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Economic and Market Review Through Q2 2020
Economic Review – 1st Quarter 2020
• The U.S. economy entered 2020 riding the longest expansion on record and coming off a 2.3% growth rate in
2019, a recession seemed unlikely and then everything changed. The Coronavirus pandemic forced
Governments around the world to put swaths of national economies into an induced coma, artificially
maintaining their vital organs with the intention of awakening them gradually. (see charts on following pages)
• Congress passed the $2.3 Trillion Coronavirus Aid Relief and Economic Security (CARES) Act in late March
which is the largest relief package in history. The package provides loans and other disbursements to a wide
swath of the economy, including direct payments to individuals, expanded unemployment benefits, loans and
grants to large and small businesses, direct aid to states and grants to healthcare providers. (see charts on
following pages)
• The Federal Reserve unleashed much of its arsenal in an attempt to stem the impact of the Coronavirus, two
emergency 50 basis point rate cuts effectively pushing short-term rates to zero and cutting reserve requirements
for the 24 largest financial institutions. In addition, the Fed will purchase $500 Billion in Treasury Securities and
$200 Billion in MBS over the next few months.
• After 113 consecutive months of gains, the U.S. job market lost 701,000 jobs in March and the DOL reported
approximately 10 Million initial jobless claims over the last two weeks of the quarter. The unemployment rate
jumped to 4.4% with the expectation that will go much higher over the coming months.
• The inflation picture continues to remain subdued, headline CPI for November came in at 2.3% with the Core
PCE up slightly to 1.8% on a year over year basis. (see chart on following pages)
• Oil prices fell 67% with WTI ending the quarter at $20.48 per barrel, its lowest close since February of 2002.
Coronavirus triggered a major disruption in demand coupled with a price war between Saudi Arabia and Russia
caused the majority of the sell off. (see chart on following pages)
• Gold which many investors see as a safe haven rose a somewhat subdued 4.2% ending the quarter at $1,583 per
ounce. Gold has posted positive returns over the past 6 quarters.
• Factories across Europe and Asia cut output and jobs in March at the fastest pace since the global financial
crisis a sign the global economy has entered a deep freeze as Governments limit activity. China PMI rose to 50.1
in March from 40.3 in February as it attempts to restart its economy from its lockdown earlier this year.
2
3
Source: Bureau of Economic Analysis, Bureau of Labor Statistics, Factset, S&P 500, J.P. Morgan Asset Management. Consumer spending (2019
annual): membership clubs, sports, amusement parks, campgrounds, movies, theaters, museums, libraries, casino gambling, purchased meals and
beverages, packaged tours, air and water transportation, hotels and motels, and select retail goods and services. Employment (January 2020): air
and water transportation, transit and ground passenger transportation, support activities for air and water transportation, arts, entertainment,
recreation, accommodation, food services and drinking places, and retail ex-food and beverage stores. Earnings (2019 operating): hotels restaurants
and leisure; airlines; select entertainment and travel booking companies; multiline and specialty retail; and textiles apparel and luxury goods.
Guide to the Markets – U.S. Data are as of March 31, 2020.
1
6
Consumer spending by industry Earnings contribution by industry2019, billions Contribution to 2019 S&P 500 operating earnings
Employment by industryJan. 2020, thousands
Retail ex-food & beverage
$2,711
Restaurants & bars $840
Entertainment $336 Transportation
$166
Hotels & tourism
$118
Total: $4,171 (19% of GDP)
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
Consumer spending
Retail ex-food & beverage
12,575
Restaurants & bars12,235
Entertainment 2,493 Transportation1,420
Hotels & tourism 2,095
Total: 30,817 (20% of payroll jobs)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Employment
Retail ex-food & beverage
$5.36
Restaurants & bars$1.38
Entertainment$1.05
Airlines & cruises$1.83
Hotels & tourism$1.08
Total: $10.71 (7% of operating earnings)
$0
$2
$4
$6
$8
$10
$12
2019 Earnings contribution
4
Global economic growth
Source: CBO, J.P. Morgan Asset Management; (Top and bottom right) BEA, Treasury Department.
2020 Federal Budget is based on the Congressional Budget Office (CBO) March 2020 Baseline Budget Forecast. CBO Baseline economic
assumptions are based on the Congressional Budget Office (CBO) January 2020 Update to Economic Outlook. Other spending includes, but is not
limited to, health insurance subsidies, income security and federal civilian and military retirement. Note: Years shown are fiscal years (Oct. 1 through
Sep. 30).
