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April 1, 2016

Dear Client: The major market measures posted the following mixed returns for the first quarter of 2016: Index YTD 2016 Dow Jones Industrial Average +1.49% S&P 500 +0.77% NASDAQ Composite -2.75%   The first quarter ended on a constructive note following some anxious volatility earlier in the quarter that saw the S&P 500 down over 10% year-to-date.  The concern seemed to center on the continuing health of the economy and whether it was beginning to slow toward a recession. As we stated in our last quarterly letter, we have confidence in the strength of our economy and do not think a recession is likely until at least 2018.  Our optimism is based in part on the following fundamentals: Private sector jobs have increased for 71 consecutive months. More jobs means more money circulating within the economy.  New claims for unemployment benefits have remained under 300,000 for 56 consecutive weeks, the longest stretch in more than forty years. Incomes are increasing while consumers continue to keep their debt ratios at low levels. This leaves room for future big-ticket spending and builds consumer confidence. Auto sales remain at or near record levels. Housing remains a bright spot for the economy with low interest rates helping to drive demand. There is also a continuing price recovery occurring in many regions of the country and with more people working and personal incomes rising, this looks to continue. Except for the energy sector, corporate profit margins are high, earnings continue to grow and balance sheets are loaded with cash which gives them flexibility to invest in greater efficiencies and make acquisitions. At the time...