- Staff
- #1
got this from my financial adviser today....interesting....
Darrell Cronk, CFA®, Senior Director of Investments March 13, 2011 Erik Davidson, CFA®, Managing Director of Investments
Friday’s massive earthquake in Japan added to the unusual array of economic, geopolitical, and environmental shocks that have hit the global economy already in 2011. Just a few of these on this not-so-short list include: an oil price shock from social unrest in the Middle East, surging food prices, continued tensions in the European Sovereign Debt Crisis, severe winters in the U.S. and Europe, and now the largest earthquake to ever hit Japan and one of the five largest earthquakes in the world since modern record keeping began. As some of these drags have persisted longer than expected and new unforeseen ones have appeared, this has both raised the level of uncertainty and tempered baseline expectations for near-term growth. Clearly, given that the Japanese economy is the world’s third largest, it is important to make an assessment of the economic impact of the Sendai Japan earthquake and tsunami. In making this assessment, we are fortunate to be able to draw on the first-hand experience of Erik Davidson who is currently in Japan. Before we begin our economic analysis, however, we would like to say that there is so much human loss and suffering that cannot be quantified, and our deepest sympathies go out to the Japanese nation and its great loss in this terrible disaster. Sudden Impact: Japan’s Domestic Economy: The earthquake was amazingly large—so large in fact that it may have shifted the earth’s axis four inches and the main island of Japan eight feet1—however, it may not have the same impact on Japan’s productive capabilities as the Kobe Earthquake in 1995, which hit a muchmore economically sensitive area, and resulted in much more significant economic impact/loss. With the exception of Sendai, the north east consists of villages with relatively low populations where fishing and agriculture are the main industries. Japan’s industrial output tends to comefrom cities further south and west (Tokyo, Yokohama, Kobe, Kyoto, Osaka, etc.). To use a example for illustrative purposes, think of this as the equivalent of an earthquake having hit Eureka, California, but not the San Francisco Bay Area. However, continuing with this example, imagine if the epicenter had been further south . . . the effect would have been even more catastrophic! Nevertheless, the unfolding situation facing Japan’s nuclear power plants may have an impact on this assessment. Six of Japan’s 55 nuclear power plants were damaged in the quake, three 1 CNN 3/12/11
are offline and two remain in danger of exploding if engineers are unable to cool the fuel rods. As a result, the government has announced a series of rolling blackouts that will affect a much wider area than that of the earthquake and tsunami zones, and will include Tokyo. Other measures to conserve power include asking manufacturers to keep factories closed. The Bank of Japan has pledged to provide up to $22 billion in additional liquidity to the banking system—three times the normal amount, to maintain economic and market stability.2 In a purely fundamental sense, it is worth keeping in mind that stock market valuations in Japan are at their lowest in decades. Therefore, the market likely has more resiliency to shocks as opposed to the “priced to perfection” valuations of the Japanese market in the past. While it is clear that the government is rallying to reduce the economic and market impact as much as possible, sadly, the tragedy comes at a very inopportune time for Japan as the government attempts to reignite its economy after two “lost” decades. From a monetary standpoint, the government has already begun to act but its options are limited as it already has the “gas pedal” all the way to floor. From a fiscal perspective, the rebuilding efforts will no doubt be stimulative, but that is against a backdrop of already high levels of national debt. Japan already has one of the highest national debt burdens of any of the industrialized countries. Japan’s current debt to GDP is approximately 200 percent. Standard and Poor’s downgraded the country’s overall credit rating from AA to AA- in January of this year. This was the first time Japan’s debt had been downgraded since 2002. Standard and Poor’s cited overall rising debt levels, headwinds from aging demographics, and reduced confidence that the government has a “coherent strategy” for dealing with its rising debt levels. Although overall Japanese government bond yields have remained surprisingly low, this latest disaster is likely to continue to make it difficult for the government to curtail its deficits, reduce overall debt, and may ultimately lead to higher interest rates. This will likely be in the face of a short-term reduction in growth of the countries manufacturing, transport, consumer and business consumption. Business activity was finally just beginning to pick back up for Japan in the first quarter of this year coming off a weak 2010 and a weak fourth quarter in which economic growth contracted 1.3 percent. Sudden Impact: Global Markets Given the importance of Japan to the global economy, the impact of the earthquake and resulting tsunami clearly has far reaching consequences across many levels and layers of assets and capital markets. The following are some initial observations: 2 Japan Battles Nuclear Meltdown, Financial Times, 03/13/11 2
