Author: Rich Balestra - Portfolio Manager

(Bloomberg)  High Yield Market Highlights

• US junk bond racked up the biggest one-day loss in nearly eight weeks on Thursday as equities plunged. High-yield markets, which have been jittery amid evolving headlines over US tariffs, are on track for their biggest weekly loss since mid-December.
• Spreads surged to a near five-month high after jumping 11 basis points on Thursday and closing in on 300 basis points, the most in two months.
• Yields rose by nine basis points to a three-week high of 7.30%, the biggest one-day jump in seven weeks
• The losses spanned across ratings; CCC yields soared to a 7-week high of 10.18%, rising by 17 basis points, driving a loss of 0.33% on Thursday; CCCs are headed for their worst week in 10 months
• CCC spreads climbed to a more than four-month high of 587, rising by 19 basis points, the biggest one-day widening since September
• BB spreads widened 9 basis points to 185 and yields advanced to a three-week high of 6.21%
• While there was a selloff in equities amid policy uncertainty, the US junk bond primary market continued at a steady pace
• 10 borrowers sold debt this week; 2 borrowers sold more than $2b on Thursday driving the week’s supply to more than $8b
• 8 of the 10 companies sold bonds with BB ratings, the best credit quality in the high-yield universe

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

• US junk bonds defied policy uncertainty, elevated volatility, and tumbling equities as they headed for their second monthly gain this year, with modest returns of 0.6%. Yields also declined for the second consecutive month, falling six basis points to 7.14%.
• The broad gains in the US junk bond market extended across all ratings. The rally was partly fueled by light supply. The year-to-date volume is at $40b, down 31% from the same period last year. February supply stands at $18b, down 32% from last February.
• The US high yield market shrugged off rising inflation expectations, a sharp decline in home sales, weakening consumer confidence, and repeated assertions by various Fed officials including Chair Powell that the rates are likely to stay higher for longer
• US high yield spreads held firm, widening just 14 basis points so far this month, even though the 10- and 5-year Treasury yields fell 28 and 20 basis points. The 5-year Treasury yield closed at a more than a two-month low, reflecting the flight to safety
• BB spreads, which are the most rate sensitive, widened 17 basis points for the month to 173. Yields fell three basis points to 6.11%, their second monthly decline. The index registered gains of 0.65% in February
• CCCs racked up gains for the 10th straight month, the longest winning streak since June 2021. The gains were modest and the lowest in the US high yield universe. CCC yields jumped to close at 9.88% and spreads widened 35 basis points to close at 553. CCCs have started coming under pressure

(Bloomberg)  Fed’s Favored Inflation Gauge Rises at Mild Pace, Spending Falls

• The Federal Reserve’s preferred measure of underlying inflation rose at a mild pace in January, offering some relief after a string of reports suggested price pressures are heating up again, while consumers pulled back on spending.
• The so-called core personal consumption expenditures price index, which excludes food and energy items, rose 0.3% from December. From a year ago, it increased 2.6%, matching the smallest annual increase since early 2021, Bureau of Economic Analysis data out Friday showed.
• Inflation-adjusted consumer spending fell 0.5%, marking the biggest monthly decline in almost four years amid extreme winter weather after a robust holiday season. The outsize decline in spending was driven by a drop in durable goods purchases, and may raise concerns about the resilience of the US economy.
• Still, Friday’s report also offers some relief on the inflation front after other reports on prices have suggested progress has not only stalled but is now reversing. Fed officials have indicated they need to see a meaningful easing in inflation before they begin lowering interest rates again, especially when they factor in the uncertainty around how President Donald Trump’s policies will impact prices.
• US Treasury yields fluctuated following the release, while stock futures and the dollar remained higher.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

• US junk bond yields edged up, looking through trade tariffs noise and mixed earnings, with Walmart posting disappointing forecasts on Thursday. Traders awaited manufacturing PMI data due later today for clues on the interest-rates path.
• Higher yields continued to bring borrowers into the market
• Four companies sold a little more than $3b in just three sessions to drive the month’s volume to $16b
• Spreads remain tight, bolstered by strong technicals and demand for all-in yield, strategists Brad Rogoff and Dominique Toublan from Barclays wrote this morning
• There is a lack of near-term catalyst to materially disrupt credit markets, they added
• Yields closed at 7.20% and spreads at 261 basis points
• CCC yields closed at 9.84% and spreads unchanged at 530

