Before the Bell Morning Market Brief

May 13, 2021

MORNING MARKET COMMENTARY: Anthony M. Saglimbene, Global Market Strategist  Quick Take: U.S. stock futures pointing to a higher open; European markets are trading mostly lower; Asia ended down overnight; West Texas Intermediate (WTI) oil trading at $64.45; 10-year U.S. Treasury yield at 1.69%.

 Markets Churn As "Hotter" Inflation Sparks Growth Concerns: Yesterday, stock prices fell across the board, as rising inflation levels in April spooked already jittery investors. The NASDAQ Composite (down 2.7% on the day) and Growth stocks more broadly took it on the chin. Inflation levels last month looked much hotter than most expected (more on that below), prompting a further push into cyclical value stocks at the expense of Technology/Growth areas. While the market was broadly lower yesterday, the trend of cyclical value outperformance continued to mitigate overall declines on Wednesday. The Dow Jones Industrials Average (down 2.0%) and several value-based sectors were lower yesterday but did hold up better than the NASDAQ.  As the FactSet chart below shows, the Dow has seen a generally consistent trend higher this year (until recently) — driven by a more concentrated exposure to cyclical value areas of the market. These value areas are seen as more leveraged to strengthening reopening trends and less impacted by rising inflation levels over the near term. In February, the NASDAQ turned sharply lower on inflation/interest rate fears, while the Dow was able to push higher and eventually create performance separation on the heels of a strengthening recovery. In our view, the NASDAQ is seeing another bout of selling pressure with inflation concerns again moving top-of- mind. The possible negative implications for rates, their impact on discounting future earnings streams, and potential Fed policy adjustments add to the stew of concerns Tech/Growth areas are facing at the moment.

FOR IMPORTANT DISCLOSURES PLEASE SEE THE DISCLOSURE PAGES AT THE END OF THIS DOCUMENT Notations:  For further information on any of the topics mentioned, please contact your Financial Advisor.  Unless specifically stated otherwise, comments contained in this document should not be construed as an investment opinion or recommendation of any securities mentioned. Charts depicted are from FactSet unless otherwise noted. ______© 2021 Ameriprise Financial, Inc. All rights reserved. Page 1 of 11

Before The Bell May 13, 2021 ______

 The NASDAQ is off 6.7% in May on a price-alone basis and down 7.5% over the last three months. The Composite is slightly more than 8.0% off its all-time high, while the S&P 500 Index and Dow are each roughly 4.0% away from their market tops. We won't pretend to know where the bottom is when it comes to the temporary selling pressure across the NASDAQ, but we can provide some markers for investors to watch. Yesterday, the Composite fell sharply below its 100-day moving average, which had previously shown pretty good support in March and February. The next critical level would be the 200-day, which is roughly another 4% below current levels. Again, it's hard to say when the selling pressure might subside in the NASDAQ. But we believe at some point, the secular growth drivers across several of the underlying companies in the NASDAQ could attract "buy-the-dip" activity. We may see some nibbles today, based on NASDAQ futures.  As the second FactSet chart below highlights, consumer price inflation (CPI) is ramping higher on a year- over-year basis. In April, headline CPI spiked +0.8% month-over-month, while core CPI jumped +0.9% month- over-month. "Actual" CPI levels in April were multiples of economists' expectations, with y/y headline inflation posting its largest gain since September 2008. Core CPI hasn't been this high since 1982, according to FactSet. However, we would stress that investors have expected higher inflation levels and have marked their calendars for easy year-over-year comparisons during the next few months for quite some time. Below are a few quick-hit items to keep in mind regarding April's inflation spike:  Expect the next few months of y/y comparisons on inflation to look very elevated when compared to the depressed levels during the depths of the pandemic.  We believe month-over-month comparisons moving forward could provide a better gauge of how much inflation is building in the economy as reopening trends gain momentum.  There is still a massive disconnect in demand and supply dynamics that are forcing inflation higher. The recovery across the U.S. and the broader world is uneven, supply is constrained, while demand is surging everywhere. In our view, it may take time for certain companies and industries to ramp back to full capacity to meet demand requirements. As a result, a catch-up period may force prices higher temporarily until an equilibrium level in demand and supply is found.  Gradually rising inflation is typically good for stocks longer-term. But large or sudden spikes in inflation versus expectations (like we saw in yesterday’s CPI numbers) can be disruptive. Although we do not expect a change in monetary policy this year in reaction to hotter inflation levels, markets will likely be more sensitive to the degree to which prices move higher.  Nevertheless, prices can become "sticky" over time, and if they linger longer than most expect. We believe the market could be more focused, not on absolute levels in CPI, but on the possibility, higher prices will last longer. In this case, more persistent levels of inflation could weigh on growth trends, which could dampen demand and profit growth over time. In our view, this is the market's main concern regarding inflation right now.  Also, implications for pulling forward tighter Federal Reserve policies are another outside worry for the market right now — though we would discount this dynamic. We believe the Fed is mainly on the sidelines for 2021, regardless of the inflation dynamics over the coming months. It's worth noting the Fed wants to see inflation levels above its target for some time. Outside of initial reopening momentum, it expects inflation will run hotter than its 2.0% target in 2021.

