before the bell · 09/04/2020 · as a bull market. yet, it is far too early to associate such...

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recommendation of any securities mentioned. Charts depicted are from FactSet unless otherwise noted. ____________________________________________________________________________________________________________________________ © 2020 Ameriprise Financial, Inc. All rights reserved. of 13

Before the Bell Morning Market Brief

April 9, 2020

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

THURSDAY MORNING MARKET UPDATE: David M. Joy, Chief Market Strategist Stocks rallied sharply on Wednesday for the second time this week, taking the S&P 500 higher by more than 10 percent in just three days. Defying expectations in some quarters of a retest of the markets low, at least for now, the index has retraced more than half of the peak to trough 1149 point drawdown between February 19th. and March 23rd. What had been a 34 percent decline is now a decline of 19 percent decline. And at least by definition, the 23 percent gain off the low qualifies as the start of a new bull market. Stocks in the Eurozone have also rallied, but somewhat less than their U.S. counterparts. The EuroStoxx 50 index is up 20 percent from its march 18th. low, but disagreement among the wealthier northern EU members and the poorer southern members about how best to support the latter as they struggle to fend off the economic effects of the virus has limited the rebound.

This latest leg of the rally has occurred in the wake of data suggesting progress in flattening the coronavirus infection curve in parts of Europe and in New York, the worst affected state in the U.S. In addition, the often cited models from the University of Washington projecting the course of the virus have brought forward the date of expected peak hospital resource usage in the U.S. and lowered the expected mortality rate.

The speed of the rebound in stocks so far mirrors the speed of the downturn. Both have defied historical precedent. Whether stocks retest the previous lows, as many anticipate, remains to be seen. History suggests that an eventual retest is to be expected. And in the present circumstance, those expecting it say it will surely come once the economic data reflects the full extent of the slowdown, and when stocks more realistically reflect the inevitable decline in earnings. And that may yet happen, but nothing says that a retest is inevitable, especially given the size of the government response to support the economy, notwithstanding its choppy introduction, and the optimistic data on the virus, the unique feature of this experience. And additional stimulus is under consideration.

Where that leaves the index in terms of valuation is very much of a guessing game. According to Bloomberg, the PE of the index based on 2020 expected earnings is currently a not inexpensive 18.6X. That equates to $147 of expected earnings for the index this year. However, estimates for earnings vary widely and many are being lowered. One such forecast is as low as $90. If that were to be realized, the index would be trading today at 30X forward earnings, significantly above the average of the past ten years of just under 16X. Even if we ignore 2020, and turn our focus to next year, what growth rate should we assume and from what base? First quarter earnings season begins next Tuesday. What managements have to say about the rest of this year will be particularly interesting this time around.

The much awaited OPEC and partners meeting to consider a meaningful reduction in crude oil production is scheduled for this Thursday. The collapse in demand as result of efforts to mitigate the effects of the virus, as well as the price war between Saudi Arabia and Russia has resulted in a collapse in oil prices. Because of the widespread stay-at-home

Before The Bell April 9, 2020 ____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________ © 2020 Ameriprise Financial, Inc. All rights reserved. of 13

directive, gasoline demand in the U.S. is at a 30-year low. In response, capital spending plans in the energy sector have been slashed and dividends have been cut. In the past week WTI has rallied from $20 to $26 dollars a barrel in anticipation of an agreement. But there is concern that any agreement will not be sufficiently large to eliminate the inventory overhang and bring production closer to demand.

Lastly, the weekly jobless claims data for the week rose by an additional 6.6 million, marking the third straight week of extraordinary dislocation in the labor market. Today’s number brings the three-week total to 16.6 million, implying a 10 percent increase in the unemployment rate.

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

Quick Take: U.S. stock index futures improved considerably right as we were publishing this report after the Federal Reserve announced a series of new support programs totoalling $2.3 trillion. European markets are trading mostly in the green; Asia ended higher overnight; West Texas Intermediate (WTI) oil trading at $25.97; 10-year U.S. Treasury yield at 0.73%.

