Update on the Investment Markets

Jeff T. Zipper, CFA, CMT, CFP - Managing Director Investments, Florida

Presented on: June 15, 2016

CFA Society South Florida

Presented by:

Presented to:

Major Pullbacks During Current Market Cycle

Sources: FactSet Research Systems, Standard & Poor’s, J.P. Morgan Asset Management. Data: 12/31/15.

When Volatility Is Up, Stock Returns Are Low

12-month equity market total returns and volatility

2011-2015

Source: Blackrock.

VOLATILITY IS CHEAP but RISING

Source: StockCharts.com

S&P MAJOR REVERSAL

Source: StockCharts.com

Remember, It’s Time In The Market —Not Market Timing

S&P 500 Index Performance

(1985-2015)

Source: Columbia Thread Needle Management. Data: 1985-2015. The S&P 500 is an unmanaged investment, not available for direct investment.

Average annual total return represents the annualized total return including reinvestment of dividends and gross of fees.

What Happens To Stocks When Rates Rise?

Source: FactSet Research Systems. Stocks=S&P 500 (1970-1978), Russell 3000 (1979-12/31/14). Bonds=Barclays U.S. Aggregate Bond Index.

Time to

initial Fed

funds rate

hike

Rate at 1st

hike

First 3 months First year Five years annualized

Stocks Bonds Stocks Bonds Stocks Bonds

May 1971 4.2% -7.3 -1.5 13.3 7.8 3.8 6.6

May 1977 4.7% 1.6 2.1 6.6 2.4 9.7 4.6

Aug 1980 9.0% 7.7 -5.7 6.0 -3.6 14.0 14.7

May 1983 8.6% 2.0 -3.5 -7.1 0.4 12.6 12.0

Nov 1986 6.0% 11.5 3.2 -7.6 1.8 11.5 9.4

Apr 1988 6.6% 6.6 1.2 22.0 7.9 14.6 11.3

Jan 1994 3.0% -3.8 -2.9 -0.7 -2.3 22.3 7.1

Jul 2004 1.0% -1.9 3.2 16.9 4.8 0.4 5.1

Purchasing Power

Source: Financial Times (4/15/15), Haver Analytics, Citi Research U.S. Equity Strategy, Bloomberg

Where Can We Find Value?

Source: Standard & Poor’s, Compustat, FactSet Research Systems, JPMorgan Asset Management

U.S. Equites Offer More Risk Than Reward

Source: BCA Research, Thomson Reuters; IBES

Regional Equity Fund Flows

Source: Business Insider (10/22/15)

Money rushing out of U.S. stocks for 10 years

Take A Hike

Source: The Economist (3/21/15), U.S. Federal Reserve

10 YEAR YIELD AT SUPPORT

Source: StockCharts.com

Negative Yields?

Source: Bloomberg. Data through 3/31/15.

Global yield curves

DOLLAR REVERSAL

Source: StockCharts.com

OIL LOOKING GOOD

Source: StockCharts.com

GOLD IN REPAIR

Source: StockCharts.com

Election Year Seasonals Peak In July

Source: Strategas Research

6/2/2016

Historical S&P 500 Seasonal vs. Open Election Year Seasonal

All Years

1QOpen Election Year

3Q

2Q 4Q

6/2/2016

S&P VS. THE SELLSIDE

S&P 500 vs. Sellside Strategist Survey

Sellside Average, 2154

S&P 500

The average year-endS&P target among 20sellside strategists is

currently 2154.

Source: Strategas Technical Analysis

Conclusion:

2016 year-end GDP growth: 2.0%-2.5%

2016 S&P 500 Target: 2,100 (18x

estimated earnings of $117)

Bullish/Bearish range 2,200-1,900

Equities: Overweight

• Domestic Equities: Overweight

• Foreign Dev Equities: Overweight

• Emerging Mkt Equities: Neutral

• Hedged Equities: Overweight

Jeff T. Zipper, CFA, CMT,CFP

Managing Director- Florida

As a Managing Director for The Private Client Reserve of U.S. Bank, Jeff manages the investment function for the state of Florida. He also works with private clients delivering expert investment services and portfolio management to help those clients work toward their goals. Jeff establishes an integrated investment approach, offering strategies for goals based on short- and long-term financial objectives, financial status and risk profiles.

Jeff began his career in the investment management industry over 25 years ago in New York City. Prior to joining The Reserve, Jeff worked at PNC Wealth Management as a senior portfolio manager. In addition, Jeff was strategy head/portfolio manager of the mid cap growth product (using fundamental & technical analysis) while at SunTrust. He has spent much of his career in wealth management providing value and sophisticated solutions to high-net-worth clients in securities analysis, brokerage, and portfolio management. Jeff has been published on Wall Street, interviewed by the media and guest speaker at national conferences to share his investment expertise.

