Download 2017 Investment Outlook

2017 Investment Outlook
Presentation By:
Robert C. Doll, CFA
–
Senior Portfolio Manager
Chief Equity Strategist
Ten Predictions | June 2017
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
1
U.S. Capital Markets Mid-Year Update
2017 YEAR
TO DATE
TRAILING
12 MONTHS
TRAILING
3 YEARS
TRAILING
8 YEARS1
90-Day Treasury Bills
0.3%
0.5%
0.2%
0.2%
10-Year U.S. Treasury
2.1
-5.6
2.4
4.0
U.S. Bonds
2.3
-0.3
2.5
4.0
High Yield Corporate Bonds
4.9
12.7
4.5
10.3
S&P 500
9.3
17.9
9.6
15.3
13.2
20.1
1.2
7.9
5.0
24.6
7.4
15.2
MSCI Emerging Markets
18.6
24.2
1.4
6.5
Commodities
-8.9
-8.7
-17.0
-4.2
MSCI World ex U.S.
Russell 2000
1 Since the end of the last U.S. recession in 2009. Data from 6/30/09 – 6/30/17.
Data source: Morningstar Direct as of 6/30/17. Past performance is no guarantee of future results. Performance for periods greater than one year is annualized. Index performance is shown for illustrative purposes only. It is not possible to invest
directly in an index. 90-Day Treasury Bills: BofAML 3-Month U.S. Treasury Bill Index; 10-Year U.S. Treasury: 10-year Treasury Constant Maturity Rate; U.S. Bonds: Bloomberg Barclays U.S. Aggregate Bond Index; High Yield Corporate Bonds:
Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index; Commodities: Thomson Reuters/CoreCommodity CRB Index.
2
Financial Market Recent Highlights
 U.S. equities have increased 30+% since the early 2016 low1
 The 35-year U.S. Treasury bull market ended on July 8, 2016, with the 10-year Treasury
yield falling to 1.37%
 U.S. earnings recession ended with huge upside
 U.S. and global economic growth is improving
 U.S. equities are no longer dominating and may cede leadership to international stocks
1 Data source: Morningstar Direct. The S&P 500 Index returned 31.5% from 1/14/16 to 5/31/17.
3
The U.S. Equity Market Has Risen
Since Brexit and the U.S. Election
U.S. Stocks Have Jumped Nearly 20% Since June 2016
S&P 500 Index Performance as of April 30, 2017
Post-Election: 13.7%
7%
Post-Brexit Low: 19.5%
6.2%
S&P 500 Index Return
6%
5%
5.1%
5.0%
4%
3%
2%
1%
0%
Post-Brexit Low to Election Day
Election Day to Inauguration Day
First 100 Days
Data source: RBC Capital Markets, 6/28/16 – 4/30/17. Used with permission. Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index. The postBrexit low occurred on 6/28/16, U.S. election day was 11/7/17, Inauguration Day was 1/20/17 and the 100th day of the Trump administration was 4/29/17.
4
Current Debates and Conundrums
Markets Are Providing Mixed Signals for Investors
Hard data
vs
Soft data
Equity returns
vs
Treasury yields
Cyclicals/Value
vs
Defensives/Growth
5
2017: A Year of Transition
Moving From… …Moving To
Investment Goals
& Preferences
Yield
Perceived safety
Low volatility
Economic & Market
Environment
Monetary easing
Globalization
Disinflation
Beta
Investment
Implications
Total return
More risk
Increased volatility
Fiscal stimulus
Nationalism
Inflation
Alpha
Bonds
Stocks
Sovereign
Credit
Large cap
Small cap
Growth
Defensive
Value
Cyclical
6
2017 Theme
A YEAR OF TRANSITION
Things in the U.S. can go so right…
and so wrong.
BofA Merrill Lynch
December 2016
7
2017 Ten Predictions – Mid-Year Assessment
THEME: A YEAR OF TRANSITION
1. U.S. and global economic growth improves modestly as the dollar strengthens and reaches parity
with the euro.
2. Unemployment drops to its lowest level in 17 years as wages increase at the fastest pace since the
Great Recession.
