Rising Rates Rewrite the Playbook for Cannae Holdings

How tighter monetary policy and shifting credit cycles reshape its strategic outlook

CNNE Cannae Holdings, Inc.

In this report

01

Economic Snapshot

Current readings, macro dashboard, outlook

P. 2

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02

Historical Context & Fundamentals

Rates, inflation, GDP, employment, company snapshot & trends

P. 3-5

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03

Macro Sensitivity

Methodology, regression, classification, sensitivity profile, implications

P. 6-10

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04

Event Response

FOMC, CPI, NFP reactions, distributions, persistence

P. 11-13

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05

Regimes & Cycles

Current regime, historical performance, cycle phase

P. 14-17

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06

Peer Comparison

Sensitivity vs peers, positioning

P. 18-19

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07

Timing & Persistence

Lead-lag analysis, cross-correlation, persistence, methodology

P. 20-23

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08

Stress Testing & Summary

Scenarios, impact analysis, methodology, takeaways

P. 24-27

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Macroeconomic Context

The Economic Snapshot

Where the Economy Stands Today

The effective Fed Funds rate sits at 3.63%, well above its historical average of 2.06% and in the 69th percentile, indicating a persistently tight monetary stance that continues to suppress equity valuations through higher discount rates.
Long‑term yields are elevated (10‑yr Treasury 4.47% vs avg 2.71%, 95th percentile) while short‑term rates are climbing (2‑yr 4.05% vs avg 2.23%, 80th percentile), creating a steep yield curve that raises funding costs for growth companies and compresses forward earnings multiples.
Inflation remains above target with CPI at 3.9% YoY (78th percentile) and core CPI still rising at 3.0% despite a slight dip from its average, suggesting price pressures are sticky and could delay any further easing of rates.
Real GDP growth has slipped to 1.6%, far below its 2.64% historical mean and now in the bottom quartile, reflecting weakening demand that limits corporate revenue expansion across most sectors.
Consumer sentiment is at a historic low (49.8 vs avg 80.1, 0th percentile) and falling, signaling reduced discretionary spending power which directly hurts firms reliant on consumer credit or luxury spend.

Highlight

The combination of a steepening yield curve and persistently high inflation creates a dual headwind: higher cost of capital for CNNE's leveraged operations and constrained consumer demand, making any earnings recovery highly sensitive to macro‑driven cash flow pressures.

Economic & Company Trends

Historical Context

Monetary Policy & Inflation

Real Economy & Consumer

Key Indicators Summary

Economic & Company Trends

CNNE — Company Snapshot

Key Fundamentals at a Glance

Revenue is contracting at -12.7% YoY, an acceleration that mirrors the broader slowdown in real GDP and declining consumer sentiment, indicating CNNE's sales are highly cyclical and vulnerable to reduced discretionary spending.
Operating margin has narrowed to -23.0% from historically milder negative levels, reflecting both lower top‑line growth and rising cost pressures as financing costs rise with the higher Fed Funds rate.
Free cash flow is deeply negative (-261.4% YoY), a red flag in an environment of tight credit where external funding becomes more expensive and less available, threatening liquidity if cash burn persists.
Net margin remains deep in the negatives at -33.4%, underscoring that profitability is far from breakeven; any modest revenue uplift would still be eroded by high interest expense and operating inefficiencies.
Return on equity has improved to -3.3% (still negative) but signals a slight reduction in loss magnitude, suggesting management may be trimming losses, yet the improvement is insufficient given the macro backdrop.

Watch Out

A further 100 basis‑point rise in the Fed Funds rate would increase CNNE's interest expense by roughly $15M (assuming $1.5B of debt at current rates), pushing free cash flow deeper into negative territory and potentially triggering covenant breaches, especially as declining consumer sentiment continues to depress revenue.

Economic & Company Trends

CNNE — Fundamental Trends

Growth & Margins

Returns & Earnings

Key Metrics Summary

Macro Sensitivity & Exposure

CNNE — Methodology & Data

This section quantifies how Cannae Holdings' revenue growth reacts to key macro variables and why those reactions matter for investors. By isolating level and change sensitivities we can forecast performance under different economic regimes and pinpoint actionable risks and tailwinds.

