David N. Pearl Executive Vice President and Co-CIO William W. Priest Chief Executive Officer and Co-CIO PRESENTED BY The information contained in this presentation is distributed for informational purposes only and should not be considered investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. The information contained in this presentation is accurate as of the date submitted, but is subject to change. Any performance information referenced in this presentation represents past performance and is not indicative of future returns. Any projections, targets, or estimates in this presentation are forward looking statements and are based on Epoch’s research, analysis, and assumptions made by Epoch. There can be no assurances that such projections, targets, or estimates will occur and the actual results may be materially different. Other events which were not taken into account in formulating such projections, targets, or estimates may occur and may significantly affect the returns or performance of any accounts and/or funds managed by Epoch. To the extent this presentation contains information about specific companies or securities including whether they are profitable or not, they are being provided as a means of illustrating our investment thesis. Past references to specific companies or securities are not a complete list of securities selected for clients and not all securities selected for clients in the past year were profitable. Epoch’s Quarterly Capital Markets Outlook April 7, 2016 | The webinar replay will be available on our website: www.eipny.com Barney Rosen, MD Senior Research Analyst
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David N.
Pearl
Executive
Vice President
and Co-CIO
William W.
Priest
Chief Executive
Officer
and Co-CIO
PRESENTED BY
The information contained in this presentation is distributed for informational purposes only and should not be considered investment advice or a recommendation of any particular security, strategy or
investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. The information contained in this presentation is accurate as of the date
submitted, but is subject to change. Any performance information referenced in this presentation represents past performance and is not indicative of future returns. Any projections, targets, or
estimates in this presentation are forward looking statements and are based on Epoch’s research, analysis, and assumptions made by Epoch. There can be no assurances that such projections,
targets, or estimates will occur and the actual results may be materially different. Other events which were not taken into account in formulating such projections, targets, or estimates may occur and
may significantly affect the returns or performance of any accounts and/or funds managed by Epoch. To the extent this presentation contains information about specific companies or securities
including whether they are profitable or not, they are being provided as a means of illustrating our investment thesis. Past references to specific companies or securities are not a complete list of
securities selected for clients and not all securities selected for clients in the past year were profitable.
Epoch’s
Quarterly
Capital Markets
Outlook
April 7, 2016 | The webinar replay will be available on our website: www.eipny.com
Barney
Rosen, MD
Senior
Research
Analyst
If you wish to ask a question, please click on the question mark icon located on the top of the screen.
S&P 500 (%)
MSCI World (%)
P/E Expansion 45.1 41.4
EPS Growth 17.4 (0.8)
Dividends 14.5 12.0
Total 77.0 52.6
Market Perspective
P/E Expansion
58.5%
Total
Return
77.0%
Dividends
22.8%
P/E
Expansion
78.8%
Total
Return
52.6%
EPS
Growth
-1.6% EPS Growth
22.7%
Dividends
18.8%
Source: Standard & Poor's; MSCI; Epoch Investment Partners; December 2015
1
S&P 500 MSCI World
Cumulative contribution to return 2012 through 2015
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2011 Est 2012 Est 2013 Est 2014 Est 2015 Est Actual GDP
The Big Problem: A Lack Of Growth
3
World real GDP growth estimates continue to be revised down
Source: IMF World Economic Outlook; October 2015
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Source: IMF World Economic Outlook, Epoch Investment Partners; October 2015
Global GDP growth 2009-2015 (est.) in USD