3. Treasury yields move higher for a third consecutive year for the first time in 36 years as the Fed raises
rates at least twice.
4. Stocks hit their 2017 highs in the first half of the year as earnings rise but price/earnings multiples fall.
5. Stocks outperform bonds for the sixth year in a row for the first time in 20 years while volatility rises.
6. Small caps, cyclical sectors and value styles beat large caps, defensive and growth areas.
7. The financials, health care and information technology sectors outperform energy, utilities and materials.
8. Active managers’ performance improves as flows into equities rise.
9. Nationalist and protectionist trends rise as pro-domestic policies are pursued globally.
10. Initial optimism about the Trump agenda fades in light of slow legislative progress.
Scorecard based on Bob Doll's 2017 Ten Predictions with data as of June 2017.
8
The Debate over Hard and Soft Data Continues
Confidence Measures Suggest an Economic Pickup Is Coming
8
_ CEO Confidence _ Average
110
_ Small Business Confidence _ Average
Measure of Confidence (points)
7
_ Consumer Confidence _ Average
140
120
6
100
5
100
4
80
3
90
60
2
40
1
0
2006
2008
2010
2012
2014
2016
80
2006
2008
2010
2012
2014
2016
20
2006
2008
2010
2012
2014
2016
Data source: Bloomberg L.P., 12/31/06 – 5/31/17. CEO Confidence: Conference Board Measure of CEO Confidence Index. Small Business Confidence: NFIB Small Business Optimism Index. Consumer Confidence: Conference Board
Consumer Confidence Index.
9
U.S. Unemployment Drops to Lowest Level in 17 Years as Wages
Increase at the Fastest Pace Since the Great Recession
Lower Unemployment Should Lead to Increased Wage Inflation
_ U.S. Unemployment Rate _ U.S. Average Hourly Earnings
 Recession Periods
U.S. Unemployment Rate
10%
9%
8%
7%
6%
5%
4%
U.S. Average Hourly Earnings
3%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Data source: Cornerstone Macro, 1/31/84 – 5/31/17. Used with permission.
10
U.S & Global GDP Remain Subdued
but Should Strengthen Modestly
The Economic Expansion Still Has Legs
U.S.
GLOBAL
REAL GDP
NOMINAL GDP
REAL GDP
NOMINAL GDP
2010
2.5%
3.8%
4.3%
9.0%
2011
1.6
3.7
3.1
10.6
2012
2.2
4.1
2.4
1.7
2013
1.7
3.3
2.4
2.7
2014
2.4
4.2
2.6
2.4
2015
2.6
3.7
2.5
-5.8
2016E
1.6
3.0
2.9
5.4
2017E
2.0
4.0
3.2
5.6
2018E
2.5
5.0
3.5
6.2
Data sources: Bureau of Economic Analysis, Haver Analytics, Strategas Research Partners for 2010 – 2015. Used with permission. Data for 2016 – 2018 is based on estimates from Nuveen Asset Management, Morgan Stanley, Merrill Lynch
and JP Morgan.
11
Stocks Have a Recent History of Outperforming Bonds
We Expect the "Stocks Over Bonds" Theme Will Persist
S&P 500
BLOOMBERG
BARCLAYS U.S.
AGGREGATE BOND
2012
16.0%
4.2%
2013
32.4%
-2.0%
2014
13.7%
6.0%
2015
1.4%
0.5%
2016
12.0%
2.6%
5-YEAR RETURN
15.1%
2.3%
2017 YTD
9.3%
2.3%
Data source: Morningstar Direct as of 6/30/17. Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index.
12
The Bond Bull Market Lasted 35 Years
Yield Trough Reached in July 2016; Yields Should Rise Slowly
10-Year U.S. Treasury Bond Yield
18%
16%
14%
Yield (%)
12%
10%
8%
6%
4%
2%
0%
1980
Yield Trough: 1.37%
July 8, 2016
1985
1990
1995
2000
2005
2010
2015
Data source: FactSet, 12/31/79 – 5/31/17. Past performance is no guarantee of future results. 10-Year U.S. Treasury Bond: 10-year Treasury Constant Maturity Rate.
