Market Navigator from the Investment Advisory Group Truist Advisory Services, Inc.
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Market Navigator
from the Investment Advisory Group
Truist Advisory Services, Inc.
March 3, 2022
Securities and insurance products and services –
• Are not FDIC or any other government agency insured
• Are not bank guaranteed
• May lose value
Monthly letter
Russia’s invasion of Ukraine shook up the world. It’s the From a market perspective, the range of outcomes has
largest war in Europe since 1945. The human suffering is widened. However, our base case outlook remains that what
enormous, and our thoughts are with the people of Ukraine. we are seeing in the U.S. markets is a correction within an
ongoing bull market. While this is the first double-digit
The repercussions will be long lasting as the world rethinks correction since the pandemic, it is important to remember
its relationship with Russia. The ripple effects from the that the average maximum drawdown for any given year for
severe sanctions on Russia will have further consequences the S&P 500 is 14%. Thus, while this correction has been
for the global economy, markets, and inflation. Russia is one deep, it is not abnormal by historical standards. This is the
of the world’s leading energy- and commodity-producing admission price to being in the market. Importantly, our work
countries, while Ukraine is a major player in agriculture shows that while geopolitical events often cause a short-term
products. market dip and choppy waters, unless they push the U.S. into
Keith Lerner, CFA, CMT recession, markets tend to rebound over the next 6-12
Co-Chief Investment Officer From an economic standpoint, European growth rates are months.
Chief Market Strategist expected to be downgraded significantly as consumer
Senior Managing Director confidence wanes and given its greater dependence on Notably, the entire market correction this year has been
Russian energy. The European Union is estimated to be the driven by fear and a subsequent contraction in valuations.
largest importer of natural gas in the world, with the most Forward earnings estimates for the S&P 500 continue to
significant share of gas (~40%) coming from Russia. move higher. Given how well corporate America adjusted
“We maintain our long- Likewise, higher energy and agriculture product costs will during the pandemic—where profits snapped back faster
standing equity overweight likely disproportionately impact segments of the emerging than most anyone anticipated—we would not underestimate
to the U.S., which we view as markets, given lower consumer incomes; Asian countries are the ability for companies to once again adapt and adjust.
the big, blue-chip country also largely a net importer of energy.
….Given expected Therefore, we maintain our long-standing equity overweight
downgrades in European Although the U.S. economy is not immune to these events to the U.S., which we view as the big, blue-chip country with
growth…we stay given the interconnectedness of the global economy and higher-quality companies. Given expected downgrades in
underweight the international given that higher oil prices will hit U.S. consumers, the European growth and weakening relative price trends, we
developed markets…and domestic economy is more insulated than other developed stay underweight the international developed markets.
retain an unfavorable view
economies. Importantly, unlike 30 or 40 years ago, the U.S. Likewise, with heightened global risk and our continued
towards emerging markets.
is now a significant energy producer. Moreover, the concerns about the regulatory environment in China, we
improvement in COVID-19 trends is underappreciated in the retain an unfavorable view towards emerging markets.
sea of gloom. Our expectation is that consumer demand for
services, including travel, will remain robust this year as the
pandemic becomes endemic. Our macro team expects U.S.
growth to move a notch lower, but still see near-term Continued on the next slide.
recession risks as relatively low.Monthly letter continued Within our sector strategy, we recently downgraded financials to neutral after strong relative performance this year, given that geopolitical tensions likely put a cap on longer-term interest rates and will have some impact on global growth. Conversely, we upgraded consumer staples to overweight and utilities to neutral given our expectation for continued choppy waters near term. On the fixed income side, we remain underweight bonds, though as we discussed last month, the rise in yields has incrementally improved the outlook. Our fixed income team’s view is that the market had become too aggressive with pricing in six or seven Federal Reserve (Fed) rate hikes. While many investors started to question the value of bonds as a diversifier given stocks and bonds are both down this year—recent days have shown strong buying demand for U.S. Treasuries. This serves to reinforce that high-quality bonds still play an important portfolio role. Also, given wider outcomes for the financial markets, we are moving our house view to a neutral bond duration from below- benchmark. Keith Lerner, CFA, CMT Co-Chief Investment Officer Chief Market Strategist Senior Managing Director
Asset class view, forecasts & valuation*
We still see value in equities relative to fixed income over the next 12 months but expect markets to remain choppy near term. Rising geopolitical tensions reinforce
our long-standing U.S. equity bias. Also, given wider outcomes, we are moving to a neutral duration from a fixed income perspective.
Tactical outlook (3-12 months) Long-term capital market assumptions (10 yr)+
Less More Expected Expected
Asset classes Attractive Attractive Equity Return Risk
Equity Global equity 5.75% 16.3%
Fixed income U.S. large cap 6.00% 15.2%
Cash U.S. small cap 7.50% 19.0%
Less More Real estate investment trusts (REITs) 4.50% 18.0%
Global equity Attractive Attractive International developed markets 5.50% 17.5%
U.S. large cap Emerging markets (EM) 5.50% 24.0%
U.S. mid cap Expected Expected
U.S. small cap Fixed income Return Risk
Real estate investment trusts (REITs)*** Intermediate-term municipals 1.25% 3.5%
International developed markets U.S. core taxable bonds 1.50% 3.4%
Emerging markets (EM) U.S. government bonds 1.00% 3.9%
Growth style relative to value U.S. IG corporate bonds 2.25% 6.0%
Less More U.S. HY corporate bonds 3.75% 9.0%
U.S. fixed income Attractive Attractive
U.S. government Key IAG 2022 forecasts
U.S. mortgage-backed securities 2022 global GDP forecast* 4.4%
U.S. investment grade corporate (IG) U.S. GDP 3.5% - 4.2%
U.S. high yield corporates (HY) Year-end Fed Funds rate range 0.75% - 1.00%
Leveraged loans 10-yr U.S. Treasury yield 1.25% - 2.25%
Duration S&P 500 12-month forward EPS** $229.29
*IMF forecast **FactSet consensus estimates
Global equity market valuation S&P 500 MSCI ACWI MSCI EAFE MSCI EM
Current price-to-earnings (P/E) ratio 19.1x 16.8x 14.1x 11.7x
10-year average P/E ratio 16.8x 15.4x 14.2x 11.7x
10-year high P/E ratio 23.4x 20.8x 18.2x 17.0x
10-year low P/E ratio 11.3x 10.4x 9.7x 8.8x
For domestic use only
Past performance does not guarantee future results. Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.
