before the bell...2019/10/07 · s&p 500 1.42% 19.59% 2,952.0 djstoxx 50 (europe) 0.27% 19.03%...

Notations:

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recommendation of any securities mentioned. Charts depicted are from FactSet unless otherwise noted. ____________________________________________________________________________________________________________________________ © 2019 Ameriprise Financial, Inc. All rights reserved. of 12

Before the Bell Morning Market Brief

October 7, 2019

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

MONDAY MORNING MARKET STRATEGY: David M. Joy, Chief Market Strategist Last week, the Citi Economic Surprise Index for the U.S. declined for the first time in fourteen weeks, dating back to June 28th. Pushing the index lower was a virtually uninterrupted string of weaker than expected economic reports, beginning with the ISM report on manufacturing activity. Instead of bouncing back to a growth reading as expected, after slipping into contraction in August, the index fell even further as the manufacturing sector remains under pressure from trade policy and sluggish global economic activity. That was followed by an equally surprising slowdown in the service sector activity report, although it continues to grow. But it was the weakest reading in three years. Factory orders also disappointed, and private sector capital goods orders for August were even weaker than indicated in the preliminary estimate. Then it was the labor market’s turn. In truth, the September jobs report was pretty good overall. The unemployment rate fell to a 50 year low at 3.5 percent, and job growth continued to broaden. The 136,000 jobs created were slightly fewer than expected, but the previous two months total was revised higher. If there is anything to take exception with it is the decelerating pace of job creation. The average monthly jobs growth in the last six months is 155,000. That is still solid growth, but lower than the 203,000 average of the previous six months, and the 216,000 total from the six months before that. And the absence of growth in the pace of average hourly wages had little to recommend it other than helping to suppress inflation, which the Fed believes is already too low. Overall, the economy continues to grow at an acceptable, but less than inspired pace, as consumers benefit from full employment while manufacturers suffer from trade policy uncertainty. The Atlanta Fed’s GDPNow model estimates third quarter growth of 1.8 percent. And following last week’s disappointing economic reports, the odds of another Fed rate cut in October jumped from 40 percent to 79 percent. And credit spreads widened modestly for the second straight week. Trade policy will once again be center stage this week as talks resume in Washington. Although the White House continues to string along investors hoping for a comprehensive deal by continually hinting at progress and breakthroughs, the likelihood of a resolution to the standoff anytime soon seems to be remote, especially in light of reports that China now wishes to focus on a narrow set of issues, and president Trump deals with an impeachment inquiry. And any hopes for relative calm on the trade front were quickly dispelled with last week’s announcement of new U.S. tariffs on a range of European goods in retaliation for what were determined by the WTO to be illegal subsidies for Airbus. Third quarter earnings season begins amid expectations for a third consecutive year-over-year decline. According to FactSet, earnings will shrink by approximately 4 percent, following smaller declines in the first and second quarters. Several companies will report results this week, with the big banks following next week.

Before The Bell October 7, 2019 ____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________ © 2019 Ameriprise Financial, Inc. All rights reserved. of 12

Lastly, the Federal fiscal year came to a close last week, with a projected deficit of $960B according to the CBO, a 17 percent increase over 2018. Assuming that turns out to be the actual total, it is expected to be the last sub-one trillion dollar deficit looking out over the CBO’s ten-year forecast horizon, not that anyone in Washington seems to care. MORNING MARKET COMMENTARY: Anthony M. Saglimbene, Global Market Strategist

• Quick Take: U.S. futures are pointing to a weaker open; European markets are trading higher; Asia ended mostly in the green overnight; West Texas Intermediate (WTI) oil trading at $53.40; 10-year U.S. Treasury yield at 1.54%.

