2013 Review & 2014 Preview

The S&P 500 had its best year since 1997 finishing up 29.6 % while the Dow Jones Industrial
Average advanced 26.5 %. No wonder the U.S. stock market surprised Wall Street strategists along
with the average investor.

The 10 year U.S. Treasury ended 2013 with a 2.99% yield up 127 basis points for the year. High
quality, long maturity bonds posted losses. The 10 year yield averaged 3.49% over the past
decade. We are likely to get there in 2014.

Gold fell 28% over the year. A $4 trillion balance sheet at the U.S. Federal Reserve could not prop
up gold prices in the face of rising interest rates and inflation below 2%.

We began 2013 full of apprehension over the “Sequester”, a 3.9% income tax raise in the top
bracket, plus a payroll tax hike for all earners. In addition, we saw an increase in capital gains and
dividend taxes up to 20 % up from 15 %.

Many were concerned with Europe's recession and implementation of our country's big new social
program "Obamacare".

The Federal Reserve executed an $85 billion per month Quantitative Easing program. After it's
December meeting they announced a tapering of their bond purchases in 2014. Markets rallied after
the news.

The Japanese Ministry of Finance embarked upon their own copy cat QE program
with positive consequences. European bond yields dropped throughout 2013 as Mr. Draghi calmed
markets and the Euro held firm. Both Japanese and EU stocks rallied strongly as their economies
stabilized.

Many investors expressed confusion over how new monetary policies would play out.
Few anticipated the result; losses in long dated bonds in the U.S. and soaring equity prices in
developed markets. We only had a 4 % earning increase for domestic corporations; revenues were
up about 2 %.

Diversified and balanced portfolios underperformed along with Emerging markets. Brazil was down
20.1%, Big Cap China -5.1%, Russia -3.4% and India -4%.

Assets considered safe were losers in 2013 while stocks and risky "Junk bonds” paid off
handsomely. We witnessed a gradual increase in investor confidence even while consumers
remained wary.

Many middle class and low income consumers feel like the country is still in recession as jobs have
not returned in great numbers nor has their income increased. Income inequality has
ironically widened in the past 5 years because of the current Administration's policy choices.

Despite record fines by the DOJ for major banks, no resolution on the Keystone pipeline and little
progress on the U.S. budget impasse, investors still perceived U.S. stock markets as an opportune
place for their idle dollars.

Europe crawled out of recession resulting in late year surges in EU stock markets. Germany for
example finished up 28.6 % in 2013. Japan was up 24.5 % in dollar terms.

The U.S. dollar did not collapse as many feared. After an anemic 5 year climb out of recession the U.S. economy seems capable of growing above 2% with less FED help and a 'do nothing Congress." We continue to expect acceleration in global economic growth in 2014.

Why was the U.S. stock market the belle of the Investor’s Ball in 2013?

Energy independence is the top of my list for good news in 2013. The country has moved closer to a long stated goal with a new technology called horizontal drilling combined with the decade’s old technology called fracking.

Entrepreneurs have made U.S. energy independence possible. Newly discovered gas and oil is located on private land and financed with private money. States that have embraced this type of drilling are North Dakota, Texas, Oklahoma, and Pennsylvania. These areas have witnessed economic booms and filled tax coffers.

One wonders what might happen if CA and NY join in the fun or if the Federal government pursued policies encouraging more drilling. The ensuing job creation would create a much needed increase in personal income, higher tax revenues plus lower trade and budget deficits. We could be freed from defending allies in the Middle East, Europe, and Japan for the purpose of oil security.

Earnings, dividends, and margins for U.S. companies reached record levels, while the P /E ratios for stocks rose at least 2 multiples. We are still below 2000 and 2007 P/E levels. Earnings on the S&P 500 companies will finish around $109 a rise of 4.7 % over 2012.

CEO’s authorized record levels of share buybacks supporting higher share prices.. U.S. corporations have approximately $1.8 Trillion in cash on their balance sheets so more buybacks and dividend increases are expected in 2014..

After such a banner year one seeks a repeat. Rather, we expect a gentler rise. The market is trading at fair value or 15.4 times a rosy $120 forward estimate .U.S. interest rates are likely headed higher as the 3 decade bull market in bonds has run it's course.

