EQUITY COMMENTARY

Fueled by a Federal Reserve intent on keeping interest rate levels intact despite any changes in inflation,
equities rose 9.1% in the fourth quarter of 2019 as measured by the S&P 500. This gain was predominantly driven
by expansion in the price-to-earnings multiple of the S&P 500 stocks from 19.6x at the end of the third
quarter to 21.6x at year end. The combination of factors including a benign Federal Reserve policy, a strong but
unspectacular economy, and falling trade tensions have driven investor confidence resulting in
valuations moving higher with few appealing alternatives. Mega cap technology stocks drove the Nasdaq to a
12.5% quarterly gain. Overseas stocks participated as well with the MSCI World and MSCI Emerging Markets
indices rising 8.7% and 11.7% on the quarter respectively. Sector wise, technology and health care drove the
majority of the gains up 14% each.