Spring Fundstrat Global Advisors 150 East 52 nd St, 31 st floor New York, NY Bloomberg: FSGA <<GO>>

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1 Fundstrat Global Advisors 150 East 52 nd St, 31 st floor New York, NY Spring 2017 Thomas J. Lee, CFA AC Head of Research Rob Sluymer Managing Director Sam Doctor Head of Data Science Research Ken Xuan Data Scientist L. Thomas Block Washington Policy Strategist John Bai Head of Sales Bill Vasilakos Tzu-Wen Chen For Reg AC certification and other important disclosures, see slide Bloomberg: FSGA <<GO>>

2 How we create value for our clients The Fundstrat Team Products and Services Samples of research For exclusive use of Fundstrat clients Slide 2

3 An integrated research process with a proven track record Market outlook Signal from noise Equity market outlook and key influences on market direction 2. Factor-based Portfolio Strategy Risk/reward for Sectors and Portfolio Factors driven by fundamental based leading indicators with quantifiable reliability. 3. Stock selection Combining factor-based screens and fundamental stock analysis to identify opportunities 4. Bespoke Research Most our clients ask us to create custom research using our proprietary databases and systematic regime models. For a copy of this slide, please contact us and reference this slide number: Slide 3

4 An integrated research process with a proven track record Credit lead equities Stocks junior piece of capital structure 2. Regimes supercede business cycles 3. Investors too reliant on last cycle factors 4. Consensus lags (not leads) Regimes drive multi-year, multi-decade cycles which need to be overlayed to biz cycle dynamics Today s Portfolio Manager has a median tenure of 7 years meaning he has only seen one cycle. Consensus tools and indicators are already discounted by markets and computers. 5. Signal from Noise We look for 1, 2, 3-sigma signals to identify quantifiable investment opportunities. For a copy of this slide, please contact us and reference this slide number: Slide 4

5 An integrated research process with a proven track record... From Third Point s 3Q16 Quarterly Letter Author: Daniel Loeb. Be nonconsensus For a copy of this slide, please contact us and reference this slide number: Slide 5

6 An integrated research process with a proven track record... Street Research Differentiation Short term -ism Regime and cycle analysis. REACTIVE not predictive Fundamental based indicators with quantifiable reliability Too many OPINIONS (not conclusions) Signal from noise. Systematic models drive conclusions with a highprobability of success. Consensus indicators Proprietary databases identifying important leading and lagging indicators. For a copy of this slide, please contact us and reference this slide number: Slide 6

7 1. From US Flash dated August 26, 2016 Market Strategy Market "alpha" Economic Leading Indicator: ISM/ PMIs Jobless claims Policy rates Debt levels Inflation Capital spending Credit and Commodities: Exchange rates US Interest rates HG credit OAS HY credit OAS Credit issuance Consumer Confidence Housing starts Auto sales M&A Earnings Profit margin Default rates Inflation breakevens Yield curve Commodity derivatives Contango/ Backwardation Quality spread rally (CCC vs BB) Signal: 2-std in 6m Dataset: 25 years 6M S&P 500 gain 8.6% Win-ratio: 78% Relative Value: HY vs Equity Equity vs debt CoC Risk premia Equity issuance Intrinsic value Market Technicals Investor Positioning: Sentiment surveys VIX Margin/ Gross leverage Investor flows 2. Portfolio Strategy: Factor analysis Sectors: Technology Consumer Disc. Industrials Materials Energy Financials REITs Healthcare Staples Telecoms Utilities Semiconductors IT Software IT Hardware Pharma/ Biotech Medical devices Healthcare services Small-cap value Win-ratio: 75% 6M rel. gain: 560bp Tech Hardware: Win-ratio: 85% 6M rel. gain: 600bp Styles: Growth vs Value Small vs Large Laggards vs leaders Momentum High vs Low Vol High vs Low Yield Cyclical vs Defensives 3. Factor Screen: Fundstrat Theme Stock Selection Quantitative and Fundamental Factors: Valuation Growth profile Cash return Profitability Sentiment Risk Credit/ leverage Short interest Technicals Correlation sensitivity 24 stocks: BC, BWA, HAR, LEN, MSG, PHM, VSTO, PWR, ARRS, CLGX, FIT, LDOS, QRVO, Z, RGLD, STLD, PE, AFSI, HTA, LSI, WAL, COTY, THS, PINC Qualitative Factors: Management Insider buying R&D spending Inflation sensitivity Currency sensitivity Commodity sensitivity Labor sensitivity For a copy of this slide, please contact us and reference this slide number: Slide 7