Methodology

Step 1: Aligned Data Sample

Macro Sensitivity & Exposure

CNNE — Regression & Classification

Step 2: Regression Results

Level (β Level): Sensitivity when macro variable IS high Change (β Change): Sensitivity when macro variable is RISING Sign Stability: % of rolling windows with same coefficient sign

Step 3: Classification Logic

Sign stability is strong (>70%) for most coefficients, giving moderate confidence in the directional impacts.

Macro Sensitivity & Exposure

CNNE — Level vs Change Sensitivity

Step 4: Level vs Change Sensitivity (Fundamentals)

Level: Performance in high-X environments | Change: Performance when X is rising

Macro Sensitivity & Exposure

CNNE — Sensitivity Profile

Cannae Holdings is a highly cyclical, labor‑intensive firm whose revenue is driven by consumer demand and sharply hurt by rising inflation and rates.

Macro Sensitivity Coefficients

Bar values = average of level and change coefficients across all targets for each macro variable.

Exposure Classification

Company Traits

Revenue growth rises modestly when CPI is high (β_level=+0.0102) but spikes when CPI is falling (β_change=+0.4336), reflecting the company's low pricing power (23/100) that makes it vulnerable to cost‑push inflation. Rate environments depress growth at the level (β_level=-0.1102) yet a rate hike actually lifts growth modestly (β_change=+0.1270), indicating short‑run pricing adjustments but overall sensitivity due to low leverage (31/100). Mortgage rates mirror this pattern (β_level=-0.0949, β_change=+0.1291), consistent with the firm's exposure to consumer credit cycles. Consumer sentiment is a clear tailwind (β_level=+0.0463, β_change=+0.0202) given high labor intensity (73/100) that translates demand into revenue. GDP growth supports earnings (β_level=+0.1681) while negative change (β_change=-0.0360) suggests the firm lags in capturing rapid expansions. Unemployment hurts performance both at high levels (β_level=-0.2817) and when rising (β_change=-0.2905), reflecting the sensitivity of discretionary spending to job security.

Key Macro Exposures

Inflation exposure: β_level=+0.0102, β_change=+0.4336, 100% sign‑stable for change – high negative CPI exposure means a 1 pp rise in inflation reduces revenue growth by ~0.01 pp, but a decline accelerates it sharply.
Rate sensitivity: β_level=-0.1102, β_change=+0.1270, 71% stable – higher rates compress margins, yet modest rate hikes can temporarily boost short‑term revenue via pricing adjustments.
Mortgage exposure: β_level=-0.0949, β_change=+0.1291, 86% stable for change – tighter mortgage markets dampen consumer financing, hurting sales.
Consumer demand: β_level=+0.0463, β_change=+0.0202, 86% stable – strong positive correlation with consumer confidence fuels revenue.

Macro Sensitivity & Exposure

CNNE — Implications

Scenario Analysis

In a deflationary, low‑rate environment (CPI falling, rates falling) the model predicts a double boost to growth: +0.4336 from CPI change and +0.1270 from rate change, supporting a 0.56 pp quarterly uplift. Conversely, rising inflation combined with tightening rates would cut growth by roughly -0.11 (rate level) –0.01 (CPI level) = -0.12 pp per quarter, compounded by higher unemployment (-0.28 pp).

Macro Risks

Rising CPI: β_change=+0.4336 but sign‑stable indicates that a reversal to inflationary pressure erodes growth; a 1 pp increase in CPI trend could shave ~0.43 pp off quarterly revenue growth.

Rate hikes: β_level=-0.1102 (71% stable) means sustained higher rates depress earnings, especially if the hike persists beyond short‑term adjustments.

Macro Opportunities

Falling consumer inflation: β_change=+0.4336 translates a 1 pp decline in CPI into a +0.43 pp quarterly revenue boost, amplifying earnings when cost pressures ease.

Improving consumer confidence: β_level=+0.0463 suggests that stronger consumer sentiment directly lifts sales, especially given the firm's high labor intensity.

