1. Economic & Stock Market Outlook 2012 Financial Planning Symposium October 27, 2011 Bruce Bittles Chief Investment Strategist (941) 906-2830 bbittles@rwbaird.com Please refer to Appendix – Important Disclosures

2. The End of the Debt Super Cycle Baird Market & Investment Strategy │ Page 2Source: Ned Davis Research 1985 Total Debt/GDP

3. Admitting the Problem The Next Step? Source: Ned Davis Research Baird Market & Investment Strategy │ Page 3 Spending/GDP Taxes Surplus Deficit

4. Debt Restricts Growth Baird Market & Investment Strategy │ Page 4Source: Federal Reserve and Ned Davis Research GDP Growth 1986 1955 $1.35 of Debt Produced $1.00 GDP 2005 $5.75 of Debt Produced $1.00 GDP 2010 Debt Expansion

5. Personal Savings Rate and Growth Baird Market & Investment Strategy │ Page 5 8.50% 5.4% Source: Ned Davis Research WWII 1985

6. Serial Bubble Creators Student Loan Debts Outstanding 1990 2004

7. QE2 Limited Value to Economy Baird Market & Investment Strategy │ Page 8 Source: Ned Davis Research National Home Price Index Home Price Trends

8. Home Sales in Previous Cycles Source: Ned Davis Research Baird Market & Investment Strategy │ Page 9 Avg. Past Cycles Current Cycle

9. Fed Policy and Job Creation Source: Ned Davis Research Baird Market & Investment Strategy │ Page 10 Recession Current Cycle Job Growth

10. Government Transfer Payments as a % of Disposable Income 20.3% 12% The Illusion of Economic Strength Source: Ned Davis Research Baird Market & Investment Strategy │ Page 12

11. Baird Market & Investment Strategy │ Page 13 Lead A Horse to Water But….. Source: Ned Davis Research Velocity Of Money M2

12. Purchasing Power of U.S. Dollar? Source: Ned Davis Research Baird Market & Investment Strategy │ Page 14 1920 2000

13. Is Gold Money? “No”! Ben Bernanke Baird Market & Investment Strategy │ Page 15

14. Real Wage Growth Now Negative Baird Market & Investment Strategy │ Page 18 Source: Ned Davis Research

15. Lost Decade for Employment Baird Market & Investment Strategy │ Page 19 19982010

16. Interest Rate Outlook 2011 - 2012 Baird Market & Investment Strategy │ Page 20 5.00% 4.00% 1.74%

17. The Road to Recovery What Is Needed Baird Market & Investment Strategy │ Page 22 Tax Reform Flat Tax Lower Corporate Rates/Remove Loopholes National Sales Tax (Not a good idea) Fed Policy Focused on Stable Dollar Budget Reform Confront Entitlements Cap Spending as a Percentage GDP to 20% U.S. Energy Policy Considering Only Oil and Natural Gas

18. Economic Outlook for 2011-2012 Secular Risks Remain Baird Market & Investment Strategy │ Page 23 Stock Market Trends Indicate Recession Risks High GDP Growth for 2011 Expected to Be 1.2 to 1.5% GDP Growth for 2012 Expected to Be 1.5% To 2.0% Interest Rates Expected to Stay Low and Stable Inflation Trends Higher in 2011 Lower in 2012 Unemployment to Remain Stubbornly High Consumer as a % of GDP in Secular Decline Home Prices Remain Under Pressure

19. Stocks Market Outlook Baird Market & Investment Strategy │ Page 24 Weight of the Evidence Fundamental Factors Federal Reserve Policy Bullish +1 Economic Fundamentals Bearish -1 ValuationsNeutral 0 Technical Factors Investor SentimentBullish +1 Seasonal Influences Neutral -1 TapeBearish -1 Weight of the Evidence = Neutral

20. Federal Reserve Policy - Bullish Don’t Fight the Fed Baird Market & Investment Strategy │ Page 25 Source: Ned Davis Research QE1 Ends QE2 Ends QE 2 Launched Jackson Hole/Bernanke QE1

21. Economic Fundamentals - Bearish Baird Market & Investment Strategy │ Page 26 Source: Ned Davis Research S&P 500 Non-Farm Payrolls

22. Corporate Earnings and the Stock Market Baird Market & Investment Strategy │ Page 27 Source: Ned Davis Research S&P 500 Index High Expectations Earnings Expectations Low

23. Sentiment – Active Money Manager - Bullish Baird Market & Investment Strategy │ Page 28 Source: Ned Davis Research S&P 500 80%

24. Consumer Confidence Baird Market & Investment Strategy │ Page 29 Source: Ned Davis Research Dow Industrials Consumer Confidence

25. Contrary Opinion and Stock Market Profits Baird Market & Investment Strategy │ Page 30 Source: Ned Davis Research Bin Laden Death Japan Disaster S&P Downgrade Apple Earnings

26. Valuations - Neutral Median Price / Earnings Ratio Baird Market & Investment Strategy │ Page 31 Source: Ned Davis Research S&P 500 Index Median Price/Earnings Ratio 40 Year Norm Price / Earnings16x

27. Seasonal Patterns - Bullish Baird Market & Investment Strategy │ Page 32 Source: Ned Davis Research Summer 2011 Second Qtr 2012

28. Stock Market Breadth – Bearish Baird Market & Investment Strategy │ Page 33

29. Financial Weapons of Mass Destruction Baird Market & Investment Strategy │ Page 34 Source: Ned Davis Research Total Notional Derivatives $249 Trillion Black Swan Events 1987, Flash Crash Day, Lehman, Enron, Bear Stearns, UBS….

30. Contact Information Bruce Bittles Chief Investment Strategist Robert W. Baird & Co., Inc. (941) 906-2830 bbittles@rwbaird.com Baird Market & Investment Strategy │ Page 35

31. Appendix - Important Disclosures This is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this date and are subject to change. The information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy. ADDITIONAL INFORMATION ON COMPANIES MENTIONED HEREIN IS AVAILABLE UPON REQUEST The indices used in this report to measure and report performance of various sectors of the market are unmanaged and direct investment in indices is not available. Baird is exempt from the requirement to hold an Australian financial services license. Baird is regulated by the United States Securities and Exchange Commission, FINRA, and various other self-regulatory organizations and those laws and regulations may differ from Australian laws. This report has been prepared in accordance with the laws and regulations governing United States broker-dealers and not Australian laws. Copyright 2011 Robert W. Baird & Co. Incorporated Other Disclosures UK disclosure requirements for the purpose of distributing this research into the UK and other countries for which Robert W Baird Limited holds an ISD passport. This report is for distribution into the United Kingdom only to persons who fall within Article 19 or Article 49(2) of the Financial Services and Markets Act 2000 (financial promotion) order 2001 being persons who are investment professionals and may not be distributed to private clients. Issued in the United Kingdom by Robert W Baird Limited, which has offices at Mint House 77 Mansell Street, London, E1 8AF, and is a company authorized and regulated by the Financial Services Authority. For the purposes of the Financial Services Authority requirements, this investment research report is classified as objective. Robert W Baird Limited ("RWBL") is exempt from the requirement to hold an Australian financial services license. RWBL is regulated by the Financial Services Authority ("FSA") under UK laws and those laws may differ from Australian laws. This document has been prepared in accordance with FSA requirements and not Australian laws. Baird Market & Investment Strategy │ Page 36