In the latest edition of Inside The Buy-side®, Corbin asked financial professionals about their expectations/sentiment on the earnings season, business climate and key areas of focus.

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4Q16 EARNINGS PRIMER
JANUARY 13, 2017
INSIDE THE BUY-SIDE®

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INSIDE THE BUY-SIDE® 4Q EARNINGS PRIMER ISSUE DATE: JANUARY 13, 2017
Market Performance1
4Q16
One-
Year
DJIA 7.9% 15.2%
NASDAQ 1.3% 9.8%
S&P 500 3.3% 11.2%
Russell 8.4% 22.4%
• We survey institutional investors and sell-side analysts
quarterly to gauge and track sentiment on topics
pertaining to the earnings season, global economy and
market drivers
• We share our research broadly with corporate
executives, investor relations (IR) professionals and
investors
• Survey scope: 101 investors globally managing over
$719 billion in assets
• Survey timeframe: Dec. 9, 2016 to Jan. 6, 2017
1 As of Dec. 31, 2016
2%
2%
4%
6%
6%
10%
10%
12%
24%
24%
Deep Value
Momentum
Sector Specific
Aggr. Growth
VC/PE
Income Value
GARP
Hedge Fund
Growth
Core Value
By Style
14%
5%
6%
11%
16%
48%
Other
Financial
IT
Industrial
Multi
Generalist
By Sector
4%
17%
23%
56%
Latin America
Asia Pacific
Europe
N. America
By Region

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WORD CLOUD: FREQUENCY OF OCCURRENCE

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KEY FINDINGS – OPTIMISM ABOUNDS AS 2017 GETS UNDERWAY
Sentiment Turns The Corner; Bullishness Makes A Comeback And Earnings Expectations
Track Higher…Are We Ahead Of Ourselves?
USA! USA! Sentiment Improves Following The Election Amid Promises Of Business
Friendly Political Environment And Stimulus Spending
• 85% expect 4Q earnings to be in line or better than consensus, up from 78% last quarter; those
expecting worse than consensus results drops to lowest level in 12 months
• All key metrics are expected to improve with views on organic growth performance garnering the
highest level of confidence in more than a year
• Management tone is described as more positive and greater than 60% expect 2017 annual
guidance to be higher than last year
• 90% consider equity markets fairly to overvalued with more in the latter camp
• 67% report they are feeling better about the economy post election while 70% expect the U.S.
economy to improve over the next six months
• Similarly, participants are most bullish on the U.S. but downbeat on Mexico and China citing
protectionism and trade war concerns
• U.S. recession fears off the table for 2017
• Financials experience biggest spike in bullish sentiment; Utilities and REITs witness biggest declines
• Healthcare sees a major shift in bearish views, moving from #2 bull spot to #4 bear spot this
quarter, while Industrials are back in favor and Materials receives the highest confidence level in
three years
Sector Views Driven By Trump Rhetoric And December Rate Hike With More Expected In
2017
#1
#2
#3

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EARNINGS EXPECTATIONS CONTINUE TO RISE; HIGHEST LEVEL IN A YEAR
27%
43%
30%
21%
40% 39%
31%
47%
22%
35%
50%
15%
Better Than In Line Worse Than
Expectations Regarding 4Q Earnings Performance Relative
To Consensus
Mar '16
Jun '16
Sep '16
Dec '16
• 85% predict 4Q earnings will be in line or better than consensus with 60% expecting a
sequential improvement
• Along those lines, 62% anticipate 2017 annual guides to be higher than last year
• In December 2015, worse than expectations peaked at 57%; at that point, it was the
highest level of bearish sentiment in 13 quarters

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ON EARNINGS EXPECTATIONS VS. CONSENSUS
Better Than
“Better growth, slow rate hikes
and low inflation.” Buy Side,
Generalist, N.A.
“Cycling off a fairly weak 4Q15.”
Sell Side, Financials, N.A.
“Business is good almost
everywhere, companies are
investing a lot in automation
and digitalisation.” Buy Side,
Multi, Europe
“Commodity prices have
bottomed and the production is
growing.” Sell Side, Energy, Asia
“Commodity price rally.” Sell
Side, Materials, Asia
In Line
“Improving economy, increased
optimism and spending.” Buy
Side, Multi, N.A.
“Industrials not showing any
inflection. Weather comp
difficult vs. 4Q15.” Sell Side,
Industrials, N.A.
“Fewer selling days.” Sell Side,
Healthcare, N.A.
“All the bad news seems to be
out there.” Sell Side, Industrials,
N.A.
“Improvements in commodity
prices and potential for rising
bank margins.” Buy Side,
Generalist, Asia
“PMI figures for October and
November.” Buy Side, PE, LatAm
Worse Than
“Reality.” Sell Side, Generalist, N.A.
“Caution in stampeding market.”
Sell Side, Generalist, Europe

