Perspectives Blog

The bean counting on second quarter GDP

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | July 25, 2013

…stic. Final second quarter GDP data reports are trickling in, putting the footprint of economic growth into focus. It looks soft, weighed down by three forces. These include: The impact of the global growth slowdown on U.S. manufacturing and trade, The fiscal drag associated with reduced government spending courtesy of the sequester, and What may be outright inventory depletion. One added surprise has been slower housing starts, particularly i…

More light, less tunnel

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

…nding will await 2014 and then see only a modest build at some point next year. After a data vacuum of almost three weeks, government agencies have started to gear up again 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 dem…

Not all emerging markets are created equal

Robert McConnaughey, Director of Global Research | January 27, 2014

…lt of some common factors heavily influencing the broad EM growth story. Those factors included the positive effects of reforms stemming from credit and currency crises of the late 1990’s, the rise of outsourcing and low-cost manufacturing, record commodity consumption from China’s infrastructure and capacity building binge, and easy access to cheap funding from the developed world. However, these factors are rapidly evolving and having dramatic…

Steady as she goes

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | April 7, 2014

…d 172K in Q3 and the 12 month average of 187K. So job growth really saw only a modest dent from weather—the weakness due to weather was seen more in hours worked. Gains across sectors in March were close to past norms, except manufacturing which was especially weak (down 1K overall). Weakness in manufacturing was mainly in non-durables (food, plastics, apparel, and paper). Some of the weakness may have been due to weather, but I would point to pa…

Signs point to an improving U.S. economy

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | December 9, 2013

…There was a big pickup in goods-producing industries, with service industry gains a touch slower. The former was flagged by rising overtime hours which are now near cycle highs and this typically precedes higher job gains in manufacturing. Further, the ISM Purchasing Managers Index was released and registered a 57.3 in November, the highest reading since April 2011, with the employment component rising to the highest level in a year. This week a…

M&A in healthcare – Out with the old, in with the new?

Harlan Sonderling, CFA, Senior Healthcare Analyst | March 31, 2014

…B’s would rise as Company A diverted from dividend growth, debt reduction and using its cash to invest in organic growth. Investors assumed, until proven otherwise, that acquisitions were value destructive, at best a means of manufacturing earnings to manage through a period of poor research productivity or patent expiry. Skepticism greeted Company A’s claim that its deals were a meaningful strategic and financial advance, that is, a timely purch…

Quality milestone in the European recovery story

March 17, 2014

…mentum in the euro area, while a pick-up in business investment suggests that European corporates are reassessing the economic outlook. Purchasing Managers’ Index data for February also underlined the recovery in the European manufacturing sector. This latest bank lending data point, shown in Exhibit 1, indicated that things are finally starting to move in the real economy. Exhibit 1: European bank lending to the private sector finally turns posi…