As the debate about future economic growth continues, we provide selected excerpts from Q4 earnings transcripts. Quotes from CEO's of companies across multiple industries. Excluding energy and manufacturing, most CEO's indicated a positive growth outlook for their respective companies and industries.

1. Market Perspective – February 2016
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Overview: 2016 is off to a very rocky start with most major indices around the globe suffering
large losses in January (and continuing into early February). The aggregate valuations of
bellwether industries (i.e. manufacturing on the downside and utilities on the upside) are
indicating recessionary conditions ahead. For example, consumer oriented industries are still
experiencing periods of growth. While opinions on the current state of the economy are sharply
divided, we believe research and due diligence are critical factors in assessing market conditions
over the longer term. This month we provide an element of our research process with highlights
from corporate CEO earnings transcripts. We believe this gives deeper insight into real “Main
Street” demand.

2. Market Performance in January
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Over the month of January, global equity
markets saw declines which were rapid,
broad, and in some cases the worst on
record for the month of January. The S&P
500 fell by ‐5.07% and the EAFE, MSCI’s
international developed country Index,
dropped even further, by ‐7.28%.
Commodities, led by energy, continue to
face very difficult conditions due to
continued dramatic price declines.
The list of macroeconomic concerns is
growing and quickly being reflected into
stock valuations. The major issues include:
• Ineffective monetary policy
• Emerging market GDP concerns
• Energy prices and debt issuances, which
drove U.S. shale energy growth
• Signs of peaking profit margins
• Slowing velocity of Money
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S&P 500 Index and MSCI EAFE Index January 2016 Performance

3. Cautious CEO Commentary – Manufacturing and Energy
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Experience Insight Impact
• The nation’s largest energy pipeline company confirms energy prices are down, but production is still rising
“On a full‐year basis, 2015 to 2014, oil prices were down 49%, of course they're down further still from there. Gas
was down 40%... Combined oil production across all of our fields was up 2% compared to 2014. Net NGL sales
volumes were up 3% compared to 2014.” – Steven Kean, CEO, Kinder Morgan
• A large domestic railroad expects future freight volumes to weaken due to a strong dollar and low energy prices
“Looking forward, we expect volumes to decline in the first quarter. We expect the challenging freight
environment to continue as the headwinds associated with coal, low commodity prices and a strong U.S. dollar
more than offset the markets that will show growth.” –Frank Longero, CFO, CSX Corp.
• A leading manufacturing equipment company expects domestic and emerging market demand to be challenging
“Automation core revenues decreased at a high single‐digit rate due to weakening in industrial markets in China
and North America.” – Thomas Joyce, CEO, Danaher
On the cautious side, global economic conditions are weakening and manufacturing CEO’s believe we
are in an “industrial recession” caused by the strong dollar, emerging market weakness and energy
sector declines.

4. More Positive CEO Commentary – Consumer and Services
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Experience Insight Impact
Despite what the stock market is indicating, we also find sectors continuing to realize positive trends.
Unlike the executives at industrial companies, consumer‐facing CEO’s are seeing strong demand.
Following are highlights from our research:
• The world’s largest credit card association continues to see more consumer dollars being spent
“We continue to see relatively strong payment volume growth.” – Charles Scharf, CEO, Visa
• Large domestic bank believes the demand for autos will continue to rise despite hovering close to prior peaks
“Auto vehicle sales were the best ever in 2015…If gas prices continue to remain low, 2016 should be another
strong year for the auto market.” – John Stumpf, CEO, Wells Fargo
• The largest domestic trucking company for consumer goods confirms U.S. consumer demand should stay strong
“I had a conversation yesterday with Bob Costello, the Chief Economist at American Trucking Association. He said
that roughly two‐thirds of the economy is consumer based, and that all data points are signaling that in 2016 the
consumer should be doing pretty well.” – Jerry Moyes, CEO, Swift Transport
• Conference call transcripts aggregator sees no claims of broad domestic recession
“C‐suite executives sound generally positive this quarter, despite growing turbulence in financial markets and
elevated levels of stress. While some mention “recession” and the likelihood of a downturn in economic activity, no
one has claimed that an outright contraction is imminent.” – Bloomberg, CEO, Orange Book

5. Industry Specific Trends We Are Seeing
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Experience Insight Impact
• Large retailer sees declines in brick‐and‐mortar traffic, but is seeing strong growth in online sales
“On the one hand we experienced softer in‐store transaction counts, but on the other hand sales from our
customer‐facing digital channels demonstrated strong growth, in excess of 25%.” – Steven H. Temares, CEO, Bed
Bath & Beyond
• Casual dining company is eliminating its traditional market spend and opting for a entirely digital strategy
“We are moving away from a traditional television‐based marketing campaign. We are now focusing 100% of our
advertising stint on digital and social media.” – David Skena, CMO, Ruby Tuesday
• Airlines are experiencing massive earnings from both strong pricing and lower fuel costs
“Of course this was by far our best year of earnings in our entire history, and that includes a record return on
invested capital of 32.7%. We no doubt benefited from 29% lower economic jet fuel prices.” – Gary Kelly, CEO,
Southwest Airlines
• Airline profits are not being spent on growth, but rather returning it to shareholders through share repurchases
“We generated $3.8 billion of free cash flow and returned $2.6 billion of that back to our owners this year… I would
expect that given the performance we’re on pace to achieve that our share buyback number would be materially
higher in 2016 than it was in 2015.” – Richard Anderson, CEO, Delta Airlines
We are also seeing secular trends independent of the business cycle. Digital businesses are continuing
to take share from traditional industries. In addition, some older industries (i.e. airlines) are seeing
signs of improved business conditions relative to their history.

6. Conclusion: We remain generally cautious as opinions on the state of the economy are sharply
divided. Business conditions in 2016 have weakened, thus both investors and corporate
management teams are adjusting their expectations for both stock prices and corporate earnings.
While the magnitude of weakness is still to be determined, our approach to this period is to
protect client capital and maintain a rational long‐term outlook. We remain defensive as we
scrutinize economic data, await for signs of stabilization, and look for opportunistic situations
where we believe the market has overreacted.
Experience Insight Impact
Market Perspective – February 2016
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7. Experience Insight Impact
Disclaimer
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Opinions expressed in this commentary may change as conditions warrant and is for informational
purposes only. Information contained herein is not intended to be personal investment advice for
any specific person for any particular purpose. We utilize information sources that we believe to
be reliable but cannot guarantee the accuracy of those sources. Past performance is no guarantee
of future performance; investing involves risk and may result in loss of capital. Consider seeking
advice from a professional before implementing any investing strategy.