Checking In On Today’s Market Versus History: Technically, the S&P 500 Index has entered a new bull market after its recent surge higher, as shown in the FactSet chart below. As ridiculous as that statement sounds, the stock benchmark is up over +20% from its 52-week low set on March 23rd – surpassing the level routinely defined as a bull market.

Yet, it is far too early to associate such market nomenclature with our current market state. Particularly, considering stock rallies in the middle of a bear market can be violent and swift. Case in point, the S&P 500 is up nearly +9% in the last week on as little as reduced volatility, a defined presidential matchup, and only early signs of some peaking in COVID-19 cases/deaths. Nevertheless, there have been promising developments in coronavirus headlines, and a little upside movement in stock prices can’t hurt heading into a long Easter weekend.



As the Ameriprise Financial chart below highlights, the speed at which stocks fell into a bear market this year is analogous to some degree with the drawdowns in 1929 and 1987. In 1929, 1987, and 2020 the S&P 500 fell more than 30% from its peak in swift fashion. As a result, each of these three periods saw the S&P 500’s most severe declines from the market tops inside the first 50 trading days.

Also, each period saw the S&P 500 recover some of its losses quickly. Yet, so far, that’s where the similarities end. In the 1929 bear market, the S&P 500 took another strong leg down as the Great Depression started to take root. In 1987, the correction proved short-loved, and the S&P 500 eventually went on to recover more of what was lost during its sharp drawdown. Importantly, in 2000 and 2007, the downdrafts in the market were drawn out and more painful, with periods of recovery, met with further stock sell-offs.

Of course, it is reasonable to assume the sudden drop in today’s market could eventually be greeted with a swift and lasting recovery to some equilibrium point if economic activity recovers quickly in the back half of the year. But it’s also just as reasonable to assume markets could be in store for more pressure this year (like in 1929, 2000, and 2007) if the economic engine is slower to get back online. As the chart below also shows, it takes time for stocks to find equilibrium. If history is any guide, we are still many months from truly knowing if stocks have seen the worst of their declines. Unfortunately, the chart below shows we may still be in for more volatility, and possibly, at the very least, a retest of the March lows at some point.

But as we have said in the past, the market/economic circumstances today stand on their own and are unique. While the chart above can provide some context for the speed at which markets have fallen from an all-time high, a leveling in COVID-19 cases across the country, a plan to reopen the economy, and clarity on the economic/corporate profit front will most likely dictate where stock prices go over the next several months, in our view.

With that said, we’ll finish our headline commentary on a somewhat brighter note. Recall, after volatility quickly spiked at the start of the financial crisis, it remained elevated for several months. Importantly, it took many more months after the severe shock in markets from the financial crisis for the VIX to edge back down toward more normalized levels. The FactSet chart below shows that volatility has materially dropped from the extreme levels back in March. Just recently, stocks have started to show they are responding favorably to this development. In our view, that’s a definite positive for investors.

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CBOE Volatility Index - Price S&P 500 - Price

Further, the Ameriprise table below also highlights the steady drop in the VIX level since March 16th, where volatility peaked above 80. As the table also highlights, after the extremes in volatility subside, near-term returns in the S&P 500 can be mixed-to-mostly flat. But the further one extends their lens, S&P 500 returns over the next six, and twelve months tend to be favorable for patient investors.

We are not fortunetellers. And we do not know precisely when stocks will ultimately hit their bottom and truly begin the next bull market run. However, we do know if investors can look out past the extreme uncertainties of the day, history typically rewards their patience, perseverance, and generally more optimistic outlook. Have a safe and relaxing Easter Weekend.



Asia-Pacific: Asian equities finished higher on Thursday. China’s State Council said Beijing would enhance macro-economic regulation and provide more credit support to smaller/private companies. However, details were light. China is facing a challenging economic backdrop this year, as the country attempts to recover from the coronavirus; at the same time, global demand is falling as the rest of the world fights the virus.