13
Stocks Hit Their 2017 Highs in the First Half of the Year as
Earnings Rise But Price/Earnings Multiples Fall
Earnings Are Set to Improve
 Improving economic growth
 Tax reform/tax cuts
Sparkle and Fade.
 Regulatory reform
 Pent up demand for housing and capex
 Repatriation
Morgan Stanley
2017 Strategy Outlook
 Continued share buybacks
Multiples Could Come Under Pressure
 Rising inflation
 Rising interest rates
 Economic acceleration shortens cycle (closer to peak of cycle)
 Slower growth in China
14
Small Caps, Cyclical Sectors and Value Styles Beat Large
Caps, Defensive and Growth Areas
Why Small > Large?
Why Cyclical > Defensive?
Why Value > Growth?
 U.S. dollar appreciation
 Growth acceleration
 GDP acceleration
 Effective tax rates for
corporations
- R2000: 32%
- S&P 500: 26%
 Yield to underperform
 Inflation increases
 Valuation
 Valuation
 Domestic focus
(weak global trade)
Why has this not worked so far this year?
 Small cap, cyclical and value stocks got ahead of themselves by the end of 2016
 Question about manufacturing activity peaking (PMIs, ISMs)
 Political and geopolitical uncertainties
Data source for tax rates: Credit Suisse.
15
Sector Performance Continues to Shift
We Anticipate Another Rotation from Growth to Value
FIRST HALF
2016
SECOND HALF
2016
2017 YEAR TO DATE
THROUGH MAY 31
POSITIONING:
OVERWEIGHT/UNDERWEIGHT
Technology
-0.5%
13.7%
17.0%
+
Health Care
-0.1
-2.5
16.5
+
Consumer Discretionary
0.6
6.2
11.8
0
Materials
9.1
9.2
9.6
‒
Russell 1000 Index
3.7
8.0
9.3
0
Industrials
6.1
12.0
9.0
0
Utilities
23.7
-5.4
8.6
‒
Consumer Staples
10.4
-4.3
7.6
0
Financials
-5.4
28.4
6.8
+
Real Estate
12.1
-5.6
5.6
0
Telecommunications
23.6
0.3
-10.3
0
Energy
15.3
9.9
-13.2
‒
Data source: FactSet, 1/1/16 – 6/30/17. Past performance is no guarantee of future results. Sector performance based on the Russell 1000 Index. Views are those of Bob Doll and do not necessarily reflect the positioning of specific
Nuveen products.
16
Sector Performance Differentials Have Been Wide
Wide Dispersion Creates Opportunities for Active Management
Sector Performance Since January 2016
 First Half of 2016
 Second Half of 2016
 First Half of 2017
30%
25%
28%
24%
24%
Total Return (%)
20%
15%
10%
10%
9%
5%
-5%
10%
8%
9% 9% 10%
12%
9%
6%
Utilities
-6%
Telecommunications
9%
8%
7%
6%
4%
1%
-5%
-10%
14%
12%
0%
-10%
-15%
12%
6%
0%
17%
17%
15%
-13%
Energy
Real
Estate
0%
-3%
-4%
Consumer
Staples
0%
-5%
Materials
Industrials
Russell
Consumer
1000 Index Discretionary
Health
Care
Technology
Financials
Data source: FactSet, 1/1/16 – 6/30/17. Past performance is no guarantee of future results. Sector performance based on the Russell 1000 Index.
