Market Commentary

July 2020

Economic Outlook Estimates are Moving Up Evercore ISI Research has revised upward U.S. Real GDP, quarter over quarter from (50%) to (40%) for the second quarter of 2020 and from (5%) to +20% for the third quarter of 2020. In 2021, GDP is estimated to grow by 5%.	Election Outlook Biden Currently Favored President Trump has recently dropped in the media polls. Biden currently leads in key Midwestern states that are key to Trump’s potential re‐election.	Massive Global Stimulus 519 stimulus initiatives in < 1 year 516. Paraguay cuts rates 50 basis pts 517. Hungary cuts base rate 15 bps 518. ECB to provide loans to non‐Eurozone Central Banks 519. Spain agrees to extend crisis furlough program through September
Equity Market Summary *1H: A Tale of Two Quarters* S&P 500 Price Change: 1Q: Pandemic impact/fears -20% 2Q: Pandemic recovery/optimism. +20% Both quarters among 10 worst/best quarters in S&P 500 history (1926+)	Earnings & Valuation *S&P 500 Stats* Earnings Growth 2019: +1% 2020 Est.: -22% 2021 Est.: +29% P/E Multiple 2019: 19.4x 2020 Est.: 24.9x 2021 Est.: 19.3x 5 year high-low, average: 23x-14x, 17x	Outlook *Historical Data vs. Sentiment* Since 1988, 8 quarters of at least a 15% market gain: next 2 quarters up 8‐of‐8 times (average of +14%) However: COVID case rebound, some re‐closings, U.S./China trade tensions, civil unrest, Presidential election shift

Economic Outlook

Estimates are Moving Up

Evercore ISI Research has revised upward U.S. Real GDP, quarter over quarter from (50%) to (40%) for the second quarter of 2020 and from (5%) to +20% for the third quarter of 2020.
In 2021, GDP is estimated to grow by 5%.

Election Outlook

Biden Currently Favored

President Trump has recently dropped in the media polls. Biden currently leads in key Midwestern states that are key to Trump’s potential re‐election.

Massive Global Stimulus

519 stimulus initiatives in < 1 year

516. Paraguay cuts rates 50 basis pts

517. Hungary cuts base rate 15 bps

518. ECB to provide loans to non‐Eurozone Central Banks
519. Spain agrees to extend crisis furlough program through September

Equity Market Summary

1H: A Tale of Two Quarters

S&P 500 Price Change:

1Q: Pandemic impact/fears -20%
2Q: Pandemic recovery/optimism. +20%

Both quarters among 10 worst/best quarters in S&P 500 history (1926+)

Earnings & Valuation

S&P 500 Stats

Earnings Growth
- 2019: +1%
- 2020 Est.: -22%
- 2021 Est.: +29%

P/E Multiple
- 2019: 19.4x
- 2020 Est.: 24.9x
- 2021 Est.: 19.3x

5 year high-low, average: 23x-14x, 17x

Outlook

Historical Data vs. Sentiment

Since 1988, 8 quarters of at least a 15% market gain: next 2 quarters up 8‐of‐8 times (average of +14%)
However: COVID case rebound, some re‐closings, U.S./China trade tensions, civil unrest, Presidential election shift

^{*Data as of 7/3/2020}

Additional Information/Articles of Interest

^{This material is for your general information. It does not take into account the particular investment objectives, financial situation, or needs of individual clients. This material is based upon information obtained from various sources that Community Trust and Investment Company believes to be reliable, but we make no representation or warranty with respect to the accuracy or completeness of such information. Views expressed herein are current only as of the date indicated, and are subject to change without notice. Forecasts may not be realized due to a variety of factors, including changes in economic growth, corporate profitability, geopolitical conditions and inflation.}