Guide to the Markets – U.S. Data are as of March 31, 2020.
4
7Coronavirus Aid, Relief, and Economic Security Act Federal budget surplus/deficit
% of GDP, 1990 – 2030, 2020 CBO Baseline
Federal net debt (accumulated deficits)% of GDP, 1940 – 2030, 2020 CBO Baseline, end of fiscal year
20%
40%
60%
80%
100%
120%
'40 '50 '60 '70 '80 '90 '00 '10 '20 '30
-18%
-13%
-8%
-3%
2%
7%'90 '95 '00 '05 '10 '15 '20 '25 '30
CBO Baseline
2030: 97.8%
2019: 79.2%
2030: -5.5%2019:
-4.6%
JPMAM Forecast
2030: 110.8%
CBO Baseline
JPMAM Forecast 2030: -5.9%
2020: -13.6%Amount ($ bn) Measure
$290One-time stimulus checks amounting to $1,200 per
adult and $500 per child up to certain income limits
$260
Enhanced, expanded and extended unemployment
benefits, adding $600 per week to every
unemployment check for 4 months, expanding
program to cover contractors and self-employed and
extending program to 39 weeks from 26 weeks
$510
Loans to distressed businesses, cities and states.
Includes $29 billion for airlines, $17 billion for firms
deemed important for national security and $454
billion as backstop for loans to other businesses,
cities and states
$377
Small business relief, largely in the form of
“forgivable loans” for spending on payroll, rent and
utilities
$150 Direct aid to state and municipal governments
$180 Health-related spending
$516 Other spending and tax breaks
$2.283 trillion ~10.8% of GDP
5
Unemployment and wages
Source: BLS, FactSet, J.P. Morgan Asset Management.
CPI used is CPI-U and values shown are % change vs. one year ago. Core CPI is defined as CPI excluding food and energy prices. The Personal
Consumption Expenditure (PCE) deflator employs an evolving chain-weighted basket of consumer expenditures instead of the fixed-weight basket
used in CPI calculations.
Guide to the Markets – U.S. Data are as of March 31, 2020.
2
3CPI and core CPI% change vs. prior year, seasonally adjusted
50-yr. avg. Jan. 2020 Feb. 2020
Headline CPI 3.9% 2.5% 2.3%
Core CPI 3.9% 2.3% 2.4%
Food CPI 3.9% 1.8% 1.8%
Energy CPI 4.4% 6.3% 2.8%
Headline PCE deflator 3.4% 1.8% 1.8%
Core PCE deflator 3.3% 1.7% 1.8%
-3%
0%
3%
6%
9%
12%
15%
'70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
Recession
6
Inflation
Source: J.P. Morgan Asset Management; (Top and bottom left) EIA; (Right) FactSet; (Bottom left) Baker Hughes.
*Forecasts are from the March 2020 EIA Short-Term Energy Outlook and start in 2020. **U.S. crude oil inventories include the Strategic Petroleum
Reserve (SPR). Active rig count includes both natural gas and oil rigs. WTI crude prices are continuous contract NYM prices in USD.
Guide to the Markets – U.S. Data are as of March 31, 2020.