17
The Financials, Health Care and Information Technology
Sectors Outperform Energy, Utilities and Materials
O VERWEIGHTS
U NDERWEIGHTS
FINANCIALS
ENERGY
 Beneficiary of asset reflation
 Persistent oversupply
 Higher interest rates, regulation easing
 Oil prices in a low trading range
 Stocks cheap, despite recent rise
 Stocks expensive relative to price of oil
Risk: Global financial accident
Risk: OPEC agreement holds, oil trades higher
HEALTH CARE
 Revenue and earnings growth strong
UTILITIES
 Rising rates
 Innovation and expenditure growth
 Little earnings growth expected in 2017
 Discount valuations
 Elevated valuations, despite recent underperformance
Risk: Political and headline risk
Risk: Economy weakens, rates fail to rise
INFORMATION TECHNOLOGY
 Good growth and value characteristics
MATERIALS
 Slowing China
 Strong balance sheets and free cash flow
 Rising dollar
 Beneficiary of improved capital spending outlook
 Infrastructure rally overdone
Risk: Dollar rising farther, hampering earnings growth
Risk: Dollar weakness, massive infrastructure spending
18
Health Care Spending Reaches an All-Time High
Nearly 20% of Consumer Spending Is Going Toward Health Care
Health Care Services as a Percentage of Personal Consumption Expenditures
20%
Health Care Services as a % of
Personal Consumption Expenditures
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
Data source: Deutsche Bank Research, May 2017. Used with permission.
19
Investors May Be Paying More Attention
to Politics than Fundamentals
Assumptions about Washington Politics Continue
 Modest tax cut in 2018 (e.g., 25% corporate)
 Less regulation
 Little to nothing on infrastructure
 No health care legislation
 Continued turmoil/chaos
But Remember:
Earnings Trump Politics
20
The United States Has Become More Divided
Legislative Progress Grows More Complicated
30%
25%
2004
MEDIAN MEDIAN
Democrat Republican
30%
MEDIAN
Democrat
25%
20%
20%
15%
15%
10%
10%
5%
5%
0%
0%
Consistently
Liberal
2014
Consistently
Conservative
MEDIAN
Republican
Polarization in the
U.S. today
1. Income inequality
and immobility
2. Generational warfare
3. Geographical
segregation
4. Immigration
Consistently
Liberal
Data source: Pew Research Center, June, 2014, "Political Polarization in the American Public."
Consistently
Conservative
5. Media polarization
Source: BCA Research.
21
The U.S. Economy Is Decelerating and
Investor Preference Has Shifted
Which Region’s Equity Market Is Preferred by Investors?
Investors’ Favorite Regions
60%
Clients Favoring Each Area
50%
47.7%
40%
31.8%
30%
20%
9.1%
10%
9.1%
2.3%
0%
Eurozone
Emerging Markets
United Kingdom
United States
Japan
Data source: Cornerstone Macro Strategy Team, CSM Client Survey May 2017. Used with permission.
22
Central Banks Have Printed a Lot of Money
Since the Recession Ended in 2009
Quantitative Easing Per Job Created Since July 2009
Quantitative Easing Per Job Created ($mm)
$1.6
$1.5
$1.4
$1.2
$1.0
$1.0
$0.8
$0.6
$0.4
$0.2
$0.2
$0.0
Bank of Japan
European Central Bank
Federal Reserve
Data source: Deutsche Bank Securities, June 2017. Use with permission.
23
What Drives the Case for Dollar Appreciation?
1. Rising interest rate differentials (between U.S. and trading partners)
2. Anticipated widening of economic growth differentials
3. Anticipation of expansive fiscal and reduced regulatory policy
4. Safe haven flows in an increasingly uncertain world
24
Good News: Equity Mutual Fund Performance Improves
More Large Cap Funds Are Beating the Benchmarks
Large Cap Funds Outperforming Their Benchmarks
80%
Large Cap Funds
Outperforming Their Benchmarks
70%
60%
50%
40%
30%
20%
10%
0%
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Data sources: Strategas Research Partners, 5/18/17. Used with permission. Past performance is no guarantee of future results.
25
The Number of Global Market Indexes Now Exceeds
the Number of U.S. Stocks
The Rise of the Benchmark
Number of Indexes
Number of Stocks
8k
7k
6k
5k
4k
3k
2k
1k
0k
1975
2016
Data source: Strategas Technical Analaysis, 12/31/16. Used with permission.