Investors wanting more of a good thing will likely allocate marginal dollars towards equities rather than bonds. With no 2014 recession in sight we expect stocks to outperform bonds once again.

Doug Coppola
January 3, 2014

Disclaimer: This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any interest in any investment vehicles managed by Client First Advisors, LLC or an associated person or entity. Client First Advisors does not accept any responsibility or liability arising from the use of this communication. No representation is being made that the information presented is accurate, current or complete, and such information is at all times subject to change without notice. Opinions expressed may differ or be contrary to the opinions and recommendations of Client First Advisors. Client First Advisors does not provide legal, accounting or tax advice. Any statement regarding legal, accounting or tax matters was written in connection with the explanation of the matters described herein and was not intended or written to be relied upon by any person as definitive advice. Any discussion of U.S. tax matters contained within this communication is not intended to be used and cannot be used for the purpose of avoiding penalties that may be imposed under applicable Federal, state or local tax law or recommending to another party any transaction or matter addressed herein. Each person should seek advice based on its particular circumstances from independent legal, accounting, and tax advisors regarding the matters discussed in this e-mail.

November 2013 Review and Outlook

November 2013 Review and Outlook 

The S&P 500 closed up 2.8% for the month and has gained 26.6% before dividends year to date. Stocks again beat a tired bond market for the month and year to date.

The stock market has risen nearly 50% without a 10% correction. This is a very unusual situation. It speaks volumes to the fact that the global Central banks have kept interest rates at historic lows.

U.S. companies are making historic earnings with record profit margins and record levels of cash on their balance sheets.

The Morgan Stanley Global Stock Market index is up about 15% year to date while Emerging markets are showing a negative 8% return.

Capital spending has yet to kick in during this abnormally slow recovery. U.S. and European CEO's remain cautious about the pace of recovery, regulation, and tax rates. The Consumer remains wary of taking on more debt.

In this environment companies buy back shares and raise dividends helping to lift the markets.

Unfortunately Washington policies have done nothing to help raise wages for the middle class or help the economy get to back 2007 employment levels.

We expect market trends to remain in place through December. Tax loss selling will be featured in a month when the market typically rises 1.5%.

In 2014 we expect additional loses in long term bond investments while global stock markets outperform both bonds and commodities. At 15.6 times forward earning the S&P 500 P/E ratio is in neutral territory.

Inventors are likely to make more positive allocations to stocks rather than bonds after they review their 2013 returns.

The Federal Reserve is expected to remain in "ease mode" long after tapering their bond buying program, likely in March 2014. We do not expect any important legislation out of Washington until after the November 2014 midterm elections nor do we expect another government shutdown or debt ceiling impasse.

As always your questions and comments are welcome.

Best wishes for a Happy Holiday Season.

Doug

December 5, 2013

Disclaimer: This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any interest in any investment vehicles managed by Client First Advisors, LLC or an associated person or entity. Client First Advisors does not accept any responsibility or liability arising from the use of this communication. No representation is being made that the information presented is accurate, current or complete, and such information is at all times subject to change without notice. Opinions expressed may differ or be contrary to the opinions and recommendations of Client First Advisors. Client First Advisors does not provide legal, accounting or tax advice. Any statement regarding legal, accounting or tax matters was written in connection with the explanation of the matters described herein and was not intended or written to be relied upon by any person as definitive advice. Any discussion of U.S. tax matters contained within this communication is not intended to be used and cannot be used for the purpose of avoiding penalties that may be imposed under applicable Federal, state or local tax law or recommending to another party any transaction or matter addressed herein. Each person should seek advice based on its particular circumstances from independent legal, accounting, and tax advisors regarding the matters discussed in this e-mail.

October Review and November Outlook

October Review and November Outlook

The S&P 500 finished October +4% bringing the index to new all time highs and +23.2 % year to date. Barclays Capital Aggregate Bond Index had a rare plus month up 0.81% yet still down 1.1% year to date. The 10 year note closed the month with a 2.52% yield.

Third quarter earnings are coming in slightly above expectations while revenue growth remains weak.

The Federal Reserve bond purchase program remains in place most likely until 2014.

Congress kicked the debt ceiling and budget negotiation cans down the road with a new deadline of Feb. 7, 2014 for an agreement.

