs maintaining easy access to borrowing. We believe fiscal policies target consumers with direct support and easy borrowing conditions, both enabling governments to fund deficit spending and lower hurdles for companies to refinance debt or use debt to grow into the recovery. After a wave of U.S. spending initiatives, markets return to the question of what more central banks can do.

The European Central Bank (ECB) meets Wednesday and likely addresses the strengthening euro and rising 10-year eurozone yields with stepped-up use of the 1.85 trillion PEPP envelope, potentially increasing monthly purchases by 15 billion euros per month in January and February to 20 billion euros per month going forward. The same day as the ECB, the Bank of Canada is scheduled to meet as well.

The U.S. Federal Reserve will hold its next policy meeting a week from Wednesday, followed by the Bank of England and the Bank of Japan a week from Friday. Fed Chairman Powell and Federal Reserve Governor Brainard both left long-term bond markets with room to play out while maintaining on-going bond purchases. We anticipate the Bank of Japan permits greater flexibility around its 10-year JGB yield target incrementally to keep JGB yields a bit more attractive following the recent rise in U.S. Treasury yields.

Rate policies remain near rock-bottom levels, and $12.7 trillion at the end of 2019 to $19.4 trillion in February 2021, or by more than 50%.

Current Projections:Actual Actual Actual Est. Actual Actual Actual Actual Est. Est. Est.2018 2019 2020 2021 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Q1-2021 Q2-2021 Q3-2021

Real GDP (YOY) 3.0% 2.2% -3.5% 5.2% -5.0% -31.4% 33.1% 4.0% 7.5% 6.0% 4.5%

Unemployment Rate 3.9% 3.5% 6.7% 5.0% 4.4% 11.1% 7.9% 6.7% 6.0% 5.5% 5.2%

CPI (YoY) 2.4% 1.8% 1.3% 2.6% 2.1% 0.4% 1.4% 1.3% 1.8% 3.5% 3.2%

Core PCE (YoY) 2.0% 1.6% 1.4% 2.0% 1.7% 0.9% 1.5% 1.4% 1.6% 2.6% 2.4%

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

All estimates other than GDP are period ending.

Full-year Quarterly

Last Updated: March 8, 2021

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



We believe the overall impact of G7 central banks fine-tuning their extraordinary policies serves to keep currencies

competitive (not too strong) and to maintain easy corporate debt markets. For investors, we believe this extends the and affirms that developed market central banks seek to support expansion and inflation, not quash it. Given this backdrop, we believe our tactical asset allocation approach remains intact. Tactically (6-12 months) Overweight Investment Grade Corporate Bonds, Underweight Government Bonds, and remain selective within High Yield Bond and Emerging Foreign Bond exposures. Given how low non-U.S. Developed Foreign Bond yields remain, we minimized exposure for strategic, long-term allocations.

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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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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. Alternative investments cover a broad range of strategies and structures designed to be low or non-correlated to traditional equity and fixed-income markets with a long-term expectation of illiquidity. Alternative investments involve substantial risks

and are more volatile than traditional investments, making them more suitable for investors with an above-average tolerance for risk. Growth securities, at times, may not perform as well as value securities or the stock market in general and may be out of favor with investors. Value securities may be unprofitable if the market fails to recognize their intrinsic worth or the portfolio manager misgauged that worth. 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, LLC of any order to buy or sell securities. This summary is based exclusively on an analysis of general current market conditions, rather than the appropriateness 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.

Ameriprise Financial Services, LLC 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, LLC. Member FINRA and SIPC.

before the bell · 2021. 3. 8. · volatility in the bond market remained el evated last week. the...

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