• Back Half Earnings Estimates Keep Falling: As the FactSet chart below highlights, the next twelve months earnings per share (EPS) estimates have drifted higher, as more of 2020’s back half earnings estimates are reflected in the $177.14 S&P 500 EPS number. Under normal conditions, we would view this as a positive for stock prices, as the direction in equities generally tracks earnings growth closely. However, with trade and global growth conditions in flux at the moment, analysts may be too optimistic for earnings growth next year, absent the removal of trade tensions from the equation. In our view, this week’s critical U.S./China high-level trade meetings in Washington may determine if global growth trends remain in flux and if EPS estimates are set to fall through the upcoming reporting season.

• Importantly, Q3’19 EPS estimates again fell during the previous quarter. Earnings growth for S&P 500 companies was always back-end loaded for this year, and we believe it is concerning estimates keep falling for the back half of the year amid slower global growth and escalating tensions between the U.S. and China.

• Further, much of the EPS growth built into this year’s full-year estimate comes from a return to earnings growth in Q4’19. At the end of December, analysts expected Q4’19 S&P 500 EPS to grow by +11.6% y/y. At the end of June, analysts expected +7.0% y/y growth. Currently, those final quarter EPS growth expectations now sit at a much lower +2.6% y/y. From an earnings perspective, the final quarter of the year is holding full-year estimates in positive territory — but barely. In our view, stock prices continue to face headwinds, partly because earnings estimates keep falling. We would say, however, the scenario outlined above is reflected in stock prices today. If companies deliver on expectations or slightly beat forecasts, which they often do, corporate profits would support equity prices, in our view.



• As the second FactSet chart above highlights, Q3’19 bottom-up EPS estimates dropped 3.6% during the third quarter. Over the last five years, the average decline in bottom-up EPS estimates during the quarter is 3.3%. Bottom line: Q3 earnings estimates fell as they usually do during the quarter and close to the longer-term average.

• Nevertheless, Q3’19 bottom-up EPS and sales estimates for a variety of S&P 500 sectors have deteriorated since the end of June. Per FactSet data, all eleven S&P 500 sectors recorded a decrease in their bottom-up EPS estimates during the third quarter, led by Energy. As a result, six of eleven S&P 500 sectors are currently projected to report y/y earnings growth declines in Q3 with Energy (-31.8% y/y), Information Technology (-10.2% y/y), and Materials (-8.4% y/y) expected to post the weakest EPS growth.

• Asia-Pacific: Asian equities finished mostly higher on Monday. Over the weekend, Bloomberg reported Chinese trade officials plan to narrow the scope of this week’s trade meeting with U.S. officials in Washington. The highly anticipated trade talks will occur on Thursday and Friday of this week, and according to reports, Beijing does not plan to include industrial reforms or subsides to state-owned enterprises in the negotiations.

• If China refuses to engage in these issues, it could upend U.S. plans for its three-pronged strategy. Washington is looking to boost agricultural and energy purchases from China, followed by implementing IP commitments in 2020, before rolling back current U.S. tariffs on Chinese imports sometime next year. While a broader breakthrough seems highly unlikely this week, the market may still look for some type of agreement that keeps future tariffs and an escalation in tensions at bay through year-end.

• Violence continued in Hong Kong over the weekend as protestors demonstrated aggressively against the face mask ban. Banks, supermarkets, and rail services canceled services as demonstrators occupied streets, vandalized property, and targeted businesses with links to mainland China, according to FactSet. If full emergency powers are enacted to stem the violence, curfews, extended detentions, and internet censorship could be the next steps, which would further erode Hong Kong’s autonomy from mainland China. Thus far, China’s government has refrained from sending in the People’s Liberation Army, which could spark condemnation from the rest of the world.

• Europe: Markets across the region are trading in the green at mid-day. The European Union (EU) continues to push back against UK Prime Minister Boris Johnson’s plan for a Brexit deal. EU leaders are asking for significant changes to Mr. Johnson’s plan, and in the face of the prime minister continuing to stress, the UK will not remain in the block forever. The Irish border and a single market/customs union agreement remain the main sticking points. However, odds favor the UK extending Brexit past the October 31st deadline and where snap elections could occur as soon as November. But the situation is fluid and between now and then a lot can happen.