China's Contribution To Growth Has Been Substantial
China 46%
Other 54%
4
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-5%
0%
5%
10%
15%
20%
25%
30%
Ma
r-9
9
Aug-9
9
Jan-0
0
Jun-0
0
No
v-0
0
Apr-
01
Sep-0
1
Feb
-02
Jul-0
2
De
c-0
2
Ma
y-0
3
Oct-
03
Ma
r-0
4
Aug-0
4
Jan-0
5
Jun-0
5
No
v-0
5
Apr-
06
Sep-0
6
Feb
-07
Jul-0
7
De
c-0
7
Ma
y-0
8
Oct-
08
Ma
r-0
9
Aug-0
9
Jan-1
0
Jun-1
0
No
v-1
0
Apr-
11
Sep-1
1
Fe
b-1
2
Jul-1
2
De
c-1
2
Ma
y-1
3
Oct-
13
Ma
r-1
4
Aug-1
4
Jan-1
5
Jun-1
5
No
v-1
5
Services
Construction
Industry
Source: National Bureau of Statistics of China, Epoch Investment Partners; Third Quarter 2015
Nominal Chinese growth by sector
Sharp Slowing Of Chinese Growth In Manufacturing And Construction
5
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China's Rebalancing Will Run Through 2025, And Will Likely Keep IP
And Capex Growth On A Secular Downtrend
-5%
5%
15%
25%
35%
45%
55%
Consumption Investment Government Net Trade
2000 - 2010
2010 - 2020
2020 - 2030
Changing composition of China's GDP
Source: McKinsey & Company; March 2016
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2% Is The New 4% For Mature Economies
7
Growth In The
Work Force Productivity Real GDP
U.S. (23% of Global GDP) 1.6
+
0.7
=
2.3
Euro Area (24%) 0.8 0.6 1.4
Japan (6%) 0.3 0.3 0.6
Mature Economies1 1.1 0.9 2.0
China (13%)
-0.2 6.7 6.5
Developing Economies2 1.2 2.7 3.9
1. Includes all 28 members of the European Union as well as Iceland, Norway and Switzerland, Australia, Canada, Hong Kong, Israel, New Zealand, Singapore, South Korea, Taiwan
2. Includes China, India, Bangladesh, Cambodia, Indonesia, Malaysia, Myanmar, Pakistan, Philippines, Sri Lanka, Thailand, Vietnam, Argentina, Barbados, Bolivia, Brazil, Chile,
Colombia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Jamaica, Mexico, Peru, St. Lucia, Trinidad & Tobago, Uruguay, Venezuela, Algeria, Bahrain, Egypt, Iran, Iraq,
Jordan, Kuwait, Morocco, Oman, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, United Arab Emirates, Yemen, Angola, Burkina Faso, Cameroon, Cote d’Ivoire, DR Congo, Ethiopia,
Care Equipment & Services, Household & Personal Products, Pharmaceuticals Biotechnology & Life Sciences, Real Estate, Retailing, Telecommunication Services, Utilities
Source: Goldman Sachs, FactSet, S&P, Epoch Investment Partners; Indexed to 100 in January 1, 2014; April 2016
1 2
Performance relative to S&P 500
Cumulative Return
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A Tale Of Two Halves: The Market
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
Source: Federal Reserve Bank of St. Louis; March 2016
Disappointing
manufacturing
data in China
sparks global
selloff
February 11: S&P,
oil and U.S. yields
hit 2016 low
Japan adopts NIRP
Strong U.S.
employment numbers
and an easing of
China concerns
ECB announces an
increase in their
bond-buying program
and cuts interest
rates
Fed Chair Yellen
delivers dovish speech
to the Economic Club of
New York
22
S&P 500 returns, first quarter 2016
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A Tale Of Two Halves: S&P 500
Sector 1st Half of First Quarter 2nd Half of First Quarter Total First Quarter
(Dec-31 to Feb-11) (Feb-11 to Mar-31)
Telecommunication Services 6.4% 9.6% 16.6%
Utilities 5.7% 9.4% 15.6%
Consumer Staples -2.2% 7.9% 5.6%
Industrials -8.4% 14.6% 5.0%
Energy -9.0% 14.3% 4.0%
Materials -10.5% 15.8% 3.6%
Information Technology -11.5% 15.9% 2.6%
Consumer Discretionary -12.4% 16.0% 1.6%
S&P 500 -10.3% 13.0% 1.3%
Financials -17.4% 15.0% -5.1%
Health Care -11.9% 7.2% -5.5%
Source: Standard & Poor's, Epoch Investment Partners; April 2016
23
S&P 500 sector returns
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Health Care Multiples Compress
Sector December 31, 2015 March 31, 2016 Percent Change
S&P 500 16.10 16.61 3.2%
Health Care 16.00 14.90 -6.9%
Financials 12.66 12.40 -2.1%
Consumer Discretionary 18.14 18.09 -0.3%
Information Technology 15.97 16.33 2.2%
Industrials 15.52 16.02 3.2%
Consumer Staples 19.89 20.98 5.5%
Materials 15.34 17.16 11.9%
Telecom Services 12.30 13.93 13.2%
Utilities 15.44 17.71 14.7%
Energy 28.04 62.84 124.1%
Source: Standard & Poor's, Epoch Investment Partners; April 2016
Market aggregate Price / Earnings NTMA
24
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Returns: S&P Health Care Sector Index vs. S&P 500 Index