26
A Stock-Pickers Market: Equities Reach
Lowest Correlations in 10 Years
Stock-to-Stock Correlation of the S&P 500 Index
0.9
0.8
Correlation
0.7
0.6
0.5
0.4
0.3
2006
2008
2010
2012
2014
2016
Data sources: Strategas Research Partners, Bloomberg, 12/29/06 – 5/31/17. Past performance is no guarantee of future results. Correlation is a statistical measure of how two securities move in relation to each other. Perfect positive
correlation (a correlation co-efficient of +1) implies that as one security moves the other security will move in lockstep, in the same direction. Alternatively, perfect negative correlation (a correlation co-efficient of –1) means that securities will move by
an equal amount in the opposite direction. If the correlation is 0, the movements of the securities are said to have no correlation; their movements in relation to one another are completely random. Index performance is shown for illustrative purposes
only. It is not possible to invest directly in an index.
27
Bull Market Top Checklist
This Bull Market Is Old, But Not Over
2000
2007
CURRENT
1. Blow-off top
√
√
X
2. Heavy inflows into equity market funds
√
√
X
3. Big pickup in M&A activity
√
√
?
4. IPO activity
√
√
X
5. Rising real interest rates
√
√
?
6. Weakening upward earnings revisions
√
√
X
7. Erosion in breadth (new highs)
√
√
?
8. Shift toward defensive leadership
√
√
?
9. Widening credit spreads
√
√
X
Source: Strategas Research Partners. Used with permission.
28
Despite Curve Flattening, a Recession Is Unlikely
Yield Curve Inversions Are the Best Signal of Recessions
10-Year U.S. Treasury Yield Less the Federal Funds Rate
 Recession Periods
5%
Yield Differential (%)
4%
3%
2%
1%
0%
-1%
-2%
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Data source: Bloomberg L.P., 1/31/84 – 5/31/17. Past performance is no guarantee of future results. Chart represents the difference between the 10-Year U.S. Treasury yield and the Federal Funds Target Rate Index.
29
Risks
Pressure on Profits Is the Biggest Risk
 Wages
 Productivity
 Pricing power
Other Risks
 Further delays in market-friendly policy
 Central bank missteps
 China slowdown
30
Equity Fundamentals: The Good and the Not So Good
OPPORTUNITIES
RISKS
1. Consumer spending reasonably strong
1. Central banks begin to play catch-up
2. Job and wage growth
2. High capacity utilization (especially labor)
leads to rising inflation
3. Capex picks up
3. Profit margin pressure
4. Still friendly Fed
4. Health care cost increases
5. Energy sector returns to health
5. China slowdown
6. Better European growth
6. Political/policy risks
7. Investor sentiment still cautious
7. Valuations no longer cheap
31
2017 U.S. Positioning
1. Overweight equities (but could be bumpy)
2. The average stock beats its benchmark
(small > large | equal weighted portfolio > cap weighted portfolio | active outperforms)
3. Underweight interest-rate-sensitive assets
(Fed funds rate and longer-term rates should rise)
4. Fed raises rates two (or three) times
5. Keep a careful eye on inflation
6. Neutralize U.S./non-U.S.
7. Overall returns are likely to be mediocre
32
Summary of Positioning
ASSETS
SECTORS
STYLES
OVERWEIGHTS
UNDERWEIGHTS
Stocks
Bonds
Financials
Energy
Technology
Materials
Health Care
Utilities
Value
Growth
Cyclicals
Defensives
Small/Mid Cap
Large/Mega Cap
33
Where Are We in the Market Cycle?
Bull markets are born on pessimism,
grow on skepticism, mature on optimism,
and die on euphoria.
Sir John Templeton
34
Think About the Long-Term and Remain Diversified
10-YEAR RETURN FORECAST BY ASSET CLASS
EQUITIES
FORECASTED RETURN RANGE
5 – 7%
U.S.