First, the initial reaction to the disaster was surprising. A typical reaction to such news is a flight to quality. The market reaction on Friday did not unfold that way. Over time investors in U.S. Treasurys will have to account for the fact that Japan is the second largest holder of these securities, owning nearly $1 trillion of bills, notes, and bonds. Undoubtedly Japan’s appetite for Treasurys will wane as the country will likely need to sell a portion of its Treasury position over time to help fund a massive rebuilding effort. Given the Bank of Japan’s smaller appetite for Treasury’s and the Federal Reserve’s current intention to end Treasury purchases after June, we may see more upward pressure on interest rates in the second half of the year. One key way to determine whether Japan is reducing its purchase of Treasurys is to watch the near term performance of the Yen. If Japan begins withdrawing global liquidity and keeping more capital at home for rebuilding purposes, it will become evident as the Yen sets new highs against other major world currencies. During the last major Japanese earthquake in Kobe in January of 1995, 7000 people perished and the “all in” direct and indirect cost was estimated at $100 billion to fully rebuild. In the first five sessions following that earthquake, the benchmark Nikkei Index fell eight percent and was off 20 percent from its peak to its April trough, taking 10 months to recover. During that same time, the Yen rallied 20 percent against the U.S. Dollar. The Nikkei was only open for 15 minutes on Friday afternoon post earthquake, so it will be an important indicator early this week. At the time of writing this, the Nikkei is down more than five percent in early morning trading, the largest drop in more than two years. Second, it is worth keeping an eye on the price of crude oil over the coming weeks. There will likely be a push-pull effect on oil prices as the continued social unrest in the Middle East and the strong concern over potential spill over into Saudi Arabia will keep tensions high in the oil markets. However, initially the reduction in near term overall demand from Japan may put downside pressure on oil prices simultaneously. Japan consumed 4.42 million barrels of oil per day in 2010 according to the International Energy Agency. This places Japan as the third largest global consumer of oil after China, which consumes 9.39 million barrels per day, and the U.S., which consumes 19.25 million barrels per day.3 It is difficult to initially estimate what percentage of the 4.42 million barrels Japan consumes will come offline due to the earthquake disruptions, however it could be a significant amount initially given multinational companies have been forced to close factories, vehicle traffic has all but stopped in the devastated region, air travel has been reduced, and many business and residential homes are without power. All of these combinations will quell oil demand coming out of Japan over the coming weeks and could put downside pressure on crude. Over the longer term, however, Japan may need to replace its decommissioned nuclear power generating capacity with higher oil imports, helping to drive up oil prices further. 3 Bloomberg, 3/10/11
3
Third, we would be remiss not to touch on the various company specific sectors that this event has the potential to impact. While it would be difficult to highlight all of them, it is worth discussing two in particular: Most investor concern is likely to focus on global insurance companies and in particular global reinsurance companies. Initial estimates, although potentially premature, are that the aggregate dollar impact to these companies is not likely to be anything that they are not already well capitalized to withstand. For the last major Japanese quake, the reinsurers paid out a total of $3 billion to $6 billion, while the Japanese government covered the rest of the losses.4 Initial estimates would suggest this event could be double that. If such estimates are correct, the reinsurers are likely to have sufficient capital to cover their losses. Nevertheless, such payouts are likely to result in a stiff reduction to their consensus earnings estimates. If history is any guide, the other sector that may well benefit from this event over the intermediate- to long-term would be the materials sector. The tsunami and earthquake destroyed a significant amount of housing and infrastructure. The Japanese housing market has been cyclically depressed for some time and it is also one of the world’s largest wooden housing markets. Therefore, lumber companies, steel, copper, iron ore, and much of the overall materials sector may be an ultimate benefactor of the needed rebuilding process. This is a sector in which we have recommended a tactical overweight position in our asset allocation guidance. Closing Thoughts At the time of writing, the situation remains fluid as we learn more about the ultimate human, economic, and far