Corporate Margin Widening: Are We Slowing Down?

July 31, 2013 10:38 by Clayton Reeves in Capital Markets, Economy  //  Tags: , , , ,   //   Comments (0)
According to the Wall Street Journal, we may be approaching a period of slowing corporate growth.  The non-financial portion of the S&P 500 are expected to increase revenues by just 1.1% in the second quarter, year on year, according to Thomson Reuters.  Earnings are expected to decline 0.6% over that same period.  This would be a sign that margin widening may be at it's end.  After all, if there is no material growth to build on, cost cuts and efficiency gains can only take a company so far. Howard Silverblatt, senior index analyst for Standard & Poor's, agrees with that conclusion, saying "I don't know how many more people you can get rid of. You cannot continuously cut to get your way out." Four out of the last five quarters, corporate revenues have grown slower than the U.S. GDP.  This is not a figure that can continue indefinitely.  According to David Bianco, chief U.S. equity strategist at Deutsche Bank, "Earnings are going to run out of growth steam unless we get a pick up in business spending."  Meanwhile, companies are hesitant to spend too much money in the face of weak growth and uncertainty around political issues that impact corporate expenses such as health care reform.  It is a bit of a catch-22 that no one has felt confident enough to muscle their way out of, and with growth in margins slowing, it may not happen anytime in the immediate future. Click here to read the WSJ article.

CCCA Economic Dashboard: July 26th, 2013

July 29, 2013 16:15 by Clayton Reeves in Capital Markets, Economy  //  Tags: , , , , ,   //   Comments (0)
Attached is the CCCA economic dashboard as of July 26th, 2013. Click here to view a larger image.

Capital Markets in 2025: What Will Change?

PricewaterhouseCoopers recently released a report on the state of capital markets in 2025.  The report expects a shift eastward, as would be expected by most market participants. This shift will increase the global horizon for many companies, and force them to look outside of their own country for growth opportunities, partners, acquisitions and even an exchange to list themselves on.  Almost three quarters of respondents said that emerging companies in particular will look to another emerging market for a listing.  Developed companies, the majority said, would prefer to list in another developed market. In terms of the might BRIC, only China has lived up to its billing so far.  80% of respondents thought that the Chinese market would be where the majority of listings occur by 2025.  For India and Brazil, 38% and 30% of respondents believe those markets will be important, respectively.  Russia is only thought to be an important market by about one in ten survey takers. This shift to emerging market exchanges will have wide implications for capital markets. Political, legal and regulatory uncertainty are all larger issues in a developing country.  Foreign investors will have to be opportunistic, but cautious when selecting investments in these new exchanges. Click here to read the report from PwC.

PwC's M&A Outlook Shows Optimism, Focus on Deal Execution

July 26, 2013 10:50 by Clayton Reeves in Capital Markets, Economy, M&A  //  Tags: , , ,   //   Comments (0)
PwC reports that the fundamentals behind M&A activity remain strong despite a slowdown in U.S. merger and acquisition (M&A) activity in the first half of 2013.  As we at CCCA have seen in the market, deal flow is constricted not by a lack of willing buyers, but a lack of targets with suitable fundamentals.  Acquirers are attempting to find companies with a history of growth, and many have struggled over the last few years to produce meaningful growth. Martyn Curragh, PwC's U.S. Deals Leader, stated in the report that “challenges in the M&A market are being driven by a lack of well-positioned assets for sale, not poor deal fundamentals. A shortage of quality assets and a growing list of willing acquirers dictate a need for confidence and greater preparation to execute, from deal strategy through integration. Greater competition is driving valuations and deal timelines, leaving some would-be acquirers to reflect on missed opportunities, and others with buyers’ remorse for failure to capture deal value.” So, focus shifts to realism around the probability of a deal being completed.  In our mind, this further enforces the need for experienced deal makers to discern the legitimacy of potential acquisitions. Click here to read the entire article.

CCCA Economic Dashboard: July 19th, 2013

July 22, 2013 15:44 by Clayton Reeves in Capital Markets, Economy, Financing  //  Tags: , , , , ,   //   Comments (0)
Attached is the CCCA economic dashboard as of July 19th, 2013. Click here to view a larger image.

The Rise of Private Public Partnerships

July 18, 2013 14:53 by Bill Conway in Capital Markets, Economy, Energy, M&A, Natural Gas, Private Equity, Regulation, Telecom, Utilities, Water  //  Tags:   //   Comments (0)
Establishing Private Public Partnerships (P3) should have the attention of many municipal organizations across the country since, even in good economic conditions, infrastructure assets are not the highest and best use of a cities limited resources. [More]

CCCA Economic Dashboard: July 12th, 2013

July 15, 2013 17:39 by Clayton Reeves in Capital Markets, Economy, Financing  //  Tags: , , ,   //   Comments (0)
Attached is the CCCA economic dashboard as of July 12th, 2013. Click here to view a larger image.

CCCA Economic Dashboard: July 5th, 2013

July 8, 2013 17:04 by Clayton Reeves in Capital Markets, Economy  //  Tags: , , ,   //   Comments (0)
Attached is the CCCA economic dashboard as of July 5th, 2013. Click here to view a larger image.

How good is your crystal ball on interest rates?

June 27, 2013 10:22 by Bill Conway in Economy  //  Tags:   //   Comments (0)
The following is a post from Dallas Wells of Asset Management Group, Inc., a subsidiary of Country Club Bank.

I will admit, my own crystal ball was a little hazy on this one. We are in a very unique situation with interest rates, as the level of central bank intervention across the globe has seriously distorted markets. The short end of the yield curve is always Fed driven, but with the QE programs, the Fed has been attempting to also control the long end of the curve. I think what the last few weeks have shown us is that while the short end of the curve may remain anchored near 0%, the long end could turn quite volatile on us. The mere whiff of change in Fed strategy wreaked havoc in the bond markets, and has moved the 10-year 100 basis points.

So, raise your hand if you saw this coming?
[More]

Economic Dashboard - March 22, 2013

March 25, 2013 16:06 by Jill Mortensen in Capital Markets, Economy  //  Tags: , , ,   //   Comments (0)
The following is the Economic Dashboard for March 22, 2013. [More]

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