The combination of strong demand and relatively low borrowing costs has been a boon for the bond market in 2017. U.S. companies have sold $406.1 billion of high-grade debt so far this year, a record for any first quarter going back to at least 1995, according to Dealogic.
This is the third consecutive first quarter where investment grade corporate issues have set a record high. Global issuance of high-grade bonds, on the other hand, is just short of record levels, totaling $843.6 billion through March 30, versus $890.5 billion for the same period last year, and $896.7 billion for the full first quarter of 2016.
Several American companies have issued huge bond offerings this year. The biggest deals include Microsoft's $17 billion sale, Broadcom Corp.’s $13.6 billion sale, and Verizon Communications $11 billion offering.
Friday, March 31, 2017
Thursday, March 30, 2017
The Smartest People Live Here
Here's no surprise: New Jersey is one of the most financially literate states in the country. That's according to personal finance site WalletHub, which analyzed 15 metrics including high school financial literacy grades and how many adults have emergency funds.
The site also looked at public high-school graduation rates and household spending habits, who was likely to have a “rainy-day fund,” and which states had the most unbanked households. The entire top ten:
1. New Hampshire
2. Minnesota
3. North Dakota
4. Maine
5. Virginia
6. Maryland
7. New Jersey
8. Illinois
9. Colorado
10. Montana
The site also looked at public high-school graduation rates and household spending habits, who was likely to have a “rainy-day fund,” and which states had the most unbanked households. The entire top ten:
1. New Hampshire
2. Minnesota
3. North Dakota
4. Maine
5. Virginia
6. Maryland
7. New Jersey
8. Illinois
9. Colorado
10. Montana
Wednesday, March 29, 2017
Consumer Confidence in Bloom
The consumer confidence report for the month of March that came out yesterday was impressive on a lot of fronts. Confidence levels are at their highest since 2000, comfortably above the highs we saw during the prior expansion from 2003 through 2007. That breaks what had been a trend of lower highs in confidence since the peak consumer confidence readings in the 1990s.
One very good sign was that consumers felt more optimistic about the jobs market. The percentage of consumers stating jobs are “plentiful” rose from 26.9 percent to 31.7 percent, while those claiming jobs are “hard to get” decreased from 19.9 percent to 19.5 percent.
If there was one concerning aspect of the report, though, it was among lower-income Americans. While higher income Americans saw their confidence levels surge to the highest levels since late 2000, confidence among consumers with incomes below $50,000 actually declined and has yet to exceed the peak levels we saw from the last cycle.
One very good sign was that consumers felt more optimistic about the jobs market. The percentage of consumers stating jobs are “plentiful” rose from 26.9 percent to 31.7 percent, while those claiming jobs are “hard to get” decreased from 19.9 percent to 19.5 percent.
If there was one concerning aspect of the report, though, it was among lower-income Americans. While higher income Americans saw their confidence levels surge to the highest levels since late 2000, confidence among consumers with incomes below $50,000 actually declined and has yet to exceed the peak levels we saw from the last cycle.
Tuesday, March 28, 2017
Shaky Earnings
Companies in the S&P 500 are expected to report first-quarter profits grew 9.1 percent, compared with the same quarter a year earlier, according to FactSet. If that holds up, it would be best quarter since the end of 2011 and a third straight quarter of earnings growth.
After five straight quarters of declining profits, a brightening earnings outlook comes at a welcome time. Still, there are reasons to be cautious. The biggest contributor to elevated first-quarter earnings forecasts is the energy sector, which is expected to earn $7.7 billion. A year ago, this group lost $1.5 billion. Exclude the group, and Factset forecasts S&P 500 earnings rose just 5.2 percent.
Also, while a rebound in oil prices is now lifting earnings, a resurgence in U.S. shale-oil production has investors increasingly worried. The price of crude oil has dropped 11 percent this month. Another prolonged slump in the price of oil could once again weigh on earnings.
After five straight quarters of declining profits, a brightening earnings outlook comes at a welcome time. Still, there are reasons to be cautious. The biggest contributor to elevated first-quarter earnings forecasts is the energy sector, which is expected to earn $7.7 billion. A year ago, this group lost $1.5 billion. Exclude the group, and Factset forecasts S&P 500 earnings rose just 5.2 percent.