*In this document, we express our high-level investment strategy views without portfolio context constraints. We aim to represent relative opportunities within each broader asset class. This allows us to signal what we are watching
and where things are changing at the margin within positions that may differ from our asset allocation guidance and Strategy Portfolios. Long-term expected risk, return and correlation statistics are derived from the Portfolio & Market Strategy
team’s capital market assumptions process and are not guaranteed. Secular trends, such as demographics, global debt, inflation, etc. are initially assessed to determine the impact on global markets over the next decade. With an understanding of
the current stage of the business cycle, a combination of quantitative and fundamental techniques is used to further analyze factors that include, but are not limited to: (1) the outlook for asset class return drivers; (2) the probability of sustained
returns; (3) absolute and relative valuation measures; (4) the impact of economic drivers on asset class assumptions and (5) changes in investor sentiment and liquidity. +Capital market assumptions are reviewed and/or modified at least once a
year and are currently as of 2021. ***REITs – Our asset class views can differ at times from our sector strategy as the latter has a much heavier emphasis on price momentum, whereas fundamentals play a greater role in our asset class view.
Investment and insurance products – Are not FDIC or any other government agency insured | are not bank guaranteed
| may lose valueSector Strategy
Geopolitical tensions have flared given the ongoing Russia-Ukraine conflict. This has injected volatility into markets as investors try to ascertain the
impact on global economic growth, monetary policy, and inflation. Accordingly, we are making changes to our sector strategy to reflect wider outcomes.
We are upgrading consumer staples to overweight from neutral and utilities to neutral from underweight. We are also downgrading financials to neutral
from overweight. Last Updated = 3/1/2022
Tactical outlook
S&P 500
(3-12M)
Sector Sector T F V Comments
Under- Over-
weight weight weight
Energy 3.6% ● + +
A positive demand/supply backdrop, strong technical trends, and positive fundamentals should result in
outperformance for the sector near term, despite long-term challenges.
Consumer Staples 6.4% ● + - Relative price trends have been improving after a significant period of underperformance given elevated levels of
uncertainty and despite unattractive valuations.
Information Technology 27.8% ● - - While technical trends have weakened, we are seeing improvement off of the recent oversold levels. Mega cap tech
stocks have strong balance sheets and produce significant cash flows. Policy is a risk.
Real Estate* 2.6% ●
Real Estate should outperform given an acceleration in rents and a sector composition that is now more weighted to
the digital economy. The sector has a nice balance of cyclical, growth, and defensive qualities.
Consumer Discretionary 11.6% ● - +
Earnings trends have been firmer, though technical trends have been weak. Valuations have shown some signs of
improvement.
Industrials 7.9% ● + Despite strong fundamentals and relative price performance that has improved, global uncertainty keeps us neutral.
Materials 2.6% ● + While valuations are attractive, mixed technical and fundamental trends warrant a neutral position.
Health Care 13.4% ● + Relative performance has improved recently, though technical trends are mixed overall. While valuations appear
attractive, fundamentals are mixed.
Financials 11.8% ● + - - Positive technical trends are offset by mixed global economic trends, weak relative earnings, and rising geopolitical
tensions that likely cap interest rates.
Utilities 2.5% ● -
Relative price trends have improved given elevated levels of global uncertainty. Though fundamentals are challenged,
the weight of the evidence warrants a neutral outlook.
Communication Services 9.5% ● - - + While valuations for the sector are attractive, relative performance has been weak due to underperformance from
some of the larger names in the sector. Relative earnings trends have also weakened.
For domestic use only. All information supplied or obtained from this page is for informational purposes only and should not be considered investment advice or guidance, an offer of or a solicitation of an offer to buy or sell a security, or
a recommendation or endorsement by TAS of any security or investment strategy. The information and material presented in this commentary are for general information only and do not specifically address individual investment
objectives, financial situations or the particular needs of any specific person who may receive this commentary, and are subject to change without notice. Truist makes no guarantees that information supplied is accurate, complete, or
timely, and does not provide any warranties regarding results obtained from its use. *Real Estate/REITs – Our asset class views can differ at times from our sector strategy as the latter has a much heavier emphasis on price
momentum, whereas fundamentals play a greater role in our asset class views.
T = Technical. This factor has the greatest focus in our overall methodology with an emphasis on relative price trends
F = Fundamentals. Includes earnings and sales trends, with an emphasis on recent changes to estimates
V = Valuation. Inputs include current/historical and absolute/relative to the overall market
+ Top Tier, -Bottom Tier, Middle Tier; Data Source: Truist IAG, FactSet.Performance summaryW E E K LY M A R K E T
M Oas
N I Tof
O RFebruary 28, 2022
Index % Total Return MTD QTD YTD 1 Yr Rates (%) 2/28/22 12/31/21 9/30/21 6/30/21 3/31/21
MSCI ACWI (net) -2.58 -7.37 -7.37 7.78 Fed Funds Target 0.25 0.25 0.25 0.25 0.25
S&P 500 -2.99 -8.01 -8.01 16.32 Libor, 3-Month 0.50 0.20 0.13 0.14 0.19
MSCI EAFE (net) -1.77 -6.52 -6.52 2.82 T-Bill, 3-Month 0.31 0.05 0.03 0.05 0.02
MSCI Emerging Markets (net) -2.99 -4.83 -4.83 -10.65
2-Year Treasury 1.42 0.72 0.28 0.25 0.16
Dow Jones Industrials -3.29 -6.43 -6.43 11.55
NASDAQ Composite -3.43 -12.10 -12.10 4.22 5-Year Treasury 1.71 1.26 0.99 0.87 0.93
S&P United States REITs -3.18 -9.88 -9.88 23.73 10-Year Treasury 1.83 1.51 1.52 1.44 1.73
Bloomberg Commodity Index 6.23 15.56 15.56 34.27 30-Year Treasury 2.18 1.90 2.09 2.06 2.42
Bloomberg Aggregate -1.12 -3.25 -3.25 -2.63 Bloomberg Aggregate (YTW) 2.33 1.75 1.56 1.50 1.61
ICE BofA US High Yield -0.90 -3.62 -3.62 0.81 Bloomberg Municipal Bond Blend 1-15
1.64 0.87 0.84 0.76 0.87
Bloomberg Municipal Bond Blend 1-15 Year
-0.31 -2.75 -2.75 -1.12
Year ICE BofA US High Yield 5.64 4.31 4.08 3.85 4.27
ICE BofA Global Government xUS (USD Currencies 2/28/22 12/31/21 9/30/21 6/30/21 3/31/21
-1.07 -3.26 -3.26 -8.99
Unhedged)
ICE BofA Global Government xUS (USD Euro ($/€) 1.12 1.14 1.16 1.19 1.18
-1.24 -2.54 -2.54 -1.80
Hedged) Yen (¥/$) 115.18 115.16 111.57 110.99 110.50
JP Morgan EMBI Global Diversified -6.55 -9.21 -9.21 -7.47 Pound ($/£) 1.34 1.35 1.35 1.38 1.38
Commodities 2/28/22 12/31/21 9/30/21 6/30/21 3/31/21
Crude Oil (WTI) 95.72 75.21 75.03 73.47 59.16
Gold 1,901 1,829 1,757 1,772 1,716
Volatility 2/28/22 12/31/21 9/30/21 6/30/21 3/31/21
CBOE VIX 30.15 17.22 23.14 15.83 19.40
U.S. style % total returns (S&P indexes) S&P 500 sector % total returns
Month YTD MTD YTD
Value Core Growth Value Core Growth 27.6
-1.44 -2.99 -4.50 Large -3.04 -8.01 -12.49 7.1
1.26 1.11 0.97 Mid -2.75 -6.18 -9.52 -4.0 -1.4 -2.8 -1.4 -1.3 -1.0 -0.9 -1.2 -1.9
-7.0 -7.7 -5.6 -4.9 -8.0 -4.9 -5.1
-12.8 -13.3 -11.4 -13.0
2.34 1.40 0.40 Small -2.08 -5.97 -9.76 Comm Cons Disc Cons Energy Financials Health Industrials Info Tech Materials Real Estate Utilities
Services Staples Care
Data Source: Truist IAG, FactSet.
