How You Stack Up Against the Indices and Sobering Employment Data

April 14, 2014

I am not sure what drove the market gyrations last week other than the Fed seems to not be all that sure of what it is trying to communicate.  Tighten – not; Unemployment is the Target – not; Perhaps Inflation – maybe.  While the objective is transparency, perhaps the old approach – you figure it out yourself – is just as good!   The data last week was limited and, depending which newspaper or broadcaster you listen to was in line with the Fed’s messaging (that is “confounding”).  This is exemplified by the employment-related data points highlighted below.  From there, I move on to offering a different approach to measuring your performance against the indices.  I welcome your thoughts on this part (I actually welcome your thoughts overall).

Click here to read the rest of this week’s commentary.

 

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Exports Impact on State GDP, the Fed Speaks and Musings About the First Friday Report

April 7, 2014

This weekly commentary has tried to bring you fresh insights, different perspectives and, occasionally, an opinion or two.  The objective has been and continues to be to offer the reader perspective based on current economic and demographic data as opposed to waiting for stale financial data – or as a recent client noted, “I don’t drive my car looking in the rearview mirror, why would I do my credit work looking at financials that are more than six months old when released.”  I couldn’t have said it better myself.  In this vein, I spend this week offering perspective regarding State Exports, the Philly Fed and a quick look at the First Friday Report.   

Click here to read the rest of this week’s commentary: http://www.lumesis.com/commentary-blog/2014-commentary/4-7-2014-exports-impact-on-state-gdp-the-fed-speaks-and-musings-about-the-first-friday-report 

 

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“Shaken Not Stirred”, Employment Observations and Taxes

March 31, 2014

This week I span far and wide looking at everything from Earthquake data to the more commonly referenced Employment Data.  I also take a look at State level Tax Receipts for the end of 2013 and reference you to a blog post (at the end of the commentary) regarding the availability of financial data in the muni space.  I start this week with a look to, what I consider, the absurd – the decision to allow Northwestern University football players the right to unionize.  

Click here to read the rest of this week’s commentary: http://www.lumesis.com/commentary-blog/2014-commentary/-shaken-not-stirred–employment-observations-and-taxes 

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Crimea’s Impact on the US Municipal Market, Job and Wage Growth and More

I go pretty far and wide this week. Everything from global affairs to employment and income data to why one sells assets. As a result, this week’s commentary may print/read a bit longer than usual.

How will what has and is occurring in Crimea impact the municipal market? Remember the old diddy “the knee bone’s connected to the shin bone …”? Let’s start with the premise that Mr. Putin is a pretty smart man. While the world is watching his Olympics and wows the world with spectacular opening and closing ceremonies (recall the tribute to the great history of the USSR, hmm), he is quietly preparing his troops to protect Russians living in Crimea. As he and his foreign minister tell us “we will not invade,” less than two weeks later Crimea votes to secede from Ukraine and become part of Russia. The US and our allies impose sanctions and, after being mocked by some of those against whom those sanctions were imposed, the US and its allies impose more sanctions only to have Mr. Putin slap back with sanctions of his own.

To read the rest of this week’s commentary please click here: http://www.lumesis.com/commentary-blog/2014-commentary/crimea-s-impact-on-the-us-municipal-market-job-and-wage-growth-and-more 

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Detroit, Flint, Puerto Rico & Others – What Can Distinguish These Places?

March 17, 2014

Last week proved to be very interesting as Puerto Rico came to market with a $3 billion deal that ended up over-subscribed. In a sign of the level of sophistication needed to understand the risk, the bonds were issued with a minimum denomination of $100,000 and we saw firms such as Wells not allow for the bonds to be purchased for retail (we heard rumors of other firms not providing for allocations to retail as well). Perhaps prudent when you consider, a few weeks back, a certain daily publication quoted financial advisors saying they would buy pretty much anything yielding over 5% for their clients (this was part of a story around, none other than Puerto Rico and arbitration claims).

To view the rest of this week’s commentary please click here: http://www.lumesis.com/commentary-blog/2014-commentary/detroit-flint-puerto-rico-others-what-can-distinguish-these-places 

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Pensions and Unionization and Did You Notice That Change by the BLS?

March 10, 2014

I was inspired to delve into a potentially touchy subject by an article I read last week around California mayors opposing legislation that would allow them to make changes to public sector employee pension plans.  This occupies a portion of this week’s commentary.  Please do not read this thinking I have a political ax to grind – my objective is to continue to promote discussion around the highly important area of the unfunded status of public sector pension plans.  I then go on to look at the latest employment data at the State level and alert you to some adjustments the BLS has made to prior months and years data.  You may want to see if your data source captures the revised data for you.  