• U.S.: Equity futures are pointing to a weaker open this morning. Earnings season won’t kick-off until next week, so macro news could remain in the spotlight and move stock prices around this week. After more mixed data on the



U.S. economy last week, including a rather solid September employment report, inflation, JOLTS, and consumer sentiment reports line the week. The September FOMC meeting minutes will also provide a better window into the divided mindset of Fed committee members and may indicate how willing the central bank is to cut rates later this month.

• According to a National Association for Business Economics survey, 80% of respondents see a slowdown in economic growth this year, up from 60% in June. Growth forecasts came down versus June levels, with the survey showing a forecast of +1.8% GDP growth in 2020, with corporate profits falling to +1.7% next year — previously forecast at +4.6%. Not surprisingly, trade policies were the culprit for the reduced growth expectations, with the survey finding softened business investment and reduced confidence has sapped growth this year. Recession odds remain low for this year and 2020 but rise to 69% by mid-2021.

• GM UAW workers remain on strike, with reports indicating contract talks between GM and the worker’s union broke down over the weekend. The three-week-old strike could start to ripple through the broader U.S. economy if it continues for several more weeks and is likely already having an effect on manufacturing activity. Pay for new employees, a path for part-time workers to move to full-time, and future vehicle-assembly locations remain the contentious points stalling a deal.

WORLD CAPITAL MARKETS (all data as of approximately 8:00 AM ET)

Americas % chg. % YTD Value Europe (Intra-day) % chg. %YTD Value Asia/Pacific (Last Night) % chg. %YTD Value

S&P 500 1.42% 19.59% 2,952.0 DJSTOXX 50 (Europe) 0.27% 19.03% 3,456.0 Nikkei 225 (Japan) -0.16% 8.82% 21,375.3 Dow Jones 1.42% 16.06% 26,573.7 FTSE 100 (U.K.) 0.28% 10.69% 7,175.6 HK Hang Seng ( H. Kong) Closed 3.22% 25,821.0 NASDAQ 1.40% 21.33% 7,982.5 DAX Index (Germany) 0.26% 14.06% 12,043.6 Korea Kospi 100 0.05% -0.51% 2,021.7 Russell 2000 0.97% 12.47% 1,500.7 CAC 40 (France) 0.19% 19.80% 5,498.9 Singapore STI 0.69% 4.61% 3,099.5 Brazil Bovespa 1.02% 16.69% 102,551.3 FTSE MIB (Italy) 0.34% 17.57% 21,543.6 Shanghai Comp. (China) Closed 19.32% 2,905.2 S&P/TSX Comp. (Canada) 0.49% 17.58% 16,449.4 IBEX 35 (Spain) 0.34% 8.36% 8,992.2 Bombay Sensex (India) -0.38% 5.11% 37,532.0 Mexico IPC 2.29% 6.54% 43,416.9 Russia TI 0.57% 19.01% 4,699.8 S&P/ASX 200 (Australia) 0.71% 21.59% 6,563.6

Global % chg. % YTD Value Developed International % chg. %YTD Value Emerging International % chg. %YTD Value

