NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE

Weekly Market Recap U.S. | February 18, 2019

The week in review WEEKLY DATA CENTER Index Returns (%) Index Characteristics
Equities Level 1 week QTD YTD 1 year 3-yr. Cum. NTM P/E P/B Div. Yld. Mkt. Cap (bn)
• Job openings at 7.335M S&P 500 2776 2.56 11.02 11.02 3.65 58.26 16.18 3.23 1.91 50.08
• CPI/Core CPI rose 1.6% y/y / 2.2% y/y Dow Jones 30 25883 3.21 11.37 11.37 5.08 74.36 15.41 3.94 2.01 N/A
• PPI/Core PPI at -0.1% m/m / 0.3% m/m Russell 2000 3900 4.22 16.52 16.52 3.46 68.28 21.30 2.00 1.30 1.23
• Industrial production at -0.6% m/m Russell 1000 Growth 974.72 2.36 12.31 12.31 6.00 70.76 19.96 6.97 1.20 25.53
• Consumer sentiment at 95.5 Russell 1000 Value 745.80 2.80 10.82 10.82 1.52 48.30 13.85 2.04 2.50 34.25
• NY Fed. mfg. survey at 8.8 MSCI EAFE 1840 2.04 7.20 7.20 -7.61 31.92 13.04 1.53 3.49 19.56
MSCI EM 1031 -0.49 6.81 6.81 -11.85 53.74 11.69 1.56 2.76 14.60
The week ahead NASDAQ 7472 2.41 12.75 12.75 4.07 78.22 21.16 4.28 1.08 4.84
• FOMC minutes Fixed Income Yield 1 week QTD YTD 1 year 3-yr. Cum. Levels
• Existing home sales U.S. Aggregate 3.19 -0.09 1.10 1.10 3.42 5.58 Currencies 2/15/19 12/31/18 2/15/18
• Flash composite PMI U.S. Corporates 3.92 -0.03 2.65 2.65 2.75 12.85 $ per € 1.13 1.14 1.25
• Durable goods orders Municipals (10yr) 2.35 0.05 1.42 1.42 5.00 6.31 $ per £ 1.28 1.27 1.41
• NAHB housing market index High Yield 6.95 0.56 5.41 5.41 4.04 36.25 ¥ per $ 110.56 109.72 106.26
Levels (%) Levels
Thought of the week Key Rates 2/15/19 2/8/19 12/31/18 12/31/18 2/15/18 2/15/16 Commodities 2/15/19 12/31/18 2/15/18
2-yr U.S. Treasuries 2.52 2.45 2.48 2.48 2.19 0.71 Oil (WTI) 55.60 45.15 61.48
Yields on risk-free assets have risen 10-yr U.S. Treasuries 2.66 2.63 2.69 2.69 2.90 1.74 Gasoline 2.28 2.27 2.61
substantially over the last few years, but 30-yr U.S. Treasuries 3.00 2.97 3.02 3.02 3.15 N/A Natural Gas 2.62 2.94 2.49
are still below 1% in real terms and remain 10-yr German Bund 0.10 0.08 0.24 0.24 0.76 0.24 Gold 1317 1279 1352
low by historical standards. As such, 3-mo. LIBOR 2.68 2.70 2.81 2.81 1.87 0.62 Silver 15.68 15.47 16.83
investors are still faced with the challenge 3-mo. EURIBOR -0.31 -0.31 -0.31 -0.31 -0.33 -0.18 Copper 6190 5965 7098
of generating adequate income in 6-mo. CD rate 0.73 0.73 0.68 0.68 0.52 0.34 Corn 3.48 3.42 3.47
portfolios. Incorporating Master Limited 30-yr fixed mortgage 4.65 4.65 4.84 4.84 4.57 3.83 BBG Idx 169.07 159.72 180.45
Partnerships (MLPs) into portfolios is one Prime Rate 5.50 5.50 5.50 5.50 4.50 3.50
way they have dealt with this issue, as MLPs
offer a juicy 8.3% dividend yield. However,
blindly moving into this asset class could CHART OF THE WEEK STYLE RETURNS S&P 500 SECTOR RETURNS
come with consequences. As we show in V B G
this week’s chart, the behavior of MLPs has MLP behavior has changed over the years 8

