objectivity² 2016 outlook & commentary - raymond … ahead...barclays int. g/c bond 109.61...

2016 Outlook & Commentary

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Table of Contents:

Objectivity² Portfolios: Overview & Strategy

2015: Worse Than it Appeared

All About Oil…But Should it Be?

US Recession: Not Likely but What Are the Risks?

Summary of our Thoughts

Case Study of Recent Irrational Selling

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On the surface it would appear that 2015 was a rather tame year as the S&P

500 index & the Barclay’s Aggregate bond index both ended the year

essentially flat. However, a deeper dive reveals that market volatility spiked

and there was a tremendous divergence in returns, that point to a much

weaker overall market environment. Most notably:

• Take out Facebook, Amazon, Netflix & Google/Alphabet (FANG) from the

S&P 500 and the index was down -4.8% for the year.

• The 50 smallest stocks in the S&P 500 were down -11.9%

• The Alerian MLP index, an investment many have flocked to in search of

yield, was down -37%, as oil prices cratered.

• High Yield bonds (HYG) were down -5% on a total return basis

Sources: Eventide, Raymond James Equity Portfolio & Technical Strategy Group

And that divergence trend has continued into 2016:

• As of January 21st 57% of stocks in the S&P 500 are

down 20+% from their recent highs (very bearish) and

20% of the market is down over 40%!

• The average stock in the Russell 3000 (broad market

index) was -34% below it 52 week high as of January

20th

2015: Worse Than it Appeared

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Portfolio Strategy Market Outlook

© 2016 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.

International Headquarters:The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863 20

Global Asset Class Returns

Source: FactSet; Raymond James Equity Portfolio & Technical Strategy

Data Thru 12/31/15 Price Change

Indices Close Q4 '15 2015

S&P 500 2043.94 6.45% -0.73%

Dow Jones 17425.03 7.00% -2.23%

NASDAQ Composite 5007.41 8.38% 5.73%

Russell 2000 1135.89 3.20% -5.71%

NYSE Alerian MLP 289.76 -4.63% -36.93%

MSCI U.S. REIT 1100.94 5.78% -1.51%

Barclays Int. G/C Bond 109.61 -1.33% -0.94%

MSCI The World 1662.79 5.11% -2.74%

MSCI EAFE (Developed) 1716.28 4.37% -3.30%

MSCI Emerging Markets 794.14 0.26% -16.96%

Euro Stoxx 3267.52 2.55% -6.77%

Japan Nikkei 225 19033.71 8.98% 8.71%Commodities

Crude Oil ($/bbl) 36.60 -17.85% -30.47%

Natural Gas ($/btu) 2.37 -7.41% -19.30%

Gold ($/ozt) 1073.10 -4.93% -10.46%Currencies

Euro per US $ 0.92 2.76% 11.39%

Japanese Yen per US $ 120.30 0.44% 0.33%Sovereign Bond Yields Current 10 Yr Avg

U.S. 10-Year Treasury 2.28 3.11

S&P 500 Metrics Current 15 Yr Avg

Dividend Yield 2.23 2.02

P/E Ratio - Next 12 Mo. 16.27 15.23

P/E Ratio - Last 12 Mo. 17.52 16.87

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

Global Asset Class Returns2015

-6.0%-4.0%-2.0%0.0%2.0%4.0%6.0%8.0%

10.0%

Global Asset Class ReturnsQ4 2015

4

Returns are Price Only, in USD terms

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Much of the market is in bear territory

8 of 48 1/28/2016 — © Eventide Asset Management, LLC.

As of January 21, 2016:

• More than half (57%) of the S&P 500 is down 20+% from its high

• Almost 20% of the S&P 500 is down 40% from its high

• Could it be that most of the market is already discounting a recession?