2
6
Change in production and consumption of liquid fuels Price of oilProduction, consumption and inventories, millions of barrels per day WTI crude, nominal prices, USD/barrel
Production 2017 2018 2019 2020* 2021* Growth since '17
U.S. 15.7 17.9 19.5 20.9 20.8 32.8%
OPEC 37.4 37.3 35.2 34.2 34.5 -7.8%
Russia 11.2 11.4 11.5 11.6 11.5 2.8%
Global 98.1 100.8 100.6 102.1 102.4 4.4%
Consumption
U.S. 20.0 20.5 20.5 20.5 20.7 3.8%
China 13.6 14.0 14.5 14.6 15.4 13.4%
Global 98.7 100.0 100.8 101.1 102.9 4.2%
Inventory Change -0.6 0.8 -0.2 1.0 -0.4
U.S. crude oil inventories and rig count**Million barrels, number of active rigs
0
500
1,000
1,500
2,000
2,500
900
950
1,000
1,050
1,100
1,150
1,200
1,250
'13 '14 '15 '16 '17 '18 '19 '20
Inventories (incl. SPR) Active rigs
Jul. 3, 2008: $145.29
Feb. 12, 2009: $33.98
Jun. 13, 2014:
$106.91
Feb. 11, 2016: $26.21 Mar. 31,
2020: $20.48
$0
$20
$40
$60
$80
$100
$120
$140
$160
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
Market Review – 1st Quarter 2020
• U.S. equities suffered a stunning blow in Q1 that few investors would have anticipated at the start of the
year. All major indices were down sharply led by the Dow Jones Industrials (-23.2%) its steepest decline
since 1987, S&P 500 (-19.6%) largest drop sine 2008 and the Nasdaq Composite (-14.2%) largest loss since
Q4 of 2018. (see chart on following pages)
• Volatility returned in a big way during the quarter with the CBOE VIX index, often referred to as the “fear
gauge” reaching a high of 82.69 on March 16th passing the peak reached during the financial crisis. The
Dow Jones Industrials dropped 32.4% over a 5 week period ending on March 23rd, followed by a sharp 3
day rally of 21.3% the largest since October of 1931. The VIX ended the quarter at 53.54 an increase of 289%
for the quarter. (see chart on following pages)
• International markets also suffered significant loses with the MSCI EAFE (-22.7%) and Emerging Markets
(-23.6%). The best market performers in U.S. Dollar terms included China (-10.2%) and Japan (-16.6%).
International stocks continued to display attractive valuations relative to their 25 year averages. (see chart on
following pages)
• All 11 S&P 500 sectors were down double digits in Q1 with the best performing sectors Technology (-11.9%)
Health Care and Consumer Staples (-12.7%). The worst performing sectors were Energy (-50.5%) and
Financials (-31.9%). (see table on following pages)
• Fixed income markets were mixed in Q1 with gains in Treasury debt, U.S. Aggregate Bond Index (+3.15%)
and Mortgage Backed Securities (+2.82%). Most credit sensitive sectors were negative as credit spreads
widened throughout the quarter with the weakest performing sectors being Convertibles (-12.95%) High
Yield (-12.68%) and Corporate Credit (-3.63%).
• The Treasury market experienced historically low rates during the quarter and ended the quarter near all
time low rates across all segments. The benchmark 10 year started the year at 1.92% dropping briefly below
.40% ending the quarter at .70%. After adjusting for inflation, the real yield on the 10 year remained
negative at -1.67%. (see chart on following pages)
• U.S. equities (S&P 500 Index) have experienced an annualized return of +9.0%, while U.S. fixed income
(Bbg Barclays Aggregate Index) returned an annualized +4.1% over the past 15 years. Over that same
period of time a diversified portfolio had an annualized rate of return of +6.6%. (see table on following pages)
7
8
Source: Compustat, FactSet, Federal Reserve, Standard & Poor’s, J.P. Morgan Asset Management.
Dividend yield is calculated as consensus estimates of dividends for the next 12 months, divided by most recent price, as provided by Compustat.
Forward price to earnings ratio is a bottom-up calculation based on the most recent S&P 500 Index price, divided by consensus estimates for
earnings in the next 12 months (NTM), and is provided by FactSet Market Aggregates. Returns are cumulative and based on S&P 500 Index price
movement only, and do not include the reinvestment of dividends. Past performance is not indicative of future returns.
Guide to the Markets – U.S. Data are as of March 31, 2020.
S&P 500 Price Index
Characteristic 3/24/2000 10/9/2007 2/19/2020 3/31/2020
Index Level 1,527 1,565 3,386 2,585
P/E Ratio (fwd.) 27.2x 15.7x 19.0x 15.4x
Dividend Yield 1.4% 1.9% 1.9% 2.4%
10-yr. Treasury 6.2% 4.7% 1.6% 0.7%
600
900
1,200
1,500
1,800
2,100
2,400
2,700
3,000
3,300
3,600
'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
+106%
-49%
+101%
-57%
+401%
Dec. 31, 1996P/E (fwd.) = 16.0x
741
Mar. 24, 2000P/E (fwd.) = 27.2x
1,527
Oct. 9, 2002P/E (fwd.) = 14.1x
777
Oct. 9, 2007P/E (fwd.) = 15.7x
1,565
Mar. 9, 2009P/E (fwd.) = 10.3x
677
Mar. 31, 2020P/E (fwd.) = 15.4x
2,585
Feb. 19, 2020P/E (fwd.) = 19.0x
3,386
-24%
9
inflection points
Source: CBOE, FactSet, Standard & Poor’s, J.P. Morgan Asset Management.