Europe: Markets across the region are trading in the green at mid-day. A rise in COVID-19 cases across Italy, Germany, Spain, and the UK over recent days are triggering concerns Europe will not be able to relax its stringent lockdown over the near-term. Germany’s infections have climbed aggressively over the last five days, while Italy recorded over 3,800 new COVID-19 cases as of yesterday — the highest in three days. Britain recorded its deadliest day yet. All of this points to higher probabilities of an “extension” to the lockdowns, not the “relaxing” of restrictions

U.S.: Equity futures are pointing to a positive open. Here's a quick news rundown to start your morning: Weekly initial jobless claims are the new “real-time” barometer for reading COVID-19 impacts on

the economy. Markets and investors have been closely monitoring the data each Thursday for weeks, and today’s release is no different. First-time claims totaled 6.6 million versus expectations for 5 million in the week ending April 4th. Continuing claims for the week ending March 28th totaled 7.5 million—which is a record.

However, the Federal Reserve upstaged the weekly jobless claims report this morning and announced $2.3 trillion in programs to support the U.S. economy. The long-awaited details of its lending program geared toward medium-sized businesses were released alongside the jobless claims. Under the outline, loans would be geared toward companies with up to 10,000 employees and $2.5 billion in revenues for 2019, per CNBC. Loans would be taken in a minimum amount of $1 million and a maximum of $25 million. A special-purpose vehicle created by the Fed and Treasury department will purchase 95% of the loans, while financing institutions will hold the other 5%.

On Wednesday, President Trump said he would like to reopen the economy with a “big bang.” While the White House is still prioritizing health considerations and would consider opening up the economy in stages based on guidance from health experts, the administration is also looking at a dual-track approach, per FactSet. Such an approach would monitor the health and the economy in a more granular way and possibly create “red” and “green” zones to designate which parts of the country are safe to open.

Oil prices are extending their gains ahead of today’s OPEC+ meeting. According to Bloomberg, the oil cartel will discuss substantial output cuts to crude today, which could potentially reach 10 million barrels per day. On Friday, G20 energy ministers are scheduled to discuss broader contributions as well as if the U.S. will cooperate in any pact. Previously, President Trump said he did not think the U.S. would participate in such an agreement and that domestic producers have already reduced output, according to FactSet.

The Senate may vote today on a bill to boost funding to the existing $350 billion small-business loan program. Per Politico, Senate Majority Leader Mitch McConnell is trying to pass legislation that would add $250 billion to the loan program, despite some opposition from Democrats looking for added funding for hospitals and community health centers. The Senate bill needs unanimous consent to pass, and House Speaker Nancy Pelosi warned that is unlikely to happen with the bill’s current form. According to The Hill, U.S. Treasury Secretary Steven Mnuchin and Senate Minority Leader Chuck Schumer are in discussions in an attempt to bridge an agreement.

The March FOMC meeting minutes showed the Federal Reserve was very concerned about the near-term economic outlook. The Fed’s outlook deteriorated significantly compared to January, and as the spread of the coronavirus took root here at home. However, the central bank said the U.S. entered this period of high uncertainty on a firm footing, with a strong labor market, and on the heels of moderate economic activity growth. The Fed also committed to keeping rates near the lower bound until the economy weathered this storm.

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WORLD CAPITAL MARKETS 4/9/2020 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 3.41% -14.40% 2,750.0 DJSTOXX 50 (Europe) -0.10% -23.57% 2,848.4 Nikkei 225 (Japan) -0.04% -17.46% 19,345.8 Dow Jones 3.44% -17.33% 23,433.6 FTSE 100 (U.K.) 1.02% -23.14% 5,735.7 Hang Seng (Hong Kong) 1.38% -13.62% 24,300.3 NASDAQ Composite 2.58% -9.52% 8,090.9 DAX Index (Germany) 0.27% -21.80% 10,360.4 Korea Kospi 100 1.61% -16.45% 1,836.2 Russell 2000 4.61% -28.28% 1,191.7 CAC 40 (France) -0.08% -25.42% 4,439.4 Singapore STI 1.26% -19.77% 2,571.3 Brazil Bovespa 2.97% -32.01% 78,625 FTSE MIB (Italy) 0.36% -25.79% 17,443.5 Shanghai Comp. (China) 0.37% -7.35% 2,825.9 S&P/TSX Comp. (Canada) 2.29% -17.55% 13,925.7 IBEX 35 (Spain) 0.62% -26.07% 6,994.9 Bombay Sensex (India) 4.23% -24.24% 31,159.6 Mexico IPC 0.12% -20.40% 34,567.8 MOEX Index (Russia) 0.00% -12.07% 2,670.0 S&P/ASX 200 (Australia) 3.46% -18.06% 5,387.3