Source: Jefferies

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Raymond James Investment Strategy



We have written quite a bit over the last few months about how the average stock in the market is doing much worse than the major indices would have you

believe, and the updated performance numbers show that this trend is still in effect. When you look at how much the average stock is down from its 52-week

high, even the relatively safer large caps (S&P 500) are now in a bear market (down >20%). The third column shows, too, how bad the start of the year has been,

with the broad market already down more than 12%. I thought, perhaps, the energy sector was having a disproportionate effect on these numbers, but even

when I removed it, stocks just aren’t performing well across the board (last row). I’m still holding out hope, though, that this means the worst is behind us and

we are nearer the end of this mess than the beginning since stocks have already been crushed.

Index Average Percent Below 52-

Week High Average YTD Performance

S&P 500 (Large Caps) -24.67% -8.89%

Russell 2000 (Small Caps) -37.64% -13.59%

Russell 3000 (Broad Market) -34.29% -12.42%

Russell 3000 ex-Energy -33.01% -11.89%

Source: YCharts.com; Raymond James Equity Research

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Aopoulos

Highlight

O² Low Volatility AllocationOur goal with this portfolio is steady growth of capital with a primary focus on capital

preservation and risk mitigation. We view this portfolio as an investment alternative

to low yielding CDs and short term bonds, for our clients’ most conservative pools of

capital.

Target Allocation

• 20% Equity, 20% Fixed, 50% Strategic, 10% Cash Alternatives

Current Allocation (Tactical)

• 15% Equity, 0% Fixed, 45% Strategic, 40% Cash Alternatives

Custom Benchmark Allocation

• 20% Equity

• 14% S&P 500, 6% MSCI EAFE)

• 80% Fixed Income

• 60% Barclays Agg Bond Index, 20% iBoxx High Yield Credit

Performance Objectives (over a 5 year period & net of fees):

• 3-5% Target Return Annualized over 5 Year Market Cycle

• CPI + 1%

• Returns in line with Custom Benchmark with Lower Volatility

• Provide daily liquidity

O² Low Volatility Portfolio Update

Tactical Update

We currently hold no fixed income in our Low Volatility portfolio as we have made the decision to mitigate risk with larger cash balances, low correlation/hedged alternative managers and lower volatility equity positions. While markets will likely remain volatile, we believe that the opportunities we can seize, due to our large cash position, can handsomely reward our investors over the next 3 to 5 years.

Recent Trades

Increased cash alternatives by 10% to 40%

Reduced US Minimum Volatility from 15% to 10%

Decreased WF/GMO Absolute Returnfrom 10% to 5%

Swapped Henderson Int’l Opps (HFOIX) for MSCI EAFE Minimum Volatility ETF (EFAV) 5% allocation

Please be advised that there is no assurance that these objectives will be met. Diversification and strategic asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future results. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. Please keep in mind that CDs offer FDIC or FSLIC insurance and a fixed rate of return whereas both principal and yield of investment securities will fluctuate with changes in market conditions.

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O² Moderate AllocationThis portfolio is built to balance our views on capital preservation and growth, and

is an alternative to the traditional “60/40 Balanced” portfolio you will see on many

investment platforms at other advisory firms.

Target Allocation

• 50% Equity, 15% Fixed, 34% Strategic, 1% Cash

Current Allocation (Tactical)



• 60% Equity

• 30% S&P 500, 6% S&P 400 Mid Cap, 6% Russell 2000 Small Cap

• 12% MSCI EAFE, 6% MSCI Emerging




• 5-7% Target Return Annualized over 5 year Market Cycle

• CPI + 3%


O² Moderate Portfolio Update

Tactical Update

We currently hold no fixed income in our Moderate portfolio as we have made the decision to mitigate risk with larger cash balances. Our equity managers are longer term, high alpha generators that have experienced short term difficulties due to indiscriminate selling across markets. We view 1812 on the S&P 500 as a critical support level and a break of that January low would increase the chances of another 5-15% of downside. While markets will likely remain volatile, we believe that the opportunities we can seize, due to our large cash position, can handsomely reward our investors over the next 3 to 5 years.