Disclosures – All information is as of title date unless otherwise noted. You cannot invest directly in an index. This document was prepared for clients of Truist Bank for informational purposes only. This material may not be suitable for all investors and may
not be redistributed in whole or part. Neither Truist Financial Corporation, nor any affiliates make any representation or warranties as to the accuracy or merit of this analysis for individual use. Information contained herein has been obtained from sources
believed to be reliable, but are not guaranteed. Comments and general statistics are based on information available at the time of writing and believed to be accurate; are for informational purposes only, are not intended as individual or specific advice, may
not represent the opinions of the entire firm and may not be relied upon for future investing. The views expressed may change at any time. The information provided in this report should not be considered a recommendation to purchase or sell any financial
instrument, product or service sponsored or provided by Truist Financial Corporation or its affiliates or agents. Investors are advised to consult with their investment professional about their specific financial needs and goals before making any investment
decisions. Past returns are not indicative of future results. An investment cannot be made into an index. ©2020 Truist Financial Corporation. and Truist are service marks of Truist Financial Corporation. All rights reserved.
Securities and insurance products and services: Are not FDIC or any other government agency insured | are not bank guaranteed | may lose valueGlobal backdrop – Geopolitical tensions set to have the biggest negative
impact on Europe and emerging markets
United States
Emerging Asia
2021 2022
3.50%- 2021 2022
5.70%
4.20%
7.20%
5.20%
Russia’s invasion is a modest negative for U.S.
economic growth due to hotter near-term inflation, but
we maintain our view that U.S. recession risks are low Europe In China, support from
and GDP growth will remain above the pre-pandemic monetary policy is less bold
pace through 2023. 2021 2022 than expected, leading to a
further slowdown in the local
2021 GDP 5.30%
economy.
($95 trillion total) 3.90%
Higher energy and agriculture
product costs due to the
24% 25% Ukrainian crisis could lead to
Other $24 higher inflation for the Asian
economies and lower
economic growth.
$26 $22 European growth rates are expected to be downgraded
significantly due to Russia’s invasion of Ukraine and the related
27% 24% sanctions introduced for Russia and Belarus. Mediterranean
economies had the potential for positive surprises if the summer
travel season was better than 2021, but recent developments have
changed that outlook.
Data Source: Truist IAG, International Monetary Fund, Bloomberg, IHS Markit
Europe includes developed countries and economies considered to be “emerging,” such as Russia, Turkey, and Ukraine.China is the top trading partner of Russia for both exports and imports
Like many other countries in the emerging markets space, China is the top trading partner of Russia for both exports and imports. Since the global
financial crisis, Russia has amassed a cumulative trade surplus of over $2 trillion. Ukraine-related sanctions could derail the Russian trade balance, but
if China continues to trade with Russia, the impact could be limited.
Exports Imports Russian annual trade surplus
($ billion)
China 13% China 22% 250
Netherlands 11% Germany 10% 200
150
Germany 7% Belarus 6%
100
Belarus 5% United States 5%
50
Turkey 5% Italy 4%
0
'10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21
Since 2010, in total, Russia has accumulated a trade surplus of over $2 trillion.
Data Source: Truist IAG, Bloomberg, World BankRussia and Ukraine are two of the largest energy, commodity, and
agriculture producers
Russia is one of the world’s leading energy and commodity-producing countries, while Ukraine is a major player in agriculture products.
Russia Ukraine
Mining/Producer World Ranking Mining/Producer World Ranking
Natural Gas 1 Sunflower seed 1
Platinum 2 Potato 3
Palladium 2 Pumpkin 3
Oil 2 Buckwheat 3
Cobalt 2 Dried peas 4
Gold 3 Carrot 5
Aluminum 3 Titanium 6
Nickel 3 Iron Ore 7
Phosphate 4 Graphite 7
Silver 4 Manganese 8
Iron Ore 5 Uranium 9
Lead 6
Uranium 6
Boron 7
Gypsum 8
Data Source: Truist IAG, Bloomberg, USGS, FAOGeopolitical cards
Russia’s military operation in Ukraine has the potential to become a major geopolitical event for many years, eclipsing all other possible affairs brewing
behind the scenes.
IAG’s current tactical recommendation
Russia & Ukraine X Iran
China
Overweight
Negotiations continue
Neutral Russia’s invasion took
The National People’s in an attempt to revive
the spotlight with a wide
Underweight Congress is set to take the 2015 nuclear deal
range of possible
X Not Investable place during March. with Iran. The timing of
outcomes. After the
President Xi Jinping is the deal is becoming
stepped-up sanctions
expected to stay on as more important,
that included the
the party chief for an especially if energy
Russian Central Bank,
unprecedented third flows out of Russia get
Russia put its nuclear
term. interrupted due to
forces on high alert.
sanctions.
Election Countries
France South Korea Colombia Philippines
The country is Bongbong Marcos (the
Campaigns started for The Colombian
scheduled to have a son of former president
France’s presidential parliamentary election
presidential election on Ferdinand Marcos) and
election. The first round will set the stage for the
March 9. A very tight vice-president Sara
is scheduled for April upcoming presidential
race is expected Duterte (the daughter of
10 and the second for election. 166 seats in
between Lee Jae- current president
April 24. Incumbent the House of
myung from the Rodrigo Duterte) are
President Emmanuel Representatives and
Democratic party and running ahead in polls
Macron is polling ahead 102 Senators will be
Yoon Suk-yeol from the for the upcoming
of other candidates. elected.
People Power party. presidential election.
Data Source: Truist IAGCentral banks continue hiking rates to tackle higher inflation
Seven central banks in the emerging markets hiked Number of central banks hiking minus easing
rates in February, although Russia hiked rates a
second time by a significant amount to halt currency
outflows as markets reacted to its invasion of 15
Ukraine. Net hiking
In the developed markets, the U.K. and New Zealand 10
raised rates, and the Federal Reserve (Fed) is
expected to start its tightening cycle in March. With 5
rising geopolitical risks, the Fed may strike a bit less
aggressive tone as compared with earlier this year.
