0
Quarterly Economic Report 2013
SVB Asset Management
Q2
Table of Contents
Thoughts from our CIO 03
Overview 04
Domestic Economy 06
Housing 14
The Federal Reserve 19
Markets & Per...
The U.S. economy continued its march forward in the second quarter even as other countries experienced new and continued
c...
4
Economic growth continues to be subdued.
While consumers are making a comeback,
companies remain cautious. Given the
dep...
Overview
5
There has been uncertainty regarding the
Fed’s actions and rising volatility has led to
mixed performance.
Spec...
Domestic Economy
SVB Asset Management
Domestic Economy
GDP Coasting Along
GDP
Source: Bureau of Economic Analysis (BEA), Congressional Budget Office (CBO) and SVB Asset Manageme...
Consumption Pushing Forward
Consumer Sentiment – University of Michigan
Source: U.S. Bureau of Economic Analysis (BEA), Ce...
Consumption Pushing Forward
Personal Income
Source: U.S. Bureau of Economic Analysis (BEA), Federal Reserve, SVB Asset Man...
Employment Still on the Incline
Employment Landscape
Source: U.S. Bureau of Labor and Statistics (BLS), SVB Asset Manageme...
Employment Still on the Incline
Fewer Workers Supporting Greater Population
Source: U.S. Bureau of Labor Statistics (BLS),...
Inflation Cruise Control
Component Distribution February 2013
Source: U.S. Bureau of Economic Analysis (BEA), U.S. Bureau ...
Inflation Cruise Control
Wage Growth: Average Hourly Earnings
Source: U.S. Bureau of Labor Statistics (BLS), U.S. Energy I...
Housing
SVB Asset Management
Housing
U.S. Housing Market Break Lights Ahead
Refinance Activity Cannot Be Boosted By Lower Rates
Source: Mortgage Bankers Associ...
U.S. Housing Market Break Lights Ahead
Home Sales & Supply
Source: National Association of Home Builders (NAHB), Census.go...
U.S. Housing Market Future Could Be Bright, However
Homeownership Rate
Source: Census.gov, National Association of Realtor...
U.S. Housing Market Future Could Be Bright, However
U.S. Homeownership Rates
Source: U.S. Census Bureau and SVB Asset Mana...
The Federal Reserve
SVB Asset Management
The Federal Reserve
Federal Reserve Eyes on the Fed
In the June 19 FOMC meeting the
Fed stated that the economy is on
firmer footing and the o...
Federal Reserve Flying by Instruments
The Fed will be monitoring
economic data very closely in the
coming months.
The Fed ...
QE 1 QE 2 Continuous Stimulus:
Operation Twist,
Extension of Operation
Twist & QE 3
Federal Reserve Wealth Effect Speeds U...
Markets & Performance
SVB Asset Management
Markets & Performance
Funds Flow Easing up on the Gas Pedal
Source: Bloomberg , Investment Company Institute, MSCI, and SVB Asset Management.
Eq...
Bond Market Mixed Performance
Fixed income markets were
rattled by the prospects of
the Fed possibly tapering its
QE3 asse...
Bond Sector Lane Bound
26
Source: Bloomberg, BoAML , Barcap Live, Citigroup and SVB Asset Management.
Spread Performance b...
Inverse Relationships Directional Indicators
Improved Leverage Ratios Led to Improved Liquidity
Source: Bloomberg and SVB ...
Benchmark Performance
Investment Performance In Reverse
Ticker 2Q 2013 2012 2011 2010 2009 2008 2007
Fixed Income
Short Be...
Commodities At a Standstill
Crude Futures – Per Barrel
Source: Bloomberg and SVB Asset Management.
Gold Prices – An Ounce ...
Loan Market Fundamentals Primed for the Race
Source: Thomson Reuters Loan Pricing Corp and SVB Financial Group
Credit Spre...
High Yield Market Fundamentals Primed for the Race
High Yield Funds Dip Notably in June
Source: Thomson Reuters Loan Prici...
Overall Loan Market Overview Primed for the Race
Historical Syndicated Loan Volumes
Source: Thomson Reuters Loan Pricing C...
Global Economy
SVB Asset Management
Global Economy
Unemployment
Source: Eurostat, Bloomberg and SVB Asset Management.
The Euro zone remains in recession but appears to have
...
Europe Euro Remains Stubbornly Steady
Currency Performance
Source: Eurostat, Bloomberg and SVB Asset Management.
While the...
China Slower Growth
Source: National Bureau of Statistics of China, Bloomberg and SVB Asset Management.
Yuan Appreciates S...
Asia Volatility Increasing
Yen Volatility Elevated
Source: Economic and Social Research Institute Japan, Bloomberg and SVB...
U.S. Dollar Upward Bias
10Yr U.S. Treasury Yield
Source: Bloomberg and SVB Asset Management.
Major central banks in develo...
Regulatory
SVB Asset Management
Regulatory
Basel III Biggest Racers
As of November 2012, 28 banks
were classified as Global
Systemically Important Banks (G-
SIBs) by...
US Debt Grapevine Ahead
The U.S. debt burden has
increased irrespective of who is in
office. This may be due to
macroecono...
Regulatory Environment Decisions, Decisions
42
Amendments to SEC 2a-7 rule have
been in place since February 2010.
Key cha...
Our Team
43
Managing Director
Jeff Schnitz
jschnitz@svb.com
Chief Investment Officer
Joe Morgan, CFA
jmorgan@svb.com
Head ...
This material, including without limitation the statistical information herein, is provided for informational purposes onl...
555 Mission Street, Suite 900
San Francisco, CA 94105
45
555 Mission Street, Suite 900
San Francisco, CA 94105
SVB Asset M...
SVB Asset Management Economic Book Q2 2013
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SVB Asset Management Economic Book Q2 2013

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SVB Asset Management is pleased to announce the release of the Q2 2013 Economic Booklet as a research piece summarizing the macro-economic and sector trends in the global market. The Economic Booklet is our reference tool for clients. Displaying graph and chart views of the global economy, this piece guides clients through factors that impact their business.