5 – 7%
Non-U.S. Developed Markets
4 – 6%
Emerging Markets
7 – 9%
BONDS
2 – 4%
U.S. Government
0 – 2%
U.S. Investment Grade
2 – 4%
U.S. High Yields
4 – 6%
Emerging Market Sovereign
5 – 7%
CASH
2 – 3%
INFLATION
2 – 3%
DIVERSIFIED PORTFOLIOS
Conservative
3 – 5%
Balanced
4 – 6%
Aggressive
5 – 7%
Data sources: MRB Partners, Nuveen Asset Management as of December 2016. The forecast data reflects the opinion of the author, Bob Doll, and not the firm. The information provided herein is not intended to be a forecast or guarantee of future
events or results. It is not a recommendation to buy or sell any specific securities and should not be considered investment advice of any kind. Investing in securities involves risk of loss that clients should be prepared to bear. There is no assurance
that an investment will provide positive performance over any period of time. Past performance is no guarantee of future results and different periods and market conditions may result in significantly different outcomes.
35
Long-Term Themes
1. United States enjoys modest, but acceptable growth
European volatility continues
China struggles to reduce dependence on investment without an accident
India continues to be strongest global economy
2. Emerging market consumers still key for global growth with an assist from the United States
3. Reflationary efforts continue to overcome deflationary forces
4. Trend toward nationalism (less globalization)
5. Economic power and financial wealth shift from developed to emerging world halted
6. End of 35-year bull market in bonds
7. Investors experience modest long-term returns
36
Potential Productivity Boosters: What is the next BIG thing?
1. U.S. energy/fracking
2. Smart manufacturing and 3D printing
3. Cloud (big data) computing
4. Robotics
5. Health care advances
Adapted from Strategas Research Partners, Nuveen Asset Management as of December 2016.
37
Set Your Sights Higher
20-Year Annualized Returns by Asset Class
1996 ‒ 2015
Average Annualized Total Returns (%)
12%
10.9%
10%
8.2%
8%
7.6%
6%
5.3%
5.2%
4.8%
4%
4.2%
3.2%
2%
0%
REITs
U.S. Equities
60/40
Portfolio
U.S. Bonds
Gold
Non-U.S.
Equities
Homes
Oil
2.2%
2.1%
Inflation
Average
Investor
Data sources: Morningstar Direct, Bloomberg L.P., Federal Reserve Bank of St. Louis, Nuveen Asset Management and DALBAR, Inc. “Quantitative Analysis of Investor Behavior (QAIB), 2016.” Data from 1/1/96 - 12/31/15.
Past performance is no guarantee of future results. Used with permission. REITs: FTSE NAREIT Equity REIT Index; U.S. Equities: S&P 500 Index; 60/40 Portfolio: 60% S&P 500 / 40% Bloomberg Barclays U.S. Aggregate
Bond Index; U.S. Bonds: Bloomberg Barclays U.S. Aggregate Index; Gold: USD/troy oz.; Non-U.S. Equities: MSCI EAFE Index; Homes by the median sale price of existing single-family homes; Oil: West Texas Intermediate
(WTI) Index; Inflation: Consumer Price Index; Average Asset Allocation Fund Investor by DALBAR, Inc. “Quantitative Analysis of Investor Behavior (QAIB), 2016,” www.dalbar.com. Average Asset Allocation Fund Investor
performance results are calculated using data supplied by the Investment Company Institute. Investor returns are represented by the change in total mutual fund assets after excluding sales, redemptions and exchanges.
38
Important Disclosures
This presentation is for general information purposes only and should not be construed as specific tax or investment advice.
The statements contained in this presentation are the opinions of Nuveen Asset Management, LLC and data available at the time of publication, and is not intended to be
a forecast or guarantee of future events or results. It contains information from third party sources believed to be reliable but are not guaranteed as to accuracy and not
intended to be all inclusive. It does not constitute an offer, solicitation, or recommendation regarding securities or investment strategy and is not intended to predict or
depict performance of any investment. Past performance is no guarantee of future results.
A Word on Risk
Equity investments are subject to market risk, active management risk, and growth stock risk; dividends are not guaranteed. Foreign investments involve additional risks,
including currency fluctuation, political and economic instability, lack of liquidity and differing legal and accounting standards. These risks are magnified in emerging
markets. The use of derivatives involves additional risk and transaction costs.
