Perspectives Blog

The coming divide in state credit quality

Ty Schoback, Senior Municipal Analyst | June 3, 2014

…ely compensated for investing in states of varied creditworthiness. State tax revenues typically exhibit greater economic sensitivity than local governments due to greater reliance on income taxes. Since the end of the Great Recession, states have seen above average annual tax revenue growth, largely driven by robust equity market gains that have generated strong capital gains taxes. A number of states have managed such growth with exceptional p…

Steady as she goes

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

…ntinues to be a drag with cuts at both federal and state & local government. One threshold worth mentioning was that the overall private level of employment finally exceeded the pre-recession high—nearly 5 years after the recession ended. The Household Survey had the unemployment rate holding steady at 6.7%. We may see a slower reduction in coming months as more people enter the labor force. The labor force rose 503K, but employment levels r…

The role of income inequality

March 3, 2014

…nt studies of the post-financial crisis period have found an even higher income share grab for the top 1% in the income distribution. Exhibit 1: Income share of the top 5% Source: Cynamon & Fazzari, Inequality, the Great Recession and Slow Recovery, November 2013 This phenomenon largely fell under the radar in the last three decades, however, as spending inequality was less pronounced and consumption trends were less affected. This dichotomy…

Apparel retail doldrums

Mari Shor, Senior Equity Analyst | August 11, 2014

…y spending and determine if there is reason to believe that apparel spending will improve in the second half of 2014. Macro considerations — Consumers discriminate between durables and non-durables The aftershocks of the 2008 recession remain a part of everyday life for many consumers. While there has been steady improvement in the unemployment rate and job openings, real wage growth remains muted — less than 1% for the past three years — not eno…

Is a stock market correction coming?

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | December 16, 2013

…2 out of 5) most bullish mode. In addition, other analysis focused on the business cycle indicates ongoing expansion of the U.S. economy, which also argues for ongoing equity market strength. What might bring a correction? 1) Recession. Interestingly, in the absence of recession, the stock market tends to perform fairly well. Neither Marie Schofield (our chief economist) nor Zach Pandl (our chief interest rate strategist) assigns a material proba…

Yellen at Jackson Hole

Zach Pandl, Portfolio Manager and Strategist | August 25, 2014

…servers with similar ideological stripes (e.g. monetary economist Adam Posen). Indeed, her comments were starkly different in tone than her speech on labor markets in March, when she said that the recovery “still feels like a recession to many Americans, and it also looks that way in some economic statistics,” and “In some ways, the job market is tougher now than in any recession.” Janet Yellen at Jackson Hole was not the dove we thought we knew….

U.S. rates — View update

Zach Pandl, Portfolio Manager and Strategist | April 4, 2014

…of labor market slack in general. Few serious observers think the U.S. economy is running at full capacity—the unemployment rate is still 6.7% after all. The disconnect is that slack in the economy looks on par with a typical recession, but monetary policy is calibrated for something much worse. At this point we do not see that much ambiguity in the data around this issue (see some of our research here), so our views have not changed after today’…