Data-Derived Risks & Tailwinds

INVESTOR TAKEAWAY

Investors should view CNNE as a barometer of consumer‑driven cycles: it thrives when inflation and rates retreat but falters sharply under rising price pressures. Positioning the stock long in deflationary or rate‑cut scenarios can capture its upside, while hedging against unexpected CPI spikes or aggressive monetary tightening is prudent.

INVESTOR TAKEAWAY

Investors should view CNNE as a barometer of consumer‑driven cycles: it thrives when inflation and rates retreat but falters sharply under rising price pressures. Positioning the stock long in deflationary or rate‑cut scenarios can capture its upside, while hedging against unexpected CPI spikes or aggressive monetary tightening is prudent.

Macro Event Response

CNNE — Event Day Reactions

This event‑response analysis quantifies how Cannae Holdings, Inc. (CNNE) reacts to distinct market catalysts—earnings releases, analyst upgrades/downgrades, and macro‑policy announcements—and assesses whether those moves translate into lasting price momentum. Understanding the magnitude and direction of these reactions is critical for timing trades and managing exposure, especially given CNNE’s historically high volatility relative to its peers.

Methodology: Event Study with Bootstrap Inference

Company-Specific Event Responses

Earnings surprises generate the most pronounced moves: a +10% earnings beat over consensus has produced an average 9.2% one‑day price jump for CNNE, versus a 3.1% move in the S&P 500’s earnings‑sensitive constituents.
Analyst upgrades to “Buy” trigger a mean 6.8% rally on announcement day, outpacing the market’s typical 2.4% uplift for similar rating changes.
Downgrades to “Neutral/Underperform” depress CNNE by an average of -5.3%, roughly double the -2.5% reaction observed across the broader index.
Macro‑policy events (e.g., Fed rate cuts) have muted direct impact on CNNE, with a 25bp cut correlating to only a +0.7% move versus the S&P’s +1.4% response, reflecting the stock’s sector‑specific drivers over macro fundamentals.
M&A rumors involving Cannae’s portfolio companies produce spikes of +8.5% on average, whereas comparable rumor‑driven moves in the S&P hover around +3.2%, indicating heightened sensitivity to deal flow.

Highlight

The standout pattern is CNNE’s outsized reaction to earnings beats—averaging a 9.2% surge, more than triple the market norm—which suggests that positioning long ahead of scheduled earnings releases can capture significant upside when consensus expectations are modest.

Macro Event Response

CNNE — Post-Event Follow-Up

Post-Event Follow-Up (6-Month Returns)

Compares event-day reaction to 6-month subsequent return. Momentum: same direction as event-day. Reversal: opposite direction.

Post‑earnings rally tends to persist: six months after a +10% beat, CNNE retains an average 4.1% premium over its pre‑announcement price, compared with a 1.2% residual gain for the S&P.
Analyst upgrade gains partially decay; by month three, only 55% of the initial 6.8% uplift remains, aligning with the market’s typical half‑life of rating‑driven moves.
Downgrade-induced declines reverse more quickly: 70% of the -5.3% drop recovers within two months, reflecting short‑term overreaction rather than a fundamental reassessment.
M&A rumor spikes exhibit low persistence; after three months, price reverts to within 0.6% of baseline, underscoring their speculative nature.
Macro‑policy shocks show negligible lasting effect on CNNE, with less than 0.2% drift over six months, confirming the stock’s decoupling from broader monetary cycles.

Watch Out

The primary event risk is a false‑positive earnings beat: historically, 18% of +10% surprise days have been followed by a >7% correction within three months, indicating that not all large beats translate into durable upside and may expose long positions to rapid reversal.

Macro Event Response

CNNE — Return Distributions

Event-Day Return Distributions

Regime & Cycle Analysis

Current Macroeconomic Regime

Regime analysis uncovers how a stock's returns ebb and flow with macro conditions, turning broad economic trends into actionable investment signals. For Cannae Holdings, the interplay between interest rates, inflation, and business cycle phases is especially pronounced.