Recent Trades

Increased Cash Alternatives from 16.25% to 23.75%

Reduced Putnam Equity Spectrum from 10% to 5%

Reduced Eventide Fundfrom 7.5% to 5%

Please be advised that there is no assurance that these objectives will be met. Diversification and strategic asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future results. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability.These risks are greater in emerging markets.

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O² Growth AllocationThis allocation is built to provide our client’s with the most growth opportunities, while

still adhering to our risk management philosophies.

Target Allocation


Current Allocation



• 80% Equity

• 40% S&P 500, 8% S&P 400 Mid Cap, 8% Russell 2000 Small Cap





• 7-9% Target Return Annualized over a 5 Year Market Cycle

• CPI + 5%


O² Growth Portfolio Update

Tactical Update

We raised cash in our Growth portfolio as hedge against market volatility and due to weakening technicals at the beginning of the year. Our opportunistic equity managers have been long term, high alpha generators but have experienced short term difficulties due to the indiscriminate selling across markets. We view 1812 on the S&P 500 as a critical support level and a break of that January low would increase the chances of another 5-15% of downside. While markets will likely remain volatile, we believe that the opportunities we can seize, due to our large cash position, can handsomely reward our investors over the next 3 to 5 years.

Recent Trades

Increased Cash Alternatives from 2.25% to 15.25%

Reduced Putnam Equity Spectrum from 17% to 13.25%

Reduced Eventide Fundfrom 17% to 13.25%

Removed Nuveen Large Cap Core Plusfrom 5.5% to 0%


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O² All Equity AllocationThis allocation is built to provide our client’s with an opportunity to seek returns in

excess of the S&P 500 and MSCI World indices, with a goal of providing less volatility

Target Allocation


Current Allocation



• 100% Equity

• 49% S&P 500, 10.5% S&P 400 Mid Cap, 10.5% Russell 2000 Small Cap



• Return in line with S&P 500 & MSCI ACWI with Lower Volatility


O² All Equity Portfolio Update

Recent Trades

Reduced Putnam Equity Spectrum from 26.5% to 20%

Reduced Eventide Fundfrom 26.5% to 20%

Removed Nuveen Large Cap Core Plusfrom 11.5% to 0%

Removed MSCI Emerging Market ETFfrom 2% to 0%

Removed MSCI EAFE ETFfrom 2% to 0%

Added Henderson Int’l Opportunities11.5% initial allocation

Added Burnham Financial Long/Short7% initial allocation

Added GaveKal KL Fund10% allocation


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It’s All about Oil…But Should it Be?

Price declines are being driven by oversupply and not lack of demand.

There has been a high correlation of equity & oil prices. One factor likely contributing to this is the indiscriminate selling of equities by the Sovereign Wealth Funds of oil producing countries such as Saudi Arabia, Kuwait, & Norway. According to Bloomberg these funds account for 5-10% of total global investment dollars.

While we may be in an industrial/commodity recession the majority of economic indicators do not foreshadow a general US recession

Employment in the energy sector accounts for less than 1% of US payrolls, 5% of business CAPEX and 6% of equity market capitalization

Lower oil prices are good for the economy as they put more money back into the pockets of the US consumer, which as we’ve noted, accounts for 70% of the US Economy

You can see how lower oil prices lead to more selling in the equity markets. Ultimately we view this as a short term link and should provide very compelling (re)entry points for investors

Sources: Eventide, Riverfront Investment Group, David Rosenberg w/Gluskin Sheff

This is not a repeat of 2008!

Oil is a not a house. Oil is a commodity that goes into a gas tank; it is an expense item in the household budget and production process.

Declines in price create winners & losers—the losers take the hit up front but the winners win with a lag and they far outnumber the losers.