MSCI All-Country World Idx 0.98% 15.45% 514.8 MSCI EAFE 0.43% 11.32% 1,854.4 MSCI Emerging Mkts 0.43% 5.71% 996.6 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 Equity Income Indices % chg. % YTD Value Commodities Consumer Discretionary 0.97% 21.16% 937.2 JPM Alerian MLP Index 0.18% 3.34% 23.0 Futures & Spot (Intra-day) % chg. % YTD ValueConsumer Staples 1.55% 23.40% 629.9 FTSE NAREIT Comp. 0.57% 28.90% 21,392.3 CRB Raw Industrials 0.10% -8.42% 440.0 Energy 0.62% 2.76% 423.8 DJ US Select Dividend 1.23% 15.89% 2,155.9 NYMEX WTI Crude (p/bbl.) 1.23% 17.73% 53.5 Financials 1.93% 17.19% 455.7 DJ Global Select Dividend 0.36% 2.42% 211.8 ICE Brent Crude (p/bbl.) 0.96% 9.54% 58.9 Real Estate 0.60% 30.00% 244.1 S&P Div. Aristocrats 1.36% 18.55% 2,841.7 NYMEX Nat Gas (mmBtu) -1.91% -21.53% 2.3 Health Care 1.59% 5.67% 1,043.4 Spot Gold (troy oz.) -0.31% 16.96% 1,500.0 Industrials 1.10% 19.41% 637.9 Spot Silver (troy oz.) -0.27% 12.95% 17.5 Materials 0.52% 13.34% 352.9 Bond Indices % chg. % YTD Value LME Copper (per ton) -0.36% -5.73% 5,608.0 Technology 1.71% 31.51% 1,414.4 Barclays US Agg. Bond 0.12% 9.35% 2,238.1 LME Aluminum (per ton) 0.22% -8.31% 1,708.0 Communication Services 1.40% 21.58% 167.0 Barclays HY Bond 0.11% 10.87% 2,117.0 CBOT Corn (cents p/bushel) 0.45% -2.77% 386.5 Utilities 1.52% 25.62% 329.1 CBOT Wheat (cents p/bushel) 0.10% -9.49% 491.0

Foreign Exchange (Intra-day) % chg. % YTD Value % chg. % YTD Value % chg. % YTD ValueEuro (€/$) 0.1% -4.1% 1.10 Japanese Yen ($/¥) 0.10% 2.68% 106.83 Canadian Dollar ($/C$) 0.0% 2.5% 1.33 British Pound (£/$) 0.0% -3.3% 1.23 Australian Dollar (A$/$) -0.46% -4.38% 0.67 Swiss Franc ($/CHF) 0.2% -1.2% 0.99 Data/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 GAACIndex GAAC Tactical Recommended Index GAAC Tactical Recommended

Sector Weight Tactical View Overlay Weight Sector Weight Tactical View Overlay Weight

1) Communication Services 10.5% Underweight - 2.0% 8.5% 6) Health Care 13.9% Equalweight - 13.9%

2) Consumer Discretionary 10.0% Overweight +2.0% 12.0% 7) Industrials 9.3% Equalweight - 9.3%

3) Consumer Staples 7.4% Equalweight - 7.4% 8) Information Technology 21.8% Overweight +2.0% 23.8%

4) Energy 4.6% Equalweight - 4.6% 9) Materials 2.7% Equalweight - 2.7%

5) Financials 13.1% Underweight - 2.0% 11.1% 10) Real Estate 3.2% Overweight +1.0% 4.2%

11) Utilities 3.5% Underweight - 1.0% 2.5%

Index weighting represents relative weightings based on the regional market capitalization balance of the MSCI All-Country World Index; may not add due to rounding. The GAAC Tactical Overlay, as well as Recommended Tactical Weights, is derived from the Ameriprise Global Asset Allocation Committee (GAAC).Views are expressed relative to the Index and are provided to represent investment conviction in each region. Tactical Allocations are designed to augment Index returns over a 6-12 month time horizon. Index weights as of 9/20/19. Numbers may not add due to rounding.



THE WEEK AHEAD: Russell T. Price, CFA, Chief Economist • Q3 earnings season outlook: The Q3 earnings release season gets off to a slow rolling start this week with just 3

S&P 500 companies on the docket. Once again it is expected to be a somewhat unusual and challenging release season. Earnings per share (EPS) for S&P 500 companies are expected to be down about 4% or 5% versus last year on sales growth of about 3%. (All numbers cited here are from FactSet.)