Until this year investors had the luxury of a 30 year bond bull market to fall back on for low risk returns. With stock markets now significantly outperforming bond markets more money flows in to the asset which treats investors best.

US stocks at 15 times 2014 earnings estimates are not cheap but not expensive. They are very capable of going to higher multiples in a low interest rate environment with rising earnings.

There are few signs of a classic stock market top such as Fed tightening, excess leverage, or too much bullish sentiment.

We typically get to the point where stocks are the talk of the town and investors can do no wrong before a big setback.

Asian, European and Emerging market stocks are still feared and even loathed by some. Yet Japan +22%, Germany +19%, France +18%, UK +13% are big winners this year. Emerging markets are coming back from big losses and commodity based countries are hopeful for better times in 2014.

In this world of slow growth, companies with high quality products, record levels of cash, share buyback programs, and rising dividends are preferred to low coupon fixed income investments.

The global stock rally should continue barring monetary tightening or a regional conflict of significant magnitude.

Doug

November 4, 2013

Disclaimer: This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any interest in any investment vehicles managed by Client First Advisors, LLC or an associated person or entity. Client First Advisors does not accept any responsibility or liability arising from the use of this communication. No representation is being made that the information presented is accurate, current or complete, and such information is at all times subject to change without notice. Opinions expressed may differ or be contrary to the opinions and recommendations of Client First Advisors. Client First Advisors does not provide legal, accounting or tax advice. Any statement regarding legal, accounting or tax matters was written in connection with the explanation of the matters described herein and was not intended or written to be relied upon by any person as definitive advice. Any discussion of U.S. tax matters contained within this communication is not intended to be used and cannot be used for the purpose of avoiding penalties that may be imposed under applicable Federal, state or local tax law or recommending to another party any transaction or matter addressed herein. Each person should seek advice based on its particular circumstances from independent legal, accounting, and tax advisors regarding the matters discussed in this e-mail.

Third Quarter Review

Third Quarter Review 

The SPX closed up 5% for the quarter while September gained 3%. Companies in the index are forecast to report earnings up 4.6% year over year. Revenues are expected to be weaker than earnings. The index now trades at 15.6 times 2013 expected estimates of $108. Nearly 80% of the 18% stock market gain in 2013 has been due to rising P/E's rather than rising earnings. This is unusual.

The rosy $114 estimate for next year is based on a belief that capital spending will pick up and the global economy has bottomed. Stock prices normally rise as we get higher earnings particularly when combined with below normal interest rates.

The 10 year Treasury note traded around 6% for decades prior to the financial crisis. In September it closed with a 2.64% yield up significantly from 1.66% in May this year. Bears believe higher rates will drive stocks lower along with bonds but it has not yet happened. However the spell of rising bond prices started in 1981 appears to be broken. We are a long way away from normalized rates which should keep P/E ratios at the high end of historic ranges.

The Federal Reserve failed to reduce its $85 billion dollar/month bond buying program recently which surprised the markets. The Chairman had spoken of tapering in May driving up yields, now investors are confused. It seems the Fed’s talk of tapering drove rates higher then they had anticipated. Given the current norm of +2% GDP levels the Fed needs to keep it's QE policy going.

Slow growth in this year's first half was due to higher income taxes plus uncertainty over Obamacare's costs to small business. This one two punch kept employment lower than what it might have been. Both individuals and CEO's are still hoarding cash and refinancing debt. Big business waits for corporate tax rules to change before investing more in the U.S. The Fed policy helps financial assets more than the economy or employment.

Small-Cap Growth funds have outperformed Big Cap Growth and Value funds. Growth stocks outperform slower stable and cyclical stocks in weak economic periods. Dividend focused investing has taken a back seat on this year's investment train.

Euro zone investor confidence turned positive for the first time in two years. The Europe 350 Index rose 5% this past month. Emerging markets rose 6.5% in September boosting 3Q gains to 5.1% after a rocky start in the first half.

Now we see Congressional budget negotiations have reached an impasse resulting in a partial government shutdown. This drama will likely continue until the October 17th when the current debt ceiling is reached. After this point, revenues received by the government must equal those spent by government. What a novel concept! Interest on the debt can and will be prioritized for payment if necessary.

