Exhibit 51: ISM Manufacturing Index and S&P Exhibit 52: Estimated Incremental S&P 500 500 Returns Earnings per Share by Tax Rate Equity market performance is closely related to the Proposals for lower corporate tax rates could lead to business cycle. higher earnings. Index % YoY Incremental EPS ($) 65 - r 60 16 14 ’ 60 i ' ‘ Lu 4 13 + af A Pr 12 ty wr 1 "1 55 a ‘; fi aH \ } ‘a : ¥) " . it bit en p20 4g - ; | LF t Sy LY | Oy ‘ Mth ru hel AVE 8 8 } h tye we TO 4 45 ht BV i ' 6 6 i a! 4 I 5 40 - wy f 0 ads 95 - ——— ISM Manufacturing Index - -40 2 = = — — =S&P500 Return (Right) fl 30 - -60 30 29 28 27 26 25 24 23 2D: 21 20 1995 2000 2005 2010 2015 US Effective Tax Rate (%) Data through November 30, 2016. Data as of December 31, 2016. Source: Investment Strategy Group, Bloomberg. Note: The current US effective tax rate for the S&P 500 companies is 33.3%. Source: Investment Strategy Group, Standard & Poor's. estimates its new long-run equilibrium level has Although current valuations may be fallen to 3%, a full 1.5 percentage points below fundamentally justified, that does not mean the historical average.” Of equal importance, the they are impervious to downward pressure. Our Federal Reserve is not expected to reach that 3% central-case equity view for 2017 acknowledges target for six years based on current market pricing this, calling for some contraction in P/E multiples in Eurodollar futures. given the uncertainty associated with a new A similar valuation tailwind emerges from the administration and continued Federal Reserve market’s current sector composition. The combined interest rate hikes. Even so, that headwind will be technology and health-care sectors constitute about more than offset by the 6-10% earnings growth 40% of S&P 500 earnings today, almost three we forecast, resulting in a 1-5% total return for US times as high as their 15% share in the late 1980s. — equities this year (see Exhibit 50). Because these faster-growing, higher-margin sectors Investors mi