Before the Bell Morning Market Brief

May 3, 2021

MONDAY MORNING MARKET STRATEGY: David M. Joy, Chief Market Strategist U.S. equities finished April with their best monthly gain of the year. The S&P 500 rose 5.2 percent, bringing its year-to- date return to 11.3 percent. The month began far stronger than it ended, however. All of the gains came in the first two weeks, led by an eclectic mix of real estate, financials, communications services and consumer discretionary stocks, although each of the eleven sector groups were positive. The Russell 1000 growth index climbed 6.8 percent, outpacing the 3.9 percent gain in the 1000 Value index. However, over the final two weeks the growth index fell slightly, while value index managed a fractional gain. Notably, both real estate and financials were strong throughout.

First quarter earnings are far exceeding expectations. According to FactSet, at the start of the year first quarter earnings were expected to grow by roughly 16 percent. By the end of the quarter, that forecast had grown to 24 percent. Now, with 60 percent of the S&P 500 having reported, earnings are growing at a rate of 46 percent. It is a similar story in revenue growth. Now running at a pace of 9 percent growth, revenue was expected to grow by 6 percent at the end of the quarter, and by 4 percent at the start of the year.

Bond yields eased during April, relieving a measure of anxiety among both bond and stock investors alike. The ten-year note yield reached its high for the year of 1.74 percent on March 31st, subsequently declining to an April low of 1.54 percent on the 22nd., before ending the month at 1.63 percent. As a result, the Bloomberg Barclays U.S. Treasury index enjoyed its first positive monthly return of the year, rising 0.8 percent. The index is still 3.5 percent lower on the year, however. High yield spreads continued to tighten during the month, although the pace did slow. It was the fourth straight month of gains this year in the high yield space, leaving the Bloomberg Barclays U.S. High Yield index higher on the year by 1.9 percent.

The dollar gave back most of its gain from March during the month, and the VIX index eased as well, falling at mid- month to its lowest level in over a year before rising slightly at month-end.

It was also the fourth straight month this year of rising inflation expectations, as the ten-year breakeven rate edged higher to 2.41 percent from 2.37 at the end of March. At the start of the year, the rate was 1.99 percent. The debate continues over whether rising year-over-year inflation readings will be transitory, as the Fed expects, or more intractable as a vocal chorus of skeptics believe. The trailing twelve-month core PCE deflator in March climbed by 1.8 percent, up from 1.4 percent in February. The April report will undoubtedly add fuel to the debate when it is reported later this month, as it will replace a -0.4 percent reading from last year. In its April FOMC statement last week, the Federal Reserve acknowledged that inflation has risen, but repeated its view that the rise was “largely reflecting transitory factors”. And during his post-meeting press conference Chair Powell pushed back on the question of whether it was time to “begin talking about talking about” tapering its pace of bond purchases.

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 14

Before The Bell May 3, 2021 ______

The advance estimate of first quarter real GDP showed growth at an annualized pace of 6.4 percent. And although that was slightly below expectations, outside of last year’s third quarter growth of 33 percent it was the strongest growth rate since the third quarter of 2003. Not surprisingly, personal consumption was strong as a result of federal stimulus payments. Conversely, a drawdown in inventories reduced growth by 2.6, as demand has rebounded faster than production, in part due to supply chain bottlenecks. That augers well for future growth, however, as inventories are replenished. In the week ahead we will get the first series of data showing how the economy began the second quarter. The April jobs report on Friday is expected to show the creation of close to 1 million new jobs, with the unemployment rate falling to 5.7 percent. Other scheduled April reports include the ISM manufacturing and service sector PMIs, and vehicle sales.

The rebound has been somewhat uneven overseas. The Eurozone actually fell into recession in the first quarter. GDP growth fell 0.6 percent, following the 0.7 percent decline in last year’s fourth quarter, as a number of countries struggled through various degrees of virus-related lockdown and the vaccine rollout got off to an uneven start. The EuroStoxx 50 index gained just 1.4 percent in April in euro terms, although the weaker dollar turned that into a gain of 3.8 percent. More recent progress in vaccine distribution should result in a stronger second quarter, however. Stocks in the UK fared better, rising 3.8 percent in local currency term in April, and 4.0 in dollars. Stocks in Japan fell 1.3 percent in yen, -0.1 percent in dollars, as the country dealt with its own vaccine distribution problems. Emerging market overall enjoyed a 2.3 percent gain in dollar terms, as measured by the MSCI EM index, with gains in both Latin America and Asia, despite well documented pandemic struggles in a number of countries including Brazil, Mexico, and India.