If Congress and the Administration can ever manage to seriously address issues like Social Security, Medicare and Corporate tax reform we may experience a significant rise in market prices. For now share buybacks and dividend increases by rich corporations will continue to support markets. It appears that an unexpected recession or an exogenous shock to the financial system could derail this rosy scenario. We view this as unlikely any time soon.

European and Emerging markets are cheaper than the U.S. at current levels but are perceived to be more risky. As their economies do better they represent an interesting investment opportunity.

Lower quality bonds of short duration have outperformed higher quality, longer maturity bonds. This should continue to play out until the economy weakens materially.

Investor’s Business Daily pointed out that in the last 17 U.S. Government shutdowns the S& P 500 typically falls in the first week but ends higher a month later. October also marks the end of the DOW and S&P “Worst Six Month" period for share prices.

Doug Coppola

October 4, 2013

Disclaimer: This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any interest in any investment vehicles managed by Client First Advisors, LLC or an associated person or entity. Client First Advisors does not accept any responsibility or liability arising from the use of this communication. No representation is being made that the information presented is accurate, current or complete, and such information is at all times subject to change without notice. Opinions expressed may differ or be contrary to the opinions and recommendations of Client First Advisors. Client First Advisors does not provide legal, accounting or tax advice. Any statement regarding legal, accounting or tax matters was written in connection with the explanation of the matters described herein and was not intended or written to be relied upon by any person as definitive advice. Any discussion of U.S. tax matters contained within this communication is not intended to be used and cannot be used for the purpose of avoiding penalties that may be imposed under applicable Federal, state or local tax law or recommending to another party any transaction or matter addressed herein. Each person should seek advice based on its particular circumstances from independent legal, accounting, and tax advisors regarding the matters discussed in this e-mail.

September Musings

"Blue Moon in August"

September 3, 2013

The SPX - S&P 500 lost 3.1% in August as Treasuries fell for the fourth straight month. The index has gained 14.5% year to date with 67% of that gain taking place in the first quarter. Corporate earnings growth was 5% in the first half while revenue growth was below 2%. 

Investors are suffering from negative bond market returns in 2013. We note that Jeff Gundlach's DBLTX - Doubleline Total Return fund is down 0.88% year to date having averaged 7% gains the past three years. This year he has outperformed 86 percent of his peers. The well known PTTRX - Pimco Total Return Fund managed by Bill Gross is down 3.6% for the year. U.S. government securities lost 0.7% in August declining 3.5% in the prior 3 months. 

Municipal bonds a $3.7 trillion dollar market segment have lost more than 6% year to date, measured by iShares National Muni ETF - MUB which closed the month at 101.91 down 11% from it's all time peak last November. Fears of rising rates and looming defaults abound in spite of municipal bonds excellent credit history. 

While the US dollar was flat in August gold and oil rallied. Emerging markets and EM currencies dropped once again. 

Syrian concerns surfaced late in the month as President Obama announced a retaliatory attack for the use of chemical weapons by the Assad regime. Over the Labor Day weekend Mr. Obama hesitated and decided to seek Congressional approval for a military strike. This uncertainty will hang over the markets until a conclusion is reached. 

Many of the world's stock markets are down year to date, with Brazil and India losing about 25%, Western European markets have recently turned positive as the Eurozone emerged from its long recession. 

US GDP was revised to +2.5% for the second quarter. The Federal Reserve looks for +3% growth in the second half of this year but some remain skeptical. 

Global markets are facing the following uncertainties going into the balance of the year: 
1- An imminent attack on Syria. 
2- The reduction and eventual withdrawal QE stimulus by the FED. 
3- The appointment of a new Fed Chairman. 
4- The effect of higher rates on consumer spending. 
5- The outcome of the September 22 national elections in Germany. 
6- The outcome of debt ceiling and budget negotiations in October. 

Ten year governments have climbed from 1.40% last summer to 2.90% without a negative impact on US or Euro stock markets. Past experience shows that if rates climb due to a strong economy, equity markets move higher. 

There is currently no sign of wage inflation with workers having scant bargaining power. Since 2009 non-government hourly pay is down from $8.85 to $8.77. 

On the positive side of the ledger we have diminishing unemployment, lower budget deficits, a stronger dollar and improving current account deficits. We are moving towards energy independence. We are the largest world economy and the US dollar is the reserve currency. 