8 On underhand free throws Rick Barry: Dad, they're going to make fun of me. That's the way the girls shoot. Growth -1.1% (YTD relative) (319 stocks) Rick Barry s father: Son, they can't make fun of you if you're making them. Growth as cheap as Value The Intersect +6.4% (YTD relative) Stocks are the new bonds Both Value Growth +1.8% (YTD relative) (171 stocks) Ticker CSCO IBM APD PX Company name Cisco Systems International Business Machines Air Products & Chemicals Inc. Praxair Inc. Div yield > LT co bond yield +11.5% (YTD relative) (currently 54 stocks) OXY Occidental Petroleum Corp. VZ Verizon Communications Laggards become Leaders Value +1.2% (YTD relative) (359 stocks) New for 4Q16 VFC VF Corp KMB Kimberly Clark Lagged 4-plus years +14.4% (YTD relative) (68 stocks)

9 An integrated research process with a proven track record... High-yield weakened materially mid year ahead of S&P 500 VIX term structure smells bottoms 6/2014 HY starts weakening 7/2015 S&P 500 rolls over When VIX term structure inverts, has signaled tactical bottoms For a copy of this slide, please contact us and reference this slide number: Slide 9

10 Click here to An integrated research process with a proven track record... S&P 500 price level (log scale) Recession 2Q15 2Q Investment as % of GDP Construction + capex + consumer durables Rising Falling Inflation Trend in inflation using CPI High inflation Reflation / stable inflation Disinflation Credit Charge-offs as a % of net loans and leases Improving Deteriorating For a copy of this slide, please contact us and reference this slide number: Slide 10

11 An integrated research process with a proven track record... Only at the EXTREMES, the VIX term structure generates meaningful signal Range of VIX term structure 4m- 1m S&P 500 return (%) S&P 500 win-ratio # Low - High instances 1M 6M 1M 6M Decile % 8.4% 57% 73% Decile % -0.3% 60% 56% Decile % 0.7% 66% 69% Decile % 2.2% 56% 75% Decile % 3.2% 66% 78% Decile % 2.8% 61% 71% Decile % 3.7% 71% 76% Decile % 3.0% 69% 68% Decile % 3.9% 60% 71% Decile % 7.4% 71% 88% For a copy of this slide, please contact us and reference this slide number: Slide 11

12 How we create value for our clients The Fundstrat Team Products and Services Samples of research For exclusive use of Fundstrat clients Slide 12

13 49 years of research and investment experience... Thomas J Lee, CFA Managing Partner Head of Research Fundstrat research is led by Thomas Lee, who has over 24 years of experience in equity research. Prior to founding Fundstrat, Mr. Lee was at J.P. Morgan from 1999 to 2014, and served as Chief Equity Strategist from 2007 to He has been top ranked by Institutional Investor (II) every year since His areas of expertise include Market Strategy, Small/Mid-Cap Strategy, and Telecom Services. He has previously served as Managing Director at Salomon Smith Barney. He is a CFA charterholder and a member of the New York Society of Security Analysts (NYSSA) and the Economic Club of NY. He received his BSE from the Wharton School at University of Pennsylvania with concentrations in Finance and Accounting. John Bai Managing Partner Head of Sales, Fundstrat Fundstrat sales is led by John Bai, who has 25 years of experience in finance. Former head of Asia and US equity sales at Mizuho Securities. Former head of hedge funds sales at CLSA (Calyon Securities). Former head of Asia equity sales at ING Barings. Extensive knowledge of all major hedge funds in USA and Asia. Was ranked top Asia equity sales in Biggest producer of commissions at CLSA and Mizuho Securities since BA in electrical engineering Columbia University. MBA in finance and accounting University of Chicago. For a copy of this slide, please contact us and reference this slide number: Slide 13