Last week President Biden outlined his $1.8T American Families Plan, which includes a range of proposed tax increases as outlined during the campaign. This follows the administrations proposed $2.3T infrastructure plan, negotiations for which with Republicans are scheduled to begin this week. While there is general agreement on the need for infrastructure investment, there is little agreement on how big such a package should be, or what programs should be included. And there is certainly little agreement on the various tax proposals, including among some moderate Senate Democrats.

MORNING MARKET COMMENTARY: Anthony M. Saglimbene, Global Market Strategist  Quick Take: U.S. futures are pointing to a higher open; European markets are trading higher; Asia ended lower overnight; West Texas Intermediate (WTI) oil trading at $63.72; 10-year U.S. Treasury yield at 1.65%.

 May Seasonality — Sell or Hold? In April, the S&P 500 Index returned +5.3% on a total return basis, led by Real Estate (+8.03%), Communication Services (+7.9%), and Consumer Discretionary (+7.1%). Growth outperformed Value across the market-cap spectrum, the U.S. outperformed other developed foreign markets, and performance across commodities was notably strong.  U.S. equities logged their third consecutive month of gains, with the S&P 500 seeing its best month since November 2020. A receding pandemic threat, improved vaccine momentum, hope for more fiscal spending (i.e., an infrastructure bill), strong corporate earnings, and a rebounding U.S. economy kept the bullish narrative in place last month.  Four months into the year, and the S&P 500 has made 25 record closing highs so far. That translates into roughly 31% of all trading days that the S&P 500 recorded a new closing high in 2021, per Bespoke Investment Group. If the record pace continues, which is a big “if,” the S&P 500 could match/surpass the previous record number of closing highs in a given year, 2017 (62), 1964 (65), and 1995 (77).  In April, the outperformance across small-caps narrowed, as the FactSet chart below shows. With the calendar turning to May, U.S. broad benchmark performance is starting to look more bunched, particularly across the S&P 500, Dow Jones Industrials Average, and NASDAQ Composite.

 Based on the time of the year, any discussion on seasonality would be remiss if it didn’t include a look at the old market adage "sell in May and go away." The informal guidance (which we never subscribe to) states the market's best performance of the year typically comes in the November through April period. Therefore an investor should "go away" in May through October. Notably, the S&P 500 Index returned over +13% in the May through October period last year and has been positive in the previous ten years. And while S&P 500 returns in the May through October period during the last ten years haven't always been spectacular, most of the time, they have outperformed what an investor would have received in cash or other short-term bond instruments. In some cases, by a very wide margin. Bottom line: After a strong run of stock performance over recent months, particularly across small-caps, investors could use a "May check-up" to look for rebalancing opportunities and realign their portfolios with strategic/tactical targets.  With that out of the way, May is a historically weaker month for stock prices. But the S&P 500 has generated a slightly positive return in May over the last twenty years. More recently, the Index has produced a positive return in seven of the previous eight years, as the FactSet table below shows. Average returns in June actually turn negative over a twenty-year period, driven by a couple of standout declines in 2002, 2008, and 2010. However, the May through July period for stock prices has typically shown a positive return over the last several years. Again, indicating long-term investors should ignore such simple market adages as "sell in May" and stick to their well-established investment strategies.  Yet, it is still tempting to look at how far stocks have run since the March 2020 bottom and think to yourself, if there ever was a time "sell in May" made sense — it might be now. In fact, our updated year-end S&P 500 target stands at 4250, not much higher than the current Index level of 4181. In our view, stocks are due for a period of consolidation and have priced in much of the known catalysts for growth most expect to see this year.  But our favorable year-end S&P 500 target calls for a level closer to 4400, suggesting there is still room for stocks to gravitate higher. Of course, that higher level may need to be accompanied by stronger than expected corporate earnings growth through the remainder of the year — which is not out of the question based on how aggressively companies are hurdling over Q1 profit estimates.