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Transcript of "SVB Asset Management Economic Book Q2 2013 "

  1. 1. Quarterly Economic Report 2013 SVB Asset Management Q2
  2. 2. Table of Contents Thoughts from our CIO 03 Overview 04 Domestic Economy 06 Housing 14 The Federal Reserve 19 Markets & Performance 23 Global Economy 33 Regulation 39 2SVB Asset Management | Quarterly Economic Report Q2 2013 Thoughts from our CIO 03 Overview 04 Domestic Economy 06 Housing 14 The Federal Reserve 19 Markets & Performance 23 Global Economy 33 Regulatory 39
  3. 3. The U.S. economy continued its march forward in the second quarter even as other countries experienced new and continued challenges. GDP for the first quarter was revised downward significantly, but positive growth remained the theme throughout the first half of the year. With economic activity coasting along, consumption continued to push forward and employment growth remained on the incline. The housing sector continues to show growing promise as home prices were up over 12 percent year-over-year according to the Case-Shiller index. In fact, many housing indicators are hitting four or five-year highs, but given the depths of the recent downturn still have room to grow. Indeed, the future could be bright for this sector. The quarter ended with fears of QE “taper,” potentially leading to higher rates in the near future. This caused great volatility in all markets including a 30 bps spike in the 10-year Treasury. Higher mortgage rates may put the brakes on the housing sector in the near term, but underlying fundamentals continue to improve. Investment performance was disappointing with longer-term bond indices going negative and stock markets struggling to stay positive. Credit spreads remained range bound while commodities tanked, including a $370 drop in the price of gold. Europe stayed in recession and the aforementioned turmoil drove sovereign yields significantly higher potentially sparking euro zone fears once again. China is facing much slower growth, dragged down by lower manufacturing activity fueled by slower global demand. All this adds up to a U.S. economy underperforming on an absolute basis, but continuing to look attractive on a relative basis. – Joe Morgan, Chief Investment Officer 3 Thoughts from our CIO Chugging Forward SVB Asset Management | Quarterly Economic Report Q2 2013
  4. 4. 4 Economic growth continues to be subdued. While consumers are making a comeback, companies remain cautious. Given the depth of the recession, this recovery has been lackluster, stuck at 2 percent growth. The consumer is benefitting from rising home values and equity prices. The rise in household net worth has boosted spending and overall sentiment showing that the effects of sequestration have been muted. Employment has been improving, although at a slow pace. As the economy improves there will be more entrants into the labor market, making it more difficult for the unemployment rate to drop. In the last six months, the average jobs added has been just over 200,000. Inflation continues to run well below the Fed’s target measure of 2 percent. We believe the Fed will continue its accommodative monetary policy given that rising inflation is not currently a concern. Domestic Economy Special Topic: Housing The Fed is starting to ease its foot off the gas pedal that is quantitative easing, just by mentioning a tapering plan. While no tapering has taken place, investors are reacting in anticipation of tapering. There will be a few stages for the Fed; 1) easing the pace of quantitative easing, 2) a period of no asset purchases, and low rates and 3) finally rates will start to rise. Predictions are for the Fed to start tightening in 2015 if the economic data continues to be positive. It’s worth noting that the Fed is not slamming the breaks, but slowly removing its foot from the gas pedal. The Fed The housing market has made solid headway in recent months. Relative improvement in housing has not brought the market to levels that are consistent with a robust economy. Low mortgage rates as well as a recovering jobs market have helped push activity higher. Financing a home purchase has been helped by lower interest rates; however, activity in both the refi and new purchase sectors is no longer reacting to low rates. The relative supply of homes has fallen considerably and appears stable at healthy levels, which is probably the driving factor for higher prices. Looking ahead, slack remains in the housing market which implies the sector could run much further – a welcomed sign for the overall economy. Overview SVB Asset Management | Quarterly Economic Report Q2 2013
  5. 5. Overview 5 There has been uncertainty regarding the Fed’s actions and rising volatility has led to mixed performance. Speculation regarding monetary policy is driving cash out of higher risk assets and into liquid assets. Bond investors are cautious about long- term exposures; therefore they have remained neutral to short in new investment opportunities. Prices in commodities have come down, driven by uncertainty overseas and the strengthening of the dollar. The U.S. stock market is continuing to see positive net inflow, but at a decreasing rate as tapering is still an unknown. Appetite and demand for investment opportunities remain strong. Markets/Performance Global Economy Regulations and fiscal policies remain uncertain in the near term. The biggest development in the quarter was the release of the proposal for comment on MMF Reform by SEC. This issue is unlikely to be resolved before the end of 2013. Banks are trying to get ahead of regulations and are well prepared to meet the new requirements when implemented. U.S. debt burden continues to be a concern, but the debt ceiling will likely be raised again later this year. Regulatory Europe: Recessionary conditions prevail as economic restructuring continues. China: Slower growth to persist, yuan to remain firm. Japan: Implementation of the new monetary loosening program to create yen volatility. U.S.: Economic recovery remains well ahead of other developed nations. More momentum is necessary to sustain growth through the mid-year slowdown. SVB Asset Management | Quarterly Economic Report Q2 2013