While we are stuck in a 2% growth economy and for now headwinds must diminish to achieve 3% growth. Europe and Asia improvement will help.

The SPX closed August at 1633 up 4.3% from the 2007 peak of 1565. With the 2013 consensus SPX estimate of $107.85, earnings are up 23% from the 2006 peak. This implies downside cushion for stock prices. 

Selling at 15 times consensus numbers, equities are not unreasonably priced. Further gains should come if we have improving GDP and better earnings. It is unlikely we benefit from additional multiple expansion which has floated the market higher thus far. 

Money has continued to flow out of bond funds into money market funds. If confidence rises, stock allocations will likely increase. 

In the coming months we shall see how events unfold. Fed moves remain "data dependent". 

Our goal to guide your funds with diligence, preserve your capital, and achieve acceptable returns over the long run. 

Doug Coppola

Disclaimer: This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any interest in any investment vehicles managed by Client First Advisors, LLC or an associated person or entity. Client First Advisors does not accept any responsibility or liability arising from the use of this communication. No representation is being made that the information presented is accurate, current or complete, and such information is at all times subject to change without notice. Opinions expressed may differ or be contrary to the opinions and recommendations of Client First Advisors. Client First Advisors does not provide legal, accounting or tax advice. Any statement regarding legal, accounting or tax matters was written in connection with the explanation of the matters described herein and was not intended or written to be relied upon by any person as definitive advice. Any discussion of U.S. tax matters contained within this communication is not intended to be used and cannot be used for the purpose of avoiding penalties that may be imposed under applicable Federal, state or local tax law or recommending to another party any transaction or matter addressed herein. Each person should seek advice based on its particular circumstances from independent legal, accounting, and tax advisors regarding the matters discussed in this e-mail.

Second Quarter Earnings and Outlook

With 90% of S&P 500 companies having reported, earnings are up 2.4% according to Fact Set. The Financial sector led the way up 28% without which composite earnings would be down 3%.

Mining profits are down 60% squeezed by lower commodity prices and higher costs. Other major sector profits like Technology were down 8%, Energy down 9% and Materials down 10%.

2nd Quarter sales were up 1.6% with 55% of companies exceeding reduced expectations.

Next Quarter's sales are anticipated to be up 3% with earnings up 4% lower forecasts than 3 months ago.

At 1688.98 the S& P sells at 15.4 times 2013 earnings estimates and 14.3 times 2014’s expected number.

While P/E ratios have been rising for the past few years interest rates seem to have reached their low point for this cycle. This suggests better earnings growth is needed to propel share prices higher. The market's rise has exceeded its earnings rise particularly since late 2012.

Europe seems to be moving out of recession but a key German election looms in September and recovery in the Southern tier will be a long process.

China and Japan are both undergoing transitions in their policies affecting the economy of each country and Asia in particular. The jury is out on the results as big structural adjustments are required to be implemented which take time and determination. The under performing Emerging markets as well as commodity driven developed countries are mainly affected.

In the U.S. very soon we face intractable budget issues and the full roll out of Obamacare both problematical. The ongoing uncertainty keeps business spending and new hiring in check. As consumer spending slows as it has this past month so too may the economy.

It will be an interesting period ahead setting the course for a stronger recovery or a stall as the Fed begins to unwind its QE program.

With the turn in the calendar year we will see a change in Fed leadership as well. I anticipate increased market volatility as 2013 enters the final 4 months.

Doug Coppola 

August 12, 2013

Disclaimer: This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any interest in any investment vehicles managed by Client First Advisors, LLC or an associated person or entity. Client First Advisors does not accept any responsibility or liability arising from the use of this communication. No representation is being made that the information presented is accurate, current or complete, and such information is at all times subject to change without notice. Opinions expressed may differ or be contrary to the opinions and recommendations of Client First Advisors. Client First Advisors does not provide legal, accounting or tax advice. Any statement regarding legal, accounting or tax matters was written in connection with the explanation of the matters described herein and was not intended or written to be relied upon by any person as definitive advice. Any discussion of U.S. tax matters contained within this communication is not intended to be used and cannot be used for the purpose of avoiding penalties that may be imposed under applicable Federal, state or local tax law or recommending to another party any transaction or matter addressed herein. Each person should seek advice based on its particular circumstances from independent legal, accounting, and tax advisors regarding the matters discussed in this e-mail.