 And as we highlighted in our recently updated Quarterly Capital Market Digest (QCMD), stocks usually perform well when the economy is growing, and the bullish narrative could continue to drive prices higher over time. Growing profits, a brighter job outlook, and an economic recovery gaining steam, accompanied by more COVID-19 vaccines, is a risky backdrop for investors to bet against, in our view.  As such, investors will get a look at key data this week to see if that bullish narrative remains on track and if "hold in May" has more merit this year than "sell in May." During the week, 133 S&P 500 companies will report their first quarter results, and on Friday, the April nonfarm payrolls report will be released. Whisper numbers on the employment front currently suggest the economy could create over 1 million jobs a month over the summer. While the road ahead for stocks could be bumpier along the way, as long as profits and jobs are growing, we believe the longer-term trend for prices looks positive.

 Asia-Pacific: Asian equities finished lower on Monday. Trading was quiet, as China, Thailand, and Japan were closed for the Golden Week holiday. April PMIs across Asia rose almost everywhere, according to IHS Markit data. In South Korea, the composite PMI level has expanded for seven straight months, while in Taiwan, the level hit an all-time high. Composite PMI levels in Malaysia, Indonesia, and the Philippines also all sit in an expansionary condition.  Europe: Markets across the region are trading higher at midday. UK markets are closed for May Day. Like in the U.S., European companies are delivering one of their best earnings seasons on record. However, the market’s reaction has been relatively muted, with high expectations already reflected in stock prices. However, Bloomberg noted the strong earnings tailwinds support equity prices, with profit upgrades outpacing downgrades by the widest margin going back to 2000.  U.S.: Equity futures are pointing to a higher open. Here is a quick news rundown to start your morning:  Is an infrastructure compromise still possible? The Washington Post noted President Biden and top Democrats had signaled privately they are open to concessions on their $2.3 trillion infrastructure plan. And if it means receiving bipartisan support, the White House could be open to breaking the legislation into smaller bills. Some believe Democrats and Republicans are closer to building consensus than most think when it comes to traditional items like roads, bridges, airports, and waterways, per Politico, but such endeavors were a small part of the president’s proposal.  Companies are scrambling to meet demand. The Wall Street Journal highlighted how companies across a wide range of industries are scrambling to meet surging demand due to supply constraints and labor shortages. Consumers face extended delivery times due to supply chain issues, while restaurants and gyms struggle to fill open positions. As a result, inflation pressures are building as businesses pass on higher costs to end consumers due to increased input prices and raising wages to attract workers. However, labor shortages should decline over time, as rising wages attract workers and extended unemployment benefits run out.

 On the docket this week: April ISM manufacturing is expected to hit an 18-year high (Monday), while ISM nonmanufacturing ISM (Wednesday) is expected to hit an all-time high. The trade deficit and final March factory orders are reported on Tuesday. But it’s Friday’s nonfarm payrolls report that will receive all the attention. After +916K new jobs in March, FactSet estimates are calling for +975K new jobs in April, with the unemployment rate dipping to 5.8% from 6.0% in March,  Earnings Update: It’s another busy week on the earnings front, with over a quarter of the S&P 500 reporting Q1’21 profits over the next five days. With roughly 60% of S&P 500 profit reports complete, Q1'21 blended earnings per share (EPS) is higher by +45.8% y/y on sales growth of +9.1% y/y. In aggregate, S&P 500 companies are on track for their highest year-over-year EPS growth rate since Q1’10 (+55.4%). So far, 88% of companies reporting have surpassed EPS estimates, which is a record high since FactSet began tracking the data in 2008. In aggregate, S&P 500 companies have exceeded expectations by an eye-popping +22.8%, the second-highest level on record. The strong results are driven by outsized estimate cuts during the pandemic, massive fiscal/monetary stimulus, and a strengthening economic recovery across the U.S.