  6. 6. Domestic Economy SVB Asset Management Domestic Economy
  7. 7. GDP Coasting Along GDP Source: Bureau of Economic Analysis (BEA), Congressional Budget Office (CBO) and SVB Asset Management. Note: GDP values shown in legend are % change vs. prior quarter annualized. Components of GDP Gross Domestic Investment The final Q1 GDP was revised lower to an annualized 1.8 percent from 2.4 percent. The downward revision was due to a cut in the estimated growth in services consumption and a decline in non-residential structures investments. The final revision to Q1 GDP is on the side of slower growth rather than moderate growth as the Fed stated in its June 19 meeting. Growth is facing strong headwinds from fiscal policy, illustrated by a 3 percent increase in private spending which was offset by a 4.8 percent decrease in public spending. 7 -50.0% 0.0% 50.0% 100.0% 150.0% Consumption Government spending Investment ex-housing Residential Net exports $0.0 $1.0 $2.0 $3.0 Trillions Domestic Business Household & Institutional Federal State & Local -10.0% -5.0% 0.0% 5.0% 10.0% SVB Asset Management | Quarterly Economic Report Q2 2013
  8. 8. Consumption Pushing Forward Consumer Sentiment – University of Michigan Source: U.S. Bureau of Economic Analysis (BEA), Census.gov, University of Michigan / Thomson Reuters - Survey of Consumers, SVB Asset Management. Retail & Food Services Sales Personal Consumption – % Change The consumer has fared better in the second quarter as headlines surrounding sequestration and higher taxes have subsided. The wealth effect has also kicked in with higher home values and higher equity prices boosting consumer outlook. Consumer sentiment hit a high note of 84.6 in May and held strong in June at 84.1. This compares to the five-year average of 69.0 and the 30-year average of 86.0. Consumer purchases also came in strong, growing 2.6 percent last quarter. This was the largest gain in two years. 8 40.0 50.0 60.0 70.0 80.0 90.0 100.0 110.0 120.0 Average $5.0 $10.0 $15.0 $20.0 $25.0 $250.0 $300.0 $350.0 $400.0 $450.0 VehicleSales(Millions) Retail&FoodServices Sales(Billions) Ex Autos Vehicle Sales -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% SVB Asset Management | Quarterly Economic Report Q2 2013
  9. 9. Consumption Pushing Forward Personal Income Source: U.S. Bureau of Economic Analysis (BEA), Federal Reserve, SVB Asset Management. Personal Savings as a % of Disposable Income Household Net Worth Personal incomes were relatively unchanged in the second quarter as most of the effect from fiscal tightening has already hit. Savings rates as a percentage of disposable income have been held down the past few months given the lack of wage growth combined with pent-up demand. This has kept the rate around 2.5 percent in recent months. Household net worth continues to be on the rise due to higher home values and rising equity prices. The net worth of U.S. households increased to $70.3 trillion, up over 9 percent on a year-over-year basis. 9 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% MonthlyPercentage Change $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 Billions SVB Asset Management | Quarterly Economic Report Q2 2013
  10. 10. Employment Still on the Incline Employment Landscape Source: U.S. Bureau of Labor and Statistics (BLS), SVB Asset Management, National Bureau of Economic Research (NBER). Note: The underemployment rate U6 defined as persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months. Full-Time Employment Long Term Unemployment The Unemployment rate has stayed steady as 7.6 percent as an improved job market attracts more people to enter the labor force. While the U.S. has been adding an average of 200,000 jobs per month since the beginning of the year, the average is pushed up by 332,000 jobs added in February. While the economy has been adding jobs at a strong pace, the quality of jobs is weak with more part-time than full-time jobs being added. The number of long-term unemployed has come down since the peak, but still stands at approximately 40 percent of the unemployed. 10 -15.0% -5.0% 5.0% 15.0% -1,000.0 -500.0 0.0 500.0 1,000.0 Thousands Non-Farm Payroll (LHS) Unemployment Rate (RHS) U-6 (RHS) 0.0 5,000.0 10,000.0 100,000.0 105,000.0 110,000.0 115,000.0 120,000.0 125,000.0 Thousands Thousands Full Time Employment (LHS) Part Time for Economic Reasons (RHS) 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% Recession Period Unemployed 27 Weeks and Over SVB Asset Management | Quarterly Economic Report Q2 2013
  11. 11. Employment Still on the Incline Fewer Workers Supporting Greater Population Source: U.S. Bureau of Labor Statistics (BLS), SVB Asset Management. Will the Recent Spike in Earnings Hold Up? Hires and Quits Remain Depressed Workers as a percent of the total population remain depressed. Average hourly earnings growth increased in the recent quarter, but total hirings have yet to turn upward. Turnover, as measured by job hires and quits, remains depressed vs. recent growth trends. 11 57.0% 59.0% 61.0% 63.0% 65.0%3.0% 5.0% 7.0% 9.0% 11.0% Unemployment Rate (LHS) Employment to Population Rate (RHS) 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% Job Hire Rate Job Quit Rate 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 62.0% 63.0% 64.0% 65.0% 66.0% 67.0% 68.0% Labour Force Participation Rate (LHS) Avg Hourly Earnings Growth (RHS) SVB Asset Management | Quarterly Economic Report Q2 2013
  12. 12. Inflation Cruise Control Component Distribution February 2013 Source: U.S. Bureau of Economic Analysis (BEA), U.S. Bureau of Labor Statistics (BLS) and SVB Asset Management. Core PCE Consumer Price Index Producer Price Index 12 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% %changefromprioryear Core PCE Fed Target Monetary Policy Threshold -5.0% 0.0% 5.0% 10.0% 15.0% %changefromprioryear CPI Ex Food & Energy CPI -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% Percentchangefromprior year PPI Ex Food & Energy PPI CPI Components 12-month Change Food & Bev. 1.4% Housing 2.2% Apparel -0.5% Transportation -0.6% Medical Care 2.2% Recreation 0.8% Educ. & Comm. 1.3% Other 1.8% Headline CPI 1.4% Less: Energy -1.0% Food 1.4% Core CPI 1.7% 40.9% 17.2% 15.2% 7.2% 6.7% 6.0% 2.9% 4.1% Housing Transportation Food & Bev. Medical Care Educ. & Comm. Recreation Apparel less footwear Other SVB Asset Management | Quarterly Economic Report Q2 2013