5.1

3.6
2-yr. rolling correlation, monthly

3.4

3.2
changed substantially over the years. Prior

2.9

2.6

2.6

2.4
0.8 L 2.8 2.6 2.4 4

1.2

1.0
to 2014, MLPs traded in line with other high

1.1

0.0
Correl. to utilities

1 week

1 week
dividend paying equities such as utilities. 0
However, dividend cuts, which occurred on 0.6 M 2.5 2.7 3.1

Energy

Industrials

Materials

Health Care

Financials
Consumer
Discr.
S&P 500

Technology

Real Estate
Consumer
Staples
Comm.
Services
Utilities
the back of the 2014 collapse in oil prices, -4
have led MLPs to have a much stronger 0.4 S 3.5 4.2 4.9
correlation with oil prices in recent years. -8
Taking a look under the hood, this change

17.5

15.4
in correlation has also been driven by the 0.2

12.9
V B G

12.3
20

10.8

10.8
11.0

11.0
composition of the MLP universe, 44% of

7.9

7.5

7.3

5.3
which is made up of petroleum pipeline 0 L 10.8 11.0 12.3 10

businesses versus 32% in 2004. These 0

businesses tend to lock in prices for shorter

Industrials

Energy

Real Estate

Technology

S&P 500

Financials
Comm.
Services
Consumer
Discr.
Materials

Health Care
Consumer
Staples
Utilities
M 13.6 15.1 17.1

YTD

YTD
-0.2 Correl. to oil
periods of time than their peers, leading -10
the prices they pay to be more volatile. As
such, investors may want to look to the -0.4 S 15.3 16.5 17.7 -20
more stable areas of the MLP universe '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17
(such as natural gas pipelines or storage),
as broad exposure to the asset class could
be more volatile than they thought.
Please see important disclosure on next page.
 NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE

Weekly Market Recap U.S. | February 18, 2019

Chart of the Week: Source: Alerian, Commodity Research Bureau, FactSet, Standard & Poor's, J.P. Morgan Asset Russell 3000), Russell 2000 Growth Index (Measures the performance of those Russell 2000 companies with higher price-
Management. to-book ratios and higher forecasted growth values).
Thought of the week: Source: Alerian, Commodity Research Bureau, FactSet, Standard & Poor's, J.P. Morgan Asset Past performance does not guarantee future results.
Management. Diversification does not guarantee investment returns and does not eliminate the risk of loss.
Abbreviations: Cons. Sent.: University of Michigan Consumer Sentiment Index; CPI: Consumer Price Index; EIA: Energy Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of
Information Agency; FHFA HPI: - Federal Housing Finance Authority House Price Index; FOMC: Federal Open Market financial market trends, which are based on current market conditions. We believe the information provided here is
Committee; GDP: gross domestic product; HPI: Home Price Index; HMI: Housing Market Index; ISM Mfg. Index: Institute for reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the
Supply Management Manufacturing Index; PCE: Personal consumption expenditures; Philly Fed Survey: Philadelphia Fed purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors.
Business Outlook Survey; PMI: Purchasing Managers' Manufacturing Index; PPI: Producer Price Index; SAAR: Seasonally This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied
Adjusted Annual Rate on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns
Equity Price Levels and Returns: All returns represent total return for stated period. Index: S&P 500; provided by: a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied
Standard & Poor’s. Index: Dow Jones Industrial 30 (The Dow Jones is a price-weighted index composing of 30 widely- upon as advice or interpreted as a recommendation.
traded blue chip stocks.) ; provided by: S&P Dow Jones Indices LLC. Index: Russell 2000; provided by: Russell The price of equity securities may rise or fall because of changes in the broad market or changes in a company's financial
Investments. Index: Russell 1000 Growth; provided by: Russell Investments. Index: Russell 1000 Value; provided by: condition, sometimes rapidly or unpredictably. International investing involves a greater degree of risk and increased
Russell Investments. Index: MSCI – EAFE; provided by: MSCI – gross official pricing. Index: MSCI – EM; provided by: MSCI – volatility. There is no guarantee that companies that can issue dividends will declare, continue to pay, or increase
gross official pricing. Index: Nasdaq Composite; provided by: NASDAQ OMX Group. dividends. Investments in commodities may have greater volatility than investments in traditional securities, particularly
MSCI EAFE is a Morgan Stanley Capital International Index that is designed to measure the performance of the developed if the instruments involve leverage.
stock markets of Europe, Australasia, and the Far East. JPMorgan Distribution Services, Inc., member of FINRA.
Bond Returns: All returns represent total return. Index: Barclays US Aggregate; provided by: Barclays Capital. Index: J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co.
Barclays Investment Grade Credit; provided by: Barclays Capital. Index: Barclays Municipal Bond 10 Yr; provided by: Those businesses include, but are not limited to, J.P. Morgan Investment Management Inc., Security Capital Research &
Barclays Capital. Index: Barclays Capital High Yield Index; provided by: Barclays Capital. Management Incorporated and J.P. Morgan Alternative Asset Management, Inc. and JPMorgan Asset Management
Key Interest Rates: 2 Year Treasury, FactSet; 10 Year Treasury, FactSet; 30 Year Treasury, FactSet; 10 Year German Bund, (Canada) Inc.
FactSet. 3 Month LIBOR, British Bankers’ Association; 3 Month EURIBOR, European Banking Federation; 6 Month CD, ©JPMorgan Chase & Co., February 2019.
Federal Reserve; 30 Year Mortgage, Mortgage Bankers Association (MBA); Prime Rate: Federal Reserve.
Commodities: Gold, FactSet; Crude Oil (WTI), FactSet; Gasoline, FactSet; Natural Gas, FactSet; Silver, FactSet; Copper, Unless otherwise stated, all data is as of February 18, 2019 or as of most recently available.
FactSet; Corn, FactSet. Bloomberg Commodity Index (BBG Idx), Bloomberg Finance L.P. 0903c02a81dbac80
Currency: Dollar per Pound, FactSet; Dollar per Euro, FactSet; Yen per Dollar, FactSet.
S&P Index Characteristics: Dividend yield provided by FactSet Pricing database. Fwd. P/E is a bottom-up weighted
harmonic average using First Call Mean estimates for the "Next 12 Months" (NTM) period. Market cap is a bottom-up
weighted average based on share information from Compustat and price information from FactSet's Pricing database as
provided by Standard & Poor's.
MSCI Index Characteristics: Dividend yield provided by FactSet Pricing database. Fwd. P/E is a bottom-up weighted
harmonic average for the "Next 12 Months" (NTM) period. Market cap is a bottom- up weighted average based on share
information from MSCI and Price information from FactSet's Pricing database as provided by MSCI.
Russell 1000 Value Index, Russell 1000 Growth Index, and Russell 2000 Index Characteristics: Trailing P/E is provided
directly by Russell. Fwd. P/E is a bottom-up weighted harmonic average using First Call Mean estimates for the "Next 12
Months" (NTM) period. Market cap is a bottom-up weighted average based on share information from Compustat and
price information from FactSet's Pricing database as provided by Russell.
Sector Returns: Sectors are based on the GICS methodology. Return data are calculated by FactSet using constituents
and weights as provided by Standard & Poor’s. Returns are cumulative total return for stated period, including
reinvestment of dividends.
Style Returns: Style box returns based on Russell Indexes with the exception of the Large-Cap Blend box, which reflects
the S&P 500 Index. All values are cumulative total return for stated period including the reinvestment of dividends. The
Index used from L to R, top to bottom are: Russell 1000 Value Index (Measures the performance of those Russell 1000
companies with lower price-to-book ratios and lower forecasted growth values), S&P 500 Index (Index represents the
500 Large Cap portion of the stock market, and is comprised of 500 stocks as selected by the S&P Index Committee),
Russell 1000 Growth Index (Measures the performance of those Russell 1000 companies with higher price-to-book ratios
and higher forecasted growth values), Russell Mid Cap Value Index (Measures the performance of those Russell Mid Cap
companies with lower price-to-book ratios and lower forecasted growth values), Russell Mid Cap Index (The Russell
Midcap Index includes the smallest 800 securities in the Russell 1000), Russell Mid Cap Growth Index (Measures the
performance of those Russell Mid Cap companies with higher price-to-book ratios and higher forecasted growth values),
Russell 2000 Value Index (Measures the performance of those Russell 2000 companies with lower price-to-book ratios
and lower forecasted growth values), Russell 2000 Index (The Russell 2000 includes the smallest 2000 securities in the