Nobody wins when a home price collapses. Besides, banks exposure is 3-5% in terms of the Energy sector on the loan book compared to 30% for housing credit at the peak of the last cycle.

David RosenbergBreakfast with DaveJanuary 22nd, 2016

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Oil and the S&P 500 have recently been trading

together – should this be?


13

Across a dashboard of indicators, the S&P 500 is

trading around fair value

Metric Current Average % above / below average History

Trailing PE 15.9 16.0 -1% 1960-present

Forward Consensus PE 15.0 15.1 -1% 1986-present

Trailing Normalized PE 16.7 19.0 -12% 9/1987-present

Shiller PE 24.1 16.6 45% 1881-present

P / BV 2.6 2.85 -9% 1986-present

EV / EBITDA 10.1 9.9 2% 1986-present

Trailing PEG 1.73 1.47 18% 2001-present

Forward PEG 1.63 1.26 29% 2001-present

P / OCF 12.0 10.5 5% 1986-present

P / FCF 23.3 28.2 -25% 1986-present

EV / sales 2.08 1.80 10% 1986-present

ERP (market based) 713 455 57%* 11/1980-present

Normalized ERP 490 280 75%* 1987-present

As of Jan 24, 2016 except for ERP and PEG which are of Dec 31, 2015. *ERP above average implied equities are attractive relative to bonds. Note: Trailing P/E based on

GAAP EPS from 1960-77, Operating EPS from 1978-87, Pro forma EPS 1988-now. Market-based ERP based on DDM-implied S&P 500 return less AAA corp bond yield.

Normalized ERP based on normalized EPS yield less normalized real risk-free rate. Sources: S&P, Compustat, Bloomberg, FactSet/First Call, BofA Merrill Lynch US Equity &

US Quant Strategy. The general market targets above are not meant to represent fund performance. There is no assurance opinions or forecasts will come to pass.


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Valuation is very close to historic averages

This is a general market illustration for informational purposes only and not meant to represent buy or sell advice.

1/28/2016 25 of 48 — © Eventide Asset Management, LLC. For Financial Professional Use Only.

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The leading indicators remain positive

Source: Conference Board

The data lines above are for informational purposes only and not meant to represent buy or sell advice.


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The 10 components of the LEI

Source: Conference Board


1. Average weekly hours, manufacturing2. Average weekly initial claims for unemployment insurance3. Manufacturers’ new orders, consumer goods and materials4. ISM® Index of New Orders5. Manufacturers' new orders, nondefense capital goods excluding aircraft orders6. Building permits, new private housing units7. Stock prices, 500 common stocks8. Leading Credit Index™9. Interest rate spread, 10-year Treasury bonds less federal funds10. Average consumer expectations for business conditions

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So what are the big four doing?


The data above is for informational purposes only and not meant to represent buy or sell advice. Past performance is not assurance of future results.

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US Recession: Not Likely but What are the Risks?

While we’ve laid out why we don’t believe the oil price declines are going to cause a US Recession, we do think it’s always a good exercise to examine the best, worst & most likely scenarios. Below are three scenarios that we think are worthy of consideration:

Based on S&P 500 starting value of 2043 and P/E of 16.25 (12/31/15)

Base Line P/E of 15.5-18x S&P Range of 1810-2230 (-11% to 9% return) Assumes volatility continues and global uncertainty keep a

lid on valuations

Bull Case P/E of 16.5-18.5x S&P Range of 1922-2294 (-6% to 12% return) Assumes gradual pace of tightening from the Fed, no

major issues in Emerging Markets and US GDP comes in around 2-2.5%

Bear Case P/E of 14.5-17x S&P Range of 1690-2040 (-17% to 0% return) Assumes major economic issues in emerging markets that

pressure the global economy and markets. Investor psychology is damaged and P/E multiples contract.