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 All of this has sent volatility higher and back above its 5-year average, as the third FactSet chart below shows. That said, volatility is still well below levels seen this time last year but is on the move higher.

 Notably, the sectors expected to benefit from rising prices/higher inflation are holding up well, with most actually advancing higher in May. As the Ameriprise table below shows, cyclical sectors have moved up in May and remained the clear market leaders over the last three months.  Bottom line: We believe sectors like Financials, Materials, Industrials, and Energy could continue to see their business trends improve this year as the economy more fully reopens. All four sectors are expected to see some of their strongest earnings trends on record in the second quarter.  Yet, we expect markets to churn over the near term, volatility to increase, and possibly, a healthy correction to develop in certain areas that have run higher for some time. But that shouldn’t detract investors from the generally positive macro set-up for stocks over the intermediate-to-longer-term, in our view.

% Change 6- % Change 3- % Change MTD S&P 500 Sector Month Month Energy (CYC) 60.8 17.7 6.1 Materials (CYC) 26.0 15.0 3.1 Financials (CYC) 37.8 16.3 1.0 Health Care (DEF) 10.0 3.8 0.3 Consumer Staples (DEF) 4.6 5.8 0.1 Industrials (CYC) 21.0 12.3 -0.5 S&P 500 14.9 3.3 -2.8 Utilities (DEF) -1.5 2.9 -3.6 Real Estate (DEF) 13.1 7.4 -4.0 Comms Services (CYC) 17.1 3.8 -4.3 Technology (CYC) 9.2 -5.3 -6.0 Consumer Discretionary (CYC) 8.5 -2.6 -7.1 Sources: American Enterprise Investment Services, Inc., & FactSet. Price data as of May 12, 2021. (CYC) = Cyclical. (DEF) = Defensive.

Before The Bell May 13, 2021 ______

 Asia-Pacific: Asian equities finished lower on Thursday. Stocks ended the overnight session sharply down and in sympathy with the pressure seen in the U.S. yesterday. Tech led the decline, with indexes in Japan and Hong Kong some of the worst performers.  Europe: Markets across the region are trading mostly lower at midday. European markets are broadly lower, with liquidity thin based on several European Union countries on holiday.  U.S.: Equity futures are pointing to a higher open. Here is a quick news rundown to start your morning:  The market is pulling forward tighter Fed policy. Based on hotter inflation readings in April, the market is increasingly pulling forward the Federal Reserve’s rate hike timeline. According to Bloomberg, eurodollar futures are pricing in 80% plus odds of a quarter point Fed Funds rate hike by the end of 2022, up from 66% on Monday. This is over a full year ahead of the Fed’s dot plot and is partly why investors are nervous about rising inflation levels.  Stocks look set to open higher. After the Dow suffered its worst day since January yesterday, futures look set to reverse some of that pressure in Thursday morning trading. Tech stocks look to rebound a bit at the open, with NASDAQ futures running positive this morning. Bitcoin is trading lower after Telsa said it would no longer accept the cryptocurrency for its car purchases, citing environmental concerns. Importantly, we would remind investors to keep broad market selling pressures in perspective. The S&P 500 is down less than 5% from an all-time high and is still up +8.3% year-to-date. Bottom line: Stocks do not typically move in a straight line over time, even though the last 12 months or so look pretty close.  Room to compromise? President Biden and Republican congressional leaders said on Wednesday they see a narrow opening for compromise on infrastructure spending, yet significant obstacles remain, per Bloomberg. However, Republican leaders said they are unwilling to compromise on their opposition to raising taxes to fund infrastructure spending. Biden acknowledged the ideological divide after the meeting. Most Washington insiders believe the difference in scope and scale between Democrats and Republicans on infrastructure is too wide to see an eventual compromise. This would likely force Democrats into using the budget reconciliation process to pass an infrastructure bill, which would still require the White House to compromise on the broad strokes to receive moderate support.  Earnings Update: With roughly 91% of S&P 500 profit reports complete, Q1'21 blended earnings per share (EPS) is higher by +49.5% y/y on sales growth of +10.1% y/y.