To read the rest of this week’s commentary please click here. 

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Growth, Income, Pensions and Housing – A Few of My Favorite Things

Lots to cover this week so I will refrain from spending time opining on world affairs, the media, the Fed or our elected lot in Washington.  I’m also going to refrain from commenting on Representative Camp’s proposal until I have had more time to review the same.  If all of the subjects in our title were directionally right, they truly would be amongst my favorite things.    

Growth – Swing and a Miss

In case you missed it, on Friday, the Commerce Department issued a revision to its economic growth figure for the last quarter of 2013 – the estimate now stands at an annual growth rate of 2.4% v. an initial estimate of 3.2% (both of which are down from the pace of growth for the third quarter which was 4.1%).  I am not sure anyone can fully blame the weather for the slowdown. 

The impact of slow growth (which many describe as the “new normal”) can have an impact on the municipal market.  Slow growth in the economy undoubtedly will impact tax receipts.  Moreover, with the Fed sticking to its taper plan, absence of or even less stimulus that arguably was supportive of maintenance or growth (depends which economist and politician you ask) will also impact growth (as many of you know, I am not a big believer that the employment picture has improved – more on that next week – and we know wages have shown very little growth as well).  Quickly, on the point of wages/income, using the Filter Module in DIVER Analytics, I know that Average Weekly Wages were up in 2,529 counties between second quarter 2012 and 2013 (the good news) but up only 1.8% (from $671.19 to $683.53).  For more depth on income data, I suggest the Filter or Data Access modules. 

Growth and Pensions

Staying with slow growth but turning to how States spend their budgets.  Governor Christie (no, I will not write about bridge-gate) issued his latest budget.  The good news is the Governor seems to plan on doing his part to address New Jersey’s unfunded pension system by making a $2.25 billion contribution.  The bad news is that over 90% of the budget growth is to address pensions, retiree costs and debt service (and not services many deem equally if not more important – education, safety, etc.).  I don’t think many folks believe that the unfunded liabilities are not an issue.  The DIVER data team tracks over 200 State Pension plans and as the chart below demonstrates, these plans are, on average, 70% funded – that is using the assumptions of the plans themselves (I will not go back down this path as I recently addressed my concerns around pension funding and discount rates; I do however, offer these self-explanatory tables). Are State and cities paying attention?

Growth – Swing and a Miss

In case you missed it, on Friday, the Commerce Department issued a revision to its economic growth figure for the last quarter of 2013 – the estimate now stands at an annual growth rate of 2.4% v. an initial estimate of 3.2% (both of which are down from the pace of growth for the third quarter which was 4.1%).  I am not sure anyone can fully blame the weather for the slowdown. 

The impact of slow growth (which many describe as the “new normal”) can have an impact on the municipal market.  Slow growth in the economy undoubtedly will impact tax receipts.  Moreover, with the Fed sticking to its taper plan, absence of or even less stimulus that arguably was supportive of maintenance or growth (depends which economist and politician you ask) will also impact growth (as many of you know, I am not a big believer that the employment picture has improved – more on that next week – and we know wages have shown very little growth as well).  Quickly, on the point of wages/income, using the Filter Module in DIVER Analytics, I know that Average Weekly Wages were up in 2,529 counties between second quarter 2012 and 2013 (the good news) but up only 1.8% (from $671.19 to $683.53).  For more depth on income data, I suggest the Filter or Data Access modules. 

Growth and Pensions

Staying with slow growth but turning to how States spend their budgets.  Governor Christie (no, I will not write about bridge-gate) issued his latest budget.  The good news is the Governor seems to plan on doing his part to address New Jersey’s unfunded pension system by making a $2.25 billion contribution.  The bad news is that over 90% of the budget growth is to address pensions, retiree costs and debt service (and not services many deem equally if not more important – education, safety, etc.).  I don’t think many folks believe that the unfunded liabilities are not an issue.  The DIVER data team tracks over 200 State Pension plans and as the chart below demonstrates, these plans are, on average, 70% funded – that is using the assumptions of the plans themselves (I will not go back down this path as I recently addressed my concerns around pension funding and discount rates; I do however, offer these self-explanatory tables). Are State and cities paying attention?

Please click here to read the rest of this week’s commentary: http://www.lumesis.com/commentary-blog/2014-commentary/growth-income-pensions-and-housing-a-few-of-my-favorite-things 

 

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