Source: Raymond James Equity Portfolio and Technical Strategy

“The U.S. has solved many of its long-term problems (peak oil, manufacturing jobs, housing bubble, over leveraged banks, the deficit is under control, balance sheets are strong, etc.) and with cash on the sidelines, an improving economy, and everyone cautious, it is the formula for a continuation of the secular bull market.”

Dr. Claus te WildtSenior VP, Fidelity Capital Markets Strategy

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|GTM – U.S.

17

|

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

Source: FactSet, FRB, J.P. Morgan Asset Management; (Top and bottom right) BEA. Data include households and nonprofit organizations. SA – seasonally adjusted. *Revolving includes credit cards. **4Q15 household debt service ratio and household net worth are J.P. Morgan Asset Management estimates. Values may not sum to 100% due to rounding.Guide to the Markets – U.S. Data are as of December 31, 2015.

Consumer finances 17

Household debt service ratioDebt payments as % of disposable personal income, SA

1Q80: 10.6% 4Q15**:

10.0%

4Q07:13.2%

Household net worthNot seasonally adjusted, USD billions

2Q07:$67,648

Consumer balance sheet3Q15, trillions of dollars outstanding, not seasonally adjusted

Total assets: $99.5tn

Total liabilities: $14.4tn

Homes: 25%

Deposits: 9%

Pension funds: 21%

Other financial assets: 39%

Other tangible: 6%

Mortgages: 67%

Other non-revolving: 2%Revolving*: 6%Auto loans: 7%

Other liabilities: 8%Student debt: 9%

3Q-’07 Peak: $81.8tn1Q-’09 Low: $69.0tn

Econ

omy

4Q15**:$87,248

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Customer delinquency has plummeted


21

And people are buying lots of things


Source: St. Louis Fed

22

Sentiment remains bearish – which is a

contrarian positive signal

As of December 31, 2015

Source: BofAML Global Research

Note: Rolling red or green lines are on 15-year +/- 1 standard deviation

The data lines above are for informational purposes only and not meant to represent buy or sell advice.


23

Individual investor sentiment is at a 10-year low

Source: Bespoke


24

Raymond James Investment Strategy



Since the last time I included a chart of the percentage of NYSE stocks above the 200-day moving average (on 12/23/15), the number has deteriorated from

about 28% to 16% as of Friday’s close. While this is a sign of horrible breadth across the broad market, stocks do have a history of bottoming out shortly after

this indicator falls below 20%. The only times in the last 15 years that the readings have been lower than they are now were August 2015, the worst of the 2011

sell-off, late into the 2008-2009 financial crisis, and toward the end of the dot-com bubble bursting.

Source: Stockcharts.com

25

Aopoulos

Highlight

The long-term gains after these selloffs have

been impressive


Source: Ben Carlson, CFA

The data above is for informational purposes only and not meant to represent buy or sell advice. Past performance is not assurance of future results.

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Summary of Our Thoughts

The Fundamental Case for Recovery

US Economy is growing, albeit at a slower pace

The US Consumer has a stronger balance sheet than any point in the last 10 years

Low oil prices are a POSITIVE to consumers and most businesses

US Equities are fairly valued, not expensive

Investor Sentiment is squarely negative, which as we often mention, is a contrarian bullish indicator

The Technical Picture

• 1820 is the January intraday low and the low from August 2014. We view this as a major support point and a breech of this level likely opens up 5-10% more downside

• Markets frequently sell off 10+% without going into a recession. In fact it’s happened 16 times since 1940 and on average the market was 79% higher in 5 years (and was positive 90% of the time, 1998 is the only exception)

• We hold our largest percentages of cash across all three models that we have had since 2011 and believe this recent oil led market weakness will provide buying opportunities for those with patience and conviction.

Words of wisdom from Sir John Templeton

“If you want to have better performance than the crowd, you must do things differently from the crowd.”

“Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria”

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A Case Study on Recent Irrational Selling

The next few slides outline the indiscriminate selling that has occurred in the Biotech space, despite better fundamentals, lower multiples, higher cash positions and a more positive regulatory environment.