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WORLD CAPITAL MARKETS 5/13/2021 As of: 8:30 AM ET Americas % chg. % YTD Value Europe (Intra-day) % chg. %YTD Value Asia/Pacific (Last Night) % chg. %YTD Value S&P 500 -2.14% 8.75% 4,063.0 DJSTOXX 50 (Europe) -0.72% 12.10% 3,919.1 Nikkei 225 (Japan) -2.49% 0.69% 27,448.0 Dow Jones -1.99% 10.44% 33,587.7 FTSE 100 (U.K.) -1.44% 8.38% 6,903.5 Hang Seng (Hong Kong) -1.81% 2.32% 27,718.7 NASDAQ Composite -2.67% 1.36% 13,031.7 DAX Index (Germany) -0.67% 9.69% 15,048.5 Korea Kospi 100 -1.25% 8.77% 3,122.1 Russell 2000 -3.26% 8.44% 2,135.1 CAC 40 (France) -0.61% 13.78% 6,241.1 Singapore STI -0.67% 11.48% 3,123.3 Brazil Bovespa -2.65% 0.58% 119,710 FTSE MIB (Italy) -0.55% 9.38% 24,317.9 Shanghai Comp. (China) -0.96% -1.25% 3,429.5 S&P/TSX Comp. (Canada) -0.86% 10.71% 19,107.8 IBEX 35 (Spain) -1.38% 10.62% 8,883.6 Bombay Sensex (India) -0.96% 2.16% 48,690.8 Mexico IPC -1.83% 11.60% 48,748.4 MOEX Index (Russia) -0.52% 12.15% 3,635.0 S&P/ASX 200 (Australia) -0.88% 8.12% 6,982.7

Global % chg. % YTD Value Developed International % chg. %YTD Value Emerging International % chg. %YTD Value MSCI All-Country World Idx -1.67% 7.08% 686.8 MSCI EAFE -0.89% 7.16% 2,269.5 MSCI Emerging Mkts -1.04% 2.35% 1,315.3 Note: International market returns shown on a local currency basis. The equity index data shown above is on a total return basis, inclusive of dividends.

S&P 500 Sectors % chg. % YTD Value Commodities Communication Services -2.03% 11.55% 246.5 Equity Income Indices % chg. % YTD Value Futures & Spot (Intra-day) % chg. % YTD Value Consumer Discretionary -3.28% 2.57% 1,333.3 JPM Alerian MLP Index -0.78% 30.65% 181.2 CRB Raw Industrials -0.43% 15.17% 588.2 Consumer Staples -1.32% 3.57% 714.6 FTSE NAREIT Comp. TR -2.48% 12.06% 22,701.8 NYMEX WTI Crude (p/bbl.) -2.21% 33.18% 64.6 Energy 0.06% 40.19% 394.3 DJ US Select Dividend -1.83% 25.04% 2,733.0 ICE Brent Crude (p/bbl.) -2.08% 31.04% 67.9 Financials -1.30% 24.81% 608.1 DJ Global Select Dividend -0.71% 21.52% 258.7 NYMEX Nat Gas (mmBtu) -0.71% 16.11% 2.9 Health Care -1.00% 7.67% 1,417.5 S&P Div. Aristocrats -2.08% 13.69% 3,790.1 Spot Gold (troy oz.) 0.10% -4.26% 1,817.5 Industrials -2.44% 14.81% 856.8 Spot Silver (troy oz.) -0.12% 2.23% 27.0 Materials -2.54% 18.50% 537.2 LME Copper (per ton) -0.15% 34.64% 10,433.3 Real Estate -2.37% 13.43% 256.4 Bond Indices % chg. % YTD Value LME Aluminum (per ton) -1.49% 24.82% 2,463.5 Technology -2.86% 0.94% 2,304.8 Barclays US Agg. Bond -0.32% -3.03% 2,319.5 CBOT Corn (cents p/bushel) -1.99% 45.86% 700.5 Utilities -2.35% 3.50% 326.7 Barclays HY Bond -0.16% 1.91% 2,382.8 CBOT Wheat (cents p/bushel) -0.99% 15.00% 722.5

Foreign Exchange (Intra-day) % chg. % YTD Value % chg. % YTD Value % chg. % YTD Value Euro (€/$) 0.08% -1.10% 1.21 Japanese Yen ($/¥) 0.07% -5.79% 109.59 Canadian Dollar ($/C$) 0.02% 4.89% 1.21 British Pound (£/$) -0.15% 2.66% 1.40 Australian Dollar (A$/$) -0.22% 0.18% 0.77 Swiss Franc ($/CHF) 0.22% -2.44% 0.91 Data/Price Source: Bloomberg. Equity Index data is total return, inclusive of dividends, where applicable.