Debt or fixed income securities are subject to market risk, credit risk, interest rate risk, call risk, tax risk, political and economic risk, derivatives risk, income risk, and
other investment company risk. As interest rates rise, bond prices fall. Credit risk refers to an issuer’s ability to make interest payments when due. Below investment
grade or high yield debt securities are subject to liquidity risk and heightened credit risk. Foreign investments involve additional risks as noted above.
Nuveen Asset Management, LLC is a registered investment adviser and an affiliate of Nuveen Investments, Inc.
39
Index Definitions
One basis point equals .01%, or 100 basis points equal 1%.
The Bloomberg Barclays U.S. Aggregate Bond Index represents securities that are SEC-registered, taxable and dollar denominated. The index covers the U.S.
investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities.
The Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index tracks the performance of U.S. non-investment-grade bonds and limits each issuer to
2% of the index.
The Bloomberg Barclays U.S. Treasury Bellwethers 10-Year Index is a universe of Treasury bonds, and used as a benchmark against the market for long-term
maturity fixed-income securities. The index assumes reinvestment of all distributions and interest payments.
The BofA Merrill Lynch 3-Month U.S. Treasury Bill Index is an unmanaged index of Treasury securities maturing in 90 days that assumes reinvestment of all income.
Capital expenditures (capex) are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment.
The CEO Confidence Index is based on a monthly survey of 100 CEOs that seeks to gauge the economic outlook of CEOs.
Consumer Confidence Index (CCI) measures how optimistic or pessimistic consumers are about to the economy in the near future.
The Consumer Price Index (CPI) is an inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing,
electricity, food, and transportation.
Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of a company's profitability.
The federal funds rate is the interest rate at which U.S. depository institutions lend reserve balances to other depository institutions overnight, on an uncollateralized
basis.
The Federal Open Market Committee (FOMC) is the branch of the Federal Reserve Board that determines the direction of monetary policy. It is composed of the board
of governors, which has seven members and five reserve bank presidents.
The FTSE NAREIT Equity REIT Index is an unmanaged index reflecting performance of the U.S. real estate investment trust market.
Gross domestic product (GDP) is a primary indicator used to gauge the health of a country's economy. It represents the total dollar value of all goods and services
produced over a specific time period. Real GDP is adjusted for inflation. Nominal GDP is not adjusted for inflation.
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Index Definitions
The MSCI EAFE Index is a stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. & Canada.
The MSCI Emerging Markets Index captures large and mid cap representation across 23 Emerging Markets countries.
The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets.
The MSCI World Index ex-U.S. is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed
markets minus the United States.
NFIB Small Business Optimism Index is a composite of 10 seasonally adjusted components based on the following questions: plans to increase employment, plans to
make capital outlays, plans to increase inventories, expect economy to improve, expect real sales higher, current inventory, current job openings, expected credit
conditions, now a good time to expand, and earnings trend.
The Russell 1000® Index is a large-cap index measuring the performance of the largest 1,000 U.S. incorporated companies.
The Russell 1000® Growth Index is a market-capitalization-weighted index that measures the performance of those Russell 1000 companies with higher price-to-book
ratios and higher forecasted growth values.
The S&P 500® Index is a capitalization-weighted index of 500 stocks designed to measure the performance of the broad domestic economy.
The Thomson Reuters/CoreCommodity CRB Index tracks the performance of 19 different commodities.
The troy ounce is used in the pricing of metals such as gold, platinum and silver. There are 14.58 troy ounces in a pound.
The Trade Weighted U.S. Dollar Index: measures the value of the U.S. dollar relative to other world currencies.
The U.S. Treasury T-Bill Constant Maturity Rate 10 Yr. Index is published by the Federal Reserve Board based on the average yield of a range of Treasury securities,
all adjusted to the equivalent of a 10-year maturity.
The West Texas Intermediate (WTI) Index is used as a benchmark for pricing much of the world’s crude oil production.
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The Russell 2000® Index is composed of the 2,000 smallest stocks in the Russell 3000® Index and is widely regarded in the industry as the premier measure of small
cap stock performance.
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The Russell 1000® Value Index is a large-cap value index measuring the performance of the largest 1,000 U.S. incorporated companies with lower price-to-book ratios
and lower forecasted growth values.
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