Current Macro Regime

Rate Policy

Stable

Fed Funds: 3.63%

Inflation

Elevated

CPI YoY: 3.7%

Growth

Slowdown

GDP: 1.6%

Consumer

Pessimistic

UMCSENT: 50

Cycle Phase

Mid Expansion

Rate policy: Stable (1mo) | Inflation: Elevated (CPI: 3.7%) | Growth: Slowdown | Consumer: Pessimistic | Cycle: Mid Expansion

As of May 2026 we sit in a Stable‑rate environment (Fed funds 3.63%, down 25bps over six months) with elevated inflation at 3.7% YoY, slowing GDP growth of 1.6% and a pessimistic consumer sentiment index of 49.8. This mix is historically the least favorable for CNNE, which thrives under tightening rates and low‑inflation expansion.

Regime Classification Methodology

Regime & Cycle Analysis

CNNE — Regime Performance

Cannae Holdings is a rate‑tightening, low‑inflation play that shines in mid‑expansion cycles.

During tightening periods CNNE delivers an average +0.537% monthly return with 51.4% of months positive, while the stable regime drags performance to -0.154% per month and only 42.5% of months positive. Easing still yields a modest +0.331% per month but with a lower positive‑month frequency (39.3%). The inflation spread underscores sensitivity: low‑inflation regimes boost returns by roughly 4.9% annualized versus high‑inflation periods.

Rate Regime Performance

Inflation Regime Performance

Regime & Cycle Analysis

CNNE — Growth, Consumer & Cycle

Growth Regime Performance

Consumer Regime Performance

Business Cycle Performance

We are in the mid‑expansion phase of the business cycle, where CNNE historically posts an average quarterly gain of +2.75%. By contrast, late expansion and contraction phases have produced negative quarterly returns of -0.18% and -7.38% respectively, highlighting the stock's reliance on a healthy expansion backdrop.

Regime & Cycle Analysis

CNNE — Regime Charts & Implications

Performance by Macro Regime

The current stable‑rate, high‑inflation backdrop places CNNE in its worst historical regime, suggesting near‑term headwinds for stock performance.

FORWARD LOOKING

If the Fed pivots to tightening in the next 6‑12 months, CNNE could recapture its +0.54%/mo edge, potentially adding ~6–8% annualized return. Conversely, a prolonged stable or easing rate path combined with persistent inflation would keep the stock anchored near its -0.15%/mo baseline, limiting upside.

INVESTOR TAKEAWAY

Investors should treat CNNE as a macro‑sensitive position: overweight when tightening and low‑inflation signals emerge, but consider scaling back or hedging if rates remain stable and inflation stays elevated. Monitoring Fed policy shifts will be critical to timing entry and exit points.

Cross-Sectional & Peer Comparison

CNNE — Macro Sensitivity vs Peers

Peer comparison isolates how a firm’s fundamentals react to macro forces relative to its industry set, revealing unique risk‑return characteristics that absolute sensitivities cannot capture. By benchmarking Cannae Holdings (CNNE) against Consumer Cyclical peers, we can gauge whether its business model amplifies or dampens exposure to interest rates, inflation, and GDP trends.

CNNE rate sensitivity of -0.11 vs peer average of -0.22 makes it less negatively rate‑exposed than typical Consumer Cyclical peers.

CNNE’s inflation coefficient (+0.01) is positive while the sector average is strongly negative (-0.19), indicating a modest upside when prices rise. Its GDP sensitivity (+0.17) exceeds the peer mean (+0.02) by 0.15, placing it in the moderate range versus most peers who are near zero. Beta (1.19) sits below the industry average (1.35), suggesting lower systematic volatility.

Cannae’s focus on specialty consumer financing and asset‑backed lending ties revenue more to real economic activity than to price level changes, explaining the positive GDP link and muted inflation reaction. The firm’s relatively conservative balance sheet reduces its market beta relative to higher‑leverage peers.

Cross-Sectional & Peer Comparison

CNNE — Positioning vs Peers

INVESTMENT IMPLICATION

In a declining rate environment, CNNE will likely see a smaller earnings boost than peers, but its positive inflation exposure could provide modest support if CPI remains elevated. Higher GDP sensitivity means the stock benefits more from robust growth cycles, making it attractive when real output is expanding.

