Election Year Economic Forecasting NIRI Virtual Chapter Professional

Election Year Economic Forecasting NIRI Virtual Chapter Professional Development Series Wednesday February 19, 2020 Noon – 1 pm EST The NIRI Virtual Chapter: Experience the power of connecting.

Our Sponsors The Virtual Chapter appreciates the support of our sponsors GOLD Level Sponsors SILVER Level Sponsors BRONZE Level Sponsors The NIRI Virtual Chapter: Experience the power of connecting. 2

CPE Credit and Q&A CPE Credit • NIRI Virtual offers Continuing Professional Education (CPE) credit for attending and participating in our monthly programs. • For CPE Credit, you must answer all three (3) of the polling questions AND you must complete the program survey that is provided at the end of this presentation. Q&A • If you are participating via the live webinar, you can type your question in the “chat box” at the bottom of your computer screen Professional Development Unit (PDU) • Holders of the NIRI IRC® credential can earn 1 professional development unit (PDU) per meeting/webinar. IRC-credentialed speakers may also earn PDUs. More information is available at www. niri. org/certification. The NIRI Virtual Chapter: Experience the power of connecting. 3

Agenda Learning Objectives • Describe and discuss the results of the Democratic primaries and strategies in the Trump re-election campaign • Detail how a company's industry sector may be impacted by the election • Clearly advise their management team on potential adjustments to their IR messaging strategies in response to the administration's agenda The NIRI Virtual Chapter: Experience the power of connecting. 4

Today’s Speakers Featured Speaker Charles Gabriel President Capital Alpha Partners Charles. Gabriel@capalphadc. com The NIRI Virtual Chapter: Experience the power of connecting. Moderator Heather Davis Investor Relations Professional https: //www. linkedin. com/in/hpribyl Heather. Pribyl@gmail. com 5

What do you think is most likely in the 2020 national election cycle? Polling Question #1 A. Status Quo (President Trump wins reelection, GOP Senate and Democratic House majorities) B. Democrats win Presidency C. None of the above

2020 Vision: Investing As Trump Seeks A New Lease Charles Gabriel President, Capital Alpha Partners 7

Net Negatives For the 45 th President Have Stayed High. . . As of February 10, 2020 8 Source: Real Clear Politic, https: //www. realclearpolitics. com/epolls/other/president_trump_job_approval-6179. html

. . . And His Approval Lowest Among His Obama Peers Trump Bush Clinton 9 Source: Gallup, https: //news. gallup. com/interactives/185273/presidential-job-approval-center. aspx

S&P Since Trump’s Inauguration Day Has Been Basically In-line S&P 500 In the First 763 Trading Days of Each Presidency Source: CNN, https: //www. cnn. com/interactive/2019/business/stock-market-by-president/index. html 10

He’ll Be Hard Pressed to Match Previous Dems’ Stock Performance As of January 31, 2020 11 Source: CNN, https: //www. cnn. com/interactive/2019/business/stock-market-by-president/index. html

Trump Threw Markets & the Fed - A 2 nd Yr Curve Trading Days Since 12

Source: Bloomberg, https: //www. bloomberg. com/opinion/articles/2020 -02 -05/u-s-stocks-rally-suggestsmarket-favors-trump-re-election 13

ELECTION 2020 REPORT - II: Impeachment Backgame, Incumbent's Edge: Correction Toward a Re-Elect In. Trump irony befitting the times, the president’s fortunes seem rising even as the House, on December 18 th, voted to impeach him. While it’s early, we’ve seen enough to now flip our odds to forecast a 55% likelihood of a second Trump term. In combination with a retained GOP Senate, and narrowed but sustained Democratic House majority, the result will elevate our second -most-likely “status quo” scenario to first, with “White House shift” falling just behind. The more market-risky the “Blue Wave” and mixed “Red Wave” outcomes drop to more distant possibilities. Why does Trump seem advantaged? The economy and stock market are strong (S&P up by half since Election Day 2016), and POTUS could benefit from year-ending Hill productivity that, along with an initial China trade deal, has helped him to fulfill his promises. As we argued on December 13 th, Trump has demonstrated appreciation for the political-economic cycle, or the concept that “timing is everything” when it comes to front-loading pain at the beginning of a four-year term before fostering satisfaction near the end. The positive side effect, if history is a guide, could see third-and (now) fourth-year stock market gains. The net could buttress Trump in crucial Great Lakes states, while a contentious nominating struggle threatens to delay Democrats’ unification until their July 13 -16 convention. As one of the party’s top strategists observed, this could allow Trump to exploit organizational and financial advantage, much as Barack Obama was able to do in securing his own re-elect in 2012. Perhaps the most vexing factor for Democrats is that the impeachment has seemed a bomb that didn’t go off, or worse, could explode in their own hands. Add read-through from the UK’s December elections and the traditional advantage seen by incumbents seems set to reassert itself, despite the off-putting edges that have made Trump one of the most controversial and divisive presidents in U. S. history. Trump’s Approval Rating 2020 Generic Ballot RCP Avg 45. 7 % + 6. 3 TOP SCENARIO ODDS Red Wave 15% Blue Wave 25% White House Shift 20% Status Quo 40% Republican White House 55% Republican Senate 60% Democratic House 75% 14