Oil has no impact on Biotech….clearly a case of the baby getting thrown out with the bath water

Sources: Eventide

“This is why it’s a challenging time to be an advisor, but a very exciting time to be an investor.”

-O² Team

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Source: Bloomberg. As judged by the XBI biotech ETF.

The worst selloff in biotech history

Peak (July 20, 2015) to trough (January 20, 2016) drawdown of this selloff has been 44.7%, surpassing the magnitude of the decline during the 2008-2009 financial crisis.

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But why?


• Investors have been exiting all types of risk – including uncorrelated risk

• Biotech typically experiences one selloff per year

• Residue from 2015 drug pricing scare?

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Regulatory fundamentals are attractive


Source: FDA, Raymond James

31

Consensus forward P/E of the four largest biotech

companies is now lower than the S&P 500


Source: Jefferies, FactSet. The largest four biotech companies are AMGN, BIIB, CELG, and GILD

The data lines above are for informational purposes only and not meant to represent buy or sell advice..

32

Actual growth (4-year) has exceeded consensus in

big biotech


Source: FactSet, Raymond James. This graph is of consensus 4-year forward EPS CAGRs from AMGN, BIIB, CELG, and GILD.

Past performance is not assurance of future results.

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34

Disclaimers

The views in this commentary do not take into account the particular investment objectives, financialsituations, or needs of every individual client.

Investments are subject to market risk, including possible loss of principal. International investing involvesadditional risks such as currency fluctuations, differing financial accounting standards, and possible politicaland economic instability. These risk are greater in emerging markets.

Commodities are volatile investments and should only form a small part of a diversified portfolio. There maybe sharp fluctuations even during periods when prices are rising overall. The price of gold has been subject todramatic price movements over short periods of time and may be affected by elements such as currencydevaluations or revaluations, economic conditions within an individual country, trade imbalances, or trade orcurrency restrictions between countries. As a result, the market prices of securities of companies mining orprocessing gold may also be affected.

Dividends are not guaranteed and can fluctuate.

Past performance does not guarantee future results. There is no assurance that these trends will continue.

Views expressed in this newsletter are the current opinion of the author and are subject to change withoutnotice.

Raymond James &Associates is not affiliated Gluskin Sheff, JP Morgan or Eventide Asset Mgmt.

There is an inverse relationship between interest rate movements and bond prices. Generally, when interestrates rise, bond prices fall and when interest rates fall, bond prices rise.

Material is provided for informational purposes only and does not constitute a recommendation. It has been obtained from sources believed to be reliable, but accuracy is not guaranteed.

Technical Analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume.

Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.

Asset allocation and diversification do not ensure a profit or protect against a loss. Investments are subject to market risk, including possible loss of principal.

P/E is the price of the stock divided by its earnings per share.

35

Disclaimers

U.S. Treasury securities are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and guaranteed principal value.

Indexes Referenced:The S&P 500 is an unmanaged index of 500 widely held stocks. It is not possible to invest directly in an index.The Dow Jones Industrial Average is an unmanaged index of 30 widely held securities.

The NASDAQ Composite Index is an unmanaged index of all stocks traded on the NASDAQ over-the-counter market.

The MSCI World Index is designed to measure the equity market performance of developed markets. It tracks 23 countries including the Unites States.

The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. These international securities involve additional risks such as currency fluctuations, differing financial accounting standards and possible political and economic instability.

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

The MSCI US REIT Index is a free float-adjusted market capitalization index that is comprised of equity REITs. The index is based on MSCI USA Investable Market Index (IMI) its parent index which captures large, mid and small caps securities. With 143 constituents, it represents about 99% of the US REIT universe and securities are classified in the REIT sector according to the Global Industry Classification Standard (GICS®). It however excludes Mortgage REIT and selected Specialized REITs.