Before The Bell May 13, 2021 ______

BY THE NUMBERS: ECONOMIC ACTUALS AND FORECAST:

Current Projections: Full-year Quarterly Actual Actual Est. Est. Actual Actual Actual Actual Actual Est. Est. 2019 2020 2021 2022 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Q1-2021 Q2-2021 Q3-2021 Real GDP (YOY) 2.2% -3.5% 6.5% 3.5% -5.0% -31.4% 33.1% 4.0% 6.4% 9.0% 6.0% Unemployment Rate 3.5% 6.7% 5.0% 3.6% 4.4% 11.1% 7.9% 6.7% 6.0% 5.4% 5.1% CPI (YoY) 1.8% 1.3% 3.1% 2.6% 2.1% 0.4% 1.4% 1.3% 2.6% 3.8% 3.4% Core PCE (YoY) 1.6% 1.4% 2.4% 2.2% 1.7% 0.9% 1.5% 1.4% 1.8% 2.7% 2.6%

Sources: Historical data via FactSet. Estimates (Est.) via American Enterprise Investment Services Inc. YoY = Year-over-year, Unemployment numbers are period ending. GDP: Gross Domestic Product; CPI: Consumer Price Index PCE: Personal Consumption Expenditures Price Index. Core excludes food and energy. All estimates other than GDP are period ending. Last Updated: April 30, 2021

ECONOMIC NEWS OUT TODAY: Economic Releases for Thursday, May 13, 2021. All times Eastern. Consensus estimates via Bloomberg.

Time Period Release Consensus Est. Actual Prior Revised to 8:30 AM May 8 Initial Jobless Claims 490k 473k 498k 507k 8:30 AM May 1 Continuing Claims 3650k 3655k 3690k 3700k 8:30 AM APR Producer Price Index (CPI)(MoM) +0.3% +0.6% +1.0% 8:30 AM APR PPI Ex. Food & Energy (MoM) +0.4% +0.7% +0.7% 8:30 AM APR Producer Price Index (CPI)(YoY) +5.8% +6.2% +4.2% 8:30 AM APR PPI Ex. Food & Energy (YoY) +3.8% +4.1% +3.1%

Economic Perspective: Russell T. Price, CFA – Chief Economist  April producer prices echoed those of the price hikes seen at the consumer level reported yesterday. Most producer cost categories showed gains in the month, but increases were far from universal. The headline PPI figure was held lower primarily due to lower energy prices. The decline in energy prices was primarily reflective of lower m/m natural gas prices. Relative to ‘trends’ suggested by the report, goods prices excluding energy accelerated in the month. Food costs rose a very strong 2.1% m/m and aggregate goods prices ex. food and energy showed a gain of 1.0% m/m which is a further acceleration versus previous months.  Investing in an inflationary environment. Consumers are experiencing significant price increases for many goods and services as demand in the economy is returning from its pandemic slumber faster than the supply-side of the economy can currently accommodate. Over time, we believe inflation should subside again as the supply-side catches-up and year-over-year comparisons become stronger.  Yesterday’s Consumer Price Index (CPI) report, however, was a clear indication that near-term inflation is likely to run hotter than previous market expectations, at least for the next several months, in our view.  In the meantime, how should investors invest for this environment, and how can they hedge against the effects of inflation from an investment perspective?  As we mentioned in yesterday’s CPI-related economic commentary, our advice is that investors do not make material allocation adjustments beyond those suggested by the tactical portfolio adjustments as suggested by the Ameriprise Global Asset Allocation Committee (GAAC) at the start of the year.  Historically, gold has been the most commonly cited hedge against inflation for investors. But if investors had followed this path at the start of the year (when a pending inflation bulge was widely anticipated) they would have significantly underperformed. Year-to-date, the S&P 500 is 8.8% higher on a total return basis while spot gold prices are down 4.4% (both figures via Bloomberg).  It’s rarely the correct path for investors to adjust allocations based on potential changes in one singular variable. In this light, at the start of the year, the GAAC took a rising inflationary environment into consideration, along with many other factors, in recommending tactical sector over-weights to the Financials, Materials and Industrials sectors. Through yesterday, these are three of the four top sector performers with total return gains of +24.8%, +18.5% and +14.8%, respectively.

