Wealth Management

CTTMA ACG CT

6th Annual Economic Forum 11/21/16

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Presented by: John S. Traynor

CIO, EVP Wealth Management

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Since 2009, we have been in the midst of one of the longest and slowest economic expansions on record.

How long can the current U.S. expansion continue?

Source: Bureau of Economic Analysis, National Bureau of Economic Research

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Traditional Advance Signals of a Recession

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Outlook 2016 - 2017 Our Forecast

Economic Metric 2015 2016 2017

Actual Estimate Estimate

U.S. GDP (y-o-y) 2.6% 1.5% 2.1%

Global GDP 3.2% 2.9% 3.2%

Inflation (CPI-core) 1.4% 1.7% 1.8%

Fed funds 0.38% 0.50% 1.25%

10yr Treasury 2.27% 1.35% - 1.85% 2.15%

Unemployment 5.3% 4.9% 4.6%

Crude oil $37.04 $40 - $70 $50 - $70 • Slow acceleration in U.S. and global growth through 2017. • Core Inflation remains under 2% for 2016 • Interest rates subject to domestic and international conditions. • No stable equilibrium price for oil. • Dollar reverses 1H trend and appreciates. • < 25% probability of a U.S. recession within 18 months. 3

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Our problems are well known 1. Connecticut ranks last among the 50 states when our

combined debt and unfunded pension liabilities are compared relative to GDP.

2. Once known as a low tax alternative to New York, Connecticut now has the third highest state and local tax burden in the county at 12% of per capita income.

3. Fairfield County has lost a higher percentage of the 25-34 year old college educated population since 2000 than any state in the Nation.

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Connecticut- Powering the nations fiscal health

Federal Tax dollars received versus dollars paid per state (2008)

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• Since peak employment in March of 2008, CT has lost 36,900 jobs 1,713,300 then vs. 1,676,400 October 2016

• Since peak employment in March of 2008 and at the beginning of the recession, CT lost 119,100 jobs bottoming out at a low of 1,594,200 workers in February of 2010.

• Since the recession low of Feb 2010, CT has only gained back 82,200 jobs or 69.02% of jobs lost during the recession.

• Since peak employment in January of 2008 and at the beginning of the recession, the US in aggregate lost 8,699,000 jobs bottoming out at a low of 129,733,000 in February of 2010.

• Since the recession low of Feb 2010, the US in aggregate has gained back 15,219,000 jobs or 174.95% of jobs lost during the recession

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John Traynor Executive Vice President, Chief Investment Officer

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New President, New Prospects Insights for Wealth Management in 2017

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Average of 5 National Polls On election eve, the polls showed Clinton 4% ahead.

Source: BBC

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Trump wins as Ohio, Pennsylvania, and Wisconsin switch from blue to red (along with Florida, Iowa and Michigan)

Source: BBC

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The Trump wave washes over Connecticut

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Clinton TrumpAnsonia 3,532 3,621 Bridgeport 32,035 6,596 Darien 15,668 11,393 Derby 2,332 2,651 Easton 2,203 2,131 Fairfield 17,859 12,024 Greenwich 16,253 11,096 Milford 13,596 13,386 Monroe 4,520 5,922 Naugatuck 5,219 7,310 New Canaan 5,767 4,541 Norwalk 24,229 12,288 Oxford 2,398 4,685 Seymour 2,777 4,439 Shelton 8,001 12,051 Stamford 34,148 16,223 Stratford 13,729 10,534 Trumbull 9,292 9,744 Weston 3,807 1,632 Westport 10,427 4,139 Wilton 6,055 3,783

• The CT State Senate was equally split 18-18.

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The economy and change mattered most, and more than party

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The four most pressing issues that must be addressed by the next occupant of the White House.

1. Fiscal Stimulus • Our overworked Central Bankers are out of options to spur the

economy. Our politicians need to do their part to grow the economy.

2. Trade • It is important that the United States maintains its post WWII role as

the leader of global markets.

3. Productivity • The surest path to improving productivity is raising the education and

skills of all workers.

4. Deficits • Finding long term solutions to our deficit must be a priority for the

next administration.

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• The current U.S. economic expansion is unlike any in modern times. − Previous business cycles are not reliable models for the current cycle

• Economic growth is likely to continue for several years but at a slow pace.

− The risk of a near-term U.S. recession is low − Global growth will continue to be fueled by emerging markets and China, in

particular. − The U.S. will lead developed market economies.

• Capital market returns will be lower than normal for the next several years.

− Slow growth, normalizing profit margins, and above average valuation levels will restrain stock returns

− Low starting interest rates and eventual rate increases will restrain bond returns.

• At a time of reduced expectations, investors should work with advisors to insure their portfolios are managed to meet their needs – both financial and personal.

Conclusions

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The Northeast shows its Smarts

• More MacArthur fellows are born in NY than any other state.

• The Northeast dominates the country in attracting MacArthur fellows.

Top locations per 100,000 people 1. Washington DC 2. Massachusetts 3. New York 4. Rhode Island 5. Connecticut 6. Vermont

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The Year in Review - THE MARKET STARTED VOTING FOR CHANGE IN JULY

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Jan – June July – Nov 14th

- The recession portfolio - The growth portfolio

Equity Sector Performance – 2016 YTD

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Important Disclosures

Investment and insurance products offered through People’s Securities, Inc. (member of FINRA and SIPC), a subsidiary of People’s United Bank, N.A. are not deposits or other obligations of, and are not guaranteed by, People’s United Bank, or any of its affiliates; Investments and assets held in a fiduciary account are not deposits, or other obligations, are not guaranteed by People’s United Bank, may not be insured by the FDIC, by any other government agency, or by People’s United Bank, or any of its affiliates, and may lose value.

Investment and insurance solutions offered through People’s Securities, Inc. (member of FINRA and SIPC), a subsidiary of People’s United Bank, N.A. are not deposits or other obligations of, and are not guaranteed by, People’s United Bank, or any of its affiliates; may not insured by the FDIC, by any other government agency, or by People’s United Bank, or any of its affiliates. Investment products may involve risk, including possible loss of principal.

Member FDIC. Equal Opportunity Lender.

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