Drawdowns are calculated as the prior peak to the lowest point.
Guide to the Markets – U.S. Data are as of March 31, 2020.
4Major pullbacks since the Financial CrisisS&P 500 Price index
VolatilityVIX Index VIX Level
'08 Peak 80.9
Average 17.2
Latest 53.5
1,000
1,500
2,000
2,500
3,000
3,500
'10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
8
18
28
38
48
58
68
78
88
'10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Aug. 25, 2015: -12.4%
Jul. 2, 2010: -16.0%
Oct. 3, 2011: -19.4%
Jun. 1, 2012: -9.9%
Jun. 24, 2013: -5.8%
Oct. 15, 2014: -7.4%
Jul. ’10:Flash Crash,
BP oil spill, Europe/Greece
Oct. ’11:U.S. downgrade,
Europe/periphery stress
Jun. ’12:Euro double
dip
Jun. ’13:Taper Tantrum
Oct. ’14:Global
slowdown fears, Ebola
Aug. ’15:Global
slowdown fears,
China, Fed uncertainty
Feb. 11, 2016:-13.3%
Feb. ’16:Oil, U.S.
recession fears, China
Feb. 8, 2018:-10.2%
Feb. ’18:Inflation,
trade, tech
Dec. 24, 2018:-19.8%
Dec. ’18:Rising
rates, trade, peak
growth
Mar. 31, 2020:-23.7%
Feb. ’20:Global
slowdown, COVID-19,
oil price collapse
10
Source: FactSet, MSCI, Standard & Poor’s, Thomson Reuters, J.P. Morgan Asset Management.
*Valuations refer to NTMA P/E for Europe, U.S., Japan and developed markets and P/B for emerging markets. Valuation and earnings charts use
MSCI indices for all regions/countries, except for the U.S., which is the S&P 500. All indices use IBES aggregate earnings estimates, which may differ
from earnings estimates used elsewhere in the book. MSCI Europe includes the eurozone as well as countries not in the currency bloc, such as
Norway, Sweden, Switzerland and the UK (which collectively make up 46% of the overall index). Past performance is not a reliable indicator of
current and future results.
Guide to the Markets – U.S. Data are as of March 31, 2020.
Global earnings Global valuations EPS, local currency, next 12 months, Jan. 2006 = 100 Current and 25-year historical valuations*
20
40
60
80
100
120
140
160
180
200
220
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Japan
Europe
U.S.
EM
16.33x 16.07x
14.57x
21.37x
15.04x
13.46x
12.08x
11.86x
1.78x
1.39x
0.0x
0.4x
0.8x
1.2x
1.6x
2.0x
2.4x
2.8x
3.2x
3.6x
4.0x
4.4x
4.8x
5.2x
5x
9x
13x
17x
21x
25x
29x
33x
U.S. DM Europe Japan EM
49x
Axis
Pri
ce
-to
-ea
rnin
gs
Pric
e-to
-bo
ok
Current
25-year range
25-year average
11
Source: FactSet, Russell Investment Group, Standard & Poor’s, J.P. Morgan Asset Management. All calculations are cumulative total return, not annualized, including dividends for the stated period. Since market peak represents period 10/9/07 – 3/31/20. Since market low represents period 3/9/09 – 3/31/20. Correlation to Treasury yields are trailing 2-year monthly correlations between S&P 500 sector price returns and 10-year Treasury yield movements. Foreign percent of sales is from Standard & Poor’s, S&P 500 2018: Global Sales report as of August 2019. Real Estate and Comm. Services foreign sales are not included due to lack of availability. NTM earnings growth is the percent change in next 12 months earnings estimates compared to last 12 months earnings provided by brokers. Forward P/E ratio is a bottom-up calculation based on the most recent S&P 500 Index price, divided by consensus estimates for earnings in the next 12 months (NTM), and is provided by FactSet Market Aggregates. Buyback yield is net of share issuance and is calculated as last 12-months net buybacks divided by market cap. Dividend yield is calculated as the next 12-month consensus dividend divided by most recent price. Beta calculations are based on 10-years of monthly price returns for the S&P 500 and its sub-indices. *Communication Services (formerly Telecom) averages and beta are based on 5-years of backtested data by JPMAM. **Real estate NTM earnings growth is a 15-year average due to data availability. Past performance is not indicative of future returns.Guide to the Markets – U.S. Data are as of March 31, 2020.