14 Focused on generating alpha for clients... Research/Strategy Team Thomas J. Lee, CFA, Managing Partner Prior to founding Fundstrat, Mr. Lee was at J.P. Morgan from 1999 to 2014 and served as Chief Equity Strategist from 2007 to He was top-ranked by Institutional Investor every year since Previously served as Managing Director at Salomon Smith Barney. Sam Doctor, Managing Director Head of Data Science Research. Former US Small and Mid Cap Technology Analyst and India Small / Mid Cap Strategist at J.P. Morgan Chase. Rob Sluymer, Managing Director Highly regarded Senior Technical Strategist with over 26 years experience at RBC Capital Markets. L. Thomas Block, Washington Policy Strategist President of Tom Block Consults, a public policy consulting firm. Prior to that, Tom had a 21-year career at J.P. Morgan, serving as Global Head of Government Relations. Ken Xuan, Quantitative Analyst Former operations strategy consultant with West Monroe Partners, Ken holds a BS from Purdue and an MS in Operations Research from Columbia University. Institutional Sales/Advisory Team John Bai, Managing Partner Former Head of Asia and US Equity Sales at Mizuho Securities from 2009 through 2014; previously served as Head of Hedge Fund Sales at CLSA. Bill Vasilakos, Managing Director Former Senior Institutional Equity Salesperson at Empirical Research. He has over 20 years of experience in both research and sales. Tzu-Wen Chen, Vice President Former Strategic Client Services Manager at Rapid Ratings International; prior to that, she served as Senior Project Engineering Manager within the Oil and Gas industry at BHP Billiton and Transfield-Worley. For a copy of this slide, please contact us and reference this slide number: Slide 14

15 We want to hear from you... Phone Web Facebook Linkedin facebook.com/fundstratglobal linkedin.com/company/fundstratglobal-advisors For a copy of this slide, please contact us and reference this slide number: Slide 15

16 How we create value for our clients The Fundstrat Team Products and Services Samples of research For exclusive use of Fundstrat clients Slide 16

17 An integrated research process with a proven track record... An integrated approach: (i) macro; (ii) fundamental; (iii) technical and (iv) qualitative: Product The Team Approach Flagship Products Portfolio Strategy Thomas Lee Regime Analysis Cross-market analysis Historical analogs Sector recommendations US Equity Strategy FLASH 3 Points TV video Circle of Life: Analysis of Sectors State of the Market Technical Strategy Rob Sluymer Technical Analysis Actionable recommendations Asset classes, sectors, groups and individual equities Weekly Technical Strategy Daily publications Custom client portfolio analysis Bespoke products Quantitative Strategy & Data Science Sam Doctor Quantitative focus: Fundamentals Valuation Sentiment Laggards Bespoke Client Research Quantitative Model Daily market overviews Washington Policy Strategy L. Thomas Block Policy insights Interpreting how shifts in political landscape could impact equity markets Washington DC reports Key government policy and political analysis For a copy of this slide, please contact us and reference this slide number: Slide 17

18 An integrated research process with a proven track record... An integrated approach: (i) macro; (ii) fundamental and (iii) qualitative: Fundstrat Core Macro Fundamental Policy US Strategy Sector Video State of the Market Daily Technical Strategy Quant. Capital Structure Equity Strategy FLASH Circle of Life: Essential guide to Sectors 3 Points TV Marketing Deck Fundstrat Daily Weekly and Daily Publicati ons Doctor Stock Model / What the Doctor orders Equity vs CDS Corporate Research Washington Policy Thomas J Lee, CFA Head of Research u u u u Rob Sluymer Technical Strategy u Sam Doctor Quantamental Strategist u u u L. Thomas Block Washington Policy u Legend: u Lead publishing author Key contributor to the report For a copy of this slide, please contact us and reference this slide number: Slide 18

19 An integrated research process with a proven track record... From Byron Wien Vice Chairman Blackstone "My performance improved once I began to use fewer research providers and use them more intensely." For a copy of this slide, please contact us and reference this slide number: Slide 19

