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W ASHINGTON C ROSSING A DVISORS Market and Economy Outlook Slide 2 W ASHINGTON C ROSSING A DVISORS 2013 Outlook Executive Summary Improving Fundamentals + Reasonable Valuations = Bullish Economy Grows 2% in 2013, Unemployment Moves Toward 7%, Profits Grow 6-7%, S&P 500 Fair Value = 1,537, Interest Rates Remain Historically Low Record-low Interest Rates and Large Deficits Remain Government Debt Grows and Inflation Remains Positive Emerging Markets Offer Attractive Combination of Growth and Value Alternative Investments Provide Diversification Benefit Challenges Impose Significant Costs, Resources Are Also Significant Slide 3 Recent Fundamental Trends Slide 4 U.S. Stock Market Valuation Slide 5 Domestic Economy 2013 Forecast Slide 6 What is Driving the Economy? Slide 7 Key Trend #1: Employment Slide 8 Key Trend #2: Real Estate Slide 9 Key Trend #3: Manufacturing Slide 10 Key Trend #4: Income Growth Slide 11 Monetary Policy Slide 12 How Monetary Policy and the Credit Cycle Effect the Economy Slide 13 More Credit Produces Inflation Some Empirical Evidence Slide 14 Government Fiscal Policy, Deficits and Debt Slide 15 Interest Rate Outlook Slide 16 Benefit of a Global View Slide 17 The Role of Alternative Assets In Portfolios Slide 18 US Wealth Perspective Slide 19