Ener
gy
Finan
cials
Mat
erials
Indus
tria
ls
Cons. D
iscr
.
Technolo
gy
Com
m. S
ervic
es*
Real
Est
ate
Heal
th C
are
Cons. S
taple
s
Util
ities
S&P 5
00 In
dex
S&P weight 2.6% 10.9% 2.4% 8.2% 9.8% 25.5% 10.7% 3.0% 15.4% 7.8% 3.6% 100.0%
Russell Growth weight 0.1% 2.9% 1.2% 8.0% 14.1% 39.8% 11.7% 2.5% 15.1% 4.6% 0.0% 100.0%
Russell Value weight 5.4% 21.3% 4.2% 9.4% 5.2% 6.8% 8.6% 5.1% 15.5% 10.6% 7.8% 100.0%
1Q 2020 -50.5 -31.9 -26.1 -27.0 -19.3 -11.9 -17.0 -19.2 -12.7 -12.7 -13.5 -19.6
YTD -50.5 -31.9 -26.1 -27.0 -19.3 -11.9 -17.0 -19.2 -12.7 -12.7 -13.5 -19.6
Since market peak (October 2007)
-47.2 -7.1 38.7 74.9 222.5 294.6 48.8 70.6 212.0 176.1 117.3 115.3
Since market low (March 2009)
-3.4 407.1 230.4 380.6 646.6 726.9 184.3 532.5 403.0 287.1 280.3 381.2
Beta to S&P 500 1.39 1.25 1.21 1.21 1.09 1.06 0.95* 0.79 0.75 0.60 0.36 1.00 β
Correl. to Treas. yields 0.67 0.65 0.52 0.51 0.41 0.40 0.47 0.20 0.42 0.42 0.30 0.53 ρ
Foreign % of sales 51.3 30.1 56.8 43.8 34.0 58.2 44.7 - 38.5 32.7 - 42.9 %
NTM Earnings Growth -63.0% 4.0% 1.5% -0.9% 1.5% 9.3% 5.5%* 3.9% 7.5% 4.7% 3.2% 3.2%
20-yr avg. 12.1% 22.1% 19.3% 10.9% 15.2% 14.0% 10.1%* 7.7%** 9.5% 8.5% 4.7% 11.3%
Forward P/E ratio 45.0x 9.1x 15.3x 14.9x 19.9x 18.6x 15.6x 16.1x 13.9x 17.6x 16.9x 15.4x
20-yr avg. 17.0x 12.5x 14.0x 15.9x 17.8x 19.4x 18.2x* 15.7x 16.1x 16.8x 14.5x 15.5x
Buyback yield 0.7% 5.2% 2.5% 2.5% 2.2% 3.2% 1.6% -1.0% 2.1% 1.3% -2.1% 2.4%
20-yr avg. 1.5% -0.1% 0.7% 2.0% 2.4% 2.8% 1.2% -0.8% 1.9% 1.8% -0.9% 1.6%
Dividend yield 8.1% 3.3% 3.0% 2.6% 1.7% 1.6% 1.6% 4.0% 2.1% 3.3% 3.8% 2.4%
20-yr avg. 2.4% 2.3% 2.6% 2.2% 1.4% 1.0% 1.6%* 4.3% 1.8% 2.8% 3.9% 2.1%
We
igh
tD
ivR
etu
rn (
%)
EP
SP
/EB
bk
12
Yield curve
Source: BLS, FactSet, Federal Reserve, J.P. Morgan Asset Management.
Real 10-year Treasury yields are calculated as the daily Treasury yield less year-over-year core CPI inflation for that month except for March 2020
where real yields are calculated by subtracting out February 2020 year-over-year core inflation.
Guide to the Markets – U.S. Data are as of March 31, 2020.