(Bloomberg)  Fed Minutes Signal Officials on Hold Until Inflation Improves

• Federal Reserve officials in January expressed their readiness to hold interest rates steady amid stubborn inflation and economic-policy uncertainty.
• “Participants indicated that, provided the economy remained near maximum employment, they would want to see further progress on inflation before making additional adjustments to the target range for the federal funds rate,” minutes from the Federal Open Market Committee’s Jan. 28-29 meeting showed.
• The minutes, released Wednesday in Washington, said “many participants noted that the committee could hold the policy rate at a restrictive level if the economy remained strong and inflation remained elevated.”
• Officials held the Fed’s benchmark policy rate in a range of 4.25%-4.5% at that gathering.
• The record of the meeting underscored the cautious approach Fed policymakers are taking after lowering interest rates by a percentage point in the closing months of 2024. Several officials have said they’d like to see inflation cool further toward the Fed’s 2% target before backing another cut.
• Investors are currently pricing in one rate cut in 2025, with the possibility of a second, according to futures markets.
• Policymakers are watching the rollout of Trump’s economic-policy plans and how they might shape the economy. Trump is pushing an agenda that includes an increased use of tariffs on US trading partners and an immigration crackdown, both of which could affect the outlook for inflation, the labor market and economic growth.
• While characterizing risks in the economy as roughly balanced, policymakers “generally pointed to upside risks to the inflation outlook,” the minutes said.
• “Participants cited the possible effects of potential changes in trade and immigration policy, the potential for geopolitical developments to disrupt supply chains, or stronger-than-expected household spending,” the minutes showed.
• Still, officials expected that “under appropriate monetary policy” inflation would continue to decline toward their 2% goal.
• Some policymakers also noted that difficulties in fully removing seasonal distortions from inflation data at the start of the year could make the figures “harder than usual to interpret.”

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

• US junk bonds snapped back on Thursday, notching the biggest one-day returns in a week after it became clear that reciprocal tariffs were not likely before April. Yields tumbled six basis points to 7.26%.
• The gains spanned across ratings. CCCs, the riskiest part of the high-yield market, racked up gains of 0.22%, the most in three weeks, after yields dropped eight basis points to 9.91%. Risk assets rallied across markets as stocks came close to their all-time highs.
• Undeterred by the heightened volatility and uncertainty around trade policy, bankers led by Morgan Stanley offloaded $4.7b of debt of X Holdings Corp, formerly known as Twitter, at par, tighter than early indications of 98 cents on the dollar. This was the third tranche in two weeks
• The high yield primary market priced two more deals, lifting the month’s supply to $13b
• Persistent yield-driven demand and still-intact fundamentals continue to underpin credit market stability, Brad Rogoff and Dominique Toublan at Barclays wrote on Friday
• Yields and spreads, though, moved in a narrow range this week amid daily uncertainty around tariffs and stubborn inflation data renewing concerns about Fed keeping rates higher for longer, disrupting steady growth