WORLD CAPITAL MARKETS 5/3/2021 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 -0.72% 11.83% 4,181.2 DJSTOXX 50 (Europe) 0.80% 13.85% 4,006.7 Nikkei 225 (Japan) closed 5.66% 28,812.6 Dow Jones -0.54% 11.30% 33,874.9 FTSE 100 (U.K.) closed 9.26% 6,969.8 Hang Seng (Hong Kong) -1.28% 4.66% 28,357.5 NASDAQ Composite -0.85% 8.55% 13,962.7 DAX Index (Germany) 0.78% 11.19% 15,253.4 Korea Kospi 100 -0.66% 8.95% 3,127.2 Russell 2000 -1.26% 15.06% 2,266.4 CAC 40 (France) 0.63% 14.21% 6,308.9 Singapore STI -1.04% 12.80% 3,184.8 Brazil Bovespa -0.98% -0.10% 118,894 FTSE MIB (Italy) 1.23% 9.92% 24,438.7 Shanghai Comp. (China) closed -0.75% 3,446.9 S&P/TSX Comp. (Canada) -0.77% 10.64% 19,108.3 IBEX 35 (Spain) 0.91% 10.70% 8,895.3 Bombay Sensex (India) -0.13% 2.21% 48,718.5 Mexico IPC -1.82% 9.64% 48,009.7 MOEX Index (Russia) closed 7.94% 3,544.0 S&P/ASX 200 (Australia) 0.04% 8.34% 7,028.8

Global % chg. % YTD Value Developed International % chg. %YTD Value Emerging International % chg. %YTD Value MSCI All-Country World Idx -0.88% 9.29% 701.8 MSCI EAFE -1.02% 6.82% 2,268.5 MSCI Emerging Mkts -1.24% 4.80% 1,347.6 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 -0.89% 16.57% 257.6 Equity Income Indices % chg. % YTD Value Futures & Spot (Intra-day) % chg. % YTD Value Consumer Discretionary 0.30% 10.43% 1,435.9 JPM Alerian MLP Index -2.74% 26.46% 175.4 CRB Raw Industrials 0.26% 13.68% 580.59 Consumer Staples 0.04% 3.38% 713.7 FTSE NAREIT Comp. TR 0.45% 17.11% 23,726.1 NYMEX WTI Crude (p/bbl.) 0.17% 31.27% 63.69 Energy -2.72% 31.61% 371.6 DJ US Select Dividend -0.56% 24.40% 2,719.0 ICE Brent Crude (p/bbl.) -0.06% 28.80% 66.72 Financials -0.96% 23.52% 602.0 DJ Global Select Dividend -0.11% 18.56% 252.9 NYMEX Nat Gas (mmBtu) 0.65% 16.19% 2.95 Health Care -0.32% 7.27% 1,412.9 S&P Div. Aristocrats -0.54% 13.28% 3,776.6 Spot Gold (troy oz.) 0.59% -6.26% 1,779.48 Industrials -0.67% 15.42% 861.5 Spot Silver (troy oz.) 1.25% -0.61% 26.24 Materials -1.07% 14.91% 521.1 LME Copper (per ton) -0.61% 26.84% 9,829.00 Real Estate 0.62% 18.06% 267.1 Bond Indices % chg. % YTD Value LME Aluminum (per ton) -0.57% 21.99% 2,407.50 Technology -1.43% 7.34% 2,452.6 Barclays US Agg. Bond 0.10% -2.61% 2,329.6 CBOT Corn (cents p/bushel) 2.23% 43.31% 688.25 Utilities 0.76% 7.24% 339.0 Barclays HY Bond 0.03% 1.95% 2,383.5 CBOT Wheat (cents p/bushel) 0.85% 17.95% 741.00

Foreign Exchange (Intra-day) % chg. % YTD Value % chg. % YTD Value % chg. % YTD Value Euro (€/$) 0.20% -1.41% 1.20 Japanese Yen ($/¥) -0.18% -5.72% 109.51 Canadian Dollar ($/C$) -0.07% 3.50% 1.23 British Pound (£/$) 0.34% 1.46% 1.39 Australian Dollar (A$/$) 0.23% 0.52% 0.77 Swiss Franc ($/CHF) -0.16% -3.21% 0.91 Data/Price Source: Bloomberg. Equity Index data is total return, inclusive of dividends, where applicable.