32 Nominal and real 10-year Treasury yields
Average
(1958 - YTD 2020) Mar. 31, 2020
Nominal yields 5.96% 0.70%
Real yields 2.30% -1.67%
Inflation 3.65% 2.37%
Sep. 30, 1981: 15.84%
Mar. 31, 2020: 0.70%
Mar. 31, 2020: -1.67%
-5%
0%
5%
10%
15%
20%
'58 '63 '68 '73 '78 '83 '88 '93 '98 '03 '08 '13 '18
Nominal 10-year Treasury yield
Real 10-year Treasury yield
13
Asset class returns
Source: Barclays, Bloomberg, FactSet, MSCI, NAREIT, Russell, Standard & Poor’s, J.P. Morgan Asset Management.
Large cap: S&P 500, Small cap: Russell 2000, EM Equity: MSCI EME, DM Equity: MSCI EAFE, Comdty: Bloomberg Commodity Index, High Yield:
Bloomberg Barclays Global HY Index, Fixed Income: Bloomberg Barclays US Aggregate, REITs: NAREIT Equity REIT Index, Cash: Bloomberg
Barclays 1-3m Treasury. The “Asset Allocation” portfolio assumes the following weights: 25% in the S&P 500, 10% in the Russell 2000, 15% in the
MSCI EAFE, 5% in the MSCI EME, 25% in the Bloomberg Barclays US Aggregate, 5% in the Bloomberg Barclays 1-3m Treasury, 5% in the
Bloomberg Barclays Global High Yield Index, 5% in the Bloomberg Commodity Index and 5% in the NAREIT Equity REIT Index. Balanced portfolio
assumes annual rebalancing. Annualized (Ann.) return and volatility (Vol.) represents period of 12/31/04 – 12/31/19. Please see disclosure page at
end for index definitions. All data represents total return for stated period. The “Asset Allocation” portfolio is for illustrative purposes only. Past
performance is not indicative of future returns.
Guide to the Markets – U.S. Data are as of March 31, 2020.
6
1
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD Ann. Vol.
EM
EquityREITs
EM
Equity
Fixe d
Inc ome
EM
EquityREITs REITs REITs
Sma ll
Ca pREITs REITs
Sma ll
Ca p
EM
EquityCa sh
La rge
Ca p
Fixe d
Inc ome
La rge
Ca pREITs
3 4 .5 % 3 5 .1% 3 9 .8 % 5 .2 % 7 9 .0 % 2 7 .9 % 8 .3 % 19 .7 % 3 8 .8 % 2 8 .0 % 2 .8 % 2 1.3 % 3 7 .8 % 1.8 % 3 1.5 % 3 .1% 9 .0 % 2 2 .2 %
Comdty.EM
EquityComdty. Ca sh
High
Y ie ld
Sma ll
Ca p
Fixe d
Inc ome
High
Y ie ld
La rge
Ca p
La rge
Ca p
La rge
Ca p
High
Y ie ld
DM
Equity
Fixe d
Inc omeREITs Ca sh REITs
EM
Equity
2 1.4 % 3 2 .6 % 16 .2 % 1.8 % 5 9 .4 % 2 6 .9 % 7 .8 % 19 .6 % 3 2 .4 % 13 .7 % 1.4 % 14 .3 % 2 5 .6 % 0 .0 % 2 8 .7 % 0 .5 % 8 .3 % 2 2 .1%
DM
Equity
DM
Equity
DM
Equity
Asse t
Alloc .
DM
Equity
EM
Equity
High
Y ie ld
EM
Equity
DM
Equity
Fixe d
Inc ome
Fixe d
Inc ome
La rge
Ca p
La rge
Ca pREITs
Sma ll
Ca p
Asse t
Alloc .
Sma ll
Ca pComdty.
14 .0 % 2 6 .9 % 11.6 % - 2 5 .4 % 3 2 .5 % 19 .2 % 3 .1% 18 .6 % 2 3 .3 % 6 .0 % 0 .5 % 12 .0 % 2 1.8 % - 4 .0 % 2 5 .5 % - 14 .8 % 7 .9 % 18 .6 %
REITsSma ll
Ca p
Asse t
Alloc .
High
Y ie ldREITs Comdty.
La rge
Ca p
DM
Equity
Asse t
Alloc .
Asse t
Alloc .Ca sh Comdty.
Sma ll
Ca p
High
Y ie ld
DM
Equity
High
Y ie ld
EM
Equity
Sma ll
Ca p
12 .2 % 18 .4 % 7 .1% - 2 6 .9 % 2 8 .0 % 16 .8 % 2 .1% 17 .9 % 14 .9 % 5 .2 % 0 .0 % 11.8 % 14 .6 % - 4 .1% 2 2 .7 % - 15 .0 % 7 .8 % 17 .7 %
Asse t
Alloc .