  13. 13. Inflation Cruise Control Wage Growth: Average Hourly Earnings Source: U.S. Bureau of Labor Statistics (BLS), U.S. Energy Information Administration (EIA), University of Michigan / Thomson Reuters - Survey of Consumers and SVB Asset Management. Crude Oil – Spot & Futures Univ. of Michigan Survey of Inflation Expectations Inflationary measures have come down recently and there is now even a concern that inflation is too low. Core PCE is well below the Fed’s target rate of 2 percent. The Fed has acknowledged that inflation has been running below its long-term objective, but longer-term expectations remain stable given the transitory influences. While the economy has been adding jobs at a strong pace, the quality of jobs is weak with more part-time than full-time jobs being added. 13 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% Annualpercentagechange 1.5% 2.5% 3.5% 4.5% 5.5% 1 Year Ahead 5-10 Year Ahead $0.0 $50.0 $100.0 $150.0 Priceperbarrel Crude Oil Crude Oil Futures SVB Asset Management | Quarterly Economic Report Q2 2013
  14. 14. Housing SVB Asset Management Housing
  15. 15. U.S. Housing Market Break Lights Ahead Refinance Activity Cannot Be Boosted By Lower Rates Source: Mortgage Bankers Association, Bloomberg and SVB Asset Management. In a normal rate environment, interest rates can be moved to influence housing activity through mortgage finance. Refinance activity is boosted when rates are pushed lower than prior levels. The relative change in rates influences activity, not the absolute level. The graph illustrates these short-term boosts as activity has spiked over the years – but that’s not occurring now. Home purchases are more influenced by the level of rates. As rates declined in the 80s and 90s, purchases continued to march upward with few spikes. This relationship changed during the crises. Rates were driven down, but purchase activity separated, dropping precipitously. Home Purchases No Longer Dependant on Rates 15 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 0 2000 4000 6000 8000 10000 12000 MortgageRates RefiIndex Refi Index Mortgage Rates 0.0% 2.0% 4.0% 6.0% 8.0% 10.0%0.0 100.0 200.0 300.0 400.0 500.0 600.0 10-YrTreasury(inverted) PurchaseIndex Purchase Index 10-Yr Treasury SVB Asset Management | Quarterly Economic Report Q2 2013
  16. 16. U.S. Housing Market Break Lights Ahead Home Sales & Supply Source: National Association of Home Builders (NAHB), Census.gov, S&P, and SVB Asset Management. Housing Starts Home Prices – Indexed to 100 Housing indices continue to put forth better performance since the crisis, but performance is less impressive when taking a longer term view. Starts are most important when forecasting the industry’s effect on the overall economy. But housing starts remain in recessionary territory when compared to the past 50 years. Home prices reflect the same trend with double-digit, one-year increases, but levels remain below their prior peak. 16 0.0 5.0 10.0 15.0 3.0 5.0 7.0 9.0 HomeSupply(months) HomeSales(Millions) Total Sales (new & existing) Existing Home Supply 90 140 190 240 Case Schiller 20 City FHFA Purchase Median Home Price 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 0.0 500.0 1,000.0 1,500.0 2,000.0 2,500.0 3,000.0 Population(millions) HousingStarts(Thousands) Housing Starts US Population SVB Asset Management | Quarterly Economic Report Q2 2013
  17. 17. U.S. Housing Market Future Could Be Bright, However Homeownership Rate Source: Census.gov, National Association of Realtors and SVB Asset Management. Housing Affordability Composite Index Home Foreclosures - % of Total Loans The drop in homeownership during the current downturn is a positive when considering what the future may bring. Foreclosures look to have turned the corner which implies some relief for the typical consumer. Home affordability continues to be very high, but a turn in interest rates – and mortgage rates – will affect this considerably. 17 62.0% 63.0% 64.0% 65.0% 66.0% 67.0% 68.0% 69.0% 70.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 0.0% 5.0% 10.0% 15.0% 0.0 50.0 100.0 150.0 200.0 250.0 MortgageRate AffordabilityIndex Housing Affordability 30 Year Fixed Mortgage Rates SVB Asset Management | Quarterly Economic Report Q2 2013
  18. 18. U.S. Housing Market Future Could Be Bright, However U.S. Homeownership Rates Source: U.S. Census Bureau and SVB Asset Management. Over five million new renters were recorded in the 2007-2012 period, at the expense of 1.2 million fewer homeowners. Foreclosures and tough credit standards have pushed people to rent homes. The outlook is highly uncertain, though the housing market has started to stabilize. Homeownership rates are now at ~65 percent, the lowest since 1995. Single family homes and apartments available for rent have helped the rise in rental demand. Multi-family starts in 2012 increased ~150 percent in 2012 (compared to 2009). Single family for-sale properties have been converted into rentals. Vacancy rates have stabilized to 8.6 percent in 1Q 2013 as compared to a peak of 11.1 percent in 3Q 2009. Accommodative mortgage conditions coupled with good credit scores will encourage households to reconsider buying. U.S. Rental Vacancy Rates 18 60.0% 62.0% 64.0% 66.0% 68.0% 70.0% U.S. Homeownership Rates (%) 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% U.S. Rental Vacancy Rates (%) SVB Asset Management | Quarterly Economic Report Q2 2013
  19. 19. The Federal Reserve SVB Asset Management The Federal Reserve
  20. 20. Federal Reserve Eyes on the Fed In the June 19 FOMC meeting the Fed stated that the economy is on firmer footing and the outlook has improved. On that note, the market is pricing in that the Fed begins to taper its pace of asset purchases in Q3 2013. The speculation by investors is causing quite a bit of volatility in the market. However, the Fed has been adamant that the pace of quantitative easing will depend on economic data. For the next couple of quarters all eyes will be on economic data releases to predict the Fed’s response. Source: Federal Reserve and SVB Asset Management. Recent Balance Sheet Trends 20SVB Asset Management | Quarterly Economic Report Q2 2013