20 We succeed only when clients find value in our ideas We service a broad array of clients: Client Asset Size Benefits of Fundstrat Asset Managers $5B to $1T Hedge Funds $100m to $25B Pension Funds $10B to $500B Wealth Managers and Family Offices $150mm to $50B A personalized experience We are a small firm with a select number of clients Frequent calls and face to face meetings Idea dinners Regular contact from our team High conviction views and non-consensus ideas We focus on regime analysis Providing industry recommendations Extensive single-stock ideas both long and short Let us be your research department Personalized and confidential projects for clients Send custom weekly screens and reports Bespoke projects Portfolio analysis For a copy of this slide, please contact us and reference this slide number: Slide 20

21 Flagship Strategy Product: Circle of Life: State of the Market: Quantitative Research: Benchmarking Active Mgrs: Daily: Fundchat: Independent, top-down macro-driven themes and events published weekly every Friday. Essential framework for identifying investment opportunities in sectors and industries updated and published monthly. Our marketing deck provides detailed analytics behind our research. Doctor Quant Model narrows long / short idea generation to about 200 stocks with favorable risk/reward dynamics. We track the performance of over 3,200 fund managers and benchmark returns against their respective index. Earnings season: S&P 500 EPS and sales updates. Off-EPS season: high-frequency market data (short interest, HY bonds, analyst sentiment, economic momentum. Compilation of commentary, thoughts, and feedback from our clients (published exclusively for our clients). 3 Points TV video: We publish a weekly video, summarizing key topics of the week. Assist in Quarterly Letters: Customized/Bespoke work: We assist clients in writing their quarterly letters, by providing exhibits and custom analysis. Many clients ask us for customized stock analysis and channel research (identify inflection points). For a copy of this slide, please contact us and reference this slide number: Slide 21

22 How we create value for our clients The Fundstrat Team Products and Services Samples of research For exclusive use of Fundstrat clients Slide 22

23 Thomas J. Lee, CFA April 17 th 2017 Strategy VIX term structure inverted, adding to downside risk This report is published every Friday morning. This sample was published on April 17 th, 2017 As our clients know, we took a cautious stance at the start of 2017, noting that the flattening of the long-term yield curve (since 11/9/16) signaled potential for disappointing growth in And while the S&P 500 managed to advance nearly 7% in the early months of 2017, sector leadership has been notably defensive and concentrated. YTD, excluding the 10 best stocks (18% mkt cap), the S&P 500 is up ~2%--market is a lot more concentrated than most realize (Slide 13). And in late-march, we noted that high-yield spreads widened 60bp, suggesting that continued equity gains are diverging from an important market. On 4/11/17 (last week), the VIX term structure inverted (4M is lower than 1M VIX), suggesting that key supporters of the equity market are now heading for high ground. In other words, we believe that the coalition of downside factors is growing, pointing to further downside for stocks in coming weeks (Slide 3) of ~4%-5%. Inversion of VIX term structure has signal value. In 2016, we saw two instances of inversion 1/4/16 and 6/24/16 both reflect markets sensing near-term event risk. Not only does this suggest institutional investors are de-risking. But, we believe this also triggers de-leveraging by risk parity and systematic funds, further adding to downside pressure to equities. Since 2005, there have been 22 inversions of the VIX term structure, 95% of time, stocks saw further downside (5.4% average) (Slide 6): As our clients know, we use evidence-based analysis to support the signal value of indicators. The benign case (11 of 22 saw bottoms within 15 days) saw an average further drawdown of 2.3% and adverse case was a further decline of 9%. The benign case argues we should see another 50 point decline in coming days. Equity markets continue to differentiate stocks based on wage inflation risk (Slide 15) another 250bp in past 6 weeks. Last October (10/28/16), we highlighted the outperformance of stocks with low wage inflation risk (high mkt cap/employee) and since then, the cumulative outperformance is 1,250bp. Not surprising, given unemployment is in the 90 th %-tile (30yr) while capacity ute is only 19 th %-tile (Slide 14). FANG remains one of best ways to OW low wage inflation risk. What could go wrong? Positive policy surprise in France or US. The greatest risk to our downside scenario is a positive policy surprise. BOTTOM LINE: We remain cautious on equities in 1H17, despite our continued optimism on economic prospects. Given median PE is above 2000, 2007, and 2015 highs, we would ideally like to see Given recent inversion of VIX TS, this may be sooner than later. For Reg AC certification and other important disclosures see Slide 19. For exclusive use of Fundstrat clients only. WEEKLY FLASH U.S. Portfolio Strategy Thomas J. Lee, CFA AC Data Science Research Sam Doctor Technical Strategy Rob Sluymer, CFA Washington Policy Strategy L. Thomas Block Near Cyclicals Valuation S&P 500 price / target Fundstrat 2017E EPS Fundstrat 2018E EPS 2018 P/E Near Cyclicals Defensives P R R This document is prepared solely for clients of Fundstrat CGlobal Advisors. A For inquiries, please contact Sales at This 7140 document or via is prepared sales@fundstrat.com. solely for Fundstrat clients. For Bloomberg: inquiries, please FSGA contact <<GO>> Sales at or via sales@fundstrat.com. 1 Bloomberg: FSGA <<GO>> Click here for research library. For a copy of this slide, please contact us and reference this slide number: Slide 23

