Perspectives Blog

What’s behind the weakness in U.S. housing?

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | March 24, 2014

Existing U.S. home sales have been weak across all regions and this weakness pre-dates this year’s tough winter. Skyrocketing home prices, the surge in interest rates, and meager income growth have hit affordability and dented demand. Housing is no longer the accelerator for economic growth that it was earlier in the cycle. While the jury is out on just how much cold weather has impacted economic activity in recent months, we should keep in mi…

Predicting new drug sales is more art than science

Harlan Sonderling, CFA, Senior Healthcare Analyst | April 14, 2014

Predicting sales of new medicines is highly inaccurate and subject to significant and often costly errors. While investment analysts can draw on research tools and experience, history suggests new drug forecasting will remain more art than science. Despite the high level of uncertainty and variability in new drug forecasts, the innovative medicine industry is alive and well. Predicting sales of new medicines is highly inaccurate and subject to…

Retail sector outlook – It’s a share game

Mari Shor, Senior Equity Analyst | March 17, 2014

…4) limited upward pressure on wages as hiring has lagged prior economic recoveries. On the first point, the “allocation nation” theme should continue to play out in 2014 with consumers spending more on durables (e.g., autos, home-related expenditures) versus non-durables. Even within non-durables categories, the ongoing spending shift towards accessories and away from apparel can be expected given less favorable weather through summer, less demo…

Missing links and multipliers

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | June 9, 2014

Several forces are colliding now and causing a downshift in the trajectory of the U.S. housing recovery. Household formations remain at multi-year lows due in large part to mediocre income and job gains in combination with high student loan debt by 25 – 45 year old homebuyers. Fewer homeowners mean missing multipliers for growth. As a result, housing will prove less of an accelerator for economic growth in the period ahead. Having witnessed a…

Apparel retail doldrums

Mari Shor, Senior Equity Analyst | August 11, 2014

s their spending in certain categories. For the past three to four years, spending on durable goods has outpaced spending on non-durables, including apparel (Exhibit 1). Relative strength in durable goods, including autos and home-related items, likely reflects post-recession catch-up spending and investment in home-related assets supported by strong housing fundamentals and government infrastructure spend. In addition, travel and leisure spendin…

A tepid cyclical lift

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

…ly if expectations are tempered. Strength in some consumer durable channels is encouraging, but appears to be more of a “wallet share” gain than a general lift due to recovering wages or a release of excess savings. (Remember home equity lines of credit?) Autos, home-related durables and maintenance spending are doing well but seemingly at the expense of other consumer expenditures like apparel and dining and some parts of consumer staples. Auto…

Digital dining: How restaurants are applying technology to drive sales

Daniel Spelman, Equity Analyst | February 24, 2014

…re improving the consumer experience, leading to higher revenue and increased market share for successful brands. With almost one million restaurant locations in the United States and thousands of transactions needed to drive sales, the slightest incremental edge can have an outsized impact on the bottom line. Technology is also being used, particularly by the larger publicly traded concepts, to capitalize on their scale and improve back-end oper…