  21. 21. Federal Reserve Flying by Instruments The Fed will be monitoring economic data very closely in the coming months. The Fed is using the unemployment rate and inflation rate as thresholds to monitor the need for monetary policy. The unemployment target is set at 6.5 percent and looser monetary policy will continue as long as inflation remains below 2.5 percent. The U.S. economy has a way to go before reaching 6.5 percent unemployment, estimates are for another two years before reaching the target. Meanwhile, inflation is below target. Source: U.S. Bureau of Economic Analysis (BEA), U.S. Bureau of Labor Statistics (BLS) and SVB Asset Management. Fed Inflation, Employment Thresholds Worry Two of the Fed Presidents 21 U.S. Unemployment Target 6.5% Core PCE Threshold 2.5% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 0.0% 1.0% 2.0% 3.0% Core PCE (LHS) Core PCE Thresholds (LHS) U.S. Unemployment Rate (RHS) U.S. Unemployment Thresholds (RHS) SVB Asset Management | Quarterly Economic Report Q2 2013
  22. 22. QE 1 QE 2 Continuous Stimulus: Operation Twist, Extension of Operation Twist & QE 3 Federal Reserve Wealth Effect Speeds Up There have been some visible effects of the recent quantitative easing effort. The growth in equities and housing are both viewed as contributing to the wealth effect of the consumer. With yields at all-time lows, many investors are hunting for yield. The search for yield has shifted many investors to a “risk-on” mentality causing equities to rally. However, the recent talk of tapering has caused a sell-off in markets. This is a signal that investors do not think the economy is on firm enough footing to taper just yet. The housing sector is recovering, albeit slowly, thanks to record low mortgage rates, investors’ percentage of rental properties and improved consumer balance sheets. The housing recovery is a much anticipated improvement and if sustained should help support growth. Source: Federal Housing Finance Agency, Bloomberg and SVB Asset Management. Note: 1 U.S. House Price Index - Purchase Only Index (Indexed to 100 in Q1 1990), by the Federal Housing Financing Agency U.S. House Price Index1 vs. the Stock Market 22 600 800 1,000 1,200 1,400 1,600 1,800 150 170 190 210 230 250 Home Prices (LHS) S&P 500 (RHS) SVB Asset Management | Quarterly Economic Report Q2 2013
  23. 23. Markets & Performance SVB Asset Management Markets & Performance
  24. 24. Funds Flow Easing up on the Gas Pedal Source: Bloomberg , Investment Company Institute, MSCI, and SVB Asset Management. Equity Flows & Stock Performance Net New Fund Flows Money Market Fund Flows For the second straight quarter, mutual fund investors were net purchasers as they continue to add equity and bond funds, while being net redeemers of money market funds (-$25.2 billion). Net new cash flow to equity funds is related to global stock price performance. However, with equity markets touching all-time highs and a possible QE3 slowdown, investors are tapering new fund investments. 24 -$40.0 -$20.0 $0.0 $20.0 $40.0 Billions Total Equity Total Bond -25.0% -15.0% -5.0% 5.0% 15.0% -$40.0 -$30.0 -$20.0 -$10.0 $0.0 $10.0 $20.0 Billions Net New Cash Flow (LHS) Total Return on Equities (RHS) $2.4 $2.5 $2.5 $2.6 $2.6 $2.7 Billions MMF AUM SVB Asset Management | Quarterly Economic Report Q2 2013
  25. 25. Bond Market Mixed Performance Fixed income markets were rattled by the prospects of the Fed possibly tapering its QE3 asset purchases. Fed uncertainty and rising volatility led to mixed performance among sectors. Source: Bloomberg, BoAML and SVB Asset Management. 25 0.409 0.301 -0.887 2.278 0.967 0.874 0.795 0.665 0.591 0.253 0.176 -0.002 -0.118 -0.27 -0.556 -0.614 -1.025 0.004 -0.326 0.30 -0.03 -0.92 0.71 -0.78 0.30 -0.27 -0.03 -0.67 -1.61 -1.71 -1.49 -1.77 -1.74 -2.20 -2.26 -2.54 -1.07 -0.78 -3 -2 -1 0 1 2 3 ABS CMBS MBS Insurance Services Automotive Financial Services Banking Technology & Electronics Media Consumer Cyclical Capital Goods Healthcare Consumer Non-Cyclical Telecommunications Energy Basic Industry US Treasury US Agency Total Return % 12-mo Excess Return % YTD SVB Asset Management | Quarterly Economic Report Q2 2013
  26. 26. Bond Sector Lane Bound 26 Source: Bloomberg, BoAML , Barcap Live, Citigroup and SVB Asset Management. Spread Performance by Asset Class Investment grade corporate spreads tightened sharply throughout the second half of 2012 but then came to a grinding halt at the start of the new year. Spreads are in line with where they stood ten years ago, however, still well above the 125bp level that they averaged from 2004 through early 2007. Little has changed in ABS markets. Strong fundamentals and a favorable credit environment are the reasons for the spread convergence. MBS sector spreads slightly widened due to QE tapering concerns, lack of yield carry, and regulatory uncertainty. Spread(bps) SVB Asset Management | Quarterly Economic Report Q2 2013
  27. 27. Inverse Relationships Directional Indicators Improved Leverage Ratios Led to Improved Liquidity Source: Bloomberg and SVB Asset Management. VIX is the Directional Indicator for Equities (VIX - inverse scale) Source: Bloomberg and SVB Asset Management 27 IndexIndex $285 $290 $295 $300 $305 $310 $315 $320 $325 $330 $335 102% 103% 104% 105% 106% 107% 108% 109% 110% 111% 112% Total Debt to Total Equity (LHS) Cash & ST Investments/Share (RHS) 10 12 14 16 18 20 22 24 26 281200 1250 1300 1350 1400 1450 1500 1550 1600 1650 1700 S&P 500 (LHS) VIX (RHS) SVB Asset Management | Quarterly Economic Report Q2 2013