Electoral College Results Color A 50 -50 Nation 2004 2012 2008 2016 15

Key Battleground States: Michigan 2016 Presidential Election Trump: 47. 3 - Clinton: 47. 0 Trump +0. 3 2020 General Election Polling 16 Source: NBC News, https: //www. nbcnews. com/politics/2016 - Source: Fivce. Thirty. Eight, https: //projects. fivethirtyeight. com/polls/president-general/michigan/

Key Battleground States: Pennsylvania 2016 Presidential Election Trump: 48. 8 - Clinton: 47. 6 Trump +1. 1 2020 General Election Polling 17 Source: NBC News, https: //www. nbcnews. com/politics/2016 - Source: Fivce. Thirty. Eight,

Key Battleground States: Wisconsin 2016 Presidential Election Trump: 47. 9 - Clinton: 46. 9 Trump +1. 0 Source: NBC News, https: //www. nbcnews. com/politics/2016 -election/mi 2020 General Election Polling 18 Source: Fivce. Thirty. Eight, https: //projects. fivethirtyeight. com/polls/president -general/pennsylvania/

Maddening Electoral Vote Math Trump 306 (- 2 “faithless electors”) Clinton 232 (- 5 “faithless electors”) _______________ Trump +74 or net margin of +37 Michigan = 16 Pennsylvania = 20 Wisconsin = 10 * 2 nd Congressional District, ME = 1 19

Can Trump Expand the Map? NH 4 20 Source: 270 to. Win,

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269 -269 Electoral College Tie: What Happens? If no candidate receives a majority of electoral votes, the Presidential election leaves the Electoral College process and moves to Congress. President The House of Representatives elects the President from the 3 Presidential candidates who received the most electoral votes. ● ● Each State delegation has one vote and it is up to the individual States to determine how to vote. A candidate must receive at least 26 votes (a majority of the States) to be elected. Vice President The Senate elects the Vice President from the 2 Vice Presidential candidates with the most electoral votes. ● Each Senator casts one vote for Vice President. ● A candidate must receive at least 51 votes (a majority of Senators) to be elected. If the House of Representatives fails to elect a President by Inauguration Day, the Vice-President Elect serves as acting President until the deadlock is resolved in the House. Source: National Archives, https: //www. archives. gov/electoral-college/faq Partisan Control of the House of Representatives by State Republicans have the majority in 26 states Democrats have the majority in 22 Tied States (MI, PA) 2 22

What Could Change? Whom will he face? Progressive (Sanders/Warren) or Centrist (Beutigieg, Biden, Bloomberg)? When and to what extent will Dems unite? Is Trump done with the in-your face behavior? Could wild cards emerge? Coronavirus? Geopolitical? 23

Mayor Pete Benefitting From Lust For Outsider, Trump’s Defeat Delegate Totals After Iowa and New Hampshire Iowa New Hampshire Total Buttigieg 13 9 22 Sanders 12 9 21 Warren 8 0 8 Klobuchar 1 6 7 Biden 6 0 6 64 Source: Real. Clear. Politics, https: //www. realclearpolitics. com 24

2020 Democratic Presidential Nomination Source: Real. Clear. Politics, https: //www. realclearpolitics. com/epolls/2020/president/us/2020_democratic_presidential_nomination 6730. html 25

What percentage of Democratic delegates are pledged ahead of Super Tuesday, March 3 rd? Polling Question #2 A. <5% B. 5%-10% C. 10%-20% D. >20%

Democratic Delegate Overview Leading Into Super Tuesday Total Pledged Delegates Cumulative Pledged Delegates (Tally) Cumulative Pledged Delegates (%) Iowa February 3 41 41 1. 0% New Hampshire February 11 24 65 1. 6% Nevada February 22 36 101 2. 5% South Carolina February 29 54 155 3. 9% 27

Percentage of Democratic Pledged Delegates Awarded by Month, 2020 March 17 61. 5% Super Tuesday March 3 38% April 28 86. 9% June 9 100% April 4 68. 1% March 10 46. 8% 28 Source: Ballotpedia, https: //ballotpedia. org/Important_dates_in_the_2020_presidential_race