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30%
36% 34%
32% 33% 35%
45%
33%
22%
57%
28%
15%
Improving Staying the Same Worsening
EPS Growth
28%
32%
40%
20%
37%
43%
31%
46%
23%
38%
45%
17%
Improving Staying the Same Worsening
Operating Margins
7
22%
51%
27%
20%
35%
45%
31%
46%
23%
45%
42%
13%
Improving Staying the Same Worsening
Organic Growth
IMPROVEMENT EXPECTED ACROSS THE BOARD FOR KEY METRICS
Mar '16 Jun '16 Sep '16 Dec '16
35%
41%
24%
35%
30%
35%
43%
37%
20%
55%
31%
14%
Improving Staying the Same Worsening
Cash Flow

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7% 1% 2%
30%
16%
22%
5%
28%
27%
37%
33%
31%
34%
35%
48%
4%
22%
4%
14%
Sep' 16 Dec' 16 Sep' 16 Dec' 16
Bullish
Neutral to Bullish
Neutral
Neutral to Bearish
Bearish
8
INVESTOR SENTIMENT AND EXECUTIVE TONE MORE OPTIMISTIC
Investor
Sentiment
Management Tone

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ON INVESTOR SENTIMENT DRIVERS
Bullish
“Trump policies such as tax reform, less
regulation, etc.” Buy Side, Multi, N.A.
“Upward grind and positive impact of election
sweep.” Buy Side, Generalist, N.A.
“OPEC cuts and U.S. banks are likely to be
allowed to grow lending without more capital.”
Sell Side, Multi, Europe
“Chinese industrial production.” Sell Side,
Materials, Asia
“Reflation is coming and nobody believes it.”
Buy Side, Generalist, N.A.
Neutral to Bullish
“Political changes, interest rates.” Buy Side, Multi,
N.A.
“Higher oil prices.” Buy Side, Generalist, N.A.
“Improving economic data and general positive
sentiment.” Sell Side, Financials, N.A.
“Corporate tax cuts.” Sell Side, Generalist, Europe
“New U.S. President.” Buy Side, Generalist, Asia
Neutral
“Many risks still remain and the market has
moved aggressively.” Buy Side, Generalist, N.A.
“Lots of uncertainty.” Sell Side, Multi, LatAm
Neutral to Bearish
“Fundamentals have not improved enough to
justify valuation increases.” Buy Side, Multi, N.A.
“Market valuation is not being driven by
fundamentals but by fund flows out of bonds and
inflows from other countries.” Sell Side, Industrials,
N.A.
“Brexit uncertainty, economic growth in the U.S.
but in inflationary environment; therefore,
circumspect consumer.” Sell Side, Consumer Staples,
Europe

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THINGS THAT MAKE US GO HMMMM….MORE SEE MARKET OVERVALUED
BUT BUYING ANYWAY
10%
46%
44%
10%
36%
54%
Under Fairly Over
How Would You Classify
Equity Valuations?
20%
14%
45%
21%
42%
11%
23% 24%
Net
Buyer
Net
Seller
Holding Rotating
What Has Been Your
Investment Trend QoQ?
Sep '16 Dec '16
1. Europe, specifically EU
2. Geopolitical Issues
3. China
4. Trade
5. Aggressive Rate Hikes
Top Concerns
(Unaided)

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VIEWS ON GLOBAL ECONOMIES OVER THE NEXT SIX MONTHS: TRUMP
BUMP CATAPULTS U.S. TO #1 AND WEIGHS ON MEXICO
13%
27%
30%
31%
37%
40%
40%
44%
70%
45%
51%
33%
57%
41%
36%
44%
39%
25%
42%
22%
37%
12%
22%
24%
16%
17%
5%
Mexico
LatAm (ex-Brazil)
China
Japan
Brazil
Eurozone
Southeast Asia
India
U.S.
Improving Staying The Same Worsening
+36 pts -19 pts
+2 pts +10 pts
-12pts +8 pts
+6 pts +3 pts
-4 pts +1 pt
+17 pts -28 pts
-4 pts +2 pts
-7 pts +2 pts
-15 pts +16 pts