0
-5
-10
-15 Net easing
-20
-25
-30
2017 2018 2019 2020 2021 2022
Data Source: Truist IAG, Haver. Series constructed using predominantly countries in the MSCI All Country World Index.
Past performance does not guarantee future results.U.S. economy – Rising geopolitical tensions and oil slightly weigh on
economic growth, but still looking for above-trend growth through 2023
While growth will step down in 2022 as many pandemic assistance programs end, U.S. economic growth should remain above the pre-pandemic pace
through at least 2023. That said, the first quarter of 2022 will likely be weaker due to the combination of the omicron variant, a series of wicked winter
storms, and the Russia-Ukraine conflict, stretching our range for 2022 growth a bit wider.
Growth of gross domestic product (GDP) by year
2022
Average 2010-2019 = 2.3% Forecast range
3.5% to 4.2%
5.7%
2.7% 2.7% 2.9% 2.6%
2.3% 1.8% 2.3% 1.7% 2.3% 2.3%
1.5%
-3.4%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022f 2023f
Data Source: Truist IAG, Bureau of Economic Analysis, IHS Markit. Change in real gross domestic product year over year, actual for 2010 through 4Q2021.
f = Truist IAG forecast for 2022 and 2023First quarter U.S GDP estimates down sharply, but weakness likely short lived
Estimates for first quarter gross domestic product (GDP) have dropped more than 60% since the start of 2022. However, manufacturing data rebounded
in February and other activities have ramped up since the omicron variant peaked in mid-January. Thus, this weakness should pass rather quickly, and
our view is current growth estimates for the quarter are overly pessimistic.
Markit Composite Index PMIs Consensus estimate for 1Q22
80 (index value, 50 = expansion) gross domestic product (GDP)
5%
Down from
70 PMIs 4% to start
rebounded the year
in February 4%
60
3%
50
2%
40
1.6%
30 1%
20 0%
'19 '20 '21 '22 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22
Data Source: Truist IAG, Bloomberg, IHS Markit; Markit composite, includes manufacturing and services, and is monthly data through February 2022. Real GDP estimates shown for quarter-over-quarter percent
change on a seasonally-adjusted annualized rate through February 28, 2022.The consumer – over 2/3rds of the U.S. economy – remains in good shape
U.S. retail & food service sales (in $billions) Weekly bank deposits & savings in
$700 U.S. commercial banks (in $trillions)
$20 Up $4.3T since
$500 start of pandemic
$15
$300 $10
$100 $5
'00 '03 '06 '09 '12 '15 '18 '21 '16 '17 '18 '19 '20 '21 '22
U.S. credit card charge-off rate Number of full-time U.S. workers
12% 160 (in millions)
10%
8% 140
6% Average since 2000 = 4.7% 98.1%
4% recovered
120
2%
0.9%
0% 100
'00 '03 '06 '09 '12 '15 '18 '21 '00 '03 '06 '09 '12 '15 '18 '21
Data Source: Truist IAG, Bloomberg, Haver. Top left and bottom right data through January 2022. Bottom left data through November 2021. Top right: data through February 16, 2022.Wage pressures will continue through 2022
Average hourly earnings have jumped, which should persist through 2022. However, the labor force participation rate has been greatly impacted by
lingering issues related to the pandemic, such as childcare. Labor force participation should continue to drift higher over the next few years, helping to
ease wage pressures.
Average hourly earnings
(change year-over-year) Labor force participation rate
9%
8%
65%
7%
6%
5.7%
5% 63%
Still 1.1
4% percentage
points
3% below 2019
61%
2%
1%
0% 59%
'10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21
Data Source: Truist IAG, Bloomberg, Bureau of Labor Statistics; monthly data through January 2022.The two biggest culprits of inflation in 2021 were energy and used vehicles
Energy prices jumped 27.0% year over year, including gasoline, which soared 40% as demand rebounded but supply didn’t. Similarly, a scarcity of
vehicles spiked used vehicle prices more than 40% in the past year. In the second half of 2021, new vehicle inventories dropped below one million units,
or roughly one-third of the pre-pandemic level. Fewer new vehicles translates into both fewer used vehicles available (as a result of trade-ins) and
increased demand for used vehicles.
Year-over-year change in select CPI Consumer Price Index: Energy
categories (year-over-year change)
80% Gasoline (all types) Energy
40.5%
60%
27.0% 40%
Slower ramp
up in core
prices 20%
0%
7.5% 7.0% 6.0%
-20%
All items Food Energy Used All items less -40%
vehicles food &
'10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21
energy
Data Source: Truist IAG, Bloomberg, Bureau of Labor Statistics, January 2022 for CPI-U.Consumers don’t spend much on energy compared to the past, but higher
prices greatly impact lower income Americans
U.S. consumers spend just 4.2% of after-tax income on energy goods and services—even when crude oil hit $145 per barrel, it was less than 7%. With
gasoline prices up 10% in 2022, it shaves off just 0.2% from overall consumer spending. However, higher gasoline prices disproportionately impact
Americans in the lowest income decile.
U.S. spending on energy Impact of a 10% gasoline price hike on
(gasoline+electricity+natgas) as a consumer spending
percentage of consumer spending
9.5% -0.1%
10%
$145 per -0.1% -0.2%
-0.2%
9% barrel* -0.2% -0.2% -0.3%
-0.3%
8% -0.3%
6.8%
7%
6%
5% 4.2%
Average impact = -0.2%
4% -0.9%
3%
2%
1%
0% Income deciles
'60 '70 '80 '90 '00 '10 '20
Data Source: left chart: Truist IAG, Bloomberg; energy spending consists of gasoline and other energy goods and of electricity and natural gas services used for household utilities; spending as percentage of
disposable personal income; monthly data through February 2022. *West Texas Intermediate crude oil price was $145 per barrel in July 2008. Right chart: Truist IAG, PSC Macro.U.S. crude oil production is climbing again, boosting supply and should help
stabilize prices in 2022; Russia a small fraction of U.S. supply
After roughly 16 months of declines, U.S. crude oil production is finally heading higher. Rig counts hit a 16-year low in the fall of 2020 but are rising again.
Still, U.S. crude oil production remains 6% below its all-time high of 13.1 million barrels per day achieved in February 2020. Thus, increased crude oil
supply should help stabilize the price of gasoline, but it will likely remain elevated throughout 2022. Also, Russia accounts for just 1.4% of total U.S. crude
oil imports, which are down more than 65% since August.