Jeff is active in the community, serving on the Board of Directors – Palm Beach County Sports Commission (chairing 2 committees), Former Board of Directors – CFA Society of South Florida, and Founder/Former Chair of South FL Market Technicians Association, and member of CFA Institute, NYSSA. Also Jeff has been awarded the Lois Kwasman award for community service, twice.

Jeff T. ZipperDirect:561.653.3352 Fax 561.659.4667

jeff.zipper@usbank.com

M.B.A., Suffolk University, Sawyer Graduate School of Management, Boston, MA

B.A., State University of New York at Albany

Chartered Financial Analyst (CFA)

Chartered Market Technician (CMT)

Certified Financial Planner (CFP)

© 2015 U.S. Bank N.A.

This information represents the opinion of U.S. Bank. The views are subject to change at any time based on market or other conditions and are

current as of the date indicated on the materials. This is not intended to be a forecast of future events or guarantee of future results. It is not intended

to provide specific advice or to be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment

decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security.

Investors should consult with their investment professional for advice concerning their particular situation. The factual information provided has been

obtained from sources believed to be reliable, but is not guaranteed as to accuracy or completeness. Any organizations mentioned in this

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and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation.

Past performance is no guarantee of future results. All performance data, while obtained from sources deemed to be reliable, are not

guaranteed for accuracy. Indexes shown are unmanaged and are not available for direct investment. The S&P 500 Index is a capitalization-

weighted index of 500 widely traded stocks that are considered to represent the performance of the U.S. stock market in general. The MSCI EAFE

Index includes approximately 1,000 companies representing the stock markets of 21 countries in Europe, Australasia and the Far East (EAFE). The

MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. The Russell 2000 Index measures

the performance of the 2,000 smallest companies in the Russell 3000 Index and is representative of the U.S. small capitalization securities market.

The Barclays Capital Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar denominated, fixed-

rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities, asset-backed securities

and commercial mortgage-backed securities.

Disclosures

© 2015 U.S. Bank N.A.

Based on our strategic approach to creating diversified portfolios, guidelines are in place concerning the construction of portfolios and

how investments should be allocated to specific asset classes based on client goals, objectives and tolerance for risk. Not all

recommended asset classes will be suitable for every portfolio.

Equity securities are subject to stock market fluctuations that occur in response to economic and business developments. International investing

involves special risks, including foreign taxation, currency risks, risks associated with possible differences in financial standards and other risks

associated with future political and economic developments. Investing in emerging markets may involve greater risks than investing in more

developed countries. In addition, concentration of investments in a single region may result in greater volatility. Investments in fixed income

securities are subject to various risks, including changes in interest rates, credit quality, market valuations, liquidity, prepayments, early redemption,

corporate events, tax ramifications and other factors. Investment in fixed income securities typically decrease in value when interest rates rise. This

risk is usually greater for longer-term securities. Investments in lower-rated and non-rated securities present a greater risk of loss to principal and

interest than higher-rated securities. Investments in high-yield bonds offer the potential for high current income and attractive total return, but

involve certain risks. Changes in economic conditions or other circumstances may adversely affect a bond issuer's ability to make principal and

interest payments. The municipal bond market is volatile and can be significantly affected by adverse tax, legislative or political changes and the

financial condition of the issues of municipal securities. Interest rate increases can cause the price of a bond to decrease. Income on municipal

bonds is free from federal taxes, but may be subject to the federal alternative minimum tax (AMT), state and local taxes. There are special risks

associated with an investment in commodities, including market price fluctuations, regulatory changes, interest rate changes, credit risk, economic

changes, and the impact of adverse political or financial factors. Investments in real estate securities can be subject to fluctuations in the value of

the underlying properties, the effect of economic conditions on real estate values, changes in interest rates and risks related to renting properties,

such as rental defaults. Alternative investments very often use speculative investment and trading strategies. There is no guarantee that the

investment program will be successful. Alternative investments are designed only for investors who are able to tolerate the full loss of an investment.

These products are not suitable for every investor even if the investor does meet the financial requirements. It is important to consult with your

investment professional to determine how these investments might fit your asset allocation, risk profile and tax situation. Hedge funds are

speculative and involve a high degree of risk. An investment in a hedge fund involves a substantially more complicated set of risk factors than

traditional investments in stocks or bonds, including the risks of using derivatives, leverage and short sales, which can magnify potential losses or

gains. Restrictions exist on the ability to redeem or transfer interests in a fund.

Disclosures