July Viewpoints

Checklist of a typical expansionary (mid‐cycle) economic phase

Commodity prices rises Economy posts positive growth Increasing mergers & acquisitions and IPO listings Healthy corporate profitsHigher capacity utilizationInflation riseso Interest rates riseo Interest rates riseo Wages begin to increaseo Fed tightening begins

Characteristics of the current cycle

Lingering European debt crisis and the ballooning US debt Global growth driven by developing nations Extended period of low interest rates andWeak ‐ dollar, US housing market, employment rate Low velocity of money Low velocity of money Ongoing federal, state, and city level spending cuts and benefits reductions “Risk‐on” and “Risk‐off” stock market sentiment swings  Federal Reserve’s double‐shot of the asset inflating monetary policy

Active Asset Allocation Portfolio Targets ‐ Expansionary Economic Phase

Views presented are as of July 28, 2011 and are subject to change based on market conditions and other factors. Data included in this piece are deemed to be from reliable sources, but we do not guarantee its accuracy. These views are for informative considerations and should not be construed as a

recommendation, either expressed or implied. Model asset allocation portfolio targets are benchmarks and for informative considerations.

Active Asset Allocation Portfolio Targets ‐ Expansionary Economic Phase Conservative – cash 5%/equities 60%/fixed 35%  | Moderate – cash 5%/equities 75%/fixed 20%  | Aggressive – cash 5%/equities 90%/fixed 5%