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THE AFTERMATH OF THE ELECTION: A COLLECTIVE SIGH OF RELIEF
Yes: 67%
“Trump seems to have backed off the
outlandish rhetoric and is generally making
prudent appointments.” Buy Side, Generalist, N.A.
“Change and a shakeup in the status quo are
good.” Buy Side, REIT, N.A.
“Less regulation, stimulated by more fiscal
spending, and lower taxes all sounds good.”
Buy Side, Multi, N.A.
“Tax reform, health care reform, less regulation
and a unified Congress. People are focused on
productive uses of time and efforts, unlike
under Obama.” Buy Side, Multi, N.A.
No: 33%
“We have the ECB turning off QE, probably too
early and we have a strong dollar.” Sell Side,
Industrials, N.A.
“The economy does not rely on elections.” Buy
Side, Multi, Europe
“More or less the same. Additional stimulus
only provides marginal benefits because of full
employment.” Sell Side, Generalist, Europe
“Inflation and increased nationalism lead to the
potential for protectionism.” Sell Side, Consumer
Staples, Europe
“Rates going up, growth not proven.” Buy Side,
Generalist, Asia
Are You Feeling Better About The Economy Post Election?

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RECESSION CONCERNS PUSHED OUT; RATE HIKES NOW A QUESTION OF
“WHEN” AND “HOW MANY”, NOT “IF”
98%
Surveyed Investors Who
Believe The Fed Will Continue
To Raise Interest Rates In 2017
Most Participants Expect Two
Hikes
“I believe the Fed will raise rates but
it will coincide with next slump in
economy. They have waited too
long.” Sell Side, Industrials, N.A.
“Improving economy will lead to
two 25bps raises.” Sell Side, Multi,
LatAm
When Do You Think The U.S. Will Have
Its Next Recession?
40%
24%
16%
34%
17%
22%23%
32%
24%
4%
29%
32%
2017 2018 3+ Years
Mar '16 Jun '16 Sep '16 Dec '16
34% do not think the U.S. is heading into a
recession in the next three years

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PROTECTIONISM IN EFFECT; U.S. GDP EXPECTED TO IMPROVE DESPITE
PESSIMISM/FEARS SURROUNDING GLOBAL TRADE
24%
42%
34%
70%
26%
4%
Improving Staying the Same Worsening
Looking Out Over The Next 6 Months, Do You See The Following
Improving, Staying the Same or Worsening?
Global Trade
U.S. GDP
Improving
“Both are likely to grow, even if
there is a fear of major
backlash.” Sell Side, Multi, Europe
“Housing is robust.” Sell Side,
Multi, Asia
Worsening
“Uncertainty at its epic high.”
Sell Side, Healthcare, Asia
Staying The Same
“New administration will not be
able to enact new policy as
quickly as people believe.” Buy
Side, REIT, N.A.
“Age of globalization is over.”
Sell Side, Generalist, Asia

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RATE HIKE IMPROVES OUTLOOK FOR FINANCIALS AT THE EXPENSE OF
HIGH-YIELD SECTORS; MIXED VIEWS ON ENERGY AND CONS. DISC.
14%
21%
31%
29%
51%
36%
38%
30%
34%
38%
43%
46%
47%
67%
Materials
Building Products
Cons. Disc.
Industrials
Technology
Energy
Financials 34%
33%
25%
23%
29%
23%
32%
51%
46%
26%
26%
25%
22%
18%
*Utilities
*REITs
Cons. Disc.
Healthcare
*Telecom
*Cons. Staples
Energy
Big Shifts In Bullishness Driven By Rate
Hike, Anticipated Infrastructure
Spending; Technology Slips
Long Anticipated December Rate Hike
Beats Down High-yield Sectors;
Healthcare Sees Biggest Reversal
Sep ‘16 Dec ‘16 Sep ‘16 Dec ‘16
* Rate-sensitive, High-yield Sector

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