Leo Grohowski

October 15, 2019

Chief Investment Officer

Senior Economic AdvisorRichard Hoey

Director of Fixed Income InvestmentsJohn Flahive

Liz YoungDirector of Market Strategy, BNY Mellon Investment Management

Director of Investment StrategyJeffrey Mortimer

1.70.5

-2.4-1.1

-4.1

2.3 2.41.3 1.3 1.8

4.9

-1.8

20.621.9

14.212.8

6.2

8.57.7

11.4

6.27.9

20.7

3.1

-5

0

5

10

15

20

25

LargeCap

MidCap

Small Cap

Dev. Emerg. Taxable Treas. HighYield

Munis Hedge GlobalREITs

Commodities

PER

CEN

T

3Q19 YTD

U . S . E Q U I T I E S I N T E R N A T I O N A LE Q U I T I E S

F I X E D I N C O M E D I V E R S I F I E R S

Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-190

10

20

30

40

50

60

70

80

90

INDE

XLE

VEL

20 YEAR MEAN

Year # of +/- 1% Market Moves

2019* 37

2018 64

2017 8

2016 48

CBOE Volatility Index (VIX)

As of 10/8/19. Source: Ned Davis Research*12/1/95 – 10/8/19

30

40

50

60

70

80

90

09 10 11 12 13 14 15 16 17 18 19

CRO

WD

SENT

IMEN

T IN

DICA

TOR

YEAR

N D R C R O W D S E N T I M E N T P O L L

56.41

OPTIMISM

PESSIMISM

10.89

19.67

1.27

-3.38-5

0

5

10

15

20

25

Below 57.0 57.0-66.0From Below

57.0-66.0From Above

Above 66.0PE

RCEN

T

CROWD SENTIMENT INDICATOR

S & P 5 0 0 % G A I N P E R A N N U M *

I. Deceleration to Sustained Slow Growth

II. Trade Tensions and Stall in Globalization

III. Global Slowdown and Global Easing

IV. Evaluating Recession Risk

V. Monetary and Fiscal Policy

VI. Global and U.S. Economic Outlook

-0.8

-0.3

0.2

0.7

1.2

1.7

2.2

2.7

3.2

3.7

Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19

YIEL

D

U.S. 10-YR German 10-YR

1.67

-0.57

0

1

2

3

4

5

6

Jan-05 Nov-05 Sep-06 Jul-07 May-08 Mar-09 Jan-10 Nov-10 Sep-11 Jul-12 May-13 Mar-14 Jan-15 Nov-15 Sep-16 Jul-17 May-18 Mar-19 Jan-20 Nov-20

PERC

ENT

FEDERAL RESERVE FOLLOWS MARKET

Fed Funds Midpo in t

$14.8

0

2

4

6

8

10

12

14

16

18

Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19

$TRI

LLIO

N

BLOOMBERG BARCLAYS GLOBAL AGGREGATE NEGATIVE YIELDING DEBT

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD

$TRI

LLIO

N BBB-RATED CORPORATE BONDS

0

100

200

300

400

500

600

2014 2015 2016 2017 2018 2019 Projected

2020 Projected

$BIL

LIO

NS

Tax-Exempt Taxable

-80

-60

-40

-20

0

20

40

60

80

100

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD

$BIL

LIO

NS

SPIKES IN VOLATILITY AND CORRESPONDING INDEX MOVES

5

10

15

20

25

30

2200

2400

2600

2800

3000

3200

Jan-19 Feb-19 Mar -19 Apr -19 May -19 Jun-19 Ju l -19 Aug-19 Sep-19 Oc t -19

INDE

X LE

VEL

PRIC

E

S&P 500 ( l e f t ax i s ) Vo la t i l i t y ( r i gh t ax i s )

LOWER 2019 EARNINGS GROWTH, BUT UPSIDE IN 2020

0

2

4

6

8

10

12

Sep-18 Oct -18 Nov-18 Dec-18 Jan-19 Feb-19 Mar -19 Apr -19 May-19 Jun-19 Ju l -19 Aug-19 Sep-19

EARN

ING

S G

ROW

TH (

%)

S&P 500 - 2019 S&P 500 - 2020 STOXX 600 - 2019 STOXX 600 - 2020

STILL EXPECTING A TRADE DEAL

95

97

99

101

103

105

107

109

Jan-18 Feb-18 Mar -18 May -18 Jun-18 Ju l -18 Sep-18 Oc t -18 Dec -18 Jan-19 Feb-19 Apr -19 May -19 Ju l -19 Aug-19 Sep-19