Important Upcoming Dates February 19 Ninth Democratic Debate February 22 Nevada Democratic Caucus February 25 Tenth Democratic Debate February 29 South Carolina Primary March 3 Super Tuesday Primaries March 10 Super Tuesday Primaries March 17 Super Tuesday Primaries June 20 Final Democratic Primaries 29

Super Tuesday Delegates by State Alabama 52 American Samoa 6 Arkansas 31 California 415 Colorado 67 Democrats Abroad 13 Maine 24 Massachusetts 91 Minnesota 75 North Carolina 110 Oklahoma 37 Tennessee 64 Utah 29 Vermont 16 Virginia 99 Pledged Delegates on Super Tuesday 1, 357 Cumulative Pledged Delegates 1, 512 % Cumulative Pledged Delegates 38. 0% 30

Delegates by State After Super Tuesday 31

Key Dates Ahead Dem Convention Monday, July 13 - Thursday, July 16 GOP Convention Monday, August 24 - Thursday, August 27 Presidential Debates Tuesday, September 19 Wednesday, October 7 Thursday, October 15 Thursday, October 22 32

Election 2020 Predictions Top Election Odds Republican White House Republican Senate Top Scenario Odds 55% White House Shift 20% Status Quo 40% 60% Blue Wave 25% Democratic House 75% Red Wave 15% 33 Source: Capital Alpha Partners

2018 Midterms Newly Divided Congress Partisan Breakdown, Congress 34 Source: Fiscal. Note, https: //www. votervoice. net/mobile/NLN/Blog. Posts/1046

Historic Congressional Election Trends Senate House of Representatives 35

House Democrats in Districts Won by Trump (2016) 36

2020 Senate Elections Source: Capital Alpha Partners 37

What Does It Mean For Investors? 38

RED STOCKS Oilfield Services: BHI, HAL, WFT Refiners: ALJ, CVRR, DK, HFC, MPC, PBF, PSX, VLO, ANDV U. S. Onshore E&Ps: APC, BBG, CLR, CHK, DVN, EOG, HES, MRO, PXD, WLL Ind. Power Producers and Int. Utilities: DYN, EXC, ETR, TLN, CPN, AEE, AES, FE, PEG Brand Pharma: PFE, SNY, NVO, GSK, AZN, MRK, JNJ Generic Pharma: TEVA, MYL, NVS, ACT Hospitals: HCA, THC, CHS ESI/Commercial-Leveraged Managed Care: AET, ANTM, CI, UNH Medtech: MDT, ABT, JNJ, STJ, BAX, BSX, SYK, ZMH Post Acute: HUM-KND, AMED, EHC, SEM, LHCG Biotech: ABBV, AMGN, GILD, VRX, AGN, REGN Banks - Investment & Commercial: MS, BAC, C, JPM, GS, WFC, ZION, KEY, FITB, HBAN, RF, MTB Credit Card Companies: V, MA Internet: FB, APPL, NFLX, GOOG Insurance: AIG, MET, PRU, PRI, AEL Asset Managers: BLK, TROW, WDR, AMP Rating Agencies: MCO, MHFI GSE Common, Junior Preferreds: FNMA, FMCC, FNMAS, FMCKJ, FNMAT Mortgage Insurers: MTG, RDN, GNW, ESNT, NMIH IT Outsourcers: CTSH, INFY, WIT Student Loan Companies: SLM, NAVI, NNI Prop Schools: APOL, APEI, CECO, COCO, ESI, DV, STRA, BPI Payday/Auto Loan/Consumer Finance: ENVA, WRLD, SB, ALLY Prepaid Cards: GDOT, TSS Beverages: MNST, KO, CCE, PEP, DPS, SBUX Tobacco: MO, RAI, BTI Auto Dealers: GPI, KMX, PAG, AN, SAH, ABG, LAD Auto Manufacturers: TM, HMC, F, GM, FCAU Airlines: DAL, UAL, AAL, JBLU, LUV Trucking: HTLD, WERN, JBHT, KNX, SWFT GMOs: MON, DD, DOW, ADR, BAY, CAG, PEP, KI, MNST, DPS, KRFT, GIS Telecom and Cable: VZ, T, TMUS, S, CMCSA, CHTR, ATUS Wireless Towers: AMT, CCI, SBAC Television Broadcasters: SBGI, NXST, MDP, GTN, TGNA, CBS, CMCSA, FOX, DIS Railroads: CSX, UNP, CNI, CP, KSU, NSC, GWR Defense IT Services: BAH, CACI, LDOS, SAIC Defense products/large caps: BWXT, GD HII, LHX, LMT, NOC, RTN BLUE STOCKS Auto Manufacturers (Zero Emissions): TSLA, GOOG, AAPL Auto Suppliers: DLPH, MBLY, BBRY, NAV, VOLV, DAI, MTOR, FDML, LEA, JCI, BWA, GNTX, ALV, MGA Medicaid/ACA Leverage Managed Care: MOH, CNC Financial Exchanges: CME, ICE Homebuilders: LEN, DHI, TOL, HOV, KBH, PHM Retail Hardlines: HD, LOW Yieldcos, Renewables, Clean Tech: ABY, FSLR, ABY, BEP, CAFD, GLBL, NEP, NYLD, PEGI, TERP, FSLR, VSLR, TSLA, RUN, ENOC, OPWR Regulated Utilities: ALE, ED, ES, EIX, HIFR, NEE, PCG, PNW, SO, XEL Online Gaming: BPTY. L Domestic Steel Producers: X, NUE Construction: CAT, GVA, VMC, URS Retailers: AMZN, BBY, WMT, TGT Tax Preparers: HRB 39