La rge
Ca p
Fixe d
Inc ome
Sma ll
Ca p
Sma ll
Ca p
La rge
Ca pCa sh
Sma ll
Ca p
High
Y ie ld
Sma ll
Ca p
DM
Equity
EM
Equity
Asse t
Alloc .
La rge
Ca p
Asse t
Alloc .
La rge
Ca p
High
Y ie ld
DM
Equity
8 .1% 15 .8 % 7 .0 % - 3 3 .8 % 2 7 .2 % 15 .1% 0 .1% 16 .3 % 7 .3 % 4 .9 % - 0 .4 % 11.6 % 14 .6 % - 4 .4 % 19 .5 % - 19 .6 % 7 .2 % 17 .3 %
La rge
Ca p
Asse t
Alloc .
La rge
Ca pComdty.
La rge
Ca p
High
Y ie ld
Asse t
Alloc .
La rge
Ca pREITs Ca sh
Asse t
Alloc .REITs
High
Y ie ld
Asse t
Alloc .
EM
Equity
DM
Equity
Asse t
Alloc .
La rge
Ca p
4 .9 % 15 .3 % 5 .5 % - 3 5 .6 % 2 6 .5 % 14 .8 % - 0 .7 % 16 .0 % 2 .9 % 0 .0 % - 2 .0 % 8 .6 % 10 .4 % - 5 .8 % 18 .9 % - 2 2 .7 % 6 .6 % 14 .0 %
Sma ll
Ca p
High
Y ie ldCa sh
La rge
Ca p
Asse t
Alloc .
Asse t
Alloc .
Sma ll
Ca p
Asse t
Alloc .Ca sh
High
Y ie ld
High
Y ie ld
Asse t
Alloc .REITs
Sma ll
Ca p
High
Y ie ldComdty.
DM
Equity
High
Y ie ld
4 .6 % 13 .7 % 4 .8 % - 3 7 .0 % 2 5 .0 % 13 .3 % - 4 .2 % 12 .2 % 0 .0 % 0 .0 % - 2 .7 % 8 .3 % 8 .7 % - 11.0 % 12 .6 % - 2 3 .3 % 5 .3 % 10 .9 %
High
Y ie ldCa sh
High
Y ie ldREITs Comdty.
DM
Equity
DM
Equity
Fixe d
Inc ome
Fixe d
Inc ome
EM
Equity
Sma ll
Ca p
Fixe d
Inc ome
Fixe d
Inc omeComdty.
Fixe d
Inc omeREITs
Fixe d
Inc ome
Asse t
Alloc .
3 .6 % 4 .8 % 3 .2 % - 3 7 .7 % 18 .9 % 8 .2 % - 11.7 % 4 .2 % - 2 .0 % - 1.8 % - 4 .4 % 2 .6 % 3 .5 % - 11.2 % 8 .7 % - 2 3 .4 % 4 .1% 10 .0 %
Ca shFixe d
Inc ome
Sma ll
Ca p
DM
Equity
Fixe d
Inc ome
Fixe d
Inc omeComdty. Ca sh
EM
Equity
DM
Equity
EM
Equity
DM
EquityComdty.
DM
EquityComdty.