  28. 28. Benchmark Performance Investment Performance In Reverse Ticker 2Q 2013 2012 2011 2010 2009 2008 2007 Fixed Income Short Benchmarks 3-Month Treasury Bill G0O1 0.018 0.111 0.103 0.126 0.207 2.057 5.004 3-Month Citi/Salomon CD SBMMCD3 0.050 0.307 0.289 0.310 0.822 3.442 5.448 6-Month Treasury Bill G0O2 0.037 0.171 0.268 0.365 0.579 3.582 5.607 6-Month Cit/Salomon CD SBMMCD6 0.140 0.488 0.389 0.437 1.611 3.756 5.459 1-yr Treasury Bill G0O3 0.034 0.204 0.496 0.792 0.813 4.746 5.948 Treasury 1-3 yr Treasury G1O2 -0.042 0.434 1.554 2.348 0.785 6.609 7.317 3-5 yr Treasury G2O2 -0.607 1.577 6.229 5.695 -0.672 12.153 9.836 Corporate/Govt (A Rated and Above) 1-3 yr Corp/Govt B110 -0.017 1.188 1.527 2.641 2.766 5.184 6.981 3-5 yr Corp/Govt B210 -0.547 3.077 5.479 5.925 2.958 6.174 8.324 Agencies 1-3 yr Agencies G1P0 -.0.030 0.847 1.536 2.338 2.189 7.034 6.735 3-5 yr Agencies G2P0 -0.535 2.588 5.290 4.900 3.223 8.971 8.261 Municipals - Tax Exempt 1-3 yr Pre-refunded U1AF -0.059 0.520 1.800 0.923 3.189 5.875 4.710 3-7 yr Pre-refunded U2AF -0.253 1.539 4.951 2.087 5.345 7.992 5.390 Auto Asset Backed Securities ABS, Autos, Fixed Rate, (1.45yrs) R0U0 0.010 2.291 1.689 3.077 14.845 -0.682 5.723 Other Indices Dow Jones Industrial Average INDU 1.700 7.257 5.544 11.023 3.116 -33.762 6.432 S&P 500 SPX 1.890 13.405 2.110 12.783 23.454 -38.486 3.530 NASD CCMP 4.410 15.906 -1.799 16.910 43.888 -40.541 9.812 MSCI World Index MXWO -0.730 13.184 -7.615 9.262 27.283 -42.081 7.093 CRB Index (Commodities) CRY -5.210 -3.372 -8.264 15.430 23.563 -39.450 16.679 28 Source: Bloomberg, BoAML, Morgan Stanley. SVB Asset Management | Quarterly Economic Report Q2 2013
  29. 29. Commodities At a Standstill Crude Futures – Per Barrel Source: Bloomberg and SVB Asset Management. Gold Prices – An Ounce Iron Ore Futures – Per Ton Commodity prices are expected to fluctuate within their respective ranges due to uncertainties in Europe, Middle East tensions, U.S. fiscal tightening, and a slowdown in China. Soft demand and rising supplies could lead to a small surplus in crude over the coming months as supplies have reached all- time highs in May. The continued strength of the dollar will weigh on the price of gold. 29 $75.0 $90.0 $105.0 $120.0 $1,300.0 $1,400.0 $1,500.0 $1,600.0 $1,700.0 $1,800.0 $1,900.0 $2,000.0 $75.0 $100.0 $125.0 $150.0 $175.0 $200.0 SVB Asset Management | Quarterly Economic Report Q2 2013
  30. 30. Loan Market Fundamentals Primed for the Race Source: Thomson Reuters Loan Pricing Corp and SVB Financial Group Credit Spreads Continue to Run Below 2009 Peak Fundamentals Remain Steady 3-Month LIBOR Remains at Historic Lows Credit spreads have fallen since the 5.6 percent peak during the financial crisis in January 2009, but remain higher than the sub-2.0 percent levels seen pre-crisis. LIBOR continues to remain at historic lows even as the quarter ended with the Fed announcing that it plans to gradually reduce bond buying. There has been no mention of a higher Fed Funds target, which the markets are still measuring in years rather than months. Since the trough in loan pricing in April 2009, prices have largely recovered and are nearing the end of 2Q 2013 slightly above par as risk appetites increase but remain at reasonable levels. 30 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 10 YR BBB Yield - 10 YR Treasury Yield January 2009 5.6% May 2013 2.8% 65.0 75.0 85.0 95.0 105.0 LPC LCDX (Secondary Loan Price Index - Par = 100) 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 3 Month LIBOR May 2013 0.28% SVB Asset Management | Quarterly Economic Report Q2 2013
  31. 31. High Yield Market Fundamentals Primed for the Race High Yield Funds Dip Notably in June Source: Thomson Reuters Loan Pricing Corp., Lipper FMI and SVB Financial Group The high yield market ended the quarter in a volatile state as four issuers pulled deals in June as a result of deteriorating market conditions. The second quarter of 2013 saw a broad-based decline in the secondary high yield market as U.S. Treasury rates soared, with yield on 10-year notes approaching two-year highs of 2.65 percent before buyers returned and yield settled around 2.55 percent on June 24. The new issue market remains noticeably quiet due to high clearing yields for new bond offerings. The rolling 30-day average yield for new single-B issues hit 7.54 percent during the third week of June, versus 7.01 percent a week earlier and up from 6.52 percent from May. New issue volume for the week ended June 21 settled at $2.34 billion, consistent with the four-week trailing average of $2.32 billion. That is the lowest level for the trailing average since mid-June of last year. Bond-for-loan takeout volume ($51 billion) has been the biggest use of bond proceeds so far in 2013. Next up is bond repayments at $33.2 billion. High Yield Take-Outs of Bank Debt 31 -$5.0 -$4.0 -$3.0 -$2.0 -$1.0 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 Volume(Billions) HY Funds Loan Funds $0.0 $5.0 $10.0 $15.0 Volume(Billions) Bank-Loan Paydown SVB Asset Management | Quarterly Economic Report Q2 2013
  32. 32. Overall Loan Market Overview Primed for the Race Historical Syndicated Loan Volumes Source: Thomson Reuters Loan Pricing Corp and SVB Financial Group The syndicated loan market has remained resilient for a majority of the second quarter of 2013 across all segments (leveraged, investment grade, and other) but slowed in June as market conditions softened and deals were pulled from the market. Volatility in leveraged loans has begun to affect a traditionally insulated part of the capital markets investment grade loans. Leveraged loan issuance topped $100.0 billion in May as issuers took advantage of attractive market conditions to refinance and re-price debt. YTD loan issuance as of May 31, 2013 was just under $500.0 billion, of which institutional loan issuance accounted for two-thirds of the total. Banks have remained disciplined in their approach in Q2 2013, concentrating largely on loans with strong financial profiles, but participating only cautiously down the grade. The loan market stumbled late in the second quarter as a result of selling pressure and a pick up in supply of loans coming to market. Fifteen loan deals were pulled since the beginning of June with numerous others being reworked ahead of the fourth of July weekend. Global markets generally enjoyed incremental economic improvement, modest inflation, highly accommodative monetary policies, and low volatility. Policy risk continued to ebb, though bank failures in Europe and sequestration cuts in the U.S. may create ongoing challenges. 70 75 80 85 90 DXY USD Index 32 $0.0 $400.0 $800.0 $1,200.0 $1,600.0 $2,000.0 Issuance(Billions) Leveraged I-Grade Other SVB Asset Management | Quarterly Economic Report Q2 2013
  33. 33. Global Economy SVB Asset Management Global Economy