U.S. crude oil production vs. rig count U.S. crude oil imports from Russia
Crude oil production (l-axis) (thousands of barrels per day)
15 1,800 400
U.S. crude oil rig count (r-axis)
1,600 Down more than
12 65% since
1,400
300 August ‘21
Millions of barrels/day
1,200
Rotary rig count
9
1,000
200
800
6
600
100
3 400
200
0 0 0
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '19 '20 '21 '22
Data Source: Truist IAG, Bloomberg, U.S. Department of Energy; monthly data through February 2022.Market pullbacks are the admission price to the market; it’s also important to
remember that snapbacks, once a low is found, tend to be sharp
Despite 25 pullbacks of more than 5%, all of which came with bad news, the S&P 500 has risen more than 500% since the March 2009 low. Importantly,
snapbacks from these corrections have been sharp—once stocks found their low, the average rebound over the next five months was 19.8%.
S&P 500 price & pullbacks
S&P 500 – Average pullback and
8000 subsequent rebound since 2009 low
Pullback Snapback
Average -10.0% 19.8%
4000 -5.2% -11.9%
Duration 1.4 months 5.1 months
-9.6%
-7.1%
-6.8% -6.1%
-10.2%
2000 -5.6%
-19.8% -33.9%
-12.4% -13.3%
-7.4%
-5.8% -5.8%
-9.9% -7.7%
-6.4%
1000 -5.6 -19.4%
-7.1% -8.1%
-5.4%
500
2009 2010 2011 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Data Source: Truist IAG, FactSet
Past performance does not guarantee future resultsS&P 500 performance around select geopolitical/military events
Geopolitical events often lead to short-term market 12-
Select geopolitical/ 1-month 3-months 6-months
weakness; however, these types of events tend to not Date months
military events later later later
have a lasting impact unless they lead to recession. later
For example, when looking at a sample of major 12/7/1941 Pearl Harbor -3.4% -12.7% -9.1% 0.4%
historical geopolitical/military events, the S&P 500
10/31/1956 Suez Canal crisis -2.8% -3.8% -0.1% -11.5%
was higher 12 months later in nine of the 12 events
we reviewed. The three instances where stocks were 10/20/1962 Cuban missile crisis 8.7% 17.7% 25.1% 32.0%
down a year later coincided with a recession. Our
view remains that U.S. recession risks remain low. 10/17/1973 Arab oil embargo -7.0% -13.2% -14.4% -36.2%
11/3/1979 Iranian hostage crisis 4.2% 11.6% 3.8% 24.3%
12/25/1979 U.S.S.R. in Afghanistan 5.6% -7.9% 6.9% 25.7%
8/3/1990 Iraq invades Kuwait -8.2% -13.5% -2.1% 10.1%
1/17/1991 Gulf War 15.2% 23.5% 20.6% 33.1%
8/17/1991 Gorbachev coup 0.0% 3.0% 7.0% 8.9%
2/26/1993 World Trade Center bombing 1.2% 2.5% 4.0% 6.4%
9/11/2001 9/11 -0.2% 2.5% 6.7% -18.4%
3/20/2003 Iraq War 2.2% 15.6% 17.4% 28.4%
Average 1.3% 2.1% 5.5% 8.6%
% Positive 50% 58% 67% 75%
Data Source: Truist IAG, FactSet. Grey shading represents down markets where the economy was in recession at some point during
the measurement period. Past performance does not guarantee future resultsThe first Fed rate hike injects volatility, does not typically end the bull market
Stock market performance following the first Fed rate hike to subsequent market peak
1994 - 1998 1999 - 2000
+16%
1400 1550
+162%
1200 1500
1000 1450
1400
800
1350
600 1300
400 1250 First hike = Jun. 1999
First hike = Feb. 1994
200 1200
'94 '95 '96 '97 '98 '99 '00
2004 - 2007 2015 - 2018 +40%
+37%
1600 3000
1500
1400 2500
1300
1200
1100 2000
1000
First hike = Jun. 2004 First hike = Dec. 2015
900 1500
'04 '05 '06 '07 '15 '16 '17 '18
Data Source: Truist IAG, Bloomberg. Performance from first rate hike to peak prior to 15% or more correction.
Past performance does not guarantee future result.Investor sentiment suggests the bar for positive surprises is low
The American Association of Individual Investors (AAII) showed that the percentage of bulls dropped to just 19.2% in mid-February, the lowest since mid-
2016. This is only the 32nd time since the survey’s 1987 inception it has dipped below 20%. Similar readings historically have been followed by positive
S&P 500 returns more than 90% of the time on a 3- to 12-month time horizon.
% Individual investors bullish S&P 500 returns after % of bullish investors
(AAII sentiment) dropped below 20% (AAII survey since 1987)
19.7%
60%
50% 48% 12.9%
40% 6.7%
2.0%
30%
1-Month 3-Months 6-Months 12-Months
20% Later Later Later Later
Lowest % bulls since mid-2016 19% % of
periods 68% 94% 97% 97%
10% positive
Mar-20 Jul-20 Dec-20 May-21 Sep-21 Feb-22
Data Source: Truist IAG, FactSet. Past performance does not guarantee future resultsEntire S&P 500 decline this year has been driven by lower valuations while
earnings trends remain strong
The entire decline in the market this year has been
S&P 500 YTD return breakdown
driven by a contraction in valuations given ongoing
geopolitical and Fed rate hike concerns. 105
Underlying fundamentals remain strong, however, as Forward
evidenced by earnings estimates that continue to rise earnings
and are at a cycle high.
+2.6%
100
95
Price return
-8.2%
90 Forward P/E
-10.5%
85
12/31/21 1/14/22 1/28/22 2/11/22 2/25/22
Data Source: Truist IAG, FactSet
Past performance does not guarantee future resultsS&P 500 fundamental support and resistance levels
During the pullback, buyers stepped in with force as
S&P 500 price overlaid with fundamental
the S&P 500 traded down to an 18x forward P/E.
support/resistance levels
Should conditions deteriorate, we estimate market 5,000
downside should be contained in the 3800-3900 area. 4,900
The 3900 level coincides with a forward P/E of 17x;
4,800
there is additional technical price support just above
the 3800 level. 4,700
4,600 20x P/E
4,500 (~4600)
Conversely, near-term market upside is likely to be
capped around the 4600 area. This level coincides 4,400
with a 20x forward P/E multiple and is a technical 4,300
price resistance. 4,200 18x P/E
4,100 (~4100)
4,000
3,900 17x P/E
(~3900)
3,800
3,700
3,600
3,500
Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22
Data Source: Truist IAG, FactSet
Past performance does not guarantee future resultsOutside of large caps, U.S. stock valuations are now below 20-year average
Many segments of the market are now trading at
Current valuation relative to long-term average
valuations lower than their 20-year average. The
average stock, as proxied by the S&P 500 Equal
(Based on forward price-to-earnings ratio)
Weight Index, is trading just above 16x forward Current 20-year average
earnings estimates.