• The EPS forecast is a percentage point or so worse than what was expected ahead of the Q1 and Q2 reporting seasons, both of which ended up with results proving to be generally flat versus year-ago levels. Sales growth, however, continues a very slow slide amid slowing economic growth in most major markets around the world. The slow appreciation of the U.S. dollar also remains a point of pressure. Through Friday, the trade-weighted dollar is about 2% higher year-to-date and about 3% higher versus its year-ago levels. Recall that a stronger dollar is a negative for corporate earnings as foreign generated profits translate into fewer U.S. dollars when converted to such for financial reporting purposes.

• The earnings pressure is also expected to be broad-based. As seen in the chart at right (as sourced from FactSet), only 3 of the 11 S&P 500 sectors are expected to see yr/yr gains. Conversely, the exact opposite is true on the sales side. Only the Materials (-12.9%), Energy (-6.9%) and Financials (-1.6%) sectors are forecast to see sales as having declined versus prior year levels.

• We note the difference between sales and EPS growth. In normal periods of expansion, the opposite is the norm due to operating leverage. In Q3, NO sector is expected to see EPS exceed sales growth (although real estate comes close) which, in our view, reflects rising costs, particularly for labor, and the influence of the stronger dollar. Companies also often “pack-in” short-term expenses to periods in which earnings are already expected to be under pressure as stock prices tend not react as negatively when results are already expected to be challenged.

• Economic releases this week: Inflation dominates an otherwise slow economic calendar this week. Tuesday’s report on Small Business Optimism from the National Federation of Independent Businesses (NFIB) however, shouldn’t be overlooked as a measure of conditions at the lower-end of the business spectrum (in terms of size). Forecasters as surveyed by Bloomberg expect the reading to drift a bit lower this month to a level of 102.5. This would still be consistent with very positive sentiment in the sector, but it is off of its all-time high of 108.8 as attained in August 2018, and it would represent a further drift lower from its recent high in May of 105.0

• Tuesday we also see the first of the week’s inflation reports. Producer Prices for the month of September are expected to show modest gains on the headline and core (excluding food and energy costs) levels. However, the headline number is expected to see some downward pressure from energy costs that declined in the month by a larger than seasonally normal pattern. Overall, the headline Index is expected to show a gain of 1.8% year-over-year (yr/yr) while core prices are expected to show a yr/yr gain of 2.3%.

Ameriprise Global Asset Allocation Committee Global Equity Region - Tactical View

MSCI All-Country GAAC GAAC MSCI All-Country GAAC GAACWorld Index GAAC Tactical Recommended World Index GAAC Tactical Recommended

Region Weight Tactical View Overlay Weight Region Weight Tactical View Overlay Weight

1) United States 55.6% Overweight +7.3% 62.9% 5) Latin America 1.4% Equalweight - 1.4%

2) Canada 3.1% Equalweight - 3.1% 6) Asia-Pacific ex Japan 12.0% Equalweight - 12.0%

3) United Kingdom 4.8% Underweight - 2.0% 2.8% 7) Japan 7.3% Underweight - 2.0% 5.3%

4) Europe ex U.K. 14.5% Underweight - 2.0% 12.5% 8) Middle East / Africa 1.3% Underweight - 1.3% -

Index weighting represents relative weightings based on the regional market capitalization balance of the MSCI All-Country World Index; may not add due to rounding. The GAAC Tactical Overlay, as well as Recommended Tactical Weights, is derived from the Ameriprise Global Asset Allocation Committee (GAAC).Views are expressed relative to the Index and are provided to represent investment conviction in each region. Tactical Allocations are designed to augment Index returns over a 6-12 month time horizon. Index weights as of 9/20/19. Numbers may not add due to rounding.



• Thursday’s report on Consumer Prices is expected to show much of the same. Here too, the headline Index is expected to show a modest 1.9% yr/yr increase with prices at the Core level expected to show a “hotter” gain of +2.4%. (The chart at right, as sourced from FactSet, depicts the Core CPI index versus the Fed’s preferred measure of inflation, the Core Personal Consumption Expenditure (PCE) Index.