24 Strategy 1Q16 results season update The video is published at the end of every week, after our weekly FLASH report is published. This sample was published in March For a copy of this slide, please contact us and reference this slide number: Slide 24

25 Click here to Creating value for clients Fundstrat team Products and Services Samples of research Strategy Hard vs Soft Data Wage inflation leads to automation This marketing deck is updated quarterly and is available in electronic format for clients. This edition was updated in May Fundstrat Global Advisors 150 East 52nd St, 31st floor New York, NY May 2017 Revised: was 2150 S&P 500 Target 1H YE Thomas J. Lee, CFA AC Sam Doctor Head of Research Head of Data Science Research L. Thomas Block Robert Sluymer Policy Strategist Head of Technical Strategy Portfolio Strategy Key drivers: Growth accelerates Inflation gains Deregulation First term dynamics OW CRAP Ominous yield curve Bond proxies hurt S&P 500 Lower bond supply keeps rates low Computers, Resources, American banks, Phone carriers. John Bai Tzu-Wen Chen OW FANG Head of Sales OW Stocks are new bonds (yield parity) Bill Vasilakos For Reg AC certification and other important disclosures, see slide Bloomberg: FSGA <<GO>> For a copy of this slide, please contact us and reference this slide number: Top Longs Energy Telecoms Financials OW Laggards Top Avoids Healthcare Staples Utilities Slide 25