  34. 34. Unemployment Source: Eurostat, Bloomberg and SVB Asset Management. The Euro zone remains in recession but appears to have found a bottom. Growth is dependent on global demand to help it export its way forward. Weak financial conditions and tight lending standards are hampering internal growth. Signs of growth may appear in 2014. Unemployment in the Euro zone is a lofty 12.2 percent, as of April 2013. Germany remains the best positioned economy, with unemployment at a low 6.9 percent. Spain and Greece have unemployment rates close to 27 percent. Compared to an unemployment rate below 8 percent in 2007, the Euro zone has a large amount of excess labor capacity. High unemployment and austerity programs have sapped domestic demand. With the exception of Germany, capacity for increased consumption is limited. Increased intra-zone trade and exports are key to a sustained recovery. The ECB will intervene when necessary, but will not introduce additional extraordinary programs to boost growth. No rate cut expected in the near-term, absent financial market stress. Domestic Demand 34 Europe Scraping Bottom 0.0% 10.0% 20.0% 30.0% Unemployment Eurozone Germany United Kingdom Spain -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% ChangeYOY Eurozone Germany United Kingdom Spain SVB Asset Management | Quarterly Economic Report Q2 2013
  35. 35. Europe Euro Remains Stubbornly Steady Currency Performance Source: Eurostat, Bloomberg and SVB Asset Management. While the market has been expecting the EUR to weaken, recent abatement of political uncertainty and debt worries have helped keep the EUR firm. The GBP is holding some of the gains it made against the EUR in March, after registering marginal growth in Q1. Though GBP remains vulnerable versus the EUR, the UK’s recovery has more momentum than the Euro zone. While the UK’s recovery is more advanced than the Euro zone, it lags behind the recovery in the US. The GBP versus USD will remain range bound as incoming BOE Governor Mark Carney will use qualitative policies to nurture the UK’s recovery. The EUR is holding firm versus the USD as it has had a current account surplus every month since November 2011. Positive trade balances have been the result of slow imports, as domestic demand remains weak. Inflation will be passive, providing the ECB with scope to ease. Domestic consumption singularly isn’t enough to support sustained growth, as public consumption will remain restrained. However, the persistency of a trade surplus will decelerate any EUR decline. Eurozone Monthly Current Account 35 1.1 1.3 1.5 1.7 1.3 1.4 1.5 1.6 1.7 EUR/USD GBP/USD GBP EUR -€ 30.0 -€ 20.0 -€ 10.0 € 0.0 € 10.0 € 20.0 € 30.0 Billons SVB Asset Management | Quarterly Economic Report Q2 2013
  36. 36. China Slower Growth Source: National Bureau of Statistics of China, Bloomberg and SVB Asset Management. Yuan Appreciates Steadily Monthly Trade Balance Pace of Growth Falling China continues to run a trade surplus despite increasing import growth. Reserve accumulation persists, supporting the yuan’s strength. The central bank (PBoC) remains hawkish on fears of an asset price bubble. Manufacturing activity is grinding lower, as export growth has fallen due to soft developed markets. The CNY is likely to continue its modest appreciation this year. 36 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 CNY/USD 48 50 52 54 56 58 Manufacturing PMI Index Value: >50 = Growth; <50 = Contraction -$25.0 $25.0 $75.0 $125.0 $175.0 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Billion Trade Balance Exports Imports SVB Asset Management | Quarterly Economic Report Q2 2013
  37. 37. Asia Volatility Increasing Yen Volatility Elevated Source: Economic and Social Research Institute Japan, Bloomberg and SVB Asset Management. Indian Rupee Japan Monetary Base Japan: The BOJ enacted a ‘Quantitative-Qualitative Easing’ (QQE) program at its April meeting. QQE aims to almost double the monetary base by the end of 2014 to support achieving a 2 percent inflation rate, with a BOJ commitment to QQE indefinitely in order to maintain the inflation target. Uncertainty over the success of QQE and the status of quantitative easing in the U.S. jolted JPY/USD volatility to a two-year high. Sustained further weakening in JPY/USD will be non-linear. India: Despite the RBI holding rates steady in June, weakness in the INR accelerated as inflation remained elevated; its current account reached a record deficit; and offshore investment-related flows turned negative. Continued INR weakness is possible in the medium term. 37 ¥0.0 ¥100.0 ¥200.0 ¥300.0 Trillion BOJ Monetary Base BOJ 2014 Target JPYperUSD 40.0 45.0 50.0 55.0 60.0 INRperUSD SVB Asset Management | Quarterly Economic Report Q2 2013
  38. 38. U.S. Dollar Upward Bias 10Yr U.S. Treasury Yield Source: Bloomberg and SVB Asset Management. Major central banks in developed and emerging economies have maintained their bias towards easier monetary policies, undermining their currencies. The U.S. economy is growing faster than most developed countries, with core inflation remaining below 2 percent. While manufacturing has softened, services remain steady, and unemployment will drift lower at a gradual pace. Treasury rates moved higher on prospects the Federal Reserve will reduce the pace of its bond purchases in the second half of 2013. Ten-year real Treasury yields have turned positive for the first time in over two years, revealing the impact the Fed’s QE program had reducing long term interest rates. The timing and size of any reduction remains undecided, and will contribute to heightened currency and interest rate volatility near term. Look for the dollar index to retest highs from last summer, possibly even as far back as 2010, in coming months. Longer term, concerns about the deficit and subpar economic growth will stall the rally, especially versus the more fiscally sound, faster growing emerging market currencies. DXY USD Index 38 70 75 80 85 90 -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% Nominal Yield (LHS) Real Yield (RHS) SVB Asset Management | Quarterly Economic Report Q2 2013
  39. 39. Regulatory SVB Asset Management Regulatory