reaching effects of this terrible disaster. For years the country has been struggling with the economic impact of an aging population. This latest tragedy is perhaps the most devastating experience for Japan since World War II. As we continue to see the horrific images coming out of Japan and learn more about the incredible aftermath of the cataclysmic event, we extend our thoughts and condolences to the people of Japan. Disclosures Wells Fargo Wealth Management provides products and services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries. The information and opinions in this report were prepared by the investment management division within Wells Fargo Wealth Management. Information and opinions have been obtained or derived from sources we consider reliable, but we cannot guarantee their accuracy or completeness. Opinions represent Wells Fargo Wealth Management’s opinion as of the date of this report and are for general information purposes only. Wells Fargo Wealth Management does not undertake to advise you of any change in its opinions or the information contained in this report. Wells Fargo & Company affiliates may issue reports or have opinions that are inconsistent with, and reach different conclusions from, this report. Past performance does not indicate future results. The value or income associated with a security may fluctuate. There is always the potential for loss as well as gain. Investments discussed in this presentation are not insured by the Bloomberg, 3/11/11
Federal Deposit Insurance Corporation and may be unsuitable for some investors depending on their specific investment objectives and financial position. This report is not an offer to buy or sell, or a solicitation of an offer to buy or sell the securities or strategies mentioned. The investments discussed or recommended in the presentation may be unsuitable for some investors depending on their specific investment objectives and financial position. Fixed income securities are subject to availability and market fluctuation. These securities may be worth less than the original cost upon redemption. Certain high-yield/high-risk bonds carry particular market risks and may experience greater volatility in market value than investment grade corporate bonds. Government bonds and Treasury bills are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and fixed principal value. Interest from certain municipal bonds may be subject to state and/or local taxes and in some instances, the alternative minimum tax. Asset allocation and diversification does not assure or guarantee better performance and cannot eliminate the risk of investment losses. Indexes represent securities widely held by investors. You cannot invest directly in an index. S&P 500 Index is capitalization-weighted index calculated on a total return basis with dividends reinvested. The index includes 500 widely held U.S. market industrial, utility, transportation and financial companies. The Barclays Capital Corporate Bond Index is an unmanaged market value-weighted index of investment-grade corporate fixed-rate debt issues with maturities of one year or more. You cannot invest directly in an index. The Barclays Capital U.S. Aggregate Bond Index is composed of the Barclays Capital U.S. Government/Credit Index and the Barclays Capital U.S. Mortgage-Backed Securities Index, and includes Treasury issues, agency issues, corporate bond issues, and mortgage-backed securities. You cannot invest directly in an index. The Barclays Capital High Yield Index covers the universe of fixed rate, non-investment grade debt. Pay-in-kind (PIK) bonds, Eurobonds, and debt issues from countries designated as emerging markets (e.g., Argentina, Brazil, Venezuela, etc.) are excluded, but Canadian and global bonds (SEC registered) of issuers in non-EMG countries are included. Original issue zeroes, step-up coupon structures, and 144-As are also included. You cannot invest directly in an index. The Barclays Capital U.S. Treasury Index is the U.S. Treasury component of the U.S. Government Index. The index consists of public obligations of the U.S. Treasury with a remaining maturity of one year or more. You cannot invest directly in an index. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The Index consists of the following 23 emerging market country indices: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI. You cannot invest directly in an index. The Morgan Stanley Capital International Europe, Australasia and Far East (“MSCI EAFE”) Stock Index is an unmanaged group of securities widely regarded by investors to be representations of the stock markets of Europe, Australasia and the Far East. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI. You cannot invest directly in an index. The Market Volatility Index (VIX) is an index designed to track market volatility as an independent entity. The index calculated based on option activity and is used as an indicator of investor sentiment, with high values implying pessimism and low values implying optimism. You cannot invest directly in an index. Wells Fargo and Company and its affiliates do not provide Legal advice. Please consult your legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared.
