Opportunities on the Horizon: Investing Through a Slowing Economy

| WEALTH OUTLOOK 2023 | MID-YEAR EDITION | 76 is measured on a scale of 1 to -1. A correlation of 1 implies perfect positive correlation, meaning that two assets or asset classes move in the same direction all of the time. A correlation of -1 implies perfect negative correlation, such that two assets or asset classes move in the opposite direction to each other all the time. A correlation of 0 implies zero correlation, such that there is no relationship between the movements in the two over time. Digital commerce involves transactions conducted online to purchase goods and services. Digital remittances are funds sent from one person to another over the internet, typically across borders. Earnings per share , or EPS, portion a company’s profit allocated to each outstanding share of common stock. EPS is widely used to assess a company’s profitability. EU or the European Union is a political and economic union of 27 member states in Europe. Eurodollar futures and options are market tools for traders to express views on future interest rate moves. Fed funds rate or the effective federal funds rate (EFFR) is calculated as a volume-weighted median of overnight federal funds transactions reported in the US FR 2420 Report of Selected Money Market Rates. The federal funds market consists of domestic unsecured borrowings in US dollars by depository institutions from other depository institutions and certain other entities, primarily government-sponsored enterprises. Internal Rate of Return or IRR is used to measure the profitability of potential investments. It is defined as the discount rate at which the net present value (NPV) of all cash flows from an investment are equal to zero. This measure of return takes into consideration the time value of money and allows for comparison with projected rates of return on other investments. Liquified natural gas , or LNG, is a form of natural gas that has been converted into a liquid by cooling the gas to very low temperatures. By liquifying the natural gas, it takes up less space and can be transported by specialized tankers or stored in cryogenic tanks. Mobile POS payments are payments made at the point of sale but facilitated via mobile devices like smart phones. OPEC or the Organization or Petroleum Exporting Countries is an intergovernmental organization that helps countries coordinate and unify petroleum policies. The organization plays a significant role in influencing global oil prices and supply. OPEC consists of 13 member countries including Saudi Arabia, Iraq, Iran and Venezuela. Par is the nominal or face value of a security. It represents the value the security was originally issued at or its redemption value at maturity. A bond selling at par is worth the same amount it was issued for or at which it will be redeemed at maturity. Quantitative Tightening also known as QT is a monetary policy tool that central banks use to reduce the amount of money in circulation. It is the opposite of quantitative easing. QT typically involves central banks selling its holdings of government bonds, allowing existing bonds to mature without reinvesting the proceeds or raising reserve requirements for banks. Real total return shows a return that has been adjusted to include capital appreciation, dividend income and dividend growth. It is expressed as a percentage of the amount invested. Sharpe ratio is a measure of risk-adjusted return, expressed as excess return per unit of deviation, typically referred to as risk. SMID is short for small- and mid-cap stocks. Strategic Return Estimates or SREs are based on Citi Global Wealth Investments’ forecast of returns for specific asset classes (to which the index belongs) over a 10-year time horizon. The forecast for each specific asset class is made using a proprietary methodology based on the assumption that equity valuations revert to their long-term trend over time. Yield Curve is a graph that plots the yields of all bonds of the same quality with maturities ranging from shortest to longest. When short-term rates are lower, it is called a positive curve. When short-term rates are higher, it is called an inverted yield curve. When there is little difference between long- and short-term rates, it’s called a flat yield curve. The most common version of the yield curve plots US Treasury securities.