Country Club of Harrisburg Tuesday, June 20th 2017

Invariant Tactical Solutions

Invariant Tactical Investment Process Identifying the key elements of the marketplace mosaic to guide our decision-making Top-down Global Macro - Macro assessment of global variables to identify fundamental long-term trends - Involves analysis of Business Cycles, Asset Classes, Sectors and Industries - Delivers thematic projections and broad context Technical and Complex Systems - Technical analysis provides insight into short-term market trends resulting from emotion-driven investors - Complex systems analysis provides essential guidance in identifying meaningful indicators amidst market’s noise Risk Management Active hedging utilized to help guard against major cyclical draw-downs Multi-asset diversification: commodities, currencies, equities, credits Recognizes that indicators are probabilistic rather than predictive Absolute Return Portfolio

Stylized Facts & Asset Allocation Implications: 3-5 Years (from summer ‘16) Historic divergence between domestic U.S. equities and international equities Extreme divergence between value and growth “Inflation protection” dramatically underpriced Local currency EM bonds shunned Trillions in international government bonds have negative yields These divergences represent significant opportunity both for asset allocators willing to take tactical risk over the intermediate-long term, as well as those willing to allocate to out-of-favor factors and strategies. We all know that in an ideal world, it makes sense to allocate to out-of-favor strategies before the tide turns. This is often much harder to do in practice. Now is the time to move.

Rob Arnott (RA): Implications for Asset Allocation

30,000ft: Global Economic Growth Global economic growth remains firm, being driven by a pickup in Europe and EM.

Major Downside Unlikely Without Global Recession This should continue to provide a favorable backdrop for asset prices…

Major Downside Unlikely Without Global Recession …despite historically rich valuations, especially in developed markets like the U.S.

European Growth Especially noteworthy is the pickup in European growth. To what extent currency driven?

Interest Rates

Federal Reserve Decision on June 14th: Hiked interest rates Economy a bit softer but no big deal Watching tepid inflation, but expect it to rise to 2% target Starting to let its balance sheet roll off this year.

Federal Reserve

Federal Reserve

Federal Reserve – US Yield Curve Flattening Federal Reserve – US Yield Curve Flattening. But What Does It All Mean, Basel?

Federal Reserve – US Yield Curve Flattening Federal Reserve – US Yield Curve Flattening. But What Does It All Mean, Basel? Short answer: Not much.

Federal Reserve – US Yield Curve Flattening Federal Reserve – US Yield Curve Flattening. But What Does It All Mean, Basel?

Crude Oil Worst performing sector YTD. Sentiment extremely oversold intermediate term.

Crude Oil Ratio of oil stocks to the S&P 500 charted against the price of crude oil.

Crude Oil Demand firmer than pessimists fear, inventories beginning to normalize.

Around the World in One Slide French elections, UK elections, the Trump saga continues, Brexit negotiations, increased terror attacks, Russia investigation, Amazon buying Whole Foods, North Korea, Healthcare legislation, Oil prices, Turkey going full-despot, Bitcoin!!

Bitcoin

Kipling

Mesican Peso, Mexican Stocks

Dislaimer This presentation contains general information. Past performance is not an indication of future results. Additional information including investment management fees and expenses is provided on Invariant’s Form ADV Part II. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to any securities listed.