Perspectives Blog

How much and how fast?

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | August 29, 2013

The recent rise in long-term interest rates could negatively impact the housing market, which has been a driver of economic recovery. The effect of higher interest rates will typically show up first in the data for new home sales data, which have dropped sharply. The combination of skyrocketing rates and more expensive and rising prices has likely impacted the marginal buyer’s affordability for a new home. One of the most worrisome aspects of…

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…

Gimme credit

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

ion seen in the prior 25 years. After 1980, consumers’ access to credit was vastly expanded and this fueled consumer spending power well ahead of wage growth. Consumers used credit cards freely, and when these maxed out, used home equity lines of credit to continue their spending spree. Today we are still feeling the effects of deleveraging even though the bulk of the adjustments are behind us. We are reminded of this by the recent Quarterly Rep…

Hanging in

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

dit shrank for the second month in a row and has barely risen in a year. Consumers appear to feel this is no longer a resource to supplement spending. With the continued reluctance to use credit and little ability to tap into home equity to support spending, wages are a key determinant this cycle for consumer spending. Some cushion has been found by reducing savings, but this has limits, particularly with savings rates now very low. Spending foll…

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…

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…