Investment Insights Podcast – Leading Indicators Report Strong Economy

miller_podcast_graphicBill Miller, Chief Investment Officer

On this week’s podcast (recorded April 1, 2016), Bill reports again on the importance of leading indicators and what they are showing in terms of the stability of the economy and if a recession is likely:

What we like: Investors should focus on leading indicators; good economic data to report: order rates for manufacturing strong; employment data continues to be positive; wages are increasing; recession happening this year becomes less likely with strong data from these leading indicators

What we don’t like: On the contrary, the strong data makes a larger case for higher interest rates; with wage and labor reports positive, Fed may act on their mandate and the interest rate discussion heats up

What we’re doing about it: Portfolios will maintain the theme of interest rate normalization

Click here to listen to the audio recording

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

Investment Insights Podcast – What Indicators Are Indicating

miller_podcast_graphicBill Miller, Chief Investment Officer

On this week’s podcast (recorded February 18, 2016), Bill comments on what the leading indicators are showing in terms of the stability of the economy and if a recession is likely:

What we like: Leading indicators, published by Department of Commerce, are out and are important in understanding chances of recession; so far, indicators are showing a healthy economy with no recession likely at least in the next six months; stability in oil prices helping to calm the markets; China is actively supporting their economy

What we don’t like: We still need to hear about the ECB exposure to bad loans in China; need more clarity if the Fed will raise rates in March; there’s enough global trauma out there to make raising rates seem unwise

What we’re doing about it: Monitoring this rally period between now and the spring as economic activity is decent; may look to take longer tactical positions

Click here to listen to the audio recording

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

When in Doubt, Blame the Weather

Ryan Dressel Ryan Dressel, Investment Analyst, Brinker Capital

The 2013-2014 winter has been nothing short of a worse-case scenario for the eastern half of the U.S. In Chicago, temperatures fell below zero an astounding 22 times (the Chicago record for a winter is 25), and let’s not forget the combined 67 inches of snow. In Atlanta, the city literally came to a halt during what became known as “Icepocalypse.” In Philadelphia, we’ve seen a total of 58 inches of snow (third highest on record) including 11 different snow storms dropping one inch or more.[1]

Source: TheAtlantic.com

Source: TheAtlantic.com

Those three locales give you a pretty good idea of just how wide spread the wrath of winter is this year. While it is difficult to measure the exact impact of the weather on the economy, we can conclude that economic activity will certainly lag in January, February and March. Despite the fact that most economic indices account for seasonal effects, they do not account for outlier years like this one. Weather has been blamed for poor economic reports ranging from job growth, to new housing starts, to manufacturing—but is it justified?

A 2010 study by the American Meteorological Society determined which U.S. states are most sensitive to extreme weather variability as it relates to economic output.[2]

Dressel_Weather_2.21.14_1The research concluded that the location with the most sensitive industries had the largest total economic effect. For example, agriculture is the most sensitive on an absolute basis, but the fact that agriculture makes up such a small percentage of most states’ Gross State Product (GSP) means that extreme weather has a small total effect on sensitivity. Conversely, manufacturing, financial services, and real estate have a large relative sensitivity because of their GSP impact. As you can see on the map, the states where these industries have a significant economic impact, translates in higher sensitivity to extreme weather.

The severity of winter in the states colored red and yellow justifies the weather-related hype, while the ones in blue can be ignored for economic purposes. If you include the effects of the Government shutdown, we’ve had four consecutive months of cloudy data that we can’t put into clear context!

[1] National Oceanic and Atmospheric Administration.
[2] U.S. Economic Sensitivity to Weather Variability