By Analytical Services Division on November 3rd, 2011
"Somebody Please Build a New Factory"
In this month’s issue we pine for some corporate investment that might give the economic recovery a little more speed and sustainability. There is a mother lode of cash on the balance sheets of companies in the S&P500. There are really only three things that can be done with it: (1) pay it out as dividends, releasing more spending power into the economy, (2) invest in new plant and equipment, providing an important private sector jolt to the economy or (3) nothing. Unfortunately, the “nothing” alternative has been fairly popular.
The Federal Reserve has lowered their expectations of economic growth...Expectations of weakness beget measured weakness, and measured weakness begets another round of reduced expectations. This daisy chain of cause and effect is the downside of increased Fed transparency and obsessive short-term orientation by policy makers, businesses and individuals.
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The Data Diffusion Chart in the middle of page 2 shows that the gap between the Treasury 10-year yield and the Index is narrowing, indicating that the market has returned to trading based a little more on fundamentals rather than flight to quality concerns.
“In Celebration of Cities” (page 8-9) suggests that cities with many medical schools may have advantages over cities with none. There are a couple other metrics, as well as observations about what’s good about being a very big city.
In “Market Review—The Yield Curve” (page 5) we discuss the success of last month’s indicators as well as offer the new spots to keep an eye on.
"Somebody Please Build a New Factory"
In this month’s issue we pine for some corporate investment that might give the economic recovery a little more speed and sustainability. There is a mother lode of cash on the balance sheets of companies in the S&P500. There are really only three things that can be done with it: (1) pay it out as dividends, releasing more spending power into the economy, (2) invest in new plant and equipment, providing an important private sector jolt to the economy or (3) nothing. Unfortunately, the “nothing” alternative has been fairly popular.
Municipal Strategy Report - November 2011 (PDF) »
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