Also, while a rebound in oil prices is now lifting earnings, a resurgence in U.S. shale-oil production has investors increasingly worried. The price of crude oil has dropped 11 percent this month. Another prolonged slump in the price of oil could once again weigh on earnings.
Monday, March 27, 2017
A Troubling Sign in Business Investment
Amid generally good economic news, there was one troubling number released recently. Durable goods orders rose 1.7 percent in February, but new orders for nondefense capital goods excluding aircraft edged down by 1 percent. The move down might be evidence that businesses continue to hold back on investing heavily in their own businesses.
Overall, orders through the first two months of 2017 are up only 1.3 percent from a year ago. That is slower than January’s growth rate, which was 2.6 percent year-over-year. January was the first time the measure had grown on a year-over-year basis since October 2015, and only the second time since December 2014.
There has been definite improvement in recent months. Last summer, the year-over-year figures were running down 3 to 4 percent. But last month’s figures continue to point to a sluggish economy.
Overall, orders through the first two months of 2017 are up only 1.3 percent from a year ago. That is slower than January’s growth rate, which was 2.6 percent year-over-year. January was the first time the measure had grown on a year-over-year basis since October 2015, and only the second time since December 2014.
There has been definite improvement in recent months. Last summer, the year-over-year figures were running down 3 to 4 percent. But last month’s figures continue to point to a sluggish economy.
Friday, March 24, 2017
Moving In, Moving Out
Communities like ours, in the outer rings of metropolitan areas, are growing again. Last year saw the strongest evidence yet that Americans are returning to traditional patterns in where they move—from cities to suburbs and from North to South—after a recession-driven pause of nearly a decade.
Central counties of metropolitan areas grew 0.7 percent last year while outlying counties grew 1 percent, according to new Census Bureau population estimates. After two years of roughly comparable growth, this marked the first time since the recession that outer suburbs clearly outgrew central cities and inner suburbs. As recently as 2012, central counties grew 0.9 percent while outlying counties grew just 0.5 percent.
But we're losing population to Sun Belt cities that had seen migration from the North cut sharply since the housing-market collapse and recession of 2007-09. Las Vegas lost 5,000 more than it gained in 2011, but last year gained a net 28,000. Phoenix saw a gain of 4,000 in 2011 grow to 51,000 last year.
Central counties of metropolitan areas grew 0.7 percent last year while outlying counties grew 1 percent, according to new Census Bureau population estimates. After two years of roughly comparable growth, this marked the first time since the recession that outer suburbs clearly outgrew central cities and inner suburbs. As recently as 2012, central counties grew 0.9 percent while outlying counties grew just 0.5 percent.
But we're losing population to Sun Belt cities that had seen migration from the North cut sharply since the housing-market collapse and recession of 2007-09. Las Vegas lost 5,000 more than it gained in 2011, but last year gained a net 28,000. Phoenix saw a gain of 4,000 in 2011 grow to 51,000 last year.
Thursday, March 23, 2017
More and More Millionaires
The number of millionaire households in America increased by 400,000 in 2016, reaching a new record of 10.8 million, according to a new study from the Spectrem Group. There are now 1.4 million households worth $5 million or more and 156,000 households worth $25 million or more.
Since the 2008 financial crisis, the number of millionaire households has grown every year, adding a total of 4 million millionaire household since then. The stats mean that more than one out of every 10 households in America is worth $1 million or more.
Mass affluent households, those with a net worth between $100,000 and $1 million not including their primary residence, grew to 28.97 million last year. That's an increase of 500,000 over 2012, and of 3.77 million over the post-recession low of 25.2 million.
Since the 2008 financial crisis, the number of millionaire households has grown every year, adding a total of 4 million millionaire household since then. The stats mean that more than one out of every 10 households in America is worth $1 million or more.
Mass affluent households, those with a net worth between $100,000 and $1 million not including their primary residence, grew to 28.97 million last year. That's an increase of 500,000 over 2012, and of 3.77 million over the post-recession low of 25.2 million.
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