Perspectives Blog

Apparel retail doldrums

Mari Shor, Senior Equity Analyst | August 11, 2014

Since 2011, consumer spending has been below average overall, and spending on retail apparel has been especially poor. A host of factors, from shifting consumer priorities to poor inventory control have forced apparel retailers to compete on price, and sales and profitability have suffered dramatically. Premier global brands with differentiated product and strong, flexible supply chains are best positioned to manage through this challenging env…

Half-time report on the U.S. consumer

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | July 28, 2014

U.S. consumers have taken a more cautious attitude toward debt and been more selective about using it for discretionary purchases. With consumers using credit cards less and using debit cards much more, the supports for higher discretionary spending are keyed off income and wages and also employment. With low debt use and income growth holding back consumption and demand, households will require stronger job growth and real wage gains to accele…

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…

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…