Global % chg. % YTD Value Developed International % chg. %YTD Value Emerging International % chg. %YTD ValueMSCI All-Country World Idx 2.03% -17.66% 462.3 MSCI EAFE 0.26% -21.63% 1,581.1 MSCI Emerging Mkts -0.49% -21.26% 873.9 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 Commodities Communication Services 1.65% -13.11% 157.1 Equity Income Indices % chg. % YTD Value Futures & Spot (Intra-day) % chg. % YTD ValueConsumer Discretionary 2.84% -14.04% 844.7 JPM Alerian MLP Index 2.91% -54.71% 98.8 CRB Raw Industrials -0.17% -7.65% 417.2 Consumer Staples 1.41% -7.71% 592.5 FTSE NAREIT Comp. TR 6.88% -18.13% 17,480.7 NYMEX WTI Crude (p/bbl.) 3.11% -57.63% 25.9 Energy 6.74% -41.79% 262.5 DJ US Select Dividend 4.62% -24.63% 1,726.1 ICE Brent Crude (p/bbl.) 2.13% -49.18% 33.5 Financials 4.40% -27.29% 369.1 DJ Global Select Dividend 1.69% -31.57% 159.7 NYMEX Nat Gas (mmBtu) -2.24% -20.37% 1.7 Health Care 4.20% -6.97% 1,099.9 S&P Div. Aristocrats 3.57% -17.96% 2,516.5 Spot Gold (troy oz.) 1.20% 9.79% 1,665.9 Industrials 3.65% -23.01% 526.7 Spot Silver (troy oz.) 1.77% -14.72% 15.2 Materials 5.00% -19.17% 310.0 LME Copper (per ton) -0.81% -19.04% 4,978.2 Real Estate 7.41% -12.02% 209.7 Bond Indices % chg. % YTD Value LME Aluminum (per ton) -0.98% -19.95% 1,425.9 Technology 2.74% -6.62% 1,499.0 Barclays US Agg. Bond 0.10% 3.39% 2,300.5 CBOT Corn (cents p/bushel) 0.60% -15.84% 337.5 Utilities 5.41% -9.34% 295.3 Barclays HY Bond 0.51% -12.61% 1,907.6 CBOT Wheat (cents p/bushel) 0.87% -1.82% 553.3

Foreign Exchange (Intra-day) % chg. % YTD Value % chg. % YTD Value % chg. % YTD ValueEuro (€/$) 0.18% -2.99% 1.09 Japanese Yen ($/¥) 0.00% -0.20% 108.83 Canadian Dollar ($/C$) -0.10% -7.39% 1.40British Pound (£/$) 0.31% -6.31% 1.24 Australian Dollar (A$/$) 0.37% -10.94% 0.63 Swiss Franc ($/CHF) 0.10% -0.43% 0.97Data/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



ECONOMIC NEWS OUT TODAY: Economic Releases for Thursday, April 09, 2020. All times Eastern. Consensus estimates via Bloomberg. Time Period Release Consensus Est. Actual Prior Revised to 8:30 AM Apr. 4 Initial Jobless Claims 5500k 6606k 6648k 6867k 8:30 AM Mar. 28 Continuing Claims 8000k 7455k 3029k 8:30 AM MAR Producer Price Index (PPI) (MoM) -0.4% -0.2% -0.6% 8:30 AM MAR PPI Ex. Food & Energy (MoM) 0.0% +0.2% -0.3% 8:30 AM MAR Producer Price Index (PPI) (YoY) +0.5% +0.7% +1.3% 8:30 AM MAR PPI Ex. Food & Energy (YoY) +1.2% +1.0% +1.4% 10:00 AM Apr. P U. of M. Consumer Sentiment 75.0 89.1 Economic Perspective: Russell T. Price, CFA – Chief Economist Today’s report on new unemployment claims for the period ending last Saturday brings the three-week total for