EM
EquityCa sh
Fixe d
Inc ome
3 .0 % 4 .3 % - 1.6 % - 4 3 .1% 5 .9 % 6 .5 % - 13 .3 % 0 .1% - 2 .3 % - 4 .5 % - 14 .6 % 1.5 % 1.7 % - 13 .4 % 7 .7 % - 2 3 .6 % 1.3 % 3 .4 %
Fixe d
Inc omeComdty. REITs
EM
EquityCa sh Ca sh
EM
EquityComdty. Comdty. Comdty. Comdty. Ca sh Ca sh
EM
EquityCa sh
Sma ll
Ca pComdty. Ca sh
2 .4 % 2 .1% - 15 .7 % - 5 3 .2 % 0 .1% 0 .1% - 18 .2 % - 1.1% - 9 .5 % - 17 .0 % - 2 4 .7 % 0 .3 % 0 .8 % - 14 .2 % 2 .2 % - 3 0 .6 % - 2 .6 % 1.0 %
2005 - 2019
Source: Morningstar Direct
14
Market Returns as of March 31, 2020
Asset Class 1 Month Qtr YTD
Annualized Calendar Years
1 Yr 3 Yr 5 Yr 10 Yr 2019 2018 2017 2016 2015
S&P 500 -12.35 -19.60 -19.60 -6.98 5.10 6.73 10.53 31.49 -4.38 21.83 11.96 1.38
Dow Jones Ind. Avg. -13.62 -22.73 -22.73 -13.38 4.42 6.86 10.00 25.34 -3.48 28.11 16.50 0.21
NASDAQ Composite -10.03 -13.95 -13.95 0.70 10.39 10.70 13.67 36.69 -2.84 29.64 8.87 6.96
Large Cap Stocks -13.21 -20.22 -20.22 -8.03 4.64 6.22 10.39 31.43 -4.78 21.69 12.05 0.92
Large Cap Growth Stocks -9.84 -14.10 -14.10 0.91 11.32 10.36 12.97 36.39 -1.51 30.21 7.08 5.67
Large Cap Value Stocks -17.09 -26.73 -26.73 -17.17 -2.18 1.90 7.67 26.54 -8.27 13.66 17.34 -3.83
Mid Cap Stocks -19.49 -27.07 -27.07 -18.31 -0.81 1.85 8.77 30.54 -9.06 18.52 13.80 -2.44
Mid Cap Growth Stocks -14.91 -20.04 -20.04 -9.45 6.53 5.61 10.89 35.47 -4.75 25.27 7.33 -0.20
Mid Cap Value Stocks -22.70 -31.71 -31.71 -24.13 -5.97 -0.76 7.22 27.06 -12.29 13.34 20.00 -4.78
Small Cap Stocks -21.73 -30.61 -30.61 -23.99 -4.64 -0.25 6.90 25.52 -11.01 14.65 21.31 -4.41
Small Cap Growth Stocks -19.10 -25.76 -25.76 -18.58 0.10 1.70 8.89 28.48 -9.31 22.17 11.32 -1.38
Small Cap Value Stocks -24.67 -35.66 -35.66 -29.64 -9.51 -2.42 4.79 22.39 -12.86 7.84 31.74 -7.47
International Stocks -13.35 -22.83 -22.83 -14.38 -1.82 -0.62 2.72 22.01 -13.79 25.03 1.00 -0.81
Emerging Markets -15.40 -23.60 -23.60 -17.69 -1.62 -0.37 0.68 18.42 -14.57 37.28 11.19 -14.92
US Real Estate -19.95 -24.39 -24.39 -16.74 -0.15 1.60 7.89 28.92 -4.03 9.84 7.56 2.14
Commodities -12.81 -23.29 -23.29 -22.31 -8.61 -7.76 -6.74 7.69 -11.25 1.70 11.77 -24.66
Bonds (US Aggregate) -0.59 3.15 3.15 8.93 4.82 3.36 3.88 8.72 0.01 3.54 2.65 0.55
3 month T-Bill 0.29 0.57 0.57 2.25 1.83 1.19 0.64 2.28 1.87 0.86 0.33 0.05
15
Disclosures
All indexes are unmanaged and an individual cannot invest directly in an index. Index returns do not include fees and expenses.
The Russell indexes are used for the domestic equity indexes. MSCI EAFE is used for international, MSCI EM is used for
emerging markets, DJ US Real Estate index for Real Estate, Bloomberg Commodity index for commodities, Bloomberg Barclays
US Aggregate Bond index for bonds and the ICE BofAML US 3M Treasury Bill index for the T-Bill. The S&P 500, DJIA, and
NASDAQ Composite returns shown in final table are total returns and include dividends.
Opinions, estimates, forecasts and statements of financial market trends that are based on current market conditions constitute our
judgment and are subject to change without notice. We believe the information contained on this report has been obtained from
reliable sources.
This material has been presented for informational purposes only and is not intended to provide and should not be relied upon for
financial, accounting, legal or tax advice.
This report is not intended as an offer or solicitation for the purchase or sale of any investment or security.
Past performance is not indicative of future returns. Investors should consult their advisor before investing.
NOT FDIC INSURED – NO BANK GUARANTEE – MAY LOSE VALUE
SOURCES: Morningstar, S&P, FRB, BLS, JP Morgan, Russell, NBER, Marketwatch.com and Goldman Sachs among others
noted on individual slides.