Market Update

[Pages:22]Market Update: What's Behind the Volatility

Today's Agenda

What's Happening in the Markets and Why What Market Volatility Means for Your Portfolio Dos And Don'ts during Volatile Times Next Steps

What's Happening--and Why

One-Year Returns Are Mixed, with Bonds Leading

Mature economic growth and ongoing trade tensions have periodically weighed on stocks

20%

2019

15%

10% 5% 0% -5%

-10%

Bonds YTD: 7.8% 1Y: 9.6%

U.S. Stocks YTD: 18.6% 1Y: 3.7%

Non-U.S. Stocks YTD: 9.1% 1Y: -4.1%

-15%

-20% Aug-18

Nov-18

Feb-19

May-19

Aug-19

Past performance is no guarantee of future results. Source: Fidelity Investments, Bloomberg as of 8/8/19. U.S. Equity = Dow Jones U.S. Total Stock Market Index; Non-U.S. Equity = Morgan Stanley Capital International (MSCI) All Country World Index ex US (Net MA); Bonds = Barclays U.S. Aggregate 4 Bond Index.

Bonds Have Benefited from Falling Interest Rates

10-YEAR U.S. TREASURY BOND YIELD

3.5% Fed Interest Rate Hike Dates

3.0%

Interest Rate (%)

2.5%

2.0%

1.5%

1.0% Aug-14

Feb-15

Aug-15

Feb-16

Aug-16

Feb-17

Aug-17

Feb-18

Aug-18

Feb-19

Aug-19

5 Source: Bloomberg Finance L.P., as of 8/8/19.

Global Manufacturing Has Continued to Slow

Manufacturing Purchasing Managers' Indexes

62 60 58 56 54 52 50 48 46 Apr-16

Oct-16

MANUFACTURING PMI SURVEYS

U.S.

Eurozone

U.K.

Japan

China

Apr-17

Oct-17

Apr-18

Oct-18

6 Source: Bloomberg Finance, L.P., as of 6/30/19.

Apr-19

U.S.-China: Strategic Competition Intertwined with Trade

U.S.-CHINA RELATIONSHIP

GLOBAL TRADE INTERDEPENDENCE

Geopolitical Rivalry

Military Hegemony

in Asia

Strategic Competition

IT Sector/ Advanced Industrials

Trade

Consumer and Other

Goods

China U.S.

Industrial Policy Issues

? IP protection

Tariffs/ Market Access

? Export controls

? Investment restrictions

RIGHT: The size of the circles represents total trade. The thickness of lines represents the volume of trade flows. The size of the circle and proximity to other countries represent importance and interconnectedness. Gray circles represent other countries. Source: International Monetary Fund, Haver 7 Analytics, Fidelity Investments (AART), as of 12/31/15.

U.S. Job Market Remains Quite Strong

Thousands

U.S. INITIAL JOBLESS CLAIMS, 4 WEEK AVERAGE

750

650

550

450

350

250

150 12/68

12/73

12/78

12/83

12/88

12/93

12/98

12/03

12/08

12/13

12/18

8 Source: Bloomberg Finance L.P., as of 6/30/19.

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