Darrell Cronk, CFA®, Senior Director of Investments March 13, 2011 Erik Davidson, CFA®, Managing Director of Investments
Friday’s massive earthquake in Japan added to the unusual array of economic, geopolitical, and environmental shocks that have hit the global economy already in 2011. Just a few of these on this not-so-short list include: an oil price shock from social unrest in the Middle East, surging food prices, continued tensions in the European Sovereign Debt Crisis, severe winters in the U.S. and Europe, and now the largest earthquake to ever hit Japan and one of the five largest earthquakes in the world since modern record keeping began. As some of these drags have persisted longer than expected and new unforeseen ones have appeared, this has both raised the level of uncertainty and tempered baseline expectations for near-term growth. Clearly, given that the Japanese economy is the world’s third largest, it is important to make an assessment of the economic impact of the Sendai Japan earthquake and tsunami. In making this assessment, we are fortunate to be able to draw on the first-hand experience of Erik Davidson who is currently in Japan. Before we begin our economic analysis, however, we would like to say that there is so much human loss and suffering that cannot be quantified, and our deepest sympathies go out to the Japanese nation and its great loss in this terrible disaster. Sudden Impact: Japan’s Domestic Economy: The earthquake was amazingly large—so large in fact that it may have shifted the earth’s axis four inches and the main island of Japan eight feet1—however, it may not have the same impact on Japan’s productive capabilities as the Kobe Earthquake in 1995, which hit a muchmore economically sensitive area, and resulted in much more significant economic impact/loss. With the exception of Sendai, the north east consists of villages with relatively low populations where fishing and agriculture are the main industries. Japan’s industrial output tends to comefrom cities further south and west (Tokyo, Yokohama, Kobe, Kyoto, Osaka, etc.). To use a example for illustrative purposes, think of this as the equivalent of an earthquake having hit Eureka, California, but not the San Francisco Bay Area. However, continuing with this example, imagine if the epicenter had been further south . . . the effect would have been even more catastrophic! Nevertheless, the unfolding situation facing Japan’s nuclear power plants may have an impact on this assessment. Six of Japan’s 55 nuclear power plants were damaged in the quake, three 1 CNN 3/12/11
are offline and two remain in danger of exploding if engineers are unable to cool the fuel rods. As a result, the government has announced a series of rolling blackouts that will affect a much wider area than that of the earthquake and tsunami zones, and will include Tokyo. Other measures to conserve power include asking manufacturers to keep factories closed. The Bank of Japan has pledged to provide up to $22 billion in additional liquidity to the banking system—three times the normal amount, to maintain economic and market stability.2 In a purely fundamental sense, it is worth keeping in mind that stock market valuations in Japan are at their lowest in decades. Therefore, the market likely has more resiliency to shocks as opposed to the “priced to perfection” valuations of the Japanese market in the past. While it is clear that the government is rallying to reduce the economic and market impact as much as possible, sadly, the tragedy comes at a very inopportune time for Japan as the government attempts to reignite its economy after two “lost” decades. From a monetary standpoint, the government has already begun to act but its options are limited as it already has the “gas pedal” all the way to floor. From a fiscal perspective, the rebuilding efforts will no doubt be stimulative, but that is against a backdrop of already high levels of national debt. Japan already has one of the highest national debt burdens of any of the industrialized countries. Japan’s current debt to GDP is approximately 200 percent. Standard and Poor’s downgraded the country’s overall credit rating from AA to AA- in January of this year. This was the first time Japan’s debt had been downgraded since 2002. Standard and Poor’s cited overall rising debt levels, headwinds from aging demographics, and reduced confidence that the government has a “coherent strategy” for dealing with its rising debt levels. Although overall Japanese government bond yields have remained surprisingly low, this latest disaster is likely to continue to make it difficult for the government to curtail its deficits, reduce overall debt, and may ultimately lead to higher interest rates. This will likely be in the face of a short-term reduction in growth of the countries manufacturing, transport, consumer and business consumption. Business activity was finally just beginning to pick back up for Japan in the first quarter of this year coming off a weak 2010 and a weak fourth quarter in which economic growth contracted 1.3 percent. Sudden Impact: Global Markets Given the importance of Japan to the global economy, the impact of the earthquake and resulting tsunami clearly has far reaching consequences across many levels and layers of assets and capital markets. The following are some initial observations: 2 Japan Battles Nuclear Meltdown, Financial Times, 03/13/11 2