The S&P 500’s P/E has also contracted over the past
year but still trades at a premium to history. This is
justified, in our view, because of the huge cash flow
generation and profit margins of the mega-cap 19.2
technology stocks that comprise a significant part of
16.4 16.9 16.0
16.8
the large cap market. 15.3
14.3
13.5
S&P 500 S&P 500 Equal S&P Mid S&P Small
Weight
(Since 2016)
Data Source: Truist IAG, FactSet. Note data for the S&P 500 Equal Weight Index only available since 2016
Past performance does not guarantee future results.Value style is outperforming, though geopolitical tensions a risk
Overall, value has worked well on the heels of rising rates and a still-strong economy. However, interest rates are likely capped near term and geopolitical
risk likely puts downward pressure on global growth. This could weigh on the financials sector, which is the largest sector in value indices. Given the wide
range of outcomes, we continue to advocate a neutral style bias.
Large cap value forward P/E Large cap value price
relative to large cap growth relative to large cap growth
1.1 106
1.0 104
102
0.9
100
Average
0.8
98
0.7
96
0.6
94
0.5 92
0.4 90
'02 '03 '04 '06 '07 '09 '10 '12 '13 '14 '16 '17 '19 '20 '22 Mar-21 May-21 Aug-21 Nov-21 Feb-22
Data Source: Truist IAG, FactSet
Sectors represented by S&P style indices. Past performance does not guarantee future results.Russia and Europe more vulnerable to conflict in Ukraine
In early 2014, when Russia invaded and annexed
A look back at early 2014 – Russia seizes Crimea
Crimea from Ukraine, European markets were down
more than 4% and Russian markets declined more S&P 500 Europe Russia
than 25%. The impact to the U.S. markets was much
less severe.
Higher energy and agriculture prices could
110
disproportionately hit vulnerable members of the
emerging markets and European economies relying
on commodities and energy sourced from Russia. 105
The U.S., with its energy mostly sourced locally, is
less vulnerable to supply shocks than in the past. 100
This is one of the reasons we remain overweight
domestic equities relative to international markets. 95
90
85
80
75
70
Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14
Data Source: Truist IAG, FactSet. Indexed to 100 at 1/1/2014. Past performance does not guarantee future results.With rising geopolitical tensions, European and Russian price trends have
weakened again relative to the U.S.
105
Eurozone price relative to S&P 500 105
Germany price relative to S&P 500
100
100
95
95 90
85
90
80
85 75
Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22
105
EM price relative to S&P 500 Russia price relative to S&P 500
130
100 120
110
95
100
90 90
85 80
70
80
60
75 50
70 40
Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22
Data Source: Truist IAG, FactSet, MSCI. Eurozone = MSCI EMU, Germany = MSCI Germany, Emerging Markets = MSCI Emerging Markets, Russia = MSCI Russia
Data as of 2/28/202210-year uptrend remains intact
The 10-year U.S. Treasury yield’s upward trajectory since mid-2020 remains intact, despite the flight to quality sparked by Russia’s invasion of Ukraine.
Technicals suggest the 10-year yield has meaningful support near 1.70%. Geopolitical tensions may serve to cap the upside to rates, however, until the
geopolitical uncertainty abates.
10-year U.S. Treasury yields
2.1%
1.9%
Pre-pandemic
Pre-pandemic levellevel
1.7%
1.5%
1.3%
1.1%
0.9%
0.7%
0.5%
Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22
Data Source: Truist IAG, Bloomberg
Data as of 2/28/2022
Past performance does not guarantee future results.Overly aggressive rate hikes could threaten a healthy yield curve
Assuming the 2-year yield maintains a similar spread to the Fed funds rate and the Fed hikes rates at the market-consensus pace, there is a threat of
inverting the curve absent the 10-year moving higher. We think the Fed will be careful to avoid this outcome and remain mindful of the curve as it tightens
policy.
2/10-year U.S. Treasury yield curve
Projected curve with current 2-year spread to Fed Funds rate Projected curve with historical 2-year spread to Fed Funds rate
300
250
200
150
100
50
0
-50
-100
-150
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023
Data Source: Truist IAG, Bloomberg
Past performance does not guarantee future results.
Projected yield curve based on Fed Funds futures and current and historical 2-year yield spread to Fed Funds upper bound while 10-year yield stays the samePolicy shifts, geopolitical turmoil fueling higher rate volatility
Anxieties surrounding the Fed’s policy strategy and
Volatility and liquidity in the U.S. Treasury market
the ultimate impact of the Russia-Ukraine crisis are
creating stress in core U.S. fixed income markets. U.S. Govt. Securities Liquidity Index (l-axis) ICE BofA MOVE Index (r-axis)
Liquidity measures showed a sharp uptick in
1.5 110
deviations from fair value trading models, indicating
lower liquidity, while rate volatility trended higher, as
1.4
measured by the ICE BofA MOVE Index. We expect 100
these readings to remain elevated as the Fed is 1.3
forced to tighten policy despite rising geopolitical
tensions. 1.2 90
1.1
80
1
70
0.9
0.8 60
0.7
50
0.6
0.5 40
Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22
Data Source: Truist IAG, Bloomberg; daily data as of 2/28/2021.
Past performance does not guarantee future results.Core fixed income provides critical portfolio ballast
Historically, equity markets have endured much larger drawdowns compared to bonds in any given calendar year. On the other hand, core fixed income
has never declined more than 10% in a calendar year and provides a measure of insulation from recessions and turbulent equity markets. With higher
equity volatility expected this year, fixed income remains a key source of diversification and protection.
Maximum annual drawdown
S&P 500 Core bonds
0%
-10%
-20%
-6.6% -4.2%
-30% 2022 YTD
1994 marked the largest core fixed
drawdown for core fixed
-40%
-35% -35% income
income over the past 32 years. returns
-50%
-50%
-60%
1990 1995 2000 2005 2010 2015 2020
Data Source: Truist IAG, Bloomberg; daily data as of 2/28/2022.
Past performance does not guarantee future results.
Core bonds = Bloomberg U.S. Aggregate Bond IndexHigh quality fixed income offers stability during volatile periods
During periods of significant U.S. equity underperformance, core fixed income generally delivers stable-to-positive total return, helping to mitigate losses
in diversified portfolios.
Returns during equity market corrections of >15%
S&P 500 Core bonds
28.8%
7.4% 5.3%
3.6% 1.3%
0.1%
-0.9%
-15.3%
-19.2% -18.7% -18.5%
-33.8%
-45.5%
-56.5%
Jul 90-Oct 90 Jul 98-Oct 98 Mar 00-Oct 02 Oct 07-Mar 09 May 11-Oct 11 Sep 18-Dec 18 Feb 20-Mar 20
Data Source: Truist IAG, Bloomberg; daily data as of 2/28/2022.
Past performance does not guarantee future results.
Core bonds = Bloomberg U.S. Aggregate BondRelative value in fixed income
Our constructive expectations for the economy have Current yield vs. 10-year range
driven our preference for U.S. credit sectors,
Range Current Yield
including leveraged loans and high yield corporate
10%
bonds, where incremental yield opportunities exist.