The Alerian MLP Index is a composite of the 50 most prominent energy Master Limited Partnerships (MLPs).

The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks.

Barclays Capital U.S. Aggregate Bond Index is made up of the Barclays Capital U.S. Government / Corporate Bond Index, Mortgage-Backed Securities Index, and Asset-Based Securities Index, including securities that are of investment grade quality or better, have at least one year to maturity, and have an outstanding par value of at least $100 million.

Barclays Capital US Government/Credit Bond Index measures the performance of U.S. Dollar denominated U.S. Treasuries, government-related and investment grade U.S. corporate securities that have a remaining maturity of greater than one year.

The Nikkei index is an unmanaged index which is representative of the Japanese stock market.

36

Disclaimers

The EURO STOXX 50 Index, Europe's leading Blue-chip index for the Eurozone, provides a Blue-chip representation of supersector leaders in the Eurozone.

VIX is the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market’s expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. The VIX is a widely used measure of market risk. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The charts above are for illustrative purposes only.

Keep in mind that indexes are unmanaged and individuals cannot invest directly in any index. Indexperformance does not include transaction costs or other fees, which will affect the actual investmentperformance. Individual investor results will vary.

Material is provided for informational purposes only and does not constitute a recommendation. It has been obtained from sources believed to be reliable, but accuracy is not guaranteed.

Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC360 Concord St., Ste 210Charleston, SC 29401843-720-3527

37

Raymond James Market Outlook


International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863 44

Important Investor Disclosures Raymond James & Associates (RJA) is a FINRA member firm and is responsible for the preparation and distribution of research created in the United States. Raymond James & Associates is located at The Raymond James Financial Center, 880 Carillon Parkway, St. Petersburg, FL 33716, (727) 567-1000. Non-U.S. affiliates, which are not FINRA member firms, include the following entities that are responsible for the creation and distribution of research in their respective areas: in Canada, Raymond James Ltd. (RJL), Suite 2100, 925 West Georgia Street, Vancouver, BC V6C 3L2, (604) 659-8200; in Latin America, Raymond James Argentina S.A., San Martin 344, 22nd Floor, Buenos Aires, C10004AAH, Argentina, +54 11 4850 2500; in Europe, Raymond James Euro Equities SAS (also trading as Raymond James International), 40, rue La Boetie, 75008, Paris, France, +33 1 45 64 0500, and Raymond James Financial International Ltd., Broadwalk House, 5 Appold Street, London, England EC2A 2AG, +44 203 798 5600.

This document is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. The securities discussed in this document may not be eligible for sale in some jurisdictions. This research is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Investors should consider this report as only a single factor in making their investment decision.

For clients in the United States: Any foreign securities discussed in this report are generally not eligible for sale in the U.S. unless they are listed on a U.S. exchange. This report is being provided to you for informational purposes only and does not represent a solicitation for the purchase or sale of a security in any state where such a solicitation would be illegal. Investing in securities of issuers organized outside of the U.S., including ADRs, may entail certain risks. The securities of non-U.S. issuers may not be registered with, nor be subject to the reporting requirements of, the U.S. Securities and Exchange Commission. There may be limited information available on such securities. Investors who have received this report may be prohibited in certain states or other jurisdictions from purchasing the securities mentioned in this report. Please ask your Financial Advisor for additional details and to determine if a particular security is eligible for purchase in your state.

The information provided is as of the date above and subject to change, and it should not be deemed a recommendation to buy or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. Persons within the Raymond James family of companies may have information that is not available to the contributors of the information contained in this publication. Raymond James, including affiliates and employees, may execute transactions in the securities listed in this publication that may not be consistent with the ratings appearing in this publication.

Additional information is available on request.

International securities involve additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets.

Small-cap stocks generally involve greater risks. Dividends are not guaranteed and will fluctuate. Past performance may not be indicative of future results.

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Raymond James Market Outlook


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