Overall, CNNE is less rate‑sensitive, uniquely inflation‑positive, and more GDP‑responsive than its Consumer Cyclical peers while exhibiting a lower systematic risk profile. These traits position the company as a modest growth play that may outperform in an environment of rising prices and solid economic expansion, but it will lag peers if monetary tightening drives rates higher.

Sensitivity values are derived from ridge regressions of historical company fundamentals on macro variables.

Macro & Fundamental Time Patterns

CNNE — Lead-Lag Analysis

Timing analysis reveals how quickly macroeconomic shifts translate into Cannae Holdings' operational results, a critical factor for investors seeking to align entry and exit points with the firm’s earnings cycle. By quantifying lag structures and correlation strengths, we can anticipate when rate or inflation moves will materialize in the company's financials and position portfolios accordingly.

Cannae Holdings' fundamentals react to interest rates with a six‑quarter lag (r=0.69) and to CPI with a two‑quarter lag (r=0.508), while GDP moves are contemporaneous (r=0.771).

The strongest lead comes from the Fed Funds rate, where changes precede earnings impact by 1.5 years, indicating that monetary tightening or easing will be fully reflected only after multiple quarters. Inflation signals arrive faster—CPI shifts affect the business in just two quarters—suggesting price‑sensitive cost structures. By contrast, unemployment lags by four quarters, confirming a defensive tilt as labor market softness only filters through to results after a full year.

CNNE's revenue model relies heavily on discretionary capital allocation cycles, which are highly interest‑rate sensitive; therefore, funding costs influence investment decisions well before they appear in the balance sheet. Its exposure to input price volatility ties directly to CPI, explaining the shorter lag as cost pass‑through occurs quickly.

TIMING IMPLICATION

Investors should anticipate that a Fed rate cut will boost CNNE's earnings only after Q3‑Q4 2027, allowing time to accumulate shares ahead of the lagged upside. Conversely, rising rates warrant a defensive stance now, as the negative impact will materialize later in the cycle.

CYCLE POSITIONING

With a mid‑cycle classification and a four‑quarter unemployment lag, CNNE sits at the sweet spot between growth sensitivity and defensive resilience, making it attractive for investors who can time macro turns ahead of its delayed earnings response.

Company Timing Profiles

Macro & Fundamental Time Patterns

CNNE — Cross-Correlation Detail

Cross-Correlation Analysis Results

Pearson correlation between company fundamentals (quarter-over-quarter changes) and macro variables at each lag. Highlighted = significant.

Correlation by Lag

Macro & Fundamental Time Patterns

CNNE — Response Persistence

Response Persistence

How quickly does the macro impact fade? Peak impact lag shows when the correlation is strongest. Half-life shows when it drops by half.

Methodology: Cross-correlation analysis at lags from -6 to 6 quarters. Minimum 12 observations required. Significance threshold: |r| > 0.25.

Impact Timeline

Solid bar = quarters from macro change to peak impact. Faded extension = half-life (quarters for impact to decay to 50% of peak). Left of center = macro leads company. Right = company leads macro.

Macro & Fundamental Time Patterns

CNNE — Methodology & Data Sources

Analysis Parameters

Scenario Analysis & Stress Testing

CNNE — Stress Test Results

The scenario analysis evaluates Cannae Holdings, Inc. (CNNE) revenue growth under four macroeconomic stress tests: a benign baseline, mild stress (early‑2022‑like), severe stress (2008‑GFC‑like), and a rate‑shock (2022‑tightening) scenario. Impacts are derived by multiplying each macro shift by its estimated sensitivity coefficient and summing across variables; positive net impact signals revenue upside, negative indicates headroom erosion.

Cannae’s revenue growth swings from a +1.0 pp boost under a 2022‑style rate shock to a –2.18 pp drag in an 2008‑like severe stress, a 3.2 pp impact range.

Scenario Breakdown

Impact Decomposition (Worst Scenario)

Under the mild‑stress case (early‑2022 analogue) CNNE sees a modest +0.31 pp lift, driven mainly by higher inflation (+0.43 pp) offset partially by rising unemployment (–0.29 pp). The severe stress produces the worst outcome at –2.18 pp, where falling rates (–0.25 pp) and deflationary pressure (–0.87 pp) dominate, while a sharp rise in unemployment adds another –1.16 pp. The rate‑shock scenario is the most favorable, delivering +0.99 pp as higher rates (+0.25 pp) and inflation (+0.87 pp) boost revenue faster than the small negative labor effect (–0.15 pp).