Healthcare/Pharma Sanders, Warren M 4 All Pegged drug pricing Drug reimportation Fed negotiation ● ● Biden, Buttigieg, Bloomberg Medicare for more; expand coverage via ACA Drug reimportation Medicare drug price negotiation; independent board review Capped drug pricing for seniors Curb costs of generics ● ● ● 40

Healthcare/Pharma Risks Seem Number One Trump and the GOP have a pre. Democrats have a Medicare For All problem. Would be devastating for the sector, though passage is unlikely Moderates would pursue coverage expansion via public plan option, more worrisome than Obama era. More feasible w Senate control, elimination of filibuster. Health insurers, Pharma at risk existing conditions problem 25% chance SCOTUS will take up ACA; self-inflicted wound? Trump’s conflict w Pelosi could preclude Part B out-of-pocket cap, surprise billing bill; small ball package in May instead Trump will pursue Part B/IPI pricing model administratively, talk Part D 41

Energy/Climate Change Sanders, Warren ● ● ● Rejoin Paris Agreement Ban Fracking Ban energy exports Move power grid to renewable energy by 2040 No more leasing on federal lands Biden, Buttigieg, Bloomberg ● ● ● ● Rejoin Paris Agreement End new Oil & Gas leases Restrict Exports End offshore drilling “Day One” No more federal leasing Decarbonization by 2050 Biden a bigger threat if his election brings a Dem 42

College Costs/Debt Sanders, Warren Cancel all/most student debt College for All/most at public colleges, universities Expanded Pell Grants Cap student loan rates Whack for-profit colleges ● ● ● Biden, Buttigieg, Bloomberg Expand existing debt relief Free college for some/most Expanded Pell Grants Curb for-profit colleges ● ● 43

Taxing Question: Left or More Left? Sanders, Warren Higher Individual Taxes New Wealth Taxes Higher Payroll Taxes Higher Cap Gains Estate taxes Higher Corporate Taxes Financial Transaction ● ● ● ● Biden, Buttigieg, Bloomberg Higher rates/surcharges on upper-income taxpayers Higher cap gains on top 1% Rollback of Trump corp. tax cuts; global ● ● ● 44

Other Key Issues ● ● ● Big Tech Tobacco Housing Finance Deficit Reduction Credit Rating Agencies Privacy 45

Areas of Possible Agreement ● ● ● Infrastructure Drug Pricing/Surprise Medical Data breach 46

How will you communicate the implications of today’s discussion with your senior management team? Polling Question #3 A. I expect to share key takeaways only B. I will forward one key chart with a few comments C. I will forward the entire deck with a few comments D. I will share the takeaways in a face-to-face discussion E. I don’t expect to share takeaways from today’s session with my management team

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2020 Virtual Chapter Program Calendar Date TOPIC March 20, 2020 Targeting April 15, 2020 ESG May 6, 2020 Award Winning Investor Relations June 2020 NIRI National Event – Miami The NIRI Virtual Chapter: Experience the power of connecting. 51

Today’s Speakers Featured Speaker Charles Gabriel President Capital Alpha Partners Charles. Gabriel@capalphadc. com The NIRI Virtual Chapter: Experience the power of connecting. Moderator Heather Davis Investor Relations Professional https: //www. linkedin. com/in/hpribyl Heather. Pribyl@gmail. com 52

Our Sponsors The Virtual Chapter appreciates the support of our sponsors GOLD Level Sponsors SILVER Level Sponsors BRONZE Level Sponsors The NIRI Virtual Chapter: Experience the power of connecting. 53

Election Year Economic Forecasting Thank you for participating! Wednesday February 19, 2020 Noon – 1 pm EST The NIRI Virtual Chapter: Experience the power of connecting. 54