However, we are currently monitoring trends given
the Russia-Ukraine conflict and our slightly lower 8%
growth outlook for the U.S. economy. Still, we believe
that the risk of recession is low. 5%
With the rise in geopolitical risk, high quality fixed
income remains an important source of ballast for 3%
portfolios.
0%
-3%
U.S. 10-yr Treasury
U.S. TIPS
U.S. core taxable
EM loc cur
IG corp
MBS
Intl dev mrkts
Preferreds
Lev loans
Munis
HY muni
EM hard cur
HY corp
High quality Higher risk
Data Source: Truist IAG, FactSet, yield to worst shown except for preferreds and EM bond indices (yield to maturity).
U.S. 10-Yr Treasury = Bloomberg U.S. Treasury Bellwethers (10-Yr), U.S. Core Taxable = Bloomberg U.S. Aggregate, Municipals = Bloomberg Municipal Bond 1-15 Year, U.S. Corporates = Bloomberg U.S. Corporate IG,
MBS = Bloomberg U.S. MBS, Intl Dev Mkts = ICE BofA Global Government ex U.S. (U.S.D hedged), HY Corp = ICE BofA U.S. High Yield, Lev Loans = S&P/LSTA U.S. Leveraged Loan 100 Index, HY Muni = Bloomberg
Municipal High Yield, Preferreds = ICE BofA Fixed Rate Preferred, EM Hard Cur = JP Morgan EMBI Global Diversified, EM Loc Cur = JP Morgan GBI-EM Global Diversified. Past performance does not guarantee future
results. Investing in the bond market is subject to certain risks, including market, interest rate, issuer and inflation risk – investments may be worth more or less than the original cost when redeemed. The value of most
bond strategies and fixed income securities are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and more volatile than securities with shorter durations –
bond prices generally fall as interest rates rise, and values rise when interest rates decline. Past performance does not guarantee future results.Munis offering a smoother ride through recent volatility
AAA muni valuations restored some value relative to
Muni yields as a % of U.S. Treasury yields
U.S. Treasuries to start the year. AA-, A-, and BBB-
rated issuers offer a more compelling risk-reward 111% 2/28/2021 12/31/2021 2/28/2022
balance but require careful selection.
We expect relative strength in tax-exempt munis, 102%
underpinned by strong reinvestment activity with
insufficient new issuance to meet demand. 87%
81% 81% 80% 82% 81%
71% 71%
69% 68%
59%
43%
32%
1-year 3-year 7-year 10-year 20-year
Data Source: Truist IAG, Bloomberg. Interest income may be subject to the federal alternative minimum tax.
Other state and local taxes may apply.
Past performance does not guarantee future results.Publication details
Contributors
Keith Lerner, CFA, CMT Chip Hughey, CFA Wasif Latif
Co-Chief Investment Officer, Managing Director, Managing Director,
Chief Market Strategist Fixed Income Portfolio Strategy
Senior Managing Director
Michael Skordeles, AIF® Eylem Senyuz Shelly Simpson, CFA, CAIA
Senior U.S. Macro Strategist, Senior Global Macro Senior Investment Strategy
Portfolio & Market Strategy Strategist, Analyst,
Portfolio & Market Strategy Portfolio & Market Strategy
Jeff Terrell, CFA Dylan Kase, CFA Emily Novick, CFA, CFP®
Senior Investment Strategy Senior Investment Strategy Senior Portfolio Construction
Analyst, Analyst, Analyst,
Portfolio & Market Strategy Portfolio & Market Strategy Portfolio & Market Strategy
Evan Moog, CFA Evan Daugherty, CFA, CAIA
Investment Advisory Investment Strategy Analyst,
Associate, Portfolio & Market Strategy
Fixed Income Strategies
Additional contributor to sector strategy Editors
Charles East Oliver Merten, CFA, CFP® Julie Parham
Senior Equity Strategy Managing Director, Manager,
Analyst, Investment Communications Investment Communications
Equity StrategiesTruist Wealth – Investment Advisory Group
Keith Lerner, CFA, CMT Oscarlyn Elder, CFA, CAIA
Co-Chief Investment Officer Co-Chief Investment Officer
Chief Market Strategist Senior Managing Director
Senior Managing Director
Portfolio & market Equity strategies Manager research Alternative investments Private equity & credit
strategy Aki Pampush, CFA Ric Mayfield, CFA, CAIA Spencer Boggess
Managing Director, Managing Director, Managing Director, Ravi Ugale
Wasif Latif Equity Strategies Manager Research Alternative Investments Managing Director,
Managing Director, Private Equity & Credit
Portfolio Strategy Tracey Devine
Charles East Senior Manager Mohan Badgujar Will Repath
Mike Skordeles, AIF® Senior Equity Strategy Research Analyst Senior Private Equity & Senior Private Equity &
Senior U.S. Macro Analyst Alternative Investments Credit Analyst
Strategist Kelly Frohsin, CIMA®, CFP® Analyst
Charles Redding Senior Manager Julian Partridge
Senior Equity Strategy Research Analyst Rich Cheung Private Equity & Alternative
Eylem Senyuz
Analyst Senior Private Equity & Investments Analyst
Senior Global Macro
Strategist Chris Hett, CFA Alternative Investments
Adam White, CFA Senior Manager Analyst
Jeff Terrell, CFA Senior Equity Strategy Research Analyst
Noah Harris, CFA
Senior Investment Strategy Analyst
Senior Private Equity &
Analyst Alison Majors, AIF®, CFA, CFP®, Alternative Investments
Diverse asset managers
Scott Yuschak, CFA Senior Manager Research Analyst
Senior Equity Strategy Analyst Sabrina Bowens-Richard, CFA, CAIA
Shelly Simpson, CFA, CAIA Analyst Senior Investment Solutions
Senior Investment Strategy Len Lebov Specialist
Benardo Richardson Senior Private Equity &
Analyst
Scott Reynolds Manager Research Alternative Investments Carlton Reed
Investment Advisory Analyst Analyst Investment Advisory
Emily Novick, CFA, CFP® Associate Associate
Senior Portfolio Construction Diane Schmidt Colin Fox, CTFA
Analyst Manager Research Investment Advisory
Fixed income Analyst Associate Investment
strategies communications
Dylan Kase, CFA Thomas Toman Haley Lawson
Senior Investment Strategy Chip Hughey, CFA Manager Research Investment Advisory Oliver Merten, CFA, CFP®
Analyst Managing Director, Analyst Associate Managing Director,
Fixed Income Investment Communications
Elsa Wartner, CFA, CIMA® Ryan Taylor, CFA, CAIA
Evan Daugherty, CFA, CAIA
Evan Moog, CFA Investment Advisory Investment Advisory Julie Parham
Investment Strategy Analyst
Investment Advisory Associate Associate Investment
Associate Communications Manager
All teammates listed except Latif, Reynolds, Partridge, and Reed are investment adviser representatives of Truist Advisory Services, Inc.Disclosures Advisory managed account programs entail risks, including possible loss of principal and may not be suitable for all investors. Please speak to your advisor to request a firm brochure which includes program details, including risks, fees and expenses. International investments are subject to special risks, such as political unrest, economic instability, and currency fluctuations. Emerging Markets – Investing in the securities of such companies and countries involves certain considerations not usually associated with investing in developed countries, including unstable political and economic conditions, adverse geopolitical developments, price volatility, lack of liquidity, and fluctuations in currency exchange rate. Truist, Truist®, GFO Advisory Services®, BB&T® and Sterling Capital® are service marks of Truist Financial Corporation. 