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 Yes, markets dropped yesterday upon the “new information” of the likelihood of a stronger inflation pulse than had been expected. But we still do not believe the Fed will be inclined to act, at least until mid-Q3 or later (via fewer security purchases, NOT interest rate hikes). Investors should also remember that a temporary period of stronger inflation can be good for the financial returns of many businesses as price increases can often overcome higher costs (the effect of which can be managed against).

FIXED INCOME NEWS & VIEWS: Brian M. Erickson, CFA, Fixed Income Research & Strategy

Inflation Jumps; Ten-year Treasury Yields Do Too  April Consumer Price Index surprised to the upside leading 10-year Treasury yields seven basis points higher to 1.69% Wednesday. Yields on the short end remain anchored by the Fed’s patient approach to hiking policy rates.  See Russell Price’s Commentary in Wednesday’s Before the Bell for more on April CPI data.  Not all inflation is alike. While rising inflation tends to lift Treasury yield levels to compensate investors on a real yield basis, we view the potential implications for Fed policy as a more critical implication. Members of the Fed continue to highlight the temporary or transient nature of recent inflation trends. For example, the limited supply of dining out seating, rental cars, and lumber may drive higher prices in the near term. Still, renewed demand and higher prices encourage more restaurants to open, rental car companies to buy cars, and lumber mills to increase production. Essentially, higher prices today likely mean lower prices next year, leading to inflation that resolves after reopening effects pass.  The difference among inflation measures likely takes on new light this year. The Fed’s mandate of price stability looks beyond transient inflation forces to sustainable drivers of higher prices. This leads the Fed to focus on core Personal Consumption Expenditures inflation, which could move somewhat higher this year. Still, Fed member forecasts currently see the rise in core PCE inflation as abating next year, supporting the Fed’s position of leaving policy stimulus, including bond purchases, in place through the near-term lift of inflation.  The risk to bond markets centers on if the rise of core PCE inflation gathers momentum. Then the Fed’s patience may result in a sharp correction to the Fed’s monetary policy approach, which could be disruptive bond markets leading Treasury yields higher along with borrowing costs. Even a change in the Fed’s approach is likely to be measured starting with a tapering of bond purchases and the reshaping of the Fed’s medium-term expectations. We believe the Fed patient approach is the correct one and that disruptive changes in yields are unlikely to unfold.

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Before The Bell May 13, 2021 ______

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Price/Earnings: An equity valuation multiple calculated by dividing the market share price, as of a certain date, by earnings per share. Trailing P/E uses the share price divided by the past four-quarters’ earnings per share. Forward P/E uses the share price as of a certain date divided by the consensus estimate of the future four-quarters’ EPS.

Price/Sales: An equity valuation multiple calculated by dividing the market share price, as of a certain date, by the company’s sales per share over the most recent year.

INDEX DEFINITIONS An index is a statistical composite that is not managed. It is not possible to invest directly in an index.

Definitions of individual indices mentioned in this report are available on our website at ameriprise.com/legal/disclosures in the Additional Ameriprise research disclosures section, or through your Ameriprise financial advisor.

DISCLAIMER SECTION Except for the historical information contained herein, certain matters in this report are forward-looking statements or projections that are dependent upon certain risks and uncertainties, including but not limited to, such factors and considerations as general market volatility, global economic and geopolitical impacts, fiscal and monetary policy, liquidity, the level of interest rates, historical sector performance relationships as they relate to the business and economic cycle, consumer preferences, foreign currency exchange rates, litigation risk, competitive positioning, the ability to successfully integrate acquisitions, the ability to develop and commercialize new products and services, legislative risks, the pricing environment for products and services, and compliance with various local, state, and federal health care laws. See latest third-party research reports and updates for risks pertaining to a particular security.

This summary is based upon financial information and statistical data obtained from sources deemed reliable, but in no way is warranted by Ameriprise Financial, Inc. as to accuracy or completeness. This is not a solicitation by Ameriprise Financial Services, LLC of any order to buy or sell securities. This summary is based exclusively on an analysis of general current market conditions, rather than the appropriateness of a specific proposed securities transaction. We will not advise you as to any change in figures or our views.