• Pushing up the core rate recently has been strong housing costs and rising medical care costs. The housing costs - which are priced as a measure of rental rates - could ease in the months ahead as rents in many major cities are seeing some notable deceleration. New building is slowly closing the gap between supply and demand in the apartment sector, while some cities in the West have seen sharply lower foreign demand from Asia. On the East Coast, lower demand from international clients has also combined with some accelerated migration out of the high-tax corridor of Connecticut, New York and New Jersey due to the new limitation of State and Local tax deductions.

• Finally, on Friday, the University of Michigan’s preliminary read on Consumer Sentiment for October is expected to show a flat to slightly lower performance. As seen in the chart at right, the Conference Board’s Consumer Confidence Index traditionally has a much wider range than does the U. of M. measure. In fact, the U. of M. Index has historically shown difficulty breaking through the 100 level. That has again been the case over the last few years, but more recently the Index has fallen down into the lower end of its 3-year range amid escalating trade war concerns, heightened geopolitical tensions and the adverse backdrop of domestic politics.

• The chart at right is sourced from FactSet.

October 7 8 9 10 11Consumer Credit NFIB Small Bus. Index Job Openings Report Initial Jobless Claims Import Price Index

Trade - China Producer Price Index Wholesale Inventories Consumer Price Index U. of M. Cons. Sentiment

Industrial Production - Germany Sept 18 FOMC Minutes Industrial Production - France Inflation - Germany

Industrial Production - Spain Machinery Orders - Japan Industrial Production - Italy Industrial Production - India

Home Building - Canada Inflation - Brazil Retail Sales - Brazil

Inflation - Mexico



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

S&P 500 Earnings Estimates 2014 2015 2016 202010/7/2019 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Est. Est. Est.

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Quarterly $$ amount $30.87 $32.80 $33.54 $36.29 $38.71 $41.13 $42.87 $41.32 $38.80 $41.46 $41.08 $42.57 change over last week -$0.30 -$0.15 -$0.21 yr/yr 13.9% 10.7% 6.7% 15.9% 25.4% 25.4% 27.8% 13.9% 0.2% 0.8% -4.2% 3.0% qtr/qtr -1% 6% 2% 8% 7% 6% 4% -4% -6% 7% -1% 4%

Trailing 4 quarters $$ $119.02 $118.67 $119.64 $123.25 $126.42 $128.53 $133.50 $141.34 $149.67 $159.00 $164.03 $164.12 $164.45 $162.66 $163.91 $180.98 yr/yr 6.8% -0.3% 0.8% 11.6% 22.9% -0.1% 10.4%Implied P/E based on a S&P 500 level of: 2952 18.0 18.0 18.1 18.0 16.3

2018 20192017



BY THE NUMBERS: ECONOMIC ACTUALS AND FORECAST:

ECONOMIC NEWS OUT TODAY: Economic Releases for Monday, October 7, 2019. All times Eastern. Consensus estimates via Bloomberg. Time Period Release Consensus Est. Actual Prior Revised to 3:00 PM AUG Consumer Credit +$15.0B +$23.3B

This space intentionally left blank.

Current Projections:Actual Actual Actual Actual Actual Est. Est. Actual Actual Est. Est.2014 2015 2016 2017 2018 2019 2020 Q1-2019 Q2-2019 Q3-2019 Q4-2019

Real GDP (YOY) 2.5% 2.9% 1.6% 2.4% 2.9% 2.2% 2.1% 3.1% 2.0% 1.9% 2.2%Unemployment Rate 5.6% 5.0% 4.7% 4.1% 3.9% 3.6% 3.5% 3.8% 3.7% 3.6% 3.6%CPI (YoY) 1.6% 0.1% 1.3% 2.1% 2.4% 1.8% 2.1% 1.6% 1.8% 1.9% 2.0%Core PCE (YoY) 1.6% 1.3% 1.7% 1.6% 1.9% 1.8% 1.9% 1.6% 1.5% 1.7% 1.8%