(Bloomberg)  US Inflation Tops Forecasts, Bolstering Case for Fed to Hold

• US inflation picked up broadly at the start of the year, further undercutting chances of multiple Federal Reserve interest-rate cuts this year.
• The monthly consumer price index rose in January by the most since August 2023, led by a range of household expenses like groceries and gas, as well as housing costs. Excluding often-volatile food and energy costs, the so-called core CPI climbed 0.4%, more than forecast, fueled by car insurance, airfares and a record monthly increase in the cost of prescription drugs.
• Inflation tends to come in higher in January, because many companies choose the start of the year to hike prices and fees. That pattern has been exacerbated in the post-pandemic era, and several forecasters suggested that the jump in price growth last month won’t be repeated going forward.
• Still, Wednesday’s report from the Bureau of Labor Statistics serves as further evidence that inflation progress has at least stalled — if not in danger of being reversed. Combined with a solid labor market, it will likely keep the Fed on hold for the foreseeable future. Policymakers are also awaiting further clarity on Trump’s policies.
• “We saw strength across the board — whether you’re looking at energy, food, within core components — and so I think it points to a price environment that still remains difficult as far as the Fed is concerned,” said Sarah House, a senior economist at Wells Fargo & Co. “So for how long you expected the Fed to be on hold going into this report, I think this only lengthens that time frame.”
• Fed Chair Jerome Powell, speaking before the House Wednesday, said the latest consumer price data show that while the central bank has made substantial progress toward taming inflation, there is still more work to do.
• “I would say we’re close, but not there on inflation,” Powell told the House Financial Services Committee in response to a question on the second day of his semi-annual testimony to Congress.
• The January increase in the CPI was led by grocery prices, with two-thirds of that advance due to higher egg prices in the wake of a deadly bird flu outbreak. The more-than 15% jump was the largest since June 2015. Costs of hotel stays and used cars also climbed, possibly in the aftermath of severe wildfires in Los Angeles.
• The report incorporated new weights for the consumer basket to try to more accurately capture Americans’ spending habits, which resulted in minimal revisions to the CPI last year.
• Seasonal adjustments to January data were also minimal, and failed to offset the turn-of-the-year price hikes. As a result, “the sharp increase in the core CPI is less alarming than it first appears,” Sam Tombs, chief US Economist at Pantheon Macroeconomics, said in a note. “We recommend waiting for February’s data, when the new seasonal factors look set to dampen the seasonally adjusted index more than in previous years, before judging how the underlying trend has evolved.”
• Goods costs excluding food and energy rose by the most since May 2023. However, when removing used cars, the index was little changed.
• Policymakers also pay close attention to wage growth, as it can help inform expectations for consumer spending — the main engine of the economy. A separate report Wednesday that combines the inflation figures with recent wage data showed real hourly earnings grew 1% from a year ago.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

• US junk bonds rallied for five straight sessions on Thursday and are headed for best monthly gains since September, after a slew of data showed economic strength and a steady labor market. Yields have dropped 30 basis points this month, also the biggest monthly decline since September, reaching a six-week low of 7.19%.
• The gains spanned across the risk spectrum in January. CCCs, the riskiest part of the junk bond market, are set to reap positive returns for the ninth consecutive month and the longest such run since June 2021. CCC yields tumbled 40 basis points this month to 9.76%, the biggest monthly drop since November.
• The broad gains accelerated after Federal Reserve Chair Jerome Powell reiterated that the economy is strong and the labor market is resilient, reviving the supply starved primary market. January is poised to be the busiest month for supply since October.
• The primary calendar is getting crowded.
• The week has already priced $6.85b, the busiest since the week-ended September 27
• BBs are also on track to post the best monthly returns since August. Yields fell 26 basis points to 6.13%

(Bloomberg)  Powell Says Fed Doesn’t Need to Be in a Hurry to Lower Rates

• Federal Reserve Chair Jerome Powell said officials are not in a rush to lower interest rates, adding the central bank is pausing to see further progress on inflation following a string of rate reductions last year.
• “We do not need to be in a hurry to adjust our policy stance,” Powell said Wednesday, noting that the economy remains strong and interest rates are no longer restraining the economy as much as they had been.
• The Federal Open Market Committee voted unanimously to keep the federal funds rate in a range of 4.25%-4.5%, after lowering rates by a full percentage point in the final months of 2024.
• Strong economic growth coupled with a solid labor market allows officials to wait for further evidence of cooling inflation before adjusting rates again. It also offers them time to evaluate how President Donald Trump’s policies on immigration, tariffs and taxes may impact the economy.
• “The committee is very much in the mode of waiting to see what policies are enacted,” Powell said. “We need to let those policies be articulated before we can even begin to make a plausible assessment of what their implications for the economy will be.”
• When asked specifically about the potential for cutting rates at the Fed’s next meeting in March, Powell reiterated policymakers are not in a rush to lower borrowing costs. He stressed that the Fed wants to see “serial readings” suggesting further progress on inflation.
• Taken together with comments from other officials in recent weeks, the remarks indicate the Fed could remain on hold for some time.
• In a post-meeting statement, officials repeated that inflation remains “somewhat elevated” but removed a reference to it having made progress toward their 2% goal — a change Powell said wasn’t meant to send a policy signal. Fed policymakers also updated their description of the labor market.
• “The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid,” according to the statement.
• Officials also reiterated that the risks to their inflation and employment goals are “roughly in balance” and that the “extent and timing” of additional rate adjustments will depend on incoming data and the outlook.
• Fed officials want to keep some downward pressure on the economy to ensure inflation cools to their 2% target, but a key question for policymakers right now is just how much interest rates are currently restraining activity.
• Powell said he believes policy is meaningfully but not highly restrictive, adding rates are “meaningfully above” the so-called neutral rate, a stance of policy that neither dampens nor stimulates growth. Officials have repeatedly revised up their estimates of this rate over the past year amid stronger-than-expected economic activity and robust productivity growth.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