the series to 16.6 million. Though such totals far exceed any other period in the program’s history, they still likely under-reflect the reality of recent layoffs given the problems state unemployment web sites have had in handling recent volumes.

As we noted yesterday, we’re currently forecasting 23 million jobs to be lost between February and May. However, given the wide disparity of potential near-term paths, the number could be as low as 20 million or as high as 30 million, in our view, with a likely skew to the upside, unfortunately.

The recently passed federal stimulus legislation provided for significant added unemployment resources which should provide strong support to those effected over this period. The terms of unemployment insurance programs are determined at the state level with weekly pay-out rates ranging from about $275 to just over $500. The stimulus bill provides for an additional $600 per week for unemployment recipients until July 31st – an amount that exceeds the minimum wage equivalent in every U.S. state. Additionally, the standard benefits, combined with the added $600 brings the near-term unemployment benefit package to a level greater than median weekly earnings in 41 states, based on data from the Labor Department.

Note: U.S. financial markets are closed tomorrow in observation of Good Friday. Despite the closure, the Labor Department is still scheduled to release its Consumer Price Index report for March. Consensus estimates for the report are shown below. Given current circumstances, inflation /deflation is a distant concern for financial markets, in our view. Additionally, we believe consumer prices are likely to be very volatile over the intermediate term particularly in reflection of what could be wide swings in energy prices. Economic Releases for Friday, April 10, 2020. All times Eastern. Consensus estimates via Bloomberg. Time Period Release Consensus Est. Actual Prior Revised to 8:30 AM MAR Consumer Price Index (CPI) (MoM) -0.4% -0.6% 8:30 AM MAR CPI Ex. Food & Energy (MoM) 0.0% -0.3% 8:30 AM MAR Consumer Price Index (CPI) (YoY) +0.5% +1.3% 8:30 AM MAR CPI Ex. Food & Energy (YoY) +1.2% +1.4%

FIXED INCOME NEWS & VIEWS: Brian M. Erickson, CFA, Fixed Income Research & Strategy We See Opportunities, Not Risk in Money Markets and Ultra-Short Strategies The goal and purpose of allocations to money market and ultra-short fixed income funds is to preserve capital while

providing a modest return. We believe money market reforms of 2014 and the swift, bold action by the Federal Reserve affirm and support the preservation of capital investors are seeking when selecting these types of investments. Assets in money market funds rose to $4.3 trillion on April 1 according to Investment Company Institute (ICI) data. While a historical trend of rising money market assets often occurs in leading into a contraction, we recommend long-term investors keep money invested in the market to achieve long term performance. Yet, we find



fixed income positioning still affords reasons to tactically allocate to shorter dated fixed income instruments including money market and ultra-short fixed income funds.

We are not concerned about money market funds breaking the buck. Investors reflect back on what happened in the wake of the financial crisis and carry that forward to today. While we are sensitive to the experience investor may have had, from an investing perspective this may be considered ‘recency bias’, where if it played out that way before it’s likely to repeat this time. We believe the strength a resiliency of the U.S. bank and broader financial system counts as the foundation of a recovery rather than a liability as seen after the financial crisis (see more on our view of the financial system in the section below). Next, 2014 money market reforms brought mechanism and limitations designed to maintain a fixed $1 NAV for retail money market funds and government money market funds offers key support for the preservation of capital investors seek. Finally, the Fed’s active participation in repo markets along with the start of the Money Market Liquidity Facility on April 14 likely ensure liquidity in the types of assets these funds invest in. While we don’t recommend building large positions these types of funds on a long-term basis, they certainly have a role to play around liquidity and tactical positioning in our view.