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

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

Quarterly

September 6, 2019



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 Curtis R. Trimble – 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, CAIA – Sr Director, Asset Allocation

Gaurav Sawhney – Research Analyst

Amit Tiwari – 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 – Analyst – Core Equity

Cynthia Tupy, CFA – Analyst – 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 – 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 Bums – Sr. Manager

Matt Morgan – Sr. Manager

Natasha Wayland – Sr. Manager

The content in this report is authored by American Enterprise Investment Services Inc. (“AEIS”) and distributed by Ameriprise Financial Services, Inc. (“AFSI”) to financial advisors and clients of AFSI. AEIS and AFSI are affiliates and subsidiaries of Ameriprise Financial, Inc. Both AEIS and AFSI are member firms registered with FINRA and are subject to the objectivity safeguards and disclosure requirements relating to research analysts and the publication and distribution of research reports. The “Important



Disclosures” below relate to the AEIS research analyst(s) that prepared this publication. The “Disclosures of Possible Conflicts of Interest” section, where applicable, relates to the conflicts of interest of each of AEIS and AFSI, their affiliates and their research analysts, as applicable, with respect to the subject companies mentioned in the report. Each of AEIS and AFSI have implemented policies and procedures reasonably designed to ensure that its employees involved in the preparation, content and distribution of research reports, including dually registered employees, do not influence the objectivity or timing of the publication of research report content. All research policies, coverage decisions, compensation, hiring and other personnel decisions with respect to research analysts are made by AEIS, which is operationally independent of AFSI. IMPORTANT DISCLOSURES As of September 30, 2019 The views expressed regarding the company(ies) and sector(s) featured in this publication reflect the personal views of the research analyst(s) authoring the publication. Further, no part of research analyst compensation is directly or indirectly related to the specific recommendations or views contained in this publication. A part of a research analyst’s compensation may be based upon overall firm revenue and profitability, of which investment banking, sales and trading, and principal trading are components. No part of a research analyst’s compensation is based on a specific investment banking transaction, nor is it based on sales, trading, or principal trading. A research analyst may have visited the material operations of one or more of the subject companies mentioned in this research report. No payment was received for the related travel costs. Additional information and current research disclosures on individual companies mentioned in this research report are available on our website at ameriprise.com/legal/disclosures in the Additional Ameriprise research disclosures section, or through your Ameriprise financial advisor. You may also submit a written request to Ameriprise Financial, Inc., 1441 West Long Lake Road, Troy MI, 48098. Independent third-party research on individual companies is available to clients at ameriprise.com/research-market-insights. SEC filings may be viewed at sec.gov. Tactical asset class recommendations mentioned in this report reflect The Ameriprise Global Asset Allocation Committee’s general view of the financial markets, as of the date of the report, based on then current conditions. Our tactical recommendations may differ materially from what is presented in a customized long-term financial plan or portfolio strategy. You should view our recommendations in conjunction with a broader long-term portfolio strategy. Not all products, services, or asset classes mentioned in this report may be available for sale at Ameriprise Financial Services, Inc. Please consult with your financial advisor. Diversification and Asset Allocation do not assure a profit or protect against loss. RISK FACTORS Dividend and interest payments are not guaranteed. The amount of dividend payment, if any, can vary over time and issuers may reduce or eliminate dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer. Should a company be unable to pay interest 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

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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. 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.

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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, Inc. of any order to buy or sell securities. This summary is based exclusively on an analysis of general current market conditions, rather than the suitability 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. AFSI 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, Inc. Member FINRA and SIPC.

before the bell...2019/10/07 · s&p 500 1.42% 19.59% 2,952.0 djstoxx 50 (europe) 0.27% 19.03%...

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