First, the initial reaction to the disaster was surprising. A typical reaction to such news is a flight to quality. The market reaction on Friday did not unfold that way. Over time investors in U.S. Treasurys will have to account for the fact that Japan is the second largest holder of these securities, owning nearly $1 trillion of bills, notes, and bonds. Undoubtedly Japan’s appetite for Treasurys will wane as the country will likely need to sell a portion of its Treasury position over time to help fund a massive rebuilding effort. Given the Bank of Japan’s smaller appetite for Treasury’s and the Federal Reserve’s current intention to end Treasury purchases after June, we may see more upward pressure on interest rates in the second half of the year. One key way to determine whether Japan is reducing its purchase of Treasurys is to watch the near term performance of the Yen. If Japan begins withdrawing global liquidity and keeping more capital at home for rebuilding purposes, it will become evident as the Yen sets new highs against other major world currencies. During the last major Japanese earthquake in Kobe in January of 1995, 7000 people perished and the “all in” direct and indirect cost was estimated at $100 billion to fully rebuild. In the first five sessions following that earthquake, the benchmark Nikkei Index fell eight percent and was off 20 percent from its peak to its April trough, taking 10 months to recover. During that same time, the Yen rallied 20 percent against the U.S. Dollar. The Nikkei was only open for 15 minutes on Friday afternoon post earthquake, so it will be an important indicator early this week. At the time of writing this, the Nikkei is down more than five percent in early morning trading, the largest drop in more than two years. Second, it is worth keeping an eye on the price of crude oil over the coming weeks. There will likely be a push-pull effect on oil prices as the continued social unrest in the Middle East and the strong concern over potential spill over into Saudi Arabia will keep tensions high in the oil markets. However, initially the reduction in near term overall demand from Japan may put downside pressure on oil prices simultaneously. Japan consumed 4.42 million barrels of oil per day in 2010 according to the International Energy Agency. This places Japan as the third largest global consumer of oil after China, which consumes 9.39 million barrels per day, and the U.S., which consumes 19.25 million barrels per day.3 It is difficult to initially estimate what percentage of the 4.42 million barrels Japan consumes will come offline due to the earthquake disruptions, however it could be a significant amount initially given multinational companies have been forced to close factories, vehicle traffic has all but stopped in the devastated region, air travel has been reduced, and many business and residential homes are without power. All of these combinations will quell oil demand coming out of Japan over the coming weeks and could put downside pressure on crude. Over the longer term, however, Japan may need to replace its decommissioned nuclear power generating capacity with higher oil imports, helping to drive up oil prices further. 3 Bloomberg, 3/10/11
3
Third, we would be remiss not to touch on the various company specific sectors that this event has the potential to impact. While it would be difficult to highlight all of them, it is worth discussing two in particular: Most investor concern is likely to focus on global insurance companies and in particular global reinsurance companies. Initial estimates, although potentially premature, are that the aggregate dollar impact to these companies is not likely to be anything that they are not already well capitalized to withstand. For the last major Japanese quake, the reinsurers paid out a total of $3 billion to $6 billion, while the Japanese government covered the rest of the losses.4 Initial estimates would suggest this event could be double that. If such estimates are correct, the reinsurers are likely to have sufficient capital to cover their losses. Nevertheless, such payouts are likely to result in a stiff reduction to their consensus earnings estimates. If history is any guide, the other sector that may well benefit from this event over the intermediate- to long-term would be the materials sector. The tsunami and earthquake destroyed a significant amount of housing and infrastructure. The Japanese housing market has been cyclically depressed for some time and it is also one of the world’s largest wooden housing markets. Therefore, lumber companies, steel, copper, iron ore, and much of the overall materials sector may be an ultimate benefactor of the needed rebuilding process. This is a sector in which we have recommended a tactical overweight position in our asset allocation guidance. Closing Thoughts At the time of writing, the situation remains fluid as we learn more about the ultimate human, economic, and far reaching effects of this