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Investment advisory services are offered by Truist Advisory Services, Inc., GFO Advisory Services, LLC, Sterling Capital Management, LLC, and Precept Advisory Group, LLC, each SEC registered investment advisers. Sterling Capital Funds are advised by Sterling Capital Management, LLC. While this information is believed to be accurate, Truist Financial Corporation, including its affiliates, does not guarantee the accuracy, completeness or timeliness of, or otherwise endorse these analyses or market data. The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but Truist Financial Corporation makes no representation or guarantee as to their timeliness, accuracy or completeness or for their fitness for any particular purpose. The information contained herein does not purport to be a complete analysis of any security, company, or industry involved. This material is not to be construed as an offer to sell or a solicitation of an offer to buy any security. Opinions and information expressed herein are subject to change without notice. TIS and/or its affiliates, including your Advisor, may have issued materials that are inconsistent with or may reach different conclusions than those represented in this commentary, and all opinions and information are believed to be reflective of judgments and opinions as of the date that material was originally published. TIS is under no obligation to ensure that other materials are brought to the attention of any recipient of this commentary. Comments regarding tax implications are informational only. Truist and its representatives do not provide tax or legal advice. You should consult your individual tax or legal professional before taking any action that may have tax or legal consequences. Investments involve risk and an investor may incur either profits or losses. Past performance should not be taken as an indication or guarantee of future performance. TIS/TAS shall accept no liability for any loss arising from the use of this material, nor shall TIS/TAS treat any recipient of this material as a customer or client simply by virtue of the receipt of this material. The information herein is for persons residing in the United States of America only and is not intended for any person in any other jurisdiction. Investors may be prohibited in certain states from purchasing some over-the-counter securities mentioned herein. The information contained in this material is produced and copyrighted by Truist Financial Corporation and any unauthorized use, duplication, redistribution or disclosure is prohibited by law. TIS/TAS’s officers, employees, agents and/or affiliates may have positions in securities, options, rights, or warrants mentioned or discussed in this material. Asset classes are represented by the following indexes. An investment cannot be made directly into an index. S&P 500 Index is comprised of 500 widely-held securities considered to be representative of the stock market in general. Equity is represented by the MSCI ACWI captures large and mid cap representation across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries*. With 2,757 constituents, the index covers approximately 85% of the global investable equity opportunity set Fixed Income is represented by the Barclays Aggregate Index. The index measures the performance of the U.S. investment grade bond market. The index invests in a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States – including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities, all with maturities of more than 1 year.
Disclosures Commodities are represented by the Bloomberg Commodity Index which is a composition of futures contracts on physical commodities. It currently includes a diversified mix of commodities in five sectors including energy, agriculture, industrial metals, precious metals and livestock. The weightings of the commodities are calculated in accordance with rules that ensure that the relative proportion of each of the underlying individual commodities reflects its global economic significance and market liquidity. Cash is represented by the ICE BofAML U.S. Treasury Bill 3 Month Index which is a subset of the ICE BofAML 0-1 Year U.S. Treasury Index including all securities with a remaining term to final maturity less than 3 months. U.S. Large Cap Equity is represented by the S&P 500 Index which is an unmanaged index comprised of 500 widely-held securities considered to be representative of the stock market in general. U.S. Mid Cap is represented by the S&P MidCap 400® provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500®, measures the performance of mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment. U.S. Small Cap Core Equity is represented by the S&P 600 Small Cap Index which is a measure of the performance of the small-cap segment of the U.S. equity universe International Developed Markets is represented by the MSCI EAFE Index is an equity index which captures large and mid cap representation across 21 Developed Markets countries* around the world, excluding the U.S. and Canada. With 921 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. Emerging Markets is represented by the MSCI Emerging Markets Index captures large and mid cap representation across 24 Emerging Markets (EM) countries*. With 1,125 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. Value is represented by the S&P 500 Value Index which is a subset of stocks in the S&P 500 that have the properties of value stocks. Growth is represented by the S&P 500 Growth Index which is a subset of stocks in the S&P 500 that have the properties of growth stocks. U.S. Government Bonds are represented by the Bloomberg U.S. Government Index which is an unmanaged index comprised of all publicly issued, non-convertible domestic debt of the U.S. government or any agency thereof, or any quasi-federal corporation and of corporate debt guaranteed by the U.S. government U.S. Mortgage-Backed Securities are represented by the U.S. Mortgage-Backed Securities (MBS) Index which covers agency mortgage-backed pass-through securities (both fixed-rate and hybrid ARM) issued by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). U.S. Investment Grade Corporate Bonds are represented by the Bloomberg U.S. Corporate Investment Grade Index which is an unmanaged index consisting of publicly issued U.S. Corporate and specified foreign debentures and secured notes that are rated investment grade (Baa3/BBB- or higher) by at least two ratings agencies, have at least one year to final maturity and have at least $250 million par amount outstanding. The S&P U.S. REIT index measures the investable universe of publicly traded real estate investment trusts domiciled in the United States U.S. High Yield Corp is represented by the ICE BofAML U.S. High Yield Index tracks the performance of below investment grade, but not in default, U.S. dollar denominated corporate bonds publicly issued in the U.S. domestic market, and includes issues with a credit rating of BBB or below, as rated by Moody’s and S&P. Floating Rate Bank Loans are represented by the Credit Suisse Leveraged Loan Index. The index represents tradable, senior-secured, U.S.-dollar-denominated non-investment-grade loans. Global Equity is represented by the MSCI All World Country (ACWI) Index which is defined as a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI Index consists of 48 country indices comprising 24 developed markets countries and 24 emerging markets countries. Emerging Markets Equity is represented by the MSCI EM Index which is defined as a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets countries Intermediate Term Municipal Bonds are represented by the Bloomberg Municipal Bond Blend 1-15 Year (1-17 Yr) is an unmanaged index of municipal bonds with a minimum credit rating of at least Baa, issued as part of a deal of at least $50 million, that have a maturity value of at least $5 million and a maturity range of 12 to 17 years.
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