26 Growth Gwth + Val Value Low Beta Mid-Beta High Beta Consensus Neutral Contrarian Valuation Cash Flow Momentum Income Statement Credit Laggards Balance Sheet Sentiment Click here to Quant Strategy A framework to identify long and short / avoid investment opportunities. This portfolio is updated and published monthly Key analyses can be customized for clients, helping score portfolios and ideas within the DQM framework. May 8 th, 2017 QUANTITATIVE Introducing the Doctor Quant Model (DQM) today after extensive development and testing. We recommend investors go long Quintile 1 stocks and short / avoid Quintile 5 stocks on our model. The Quintile 1 outperformance over Quintile 5 of our equal-weighted model holds true for the Large Cap Universe and for client portfolios. Thus, we can score client portfolios within our model for bespoke analysis (Sample here). Of over 50 fundamental, valuation and sentiment factors tested, we grouped those that deliver sustainable alpha into 8 groups (slide). Consistent with typical quant processes, we lagged company data to avoid lookback bias and used un-revised data, using historical index constituents. Not surprisingly, each factor has different influence in different sectors, and was optimized accordingly. The Quintile 1 (Long) portfolio outperformed (the S&P 500 TR Index) by 800bps / year over the 26-year backtest, with a Sharpe Ratio almost 2x the benchmark s. The L/S (Buy Quintile 1 Short Quintile 5) portfolio results were even better, while 12-month holding periods modestly outperformed a quarterly rebalancing strategy. Asymmetric returns provide downside protection, with a portfolio beta of 1.07 when the S&P is positive, and just 0.74 when it is negative (slide). The model is currently long Growth (slide): The relative share of growth stocks in Quintile 1 (based on membership in the Growth Index) is in the top quintile of its history (slide). Also, the top quintile of the DQM is currently overweight low-beta stocks and contrarian stocks (slide). From a sector perspective, Quintile1 is overweight Financials and Tech and underweight Discretionary (see here). Bottom line: We think this quantitative overlay could be value added for most equity active managers. Sam DoctorWe have crafted a template to do bespoke analysis for our clients sam.doctor@fundstrat.com For Reg AC certification and other important disclosures see slide Data Science Research Sam Doctor, AC U.S. Portfolio Strategy Thomas J. Lee, CFA Technical Strategy Rob Sluymer, CFA Washington Policy Strategy L. Thomas Block This document is prepared solely for clients of Fundstrat Global Advisors. For inquiries, please contact Sales at or via sales@fundstrat.com. May 22, 2017 Bloomberg: FSGA <<GO>> Slide 1 CAGR (12/90-12/2016) Source: Fundstrat, Factset, Bloomberg. Portfolio Beta Portfolio Alpha Figure: Portfolio Quintile 1 Ranked by overall model score as of 4/30/2017 Company information Ticker Company name Sub-industry name Sector Current Price Source: Fundstrat, Bloomberg, FactSet Sam Doctor sam.doctor@fundstrat.com Mkt cap ($ mm) 1 GOOGL Alphabet Inc-Cl A Internet Software & Services Information Technology $ $644, % GS Goldman Sachs Group Inc Investment Banking & Brokerage Financials $ $94, % BLK Blackrock Inc Asset Management & Custody BanFinancials $ $62, % ADP Automatic Data Processing Data Processing & Outsourced S Information Technology $98.03 $44, % TXN Texas Instruments Inc Semiconductors Information Technology $79.72 $79, % MMM 3M Co Industrial Conglomerates Industrials $ $118, % GOOG Alphabet Inc-Cl C Internet Software & Services Information Technology $ $644, % BHI Baker Hughes Inc Oil & Gas Equipment & Services Energy $58.53 $24, % TRV Travelers Cos Inc/The Property & Casualty Insurance Financials $ $33, % LMT Lockheed Martin Corp Aerospace & Defense Industrials $ $77, % KLAC Kla-Tencor Corp Semiconductor Equipment Information Technology $99.75 $15, % ANTM Anthem Inc Managed Health Care Health Care $ $47, % AMGN Amgen Inc Biotechnology Health Care $ $120, % UPS United Parcel Service-Cl B Air Freight & Logistics Industrials $ $93, % CME Cme Group Inc Financial Exchanges & Data Financials $ $39, % INTU Intuit Inc Application Software Information Technology $ $32, % BMY Bristol-Myers Squibb Co Pharmaceuticals Health Care $55.02 $90, % AXP American Express Co Consumer Finance Financials $78.80 $70, % SPLS Staples Inc Specialty Stores Consumer Discretionary $9.67 $6, % HD Home Depot Inc Home Improvement Retail Consumer Discretionary $ $185, % PRU Prudential Financial Inc Life & Health Insurance Financials $ $46, % GD General Dynamics Corp Aerospace & Defense Industrials $ $58, % PXD Pioneer Natural Resources Co Oil & Gas Exploration & Produc Energy $ $29, % BA Boeing Co/The Aerospace & Defense Industrials $ $110, % ITW Illinois Tool Works Industrial Machinery Industrials $ $47, % RTN Raytheon Company Aerospace & Defense Industrials $ $45, % OXY Occidental Petroleum Corp Integrated Oil & Gas Energy $60.05 $45, % CXO Concho Resources Inc Oil & Gas Exploration & Produc Energy $ $18, % TJX Tjx Companies Inc Apparel Retail Consumer Discretionary $79.03 $50, % EMR Emerson Electric Co Electrical Components & Equipm Industrials $59.48 $38, % COF Capital One Financial Corp Consumer Finance Financials $81.95 $39, % APD Air Products & Chemicals Inc Industrial Gases Materials $ $31, % QCOM Qualcomm Inc Semiconductors Information Technology $54.36 $80, % ADBE Adobe Systems Inc Application Software Information Technology $ $66, % YTD perf (relative to S&P 500) Overall Quintile Sector Neutral Quintile Factor Quintiles May 22, 2017 Slide 38 For a copy of this slide, please contact us and reference this slide number: Slide 26