• US junk bonds are headed for the biggest weekly gain in more than two months after rallying for three straight sessions on optimism that inflation is easing and the Federal Reserve is likely to cut rates.
• The core consumer price index came in lower than anticipated this week, reviving hopes for the next rate cut to take place as early as March. Fed Governor Christopher Waller supported the sentiment further, saying the central bank could lower interest rates in the first half of 2025.
• US junk bond yields fell 18 basis points in four sessions, closing at 7.34% on Thursday
• CCCs are set for 0.7% weekly gains, the best reading in more than two months
• BB yields, the most rate-sensitive part of the junk bond market, are poised for a weekly drop
• BBs are looking to gain 0.59%, the most since early November
• The high yield bond rally this week was partly driven by light supply, with the volume at a modest $7b so far in January
• The demand for all-in yield remains solid and is expected to continue through the first half of 2025, Barlcays strategists Brad Rogoff and Dominique Toublan wrote in a note this morning
• Fundamentals remain strong across the high yield market, Barclays wrote, with the 2025 default forecast fairly benign

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

• US junk bonds rose for a third day Thursday, with the 17% return the highest in five weeks and 2024 standout CCCs continuing to lead the way.
• That riskiest segment of the high-yield market notched an eighth-straight session of gains, and the 0.2% advance Thursday was the most since Nov. 21
• Yields tumbled 10 basis points to 10.06%
• Overall, US junk is heading for a second-consecutive up week while yields have dropped six basis points to 7.44%
• The broad gains are partly due to light trading volume in light of the year-end holidays
• Market sentiment looks solid this morning ahead of manufacturing PMI data, with US equity futures rising as stocks look to end a five-day losing streak
• Meanwhile, the primary market is expected to get going next week as traders and bankers return to their desks

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

• US junk bonds are headed for modest weekly gains for the third consecutive week after climbing for six sessions in row. The gains come after a string of data showed a resilient economy and that was reinforced after Federal Reserve Chair Jerome Powell said the economy is “in remarkably good shape,” adding growth has been stronger than previously believed.
• The gains, though modest, cut across ratings, as equities rallied on expectations of lower taxes and lighter regulations after Trump’s nomination to head the Treasury and the Securities Exchange Commission.
• The demand for all-in yield, a key driver for spread compression in 2025, should be sustained into 2025, wrote Barclays strategists Brad Rogoff and Dominique Toublan on Friday. Although some widening from current tight levels may be expected, especially in the second half of the year, strong technicals and a defensive index composition should keep high-yield spreads contained, Rogoff and Toublan added
• Supported by attractive all-in yields, anticipated rate cuts, rotation from money markets and rebalancing from equities should keep demand strong for credit in 2025, Barclays wrote
• Junk bond yields declined six basis points so far this week and are on track for third weekly drop. Spreads tightened five basis points in the last four sessions
• The broad gains in the US junk bond market were also partly due to light primary calendar
• The week has priced about $5b so far after a light November. November priced $9b to make it the slowest month for supply since July 2023
• Thursday was the busiest day since Oct. 24 pricing $2.4b.
• Light supply is also driving big demand for new issues as investors look for paper to put money to work
• The calendar remains light, with just one deal on deck
• BB yields fell four basis points in the last four sessions and is set for third weekly decline, should this trend hold
• Single B yields closed at 7% and spreads unchanged at 248. Single Bs are also poised to notch up gains for the third week in a row

