Perspectives Blog

Hanging in

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | September 20, 2013

Recent retail sales data are well below expectations and probably an indication that consumers have become more cautious about spending. Financial conditions matter greatly, and the recent tightening is likely having some impact on housing activity and consumer attitudes. Spending follows wages and it will be difficult for retail spending to gain much traction with the tie to shallow compensation trends. The best one can say about consumer spe…

A tepid cyclical lift

Tom West, Director of Equity Research | April 28, 2014

Cyclical investment and discretionary spending are on track to deliver earnings growth of 7% in the S&P 500. Strength in some consumer durables appears more of a “wallet share” gain than a general lift due to recovering wages or a release of excess savings. Construction and energy are poised for another year of growth, while “enterprise” spending and investment in the tech sector remain challenged. The S&P 500 Index should grow earning…

Gimme credit

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | August 22, 2013

Economic data seem largely unchanged from past trends, despite uptick in retail sales. Consumers continued to pare their debt last quarter continuing a nearly five-year trend. Given consumer deleveraging, consumption remains tethered to income gains – and those gains remain sub-par. Last week’s economic data give a very mixed picture of the health of the consumer. While the market seemed to cheer the uptick in spending seen in retail sales rep…

Retail sector outlook – It’s a share game

Mari Shor, Senior Equity Analyst | March 17, 2014

…ock picking. Faced with structural and cyclical headwinds, apparel retailers will need global brand strength, enhanced technological capabilities and supply chain expertise to gain market share. Recent data points across the consumer space have been mixed, and retailers and investors are struggling to sort through the noise to determine underlying demand. To recap 2013, apparel retailers underperformed other sectors within consumer discretionary…

More light, less tunnel

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | October 31, 2013

with key reports out this week on labor markets and manufacturing orders. Unfortunately, both reports present a picture of economic activity in the third quarter that ended on a soft note well before the government shutdown. Consumer sentiment measures slipped and housing demand cooled. Next week we will see reports on industrial production and consumer spending for September giving us a fuller picture of Q3 activity. But so far, growth appears…

Defense industry outlook – Looking past the headlines

Ben Blomberg, Senior Equity Analyst | March 17, 2014

The outlook for U.S. defense contractors has been improving despite all the negative headlines. Army spending is under pressure, but Navy and Air Force spending remain well supported. The recent Ryan-Murray deal is a substantial positive, with a more predictable DoD outlook. Defense investors have had their share of bad news around the trajectory of defense spending, starting with the Budget Control Act of 2011, followed by the failure of the…

A tale of two labor markets

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | November 11, 2013

…ualized job growth is now up 1.74%, and it was only higher than this for a few months back in 2012. This certainly underscores that the economy weathered the government shutdown surprisingly well despite a hit to business and consumer confidence. But these gains still reflect an economy stuck near 2% growth. However, there were numerous distortions in the Household Survey. The unemployment rate ticked up slightly to 7.3% from 7.2%, as did the Un…