27 Washington Policy Tom Block, former head of government relations at JPMorgan, weighs in on key happenings in Washington L. Thomas Block May 15 th, 2017 WASHINGTON POLICY Comey s dismissal was not good news for the embattled Trump White House. The whole affair seemed to be handled in an unprofessional manner that doesn t bode well for the organization of the White House, Presidential leadership on a wide range of issues, and the leadership style of the President. Also, the whole affair will much depend on whom Trump selects to replace Comey. Comey testifies this week, which will ensure more news cycles on the issue. Another key hearing will be when Deputy AG Rod Rosenstein testifies about the roles played by the President and AG Sessions who had previously recused himself from the Russia investigation. Firing Comey obviously started a firestorm of partisanship, as Democrats believe they have found an issue to mobilize around that demonstrates the perception of corruption that surround the President. An issue for markets is to what extent the Comey issue will impact legislation, such as health care and tax reform. Both key issues are likely to be considered under Budget Reconciliation rules that allow the majority, even in the Senate, to act without Democratic votes. Republicans will want legislative accomplishments to balance the bad press generated from the White House. Washington Policy Strategy L. Thomas Block U.S. Portfolio Strategy Thomas J. Lee, CFA Data Science Research Sam Doctor Technical Strategy Rob Sluymer, CFA In a little noticed action, Senate Republicans lost their first straight partisan vote when three Republican Senators joined a united Democratic front to defeat efforts to repeal an Obama rule to reduce a methane emissions rule. The vote pointed out the narrow majority that the Republicans have in the Senate and the need for unity to pass their agenda. Both the appropriations bills to fund the government for the fiscal year that begins October 1 st and the eventual need to increase the debt ceiling will require bipartisan action. It is hard to see Democrats risking a government shutdown or default over these issue. Furthermore, by late summer or fall, there should be a new FBI director in place and a new plan in place to investigate the Russian role in Election Fundstrat Global Advisors 150 East 52 nd St., 31 st Floor For important New York, disclosures NY see Slide 5. This document is prepared solely for clients of (As Fundstrat cited in Economist.com) Global Advisors. For inquiries, please contact Sales at or via sales@fundstrat.com. Bloomberg: May 15 th FSGA <<GO>>, 2017 Slide 1 Source: The American Presidency Project: Gallup; YouGov 1 This document is prepared solely for Fundstrat clients. For inquiries, please contact Sales at or via sales@fundstrat.com. Bloomberg: FSGA <<GO>> For a copy of this slide, please contact us and reference this slide number: Slide 27

28 Incorporates S&P 500 earnings analysis during EPS season, and high-frequency market data (short interest, analyst ratings, high-yield bond price moves, etc.) when we are not in EPS season. Fundstrat Daily: 4-Week Publication Schedule M o n, 5/ 18 T ue, 5/ 19 W ed, 5/ 2 0 T hu, 5/ 2 1 F ri, 5/ 2 2 Global Economic High-Yield Analyst Estimates Global Momentum Markets Sentiment Revisions Markets M o n, 5/ 2 5 T ue, 5/ 2 6 W ed, 5/ 2 7 T hu, 5/ 2 8 F ri, 5/ 2 9 Memorial Day: High-Yield Analyst Short Relative Markets Closed Markets Sentiment Interest Value M o n, 6 / 0 1 T ue, 6 / 0 2 W ed, 6 / 0 3 T hu, 6 / 0 4 F ri, 6 / 0 5 Global Economic High-Yield Analyst Estimates Global Momentum Markets Sentiment Revisions Markets M o n, 6 / 0 8 T ue, 6 / 0 9 W ed, 6 / 10 T hu, 6 / 11 F ri, 6 / 12 Global Economic High-Yield Analyst Short Relative Momentum Markets Sentiment Interest Value For a copy of this slide, please contact us and reference this slide number: Slide 28

29 Commentary, thoughts, and feedback from our clients (published exclusively for clients): For a copy of this slide, please contact us and reference this slide number: Slide 29