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

• US junk bonds are set to cautiously rebound from last week’s losses after notching up gains for four sessions in a row. The market has reconciled to a slower pace of Federal Reserve interest rate cuts against the backdrop of steady growth and resilient labor market.
• Junk bonds rebounded across ratings, led by CCCs, the riskiest part of the high yield market. CCC yields plunged to a new low of 9.82%, the lowest since April 2022 and falling 25 basis points in four days. The risk premium for CCCs tumbled to 523 basis points, a three-year low, as spreads tightened for four consecutive sessions.
• CCCs are on track to be best performing asset class, with gains of 0.47% so far this week after rallying for four straight sessions.
• Tightening spreads, attractive yields, steady growth against the backdrop of easing interest-rates kept the primary markets busy, with eight companies together selling $4b in new bonds. The November tally is nearly $9b
• The broader index yields dropped six basis points this week so far to close at 7.23%. Spreads closed at 258 basis points, down eight basis points for the week
• The post-Thanksgiving period tends to be positive for risk assets, with spreads tightening in ten of the past fourteen years, Barclays strategists Brad Rogoff and Dominique Toublan wrote Friday. They expect similar performance this year. But tight starting spreads, elevated complacency, and some soft spots in earnings could limit the upside, they warn
• Though the momentum of the post-election rally faded, the slow but steady rebound this week on renewed expectations of less stringent regulations and lower taxes bolstered risk appetite, drawing high-risk pay-in-kind bonds in the primary market from RR Donnelley, commercial printing service provider.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

• The US junk bond market halted the post-election rally and recorded losses for three straight sessions as yields jumped nine basis this week to 7.21%. The market is on track to end a two-week rally, with the week-to-date loss at 0.16%.
• The rally lost further momentum after Chair Jerome Powell suggested that the Federal Reserve is in “ no hurry to lower rates.” The US economic performance has been “remarkably good,” he said, signaling that the central bank had enough room to lower rates at a careful pace.
• This came after data showed a measure of US inflation remained firm in October, highlighting the risks the central bank faces in bringing prices under control
• Inflation data was followed by producer prices on Thursday. The US producer price index rose in October, signaling pressure in Fed’s favored gauge – the core PCE
• The losses in the US junk bond market spanned across ratings. CCC yields climbed 12 basis points to 10% in three sessions this week, driving a loss of 0.02% on Thursday. CCCs are set to close the week flat
• BB yields rose eight basis points 6.15% pushing a loss of 0.03% on Thursday. BBs are set to close the week with losses of 0.19%
• Risk assets took a breather from the broad post-election rally this week, Brad Rogoff and Dominique Toublan wrote on Thursday. With few data points left and limited days for more supply, spreads can still grind tighter through year-end, despite being near 30-year lows, Rogoff and Toublan wrote
• The losses in risk accelerated with Powell’s warnings coming after several Fed officials on Wednesday suggested that there was lack of clarity on the pace of easing and the appropriate level
• “While now is the time to begin dialing back the restrictiveness of monetary policy, it remains to be seen how much further interest rates will decline or where they might eventually settle,” Kansas City Fed President Jeff Schmid said in a speech at an energy conference co-hosted by the Kansas City and Dallas reserve banks
• Uncertainty about the neutral rate has also risen, perhaps because the structural changes in the economy are “relatively recent and will take time to fully assess,” Dallas Fed President Lorie Logan said in separate remarks at the same conference
• Junk bond yields and returns also came under pressure this week because US borrowers rushed to the market after a quick and clear election outcome
• Eight borrowers sold more than $4b this week

(Bloomberg)  Powell Says It’s Smart to Go Slowly on Fed Easing If Data Allow

• Federal Reserve Chair Jerome Powell said officials may slow the pace of interest-rate cuts as they approach the so-called neutral rate — a setting that neither slows nor stimulates growth.
• The economy is doing very well and that is a great thing, Powell said Thursday during a Q&A session following a speech in Dallas.
• “I think in this situation, what it calls for is us to be careful, move carefully, and as we sort of reach the range or get near the plausible range of neutral levels, it may be the case that we slow the pace of what we’re doing just to increase the chances that we get this right,” Powell said.
• Powell said it would be smart to proceed slowly with lowering borrowing costs if the economic data allow.
• US central bankers began lowering borrowing costs in September with an aggressive half-percentage-point cut, and then lowered the policy rate again by a quarter point last week. They’ve signaled a willingness to cut rates further so long as inflation continues to slow. Powell’s remarks appear in line with some of his other colleagues who are advocating a go-slow approach to future rate reductions.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.