August Musings

“The Beat Goes On!” 

August 5, 2013 

Stocks outperformed bonds in the month of July with the S&P 500 finishing up 5% at 1685.73. 10-year Treasuries closed with a 2.58% yield after the Fed said it will continue the QE program. Bonds recovered by +0.14% but were down 2.31% in aggregate for the year. 

GDP rose 1.7% for the second quarter which was better than expected but moderate growth for a post Depression recovery. The Federal Reserve forecasts 3% GDP growth in the second half as it anticipates 6.5% unemployment and 2% inflation before ending the bond purchase program. 

It seems we are in a secular bull market in US shares as measured by the SPX index. Levels are 9% above the high of 1565 reached in 2007. Many participants do not trust stocks as after 13 sideways years and 2 bear markets. The last bull run was 1982-1999. Pension funds are underweight equities and cannot meet 7 percent targets by owning bonds. 

Conversely a bear market in bonds began July 2012 with a 1.4% nadir in the 10-year note. Since May's 10-year yield of 1.60% longer term bond prices dropped dramatically. Other high yield instruments including Utilities, REIT’s, and MLP's have under performed the broad stock market averages. We have begun to price in an end to financial repression which has kept bond yields artificially low. 

Current concerns include China's 7% and slowing GDP along with Japan’s economic experiment and the upcoming the German election. Any surprise could tilt investors back toward a more cautionary stance but most forecasters see better economic times ahead. 

Recently a perceptible change has occurred whereby most bonds no longer provide positive returns. We are focusing our investments on low or no duration bond funds which have held up relatively well but are not gaining like stocks. Any investments less than 100% SPX has been relatively disappointing. Investors who formerly avoided risk now want performance that only equity exposure can provide. 

Global markets are smarting from severe drops in commodity prices caused by China's slowdown and recession in Europe. Most Emerging markets have negative returns year to date. European stocks are just beginning to perform while America's rebound has given greater confidence to a system that held together after a period of great stress. SPX earnings have increased from 2010’s $83.66 to $102.47 last year + 22.5% yet the market has rallied about 36 % because stock market multiples are rising. 

Investors know that slow earnings growth trumps rising yields. Except for the irrational P/E peak in 1999-2000 investors have been willing to pay between 7 and 22 times earnings for the past 8 decades. According to Yardini Research SPX operating earnings are expected to be $111.00 in 2013 and $123.58 next year. The market sells at a 15.18 multiple for 2013 and 13.63 times next year's estimate. We are above the midpoint of the historic range but not overvalued. 

If the economy and corporate earnings do not hit a wall stocks become the asset of choice. With earnings rising and bonds no longer a safe bet, the stage is set for more gains. Having made the case for stocks, we recall that corrections frequently come in the Fall as Congress gets back into session. Since 1964 we have had 17 autumn declines of more than 10 % with much of the damage done in October. 

Our job is to cope with changing circumstances as best we can. We therefore adjust portfolios in a deliberate manner. It has been a challenging task to adjust rapidly enough in this slow growth and government policy driven cycle. In a rising market the only winning strategy is to move into better performing securities. Trends have changed and we are acting accordingly. As always your questions and comments are welcome. 

Doug Coppola

Disclaimer: This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any interest in any investment vehicles managed by Client First Advisors, LLC or an associated person or entity. Client First Advisors does not accept any responsibility or liability arising from the use of this communication. No representation is being made that the information presented is accurate, current or complete, and such information is at all times subject to change without notice. Opinions expressed may differ or be contrary to the opinions and recommendations of Client First Advisors. Client First Advisors does not provide legal, accounting or tax advice. Any statement regarding legal, accounting or tax matters was written in connection with the explanation of the matters described herein and was not intended or written to be relied upon by any person as definitive advice. Any discussion of U.S. tax matters contained within this communication is not intended to be used and cannot be used for the purpose of avoiding penalties that may be imposed under applicable Federal, state or local tax law or recommending to another party any transaction or matter addressed herein. Each person should seek advice based on its particular circumstances from independent legal, accounting, and tax advisors regarding the matters discussed in this e-mail.