Companies continue to raise money through debt issuance to bolster liquidity and to extend their prospects for weathering the economic effects of shelter in place orders across the U.S. When is a good time to lend to companies, or to buy fixed income assets? When they are eager for funding and willing to pay up for it. For the typical fixed income that asset money market funds and ultra-short bond funds invest in, demand has been strong and pricing attractive in our view. Take for instance the discount margin (yield) on 90 day non-financial issuer commercial paper (CP) that an annual yield of 2.40% (bond market equivalent) on Tuesday (see chart below right). Strong demand for cash liquidity even among investors leaves an imbalance where supply of CP (or company’s demand for borrowing) overwhelms investor willingness to lend for 90 days and results in an artificially high yield in our view. 90-day CP would normally yield something much closer to fed funds currently targeted to be in the 0.00% to 0.25% range. Unfortunately, individual investors are unable to directly invest in CP, but can gain the exposure through Ultra-short bond funds.

There are several reasons for investing in short fixed income for liquidity or tactical positioning. For temporary liquidity, like a holding position where funds accumulate for investment or where funds can be intermittently withdrawn. Similarly, for tactical positioning, we recommend a seven-year duration target achieve by a combination of short-term or ultra-short fixed income and long-term fixed income. For long-term investor we recommend intermediate fixed income investments and avoiding the propensity for returns to gravitate toward the Fed’s target policy range of 0.00% to 0.25%.

More advanced banking regulatory reforms in the U.S. post-2008 underly our constructive view of the U.S. banks and their prospects for weathering a contraction and the impacts of non-performing assets. The charts below show that leverage remains healthy and non-performing loan levels quite low heading into economic effects of the shelter in place slowdown of the second quarter. Aside from healthy banking system fundamentals, we believe the combination of swift, massive Fed policy support to backstop market functioning, coupled with more than $2 trillion of fiscal stimulus to backfill consumer and business activity starts the U.S. on sound footing. Certainly, additional measures may be necessary should the shelter in place extend or the process of re-employing people laid-off or let go due to the contraction. Further, the current contraction likely leads to a jump in corporate and consumer defaults that likely leads non-performing loan balances higher and weighs on performance of High Yield Corporate Bonds and bank loan funds (loans originated by banks and sold to investment managers) through much of this year.

The charts below highlight the lower leverage and greater resiliency prospects for U.S. banks relative to their Eurozone brethren. In our view, the U.S. will benefit from the long road to recovery following the 2008 financial crisis which



enabled zealous regulators to achieve remarkably low leverage and to work through troubled loans which finds non-performing loans levels near 30-year lows.

In Europe, the greater dependency on central bank monetary support and less enduring political will to evolve labor market and bank regulations left Euro area banks on more fragile footing to face an economic contraction. Progress achieved to deleverage Eurozone banks and to work through non-performing loans still leaves the European banking system on thinner ice than in the U.S. Further, while the success of banking reforms varied, political patience for euro-wide support for bank bailouts is nearly exhausted leaving banks facing the economic impact of lockdowns with simply the fiscal policy support of their nation at this point. While favorably view the U.S. financial system credit position heading into a 2Q contraction, we are skeptical of the Eurozone banking system’ ability to navigate a contraction in 2020 and more cautious around prospects of a rescue should it prove necessary.

Chart source: BCA

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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 – 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 Open – 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, CMT, CAIA – Sr Director, Asset Allocation

Cedric Buermann Jr., CFA – Analyst, Asset Allocation Gaurav Sawhney – Research Analyst

Amit Tiwari, CFA – 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, CFA – Analyst – Core Equity

Cynthia Tupy, CFA – Director – 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, CFA – 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, CFP®, 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

INNOVATION AND DEVELOPMENT

Allen Rodrigues – Vice President

Nidhi Khandelwal – Director

Dan Burns – Sr. Manager

Matt Morgan – Sr. Manager

Natasha Wayland – Sr. Manager



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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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before the bell · 09/04/2020 · as a bull market. yet, it is far too early to associate such...

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