RELA

TIVE

PER

FORM

ANC

E

STRATEGAS' CHINA TRADE DEAL BASKET REL S&P 500(100 = 12/31/2017)

Execut ive Memo on Ch ina Tar i f fs Round 1 Ch ina Tar i f f s

Annc 'd

Round 1(b) Ch ina Tar i f fs

Round 2 Ch ina Tar i f fs

L igh th izer 's Congress iona l Test imony

Round 3 Tar i f f Annc 'd

Trump Ca l ls fo r a Great T rade Dea l

G-20

$300bn a t 10% Annc 'd

70

80

90

100

110

120

130

140

PERF

ORM

ANC

E

1995 July Cut 1998 September Cut 2001 January Cut 2007 September Cut

DATE OF RATE- 9m - 6m - 3m +3m +6m +9m

S&P 500 PERFORMANCE 12 MONTHS PRIOR AND 12 MONTHS AFTER FED CUT (INDEXED TO 100)

As of 9/30/2019. Source: Factset.

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19

PMI I

NDEX

LEV

EL

US IHS Mark i t Eurozone IHS Mark i t Ch ina Ca i x i n Japan N i kke i UK CIPS Expans ion

108

277

196227

312

56

153

216

72

224

164130 136

0

50

100

150

200

250

300

350

Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19

CHAN

GE (I

N TH

OUSA

NDS)

NONFARM PAYROLLS SEASONALLY ADJUSTED1

1As of 9/30//2019. Source: U.S. Bureau of Labor Statistics. 2As of 8/31/2019. Source: Strategas. 3As of 8/31/2019. Source: Strategas and National Association of Realtors. 4As of 9/30/2019. Source: FactSet.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Jan-00 Jul-02 Jan-05 Jul-07 Jan-10 Jul-12 Jan-15 Jul-17

YOY

% C

HG

PERSONAL CONSUMPTION EXPENDITURES2

Dec-71 Sep-78 Jul-85 May-92 Apr-99 Jan-06 Nov-12 Oct-1920

40

60

80

100

120

140

160

IND

EX

CONFERENCE BOARD’S CONSUMER CONFIDENCE INDEX4EXISTING SINGLE-FAMILY HOME SALES(SAAR, THOUS)3

60

70

80

90

100

110

120

Jan-73 Ju l -73 Jan-74 Ju l -74

PRIC

E

N IXON IMPEACHMENT INQUIRY

Impeachment Inqu i ry Da tes S&P 500

Source: Cornerstone.

850

950

1050

1150

1250

1350

1450

Oc t -97 Apr -98 Oc t -98 Apr -99

PRIC

E

CLINTON IMPEACHMENT

Impeachment Da tes S&P 500

Stock Market

Low unemployment

Falling commodity prices

Inventories high

Profits decreasing

Falling inflation

Capital expenditures decreasing

Falling interest rates (loose $)

High unemployment

Rising commodity prices

Declining inventories

Profits accelerating

Capital expenditures

increasing

Rising inflation

Rising interest rates (tight $)

SELL PROTECT

CHEAPER CAPITAL: BORROW TO BUY OR BUILD

U N D E R W E I G H TS M A L L

U N D E R W E I G H T N E U T R A L S M A L L

O V E R W E I G H T O V E R W E I G H T

E Q U I T Y Large Cap Mid Cap Small Cap International Developed Large Cap International Developed Small Cap Emerging Markets Private Equity Private Equity-Real Estate

F I X E D I N C O M E Treasuries Investment-grade Corporate Tax-exempt High Yield

D I V E R S I F I E R S Real Estate (REITs) Long/Short Hedge Absolute Return Hedge Managed Futures Commodities

The information provided is for illustrative/educational purposes only. All investment strategies referenced in this material come with investment risks, including loss of value and/or loss of anticipated income. Past performance does not guarantee future results. No investment strategy or risk management technique can guarantee returns in any market environment. This material is not intended to constitute legal, tax, investment or financial advice. Effort has been made to ensure that the material presented herein is accurate at the time of publication. However, this material is not intended to be a full and exhaustive explanation of the law in any area or of all of the tax, investment or financial options available. The information discussed herein may not be applicable to or appropriate for every investor and should be used only after consultation with professionals who have reviewed your specific situation. BNY Mellon Wealth Management may refer clients to certain of its affiliates offering expertise, products and services which may be of interest to the client. Use of an affiliate after such a referral remains the sole decision of the client. BNY Mellon Wealth Management conducts business through various operating subsidiaries of The Bank of New York Mellon Corporation.©2019 The Bank of New York Mellon Corporation. All rights reserved.