terrible disaster. For years the country has been struggling with the economic impact of an aging population. This latest tragedy is perhaps the most devastating experience for Japan since World War II. As we continue to see the horrific images coming out of Japan and learn more about the incredible aftermath of the cataclysmic event, we extend our thoughts and condolences to the people of Japan. Disclosures Wells Fargo Wealth Management provides products and services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries. The information and opinions in this report were prepared by the investment management division within Wells Fargo Wealth Management. Information and opinions have been obtained or derived from sources we consider reliable, but we cannot guarantee their accuracy or completeness. Opinions represent Wells Fargo Wealth Management’s opinion as of the date of this report and are for general information purposes only. Wells Fargo Wealth Management does not undertake to advise you of any change in its opinions or the information contained in this report. Wells Fargo & Company affiliates may issue reports or have opinions that are inconsistent with, and reach different conclusions from, this report. Past performance does not indicate future results. The value or income associated with a security may fluctuate. There is always the potential for loss as well as gain. Investments discussed in this presentation are not insured by the Bloomberg, 3/11/11
Federal Deposit Insurance Corporation and may be unsuitable for some investors depending on their specific investment objectives and financial position. This report is not an offer to buy or sell, or a solicitation of an offer to buy or sell the securities or strategies mentioned. The investments discussed or recommended in the presentation may be unsuitable for some investors depending on their specific investment objectives and financial position. Fixed income securities are subject to availability and market fluctuation. These securities may be worth less than the original cost upon redemption. Certain high-yield/high-risk bonds carry particular market risks and may experience greater volatility in market value than investment grade corporate bonds. Government bonds and Treasury bills are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and fixed principal value. Interest from certain municipal bonds may be subject to state and/or local taxes and in some instances, the alternative minimum tax. Asset allocation and diversification does not assure or guarantee better performance and cannot eliminate the risk of investment losses. Indexes represent securities widely held by investors. You cannot invest directly in an index. S&P 500 Index is capitalization-weighted index calculated on a total return basis with dividends reinvested. The index includes 500 widely held U.S. market industrial, utility, transportation and financial companies. The Barclays Capital Corporate Bond Index is an unmanaged market value-weighted index of investment-grade corporate fixed-rate debt issues with maturities of one year or more. You cannot invest directly in an index. The Barclays Capital U.S. Aggregate Bond Index is composed of the Barclays Capital U.S. Government/Credit Index and the Barclays Capital U.S. Mortgage-Backed Securities Index, and includes Treasury issues, agency issues, corporate bond issues, and mortgage-backed securities. You cannot invest directly in an index. The Barclays Capital High Yield Index covers the universe of fixed rate, non-investment grade debt. Pay-in-kind (PIK) bonds, Eurobonds, and debt issues from countries designated as emerging markets (e.g., Argentina, Brazil, Venezuela, etc.) are excluded, but Canadian and global bonds (SEC registered) of issuers in non-EMG countries are included. Original issue zeroes, step-up coupon structures, and 144-As are also included. You cannot invest directly in an index. The Barclays Capital U.S. Treasury Index is the U.S. Treasury component of the U.S. Government Index. The index consists of public obligations of the U.S. Treasury with a remaining maturity of one year or more. You cannot invest directly in an index. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The Index consists of the following 23 emerging market country indices: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI. You cannot invest directly in an index. The Morgan Stanley Capital International Europe, Australasia and Far East (“MSCI EAFE”) Stock Index is an unmanaged group of securities widely regarded by investors to be representations of the stock markets of Europe, Australasia and the Far East. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI. You cannot invest directly in an index. The Market Volatility Index (VIX) is an index designed to track market volatility as an independent entity. The index calculated based on option activity and is used as an indicator of investor sentiment, with high values implying pessimism and low values implying optimism. You cannot invest directly in an index. Wells Fargo and Company and its affiliates do not provide Legal advice. Please consult your legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared.