30 For a copy of this slide, please contact us and reference this slide number: Slide 30

31 This research is for the clients of Fundstrat Global Advisors only. For important disclosures and rating histories regarding sectors or companies that are the subject of this report, please contact your sales representative or Fundstrat Global Advisors at 150 East 52nd Street, New York, NY, USA. Analyst Certification (Reg AC) Thomas J. Lee, the research analyst denoted by an AC on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm s business or client relationships. Neither I, nor a member of my household is an officer, director, or advisory board member of the issuer(s) or has another significant affiliation with the issuer(s) that is/are the subject of this research report. There is a possibility that we will from time to time have long or short positions in, and buy or sell, the securities or derivatives, if any, referred to in this research Conflicts of Interest This research contains the views, opinions and recommendations of Fundstrat. As of the time of writing and publication of this presentation, Fundstrat does not know of, or have reason to know of any material conflicts of interest at the time of the publication of this presentation. The Company has no contractual relationship, nor have we received any compensation from any of the companies listed in this research report. Analyst Industry/Sector Views Positive (+): The analyst expects the performance of his industry/sector coverage universe over the next 6-18 months to be attractive vs. the relevant broad market benchmark, being the S&P 500 for North America. Neutral (N): The analyst expects the performance of his or her industry/sector coverage universe over the next 6-18 months to be in line with the relevant broad market benchmark, being the S&P 500 for North America. Negative (-): The analyst expects his or her industry coverage universe over the next 6-18 months to underperform vs. the relevant broad market benchmark, being the S&P 500 for North America. General Disclosures Fundstrat Global Advisors is an independent research company and is not a registered investment advisor and is not acting as a broker dealer under any federal or state securities laws. Fundstrat Global Advisors is a member of IRC Securities Research Prime Services Platform. IRC Securities is a FINRA registered broker-dealer that is focused on supporting the independent research industry. Certain personnel of Fundstrat (i.e. Research Analysts) are registered representatives of IRC Securities, a FINRA member firm registered as a broker-dealer with the Securities and Exchange Commission and certain state securities regulators. As registered representatives and independent contractors of IRC Securities, such personnel may receive commissions paid to or shared with IRC Securities for transactions placed by Fundstrat clients directly with IRC Securities or with securities firms that may share commissions with IRC Securities in accordance with applicable SEC and FINRA requirements. IRC Securities does not distribute the research of Fundstrat, which is available to select institutional clients that have engaged Fundstrat. As registered representatives of IRC Securities our analysts must follow IRC Securities Written Supervisory Procedures. Notable compliance policies include (1) prohibition of insider trading or the facilitation thereof, (2) maintaining client confidentiality, (3) archival of electronic communications, and (4) appropriate use of electronic communications, amongst other compliance related policies. Fundstrat does not have the same conflicts that traditional sell-side research organizations have because Fundstrat (1) does not conduct any investment banking activities, (2) does not manage any investment funds, and (3) our clients are only institutional investors. This research is for the clients of Fundstrat Global Advisors only. Additional information is available upon request. Information has been obtained from sources believed to be reliable but Fundstrat Global Advisors does not warrant its completeness or accuracy except with respect to any disclosures relative to Fundstrat and the analyst's involvement (if any) with any of the subject companies of the research. All pricing is as of the market close for the securities discussed, unless otherwise stated. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, risk tolerance, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies. The recipient of this report must make its own independent decision regarding any securities or financial instruments mentioned herein. Except in circumstances where Fundstrat expressly agrees otherwise in writing, Fundstrat is not acting as a municipal advisor and the opinions or views contained herein are not intended to be, and do not constitute, advice, including within the meaning of Section 15B of the Securities Exchange Act of All research reports are disseminated and available to all clients simultaneously through electronic publication to our internal client website, fundstrat.com. Not all research content is redistributed to our clients or made available to third-party aggregators or the media. Please contact your sales representative if you would like to receive any of our research publications. Copyright 2016 Fundstrat Global Advisors LLC. All rights reserved. No part of this material may be reprinted, sold or redistributed without the prior written consent of Fundstrat Global Advisors LLC. 05/23/2017 For a copy of this slide, please contact us and reference this slide number: Slide 31