  40. 40. Basel III Biggest Racers As of November 2012, 28 banks were classified as Global Systemically Important Banks (G- SIBs) by FSB. Additional G-SIB buffers vary depending on the buckets each G- SIB falls into. Most G-SIBs have already met the minimum required Basel III CET1 ratio, but some banks lag behind the minimum required ratio. G-SIBs lagging behind the minimum required ratios are confident that they will meet the requirement by the deadline. G-SIBs that have met minimum required ratio will have the additional flexibility to optimize their balance sheet. #As of March 2013, except Standard Chartered Bank where data is as of December 2012 Source: Company Reports, Bloomberg Call Transcripts, Financial Stability Board, SVB Asset Management Estimated Basel III Common Equity Tier-1 Ratio of Global Systemically Important Banks 40 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% MizuhoFG WellsFargo SumitomoMitsuiFG SocieteGenerale BBVA GroupBPCE UnicreditGroup GroupCreditAgricole BankofChina StateStreet Santander StandardChartered INGBank Nordea RoyalBankofScotland GoldmanSachs BankofNewYorkMellon BankofAmerica MorganStanley UBS MitsubishiUFJFG CreditSuisse Barclays BNPParibas DeutscheBank JPMorganChase Citigroup HSBC Basel III Tier 1 common ratio Min Required Ratio G-SIB Min Required Ratio SVB Asset Management | Quarterly Economic Report Q2 2013
  41. 41. US Debt Grapevine Ahead The U.S. debt burden has increased irrespective of who is in office. This may be due to macroeconomic conditions which have required a higher reliance on debt funding in recent years. The debt ceiling was suspended from February to May 2013 and subsequently increased to accommodate the higher debt outstanding at the expiry of the suspension. Recent payments from Fannie and Freddie together with the sequester and other tax measures have eased pressures on the debt ceiling but the Treasury department is expected to require the debt ceiling to be raised again in Q3 2013. Source: Bloomberg, SVB Asset Management Outstanding Treasury Securities and U.S. Statutory Debt Limit 41 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 Trillions Outstanding Treasury Securities Democrat Republican US Statutory Debt Limit SVB Asset Management | Quarterly Economic Report Q2 2013
  42. 42. Regulatory Environment Decisions, Decisions 42 Amendments to SEC 2a-7 rule have been in place since February 2010. Key changes included more restrictive maturity limits, higher credit quality standards, the establishment of new daily and weekly liquidity requirements as well as thorough stress testing and additional disclosures. As of June 2013, two additional SEC proposals have been put forward, requiring public comments from the industry. After a 90-day comment period and review of the comments, the SEC will vote to implement either one or a combination of the two proposals described briefly to the right. Regulatory action is subject to an implementation period estimated to span one to two years subsequent to the second vote. OptionOne Floating NAV (Prime Institutional Funds Only) Mark-to-market NAV valuation similar to other mutual funds with a NAV price rounded to the nearest 1/100th of a penny Exemption for Government and Retail Funds. Government funds defined as those holding 80 percent or more in cash, government securities or repurchase agreements collateralized by government securities. Retail funds are defined as having a $1 million limit on daily redemptions Pro: Daily pricing would reflect gains and losses fostering greater transparency Con: Causes a “first-mover advantage” OptionTwo Liquidity Fees and Redemption Gates (Optional for Government Funds) If weekly liquidity drops below 15 percent of total assets, a 2 percent liquidity fee for redemptions could be imposed If weekly liquidity drops below 15 percent of total assets, a maximum 30-day suspension of redemptions could be imposed for any 90-day period Pro: The investor keeps the stability of a stable $1.00 NAV Con: In times of stress, when cash is crucial, access to funds could be delayed or subject to a fees Potential reforms could be a combination of the above proposals by the SEC Potential Reform Proposals by the SEC as of June 2013 Source: SVB Asset Management. SVB Asset Management | Quarterly Economic Report Q2 2013
  43. 43. Our Team 43 Managing Director Jeff Schnitz jschnitz@svb.com Chief Investment Officer Joe Morgan, CFA jmorgan@svb.com Head of Credit Research Melina Hadiwono, CFA mhadiwono@svb.com Portfolio Managers Eric Souza esouza@svb.com Paula Solanes psolanes@svb.com Renuka Kumar rkumar@svb.com Jose Sevilla jsevilla@svb.com Credit and Risk Sook Kuan Loh, CFA sloh@svb.com Tim Lee, CFA tlee@svb.com Kyle Balough kbalough@svb.com Silicon Valley Bank Partners Susan Winters Dave Bhagat Kelly Caviglia Priyanka Raju Girish Mallya Sudhakar Pattabiraman Head of Portfolio Management Ninh Chung nchung@svb.com SVB Asset Management | Quarterly Economic Report Q2 2013
  44. 44. This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decision. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction. All material presented, unless specifically indicated otherwise, is under copyright to SVB Asset Management and its affiliates and is for informational purposes only. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior express written permission of SVB Asset Management. All trademarks, service marks and logos used in this material are trademarks or service marks or registered trademarks of SVB Financial Group or one of its affiliates or other entities. ©2013 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of FDIC and Federal Reserve System. SVB>, SVB>Find a way, SVB Financial Group, and Silicon Valley Bank are registered trademarks. SVB Asset Management, a registered investment advisor, is a non-bank affiliate of Silicon Valley Bank and member of SVB Financial Group. Products offered by SVB Asset Management are not FDIC insured, are not deposits or other obligations of Silicon Valley Bank, and may lose value. B_SAM-13-12932 Rev. 07-08-2013 0413-0042 44 SVB Asset Management
  45. 45. 555 Mission Street, Suite 900 San Francisco, CA 94105 45 555 Mission Street, Suite 900 San Francisco, CA 94105 SVB Asset Management
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