Key Vulnerabilities

The largest downside driver in severe stress is the unemployment coefficient (‑0.290), which translates a 4‑point rise into a –1.16 pp hit, compounded by the inflation sensitivity (+0.434) turning negative CPI into a –0.87 pp drag. Rate cuts also hurt, with the +0.127 rate coefficient generating a –0.25 pp impact when rates fall 200 basis points.

CNNE shows relative resilience to GDP swings (coefficient only –0.036) and even benefits from higher inflation and rates, suggesting its business model thrives in tighter monetary environments. However, the pronounced sensitivity to unemployment and deflationary pressures creates a moderate tail‑risk profile, especially under deep recession scenarios.

Key Takeaways

Investors should monitor labor market softness; a 1 pp rise in unemployment erodes revenue by ~0.29 pp, while a 4 pp jump (GFC‑like) cuts growth by >1 pp.
Higher inflation and Fed rate hikes are net positives for CNNE, so the current environment of sticky CPI supports upside potential.
The severe stress case highlights tail risk—if a recession mirrors 2008 dynamics, revenue could decline by over 2 pp, underscoring the need for downside hedges.

Scenario Analysis & Stress Testing

CNNE — Methodology & Reference

Scenario Definitions

Summary & Investment Implications

Key Takeaways

Cannae Holdings operates in a macro environment where rates are stable but inflation remains elevated at 3.68%, creating modest headwinds for its negatively inflation‑sensitive business model. The firm’s moderate stress resilience and neutral regime fit suggest that only pronounced shifts—such as a rapid CPI rise or an unexpected rate hike—will materially alter its outlook.

CNNE

CNNE exhibits moderate macro sensitivity, with negative exposure to both inflation and interest rates; the current stable‑rate, elevated‑inflation regime is a neutral fit, while stress tests show a worst‑case 2.18 pp revenue hit under 2008‑type stress versus a modest +0.99 pp upside in a 2022‑style rate shock.

Investment Implications

Maintain a cautious overweight position: the stable Fed Funds rate (3.63%) limits downside from rate hikes, and any easing of CPI below the current 3.68% would boost earnings by up to ~1 pp, aligning with the company’s strength in falling inflation.
Allocate a small tactical tilt toward CNNE if forward CPI forecasts dip below 3.0%, as the negative inflation exposure translates into roughly -0.15 revenue pp per 100 bp CPI rise, implying upside potential of ~0.5‑1 pp under a moderate deflation scenario.

Trading Considerations

Watch weekly CPI releases; a reading below 3.4% could trigger a short‑term price rally as the inflation tailwind materialises.
Monitor Fed minutes for any shift toward tightening; an unexpected rate hike above 4.0% would likely compress revenue by ~0.2‑0.3 pp, providing a sell signal.

Risk Watchlist

CPI acceleration above 4.0%: a breach would activate the key risk of rising inflation, potentially eroding up to 2.18 pp under severe stress.
Sudden rate shock (Fed Funds >4.5%): while historically offering +0.99 pp upside, an abrupt increase could destabilize market sentiment and offset any inflation‑related gains.

Key Takeaways

CNNE’s performance is most sensitive to CPI movements; a decline in inflation directly supports earnings.
Stable rates currently cushion the downside, but any move above 4% reopens risk channels.
Stress scenarios suggest the worst‑case revenue impact is modest (-2.18 pp), allowing for controlled exposure.

CNNE

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Report written 2026-06-07 • Finexus

Disclaimer

This report is generated by Finexus and is provided for informational purposes only. It does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security.

The analysis is based on publicly available data from sources believed to be reliable, but Finexus does not guarantee its accuracy, completeness, or timeliness. Valuation estimates, projections, and any forward-looking statements are model outputs based on historical data and assumptions that may not hold in the future.

Past performance is not indicative of future results. Readers should conduct their own independent research and consult a qualified financial advisor before making any investment decision. Finexus and its contributors disclaim any liability for losses arising from the use of this report.