THE WEEK AHEAD: Russell T. Price, CFA, Chief Economist All economic estimates are via Bloomberg unless otherwise noted.  Earnings season update: One for the record books. The Q1-2021 earnings season is turning out to be nothing short of remarkable. Through last Friday, 61% of the 505 companies that currently comprise the S&P 500 had reported their results for the period. According to FactSet, 86% of the reported companies showed better than expected earnings per share (EPS) results while 78% beat on the revenue line. According to Refinitiv, the outperformance percentage is the highest its recorded since it began tracking the data in 1994 and is substantially better than the historical average of 65%.  Performance results for Q1 also got a remarkable boost over the last week as some of the S&P 500’s heaviest weighted companies reported “blow-out” earnings. The results of larger companies have a greater influence given that the S&P 500 (and measured Index earnings) are market-cap weighted. This is not a narrow story, however. The Info Tech., Financials, Energy and Consumer Discretionary sectors have each seen 90% or more of reporting companies outperform EPS estimates while the Real Estate sector has been the weakest performer with just 75% of companies beating estimates.  Last week at this time, S&P 500 companies were forecast to generate aggregate Q1 earnings per share (EPS) of $43.23, representing a y/y gain of 29.7%. As we begin this, the first week of May, blended results for Q1 are now on-track for EPS of $47.06, which would represent a 41% y/y increase. Note that in mid-March, FactSet data was indicating a y/y EPS growth rate for the period of 19.4%.  Blended revenue growth estimates (actuals + estimates) currently look for a very strong 9.1% y/y advance, according to FactSet, versus a 5-year average revenue growth rate of 3.9%. Data depicted in the chart below is sourced from FactSet. The graphic itself is sourced from American Enterprise Investment Services Inc.

 The Economic Calendar offers a steady stream of influential reports this week. Monday’s ISM Manufacturing Index is expected to show another month of strong production activity, even as the nation’s autos sector remains significantly constrained by limited semiconductor supplies. Forecasters as surveyed by Bloomberg expect the ISM Manufacturing Index to post a reading of 65.2 for the month versus the 64.7 registered in March. The chart at right depicts the ISM Manufacturing and ISM Services Index through March and has been sourced from FactSet.  Automakers will also release their April auto sales numbers today. Industry sales are expected to see a second straight month of high 17 million-unit sales (an annualized rate) as buyers leveraged their extra government stimulus payments to purchase cars while some selection was still available. Dealer inventories are nearly half of normal levels according to some reports and last week, Ford said during its earnings call that its production would be down 50% in Q2 due to the global semiconductor shortage. Ford, however, seems more negatively effected than most other automakers as it sourced much of its supply from a Japanese facility that suffered a major fire in February (and is not projected to be back to full production until June).  On Wednesday, markets will get their first look at the change in private-sector employment for the month of April with the ADP Employment Estimate. Normally, employment reports offer a reflection on the demand for workers, thus economic momentum and strength. Near-term, employment reports, however, will very likely be seen as a representation of labor supply in the American economy. Around the country, businesses are reopening as restrictions are removed and virus conditions slowly improve. Many, if not most, however, are reporting a very difficult hiring climate. Through March, there were still about 8 million people unemployed since the pre-pandemic employment peak of February 2020. Some of these people still have kids at home rather than the local classroom, others may be sick or taking care of sick family members, but a significant majority in our view are also incentivized to remain on the sidelines by very high unemployment benefits; benefits which in many cases exceed potential wages. As we noted last month, more than 40% of the jobs still “missing” since the pandemic set-in are relatively low-wage positions in the leisure and hospitality sector. Overall, forecasters as surveyed by Bloomberg expect the ADP report to show 875,000 net new jobs to have been created in April versus the 517,000 the ADP report measured in March.  The ISM Services Index is also expected to show further acceleration when reported on Wednesday. According to Bloomberg, the Index is expected to rise to 64.1 from 63.7 in March.  Meanwhile, Friday’s Employment Report from the Labor Department is also expected to show exceptionally strong hiring in April. Currently, the Bloomberg consensus looks for nearly a million (980,000) net new jobs to have been created versus the 916,000 jobs gained in March, according to the report. The unemployment rate is forecast to drop to 5.8% from March’s 6.0%.

May 3 45 6 7 ISM Manufacturing Index Trade Balance ADP Employment Estimate Initial Jobless Claims Employment Report Construction Spending Factory Orders ISM Services Index Challenger Layoff Notices Consumer Credit U.S. Auto Sales Industrial Production - Brazil Labor Productivity Industrial Production - Germany Retail Sales - Germany Inflation - China Industrial Production - France Trade - Brazil Trade - China Industrial Production - Spain Retail Sales - Eurozone Employment - Canada Monetary Policy - U.K. Inflation - Mexico

Where Market Fundamentals Stand Heading into The Week:

S&P 500 Trailing and Forward P/E valuations: Source: FactSet Please note: Although we try to maintain consistency as much as possible, Price to Earnings (P/E) ratios may differ modestly from once source to another. Most notably, P/E numbers can often show their most notable differences during an earnings release season as some sources may still use the last full ‘actual’ earnings number (for instance, currently Q4 trailing 12-month earnings per share) while others use earnings per share that are updated for Q1 using a combination of actual and estimated earnings per share. The calculation of earnings (operating earnings versus ‘as reported’ or GAAP) also often differs modestly from one data source to another due to the proprietary use of calculation methodologies. The “average” shown in the charts below represent averages for the period shown.

Consensus Earnings Estimates: Source: FactSet Please note: The consensus earnings estimates shown below should viewed cautiously. The business environment remains very dynamic given virus conditions, thus leaving current estimates with greater uncertainty than usual, in our view.

S&P 500 Earnings Estimates 2017 2018 2019 2020 2021 2022 2023 5/3/2021 Actual Actual Actual Actual Actual Actual Actual Est. Est. Est. Est. Est. Est. Est. Est. Est. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY

Quarterly $$ amount $33.32 $28.22 $39.41 $42.32 $47.06 $43.84 $46.89 $49.11 $49.24 $50.65 $53.79 $55.97 change over last week $3.83 $0.87 $0.52 $0.39 $1.88 $1.03 $0.80 $0.90 na yr/yr -14.1% -32.1% -6.6% 1.3% 41.2% 55.4% 19.0% 16.0% 4.6% 15.5% 14.7% 14.0% qtr/qtr -20% -15% 40% 7% 11% -7% 7% 5% 0% 3% 6% 4%

Trailing 4 quarters $$ $133.50 $164.05 $164.38 $158.90 $145.53 $142.73 $143.27 $157.01 $172.63 $180.11 $186.90 $189.08 $195.89 $202.79 $209.65 $223.30 yr/yr 11.6% 22.9% 0.2% -12.8% 30.5% 12.2% 6.5% Implied P/E based on a S&P 500 level of: 4181 29.2 26.6 24.2 23.2 22.4 22.1 21.3 20.6 19.9 18.7

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 Monday, May 3, 2021. All times Eastern. Consensus estimates via Bloomberg.

Time Period Release Consensus Est. Actual Prior Revised to 10:00 AM APR ISM Manufacturing Index 65.3 64.7 10:00 AM APR ISM Prices Paid 86.0 85.6 10:00 AM MAR Construction Spending (MoM) +1.8% -0.8% NA APR U.S. Auto Sales (annualized) 17.7M 17.7M

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

Fixed Income Markets Post Fed Meeting  The latest Federal Reserve policy meeting reasserted a patient Fed posture, one that would allow Treasury yields to lift higher. The Fed’s willingness to permit inflationary forces to foment caught some investors by surprise and encouraged others to press bets that inflation may lead Treasury yields higher. Ten-year Treasury yields rose from a low of 1.54% on April 22, the week before the Fed decision, to 1.64% this morning.  We raised our Base Scenario year-end 10-year yield target to 1.5% from 1.0% set before the end of 2020. Multiple rounds of fiscal stimulus and successful vaccine administration boosting the economic recovery. We believe 10-year yields likely struggle to sustain above 2% in our Optimistic Scenario ending the year near 2%. In our Adverse Scenario, we believe 10-year yields likely settle lower to 1.25%, with further downside contained by the spread of a global recovery.

 Breakeven inflation rates – the market’s indication of where headline CPI may be headed – reached for new highs last week following the Fed meeting. The TIPs trade we recommended late last year may soon have run its course for short-term investors. Short-term investors may look for an opportune time to exit the trade over the next few months. We recommend long-term investors stay the course, maintaining TIPS as a diversifier contributing stability should

inflation accelerate a Fed withdrawal and lead to stock market unease. In an environment boxed in by extraordinary Fed measures, fixed-rate Treasuries would be complimented by inflation-sensitive TIPS.  See our latest Quarterly Capital Market Digest report dated April 28, 2021 for more details on our bond market view.

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IMPORTANT DISCLOSURES on a timely basis a default may occur and interruption or As of March 31, 2021 reduction of interest and principal occur. The views expressed regarding the company(ies) and sector(s) featured in this publication reflect the personal Investments in a narrowly focused sector may exhibit higher views of the research analyst(s) authoring the publication. volatility than investments with broader objectives and is Further, no part of research analyst compensation is directly subject to market risk and economic risk. or indirectly related to the specific recommendations or views contained in this publication. Income Risk: We note that dividends are declared solely at the discretion of the companies’ boards of directors. Dividend A part of a research analyst’s compensation may be based cuts or eliminations will likely negatively impact underlying upon overall firm revenue and profitability, of which company valuations. Published dividend yields are calculated investment banking, sales and trading, and principal trading before fees and taxes. Dividends paid by foreign companies are components. No part of a research analyst’s to ADR holders may be subject to a withholding tax which could compensation is based on a specific investment banking adversely affect the realized dividend yield. In certain transaction, nor is it based on sales, trading, or principal circumstances, investors in ADR shares have the option to trading. A research analyst may have visited the material receive dividends in the form of cash payments, rights shares operations of one or more of the subject companies or ADR shares. Each form of dividend payment will have mentioned in this research report. No payment was received different tax consequences and therefore generate a different for the related travel costs. yield. In some instances, ADR holders are eligible to reclaim a portion of the withholding tax. Additional information and current research disclosures on individual companies mentioned in this research report are International investing involves increased risk and volatility available on our website at ameriprise.com/legal/disclosures due to political and economic instability, currency fluctuations, in the Additional Ameriprise research disclosures section, and differences in financial reporting and accounting or through your Ameriprise financial advisor. You may also standards and oversight. Risks are particularly significant in submit a written request to Ameriprise Financial, Inc., 1441 emerging markets. West Long Lake Road, Troy MI, 48098. Independent third- party research on individual companies is available to clients Market Risk: Equity markets in general could sustain at ameriprise.com/research-market-insights. SEC filings may significant volatility due to several factors. As we have seen be viewed at sec.gov. recently, both economic and geopolitical issues could have a material impact on this model portfolio and the equity market Tactical asset class recommendations mentioned in this as a whole. report reflect The Ameriprise Global Asset Allocation Committee’s general view of the financial markets, as of the Quantitative Strategy Risk: Stock selection and portfolio date of the report, based on then current conditions. Our maintenance strategies based on quantitative analytics carry tactical recommendations may differ materially from what is a unique set of risks. Quantitative strategies rely on presented in a customized long-term financial plan or comprehensive, accurate and thorough historical data. The portfolio strategy. You should view our recommendations in Ameriprise Investment Research Group utilizes current and conjunction with a broader long-term portfolio strategy. Not historical data provided by third-party data vendors. Material all products, services, or asset classes mentioned in this errors in database construction and maintenance could have report may be available for sale at Ameriprise Financial an adverse effect on quantitative research and the resulting Services, Inc. Please consult with your financial advisor. stock selection strategies.

Diversification and Asset Allocation do not assure a profit or PRODUCT RISK DISCLOSURES protect against loss. Exchange Traded Funds (ETF) trade like stocks, are subject to investment risk and will fluctuate in market value. RISK FACTORS Dividend and interest payments are not guaranteed. The For additional information on individual ETFs, see available amount of dividend payment, if any, can vary over time and third-party research which provides additional investment issuers may reduce or eliminate dividends paid on securities highlights. SEC filings may be viewed at sec.gov in the event of a recession or adverse event affecting a specific industry or issuer. Should a company be unable to pay interest ______© 2021 Ameriprise Financial, Inc. All rights reserved. Page 12 of 14 Before The Bell May 3, 2021 ______

All fixed income securities are subject to a series of risks which and are more volatile than traditional investments, making may include, but are not limited to: interest rate risk, call risk, them more suitable for investors with an above-average refunding risk, default risk, inflations risk, liquidity risk and tolerance for risk. event risk. Please review these risks with your financial advisor to better understand how these risks may affect your Growth securities, at times, may not perform as well as value investment choices. In general, bond prices rise when interest securities or the stock market in general and may be out of rates fall and vice versa. This effect is usually more favor with investors. pronounced for longer-term securities. This means you may lose money if you sell a bond prior to maturity as a result of Value securities may be unprofitable if the market fails to interest rate or other market movement. recognize their intrinsic worth or the portfolio manager misgauged that worth. Any information relating to the income or capital gains tax treatment of financial instruments or strategies discussed DEFINITIONS OF TERMS herein is not intended to provide specific tax advice or to be Agency – Agency bonds are issued by Government Sponsored used by anyone to provide tax advice. Investors are urged to Enterprises (GSE), but are NOT direct obligations of the U.S. seek tax advice based on their particular circumstances from government. Common GSE’s are the Federal Home Loan an independent tax professional. Mortgage Corp. (Freddie Mac) Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Bank A real estate investment trust or REIT is a company that owns (FHLB). and operates income-producing real estate. In addition, some REITs participate in the financing of real estate. To qualify as Beta: A measure of the risk arising from exposure to general a REIT, a company must: I) invest at least 75% of its total market movements as opposed to company-specific factors. assets in real estate assets, II) generate at least 75% of its Betas in this report, unless otherwise noted, use the S&P 500 gross income from real property or interest, and III) pay at least as the market benchmark and result from calculations over 90% of its taxable income to shareholders in the form of historic periods. A beta below 1.0, for example, can suggest distributions. A company that qualifies as a REIT is permitted the equity has tended to move with lower volatility than the to deduct the distributions paid to shareholders from its broader market or, due to company-specific factors, has had corporate taxes. Consequently, many REITs target to payout at higher volatility but generally low correlations with the overall least 100% of taxable income, resulting in virtually no market. corporate taxes. Corporate Bonds – Are debt instruments issued by a private An investment in a REIT is subject to many of the same risks corporation. Non-Investment grade securities, commonly as a direct investment in real estate including, but not limited known as “high-yield” or “junk” bonds, are historically subject to: Illiquidity and valuation complexities, redemption to greater risk of default, including the loss of principal and restrictions, distribution and diversification limits, tax interest, than higher-rated bonds, which may result in greater consequences, fees, defaults by borrowers or tenants, market price volatility than experienced with a higher-rated issue. saturation, balloon payments, refinancing, bankruptcy, decreases in market rates for rents and other economic, Mortgage Backed Securities – Bonds are subject to political, or regulatory occurrences affecting the real estate prepayment risk. Yield and average lives shown consider industry. prepayment assumptions that may not be met. Changes in payments may significantly affect yield and average life. Ratings are provided by Moody’s Investors Services and Please contact your financial advisor for information on CMOs Standard & Poor’s. and how they react to different market conditions.

Non-Investment grade securities, commonly known as "high- Municipal Bonds – Interest income may be subject to state yield" or "junk" bonds, are historically subject to greater risk of and/or local income taxes and/or the alternative minimum tax default, including the loss of principal and interest, than (AMT). Municipal securities subject to AMT assume a higher-rated bonds, which may result in greater price volatility “nontaxable” status for yield calculations. Certain municipal than experienced with a higher-rated issue. bond income may be subject to federal income tax and are identified as “taxable”. Gains on sales/redemptions of Securities offered through AFSI may not be suitable for all municipal bonds may be taxed as capital gains. If the bonds investors. Consult with your financial advisor for more are insured, the insurance pertains to the timely payment of information regarding the suitability of a particular investment. principal (at maturity) and interest by the insurer of the underlying securities and not to the price of the bond, which For further information on fixed income securities please refer will fluctuate prior to maturity. The guarantees are backed by to FINRA’s Smart Bond Investing at FINRA.org, MSRB’s the claims-paying ability of the listed insurance company. Electronic Municipal Market Access at emma.msrb.org, or Investing in Bonds at investinginbonds.com. Treasury Securities – There is no guarantee as to the market value of these securities if they are sold prior to maturity or Alternative investments cover a broad range of strategies and redemption. structures designed to be low or non-correlated to traditional equity and fixed-income markets with a long-term expectation Price/Book: A financial ratio used to compare a company’s of illiquidity. Alternative investments involve substantial risks market share price, as of a certain date, to its book value per

______© 2021 Ameriprise Financial, Inc. All rights reserved. Page 13 of 14 Before The Bell May 3, 2021 ______share. Book value relates to the accounting value of assets Ameriprise Financial Services, LLC and its affiliates do not and liabilities in a company’s balance sheet. It is generally not offer tax or legal advice. Consumers should consult with their a direct reflection of future earnings prospects or hard to value tax advisor or attorney regarding their specific situation. intangibles, such as brand, that could help generate those earnings. Ameriprise Financial Services, LLC. Member FINRA and SIPC.

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.

Past performance is not a guarantee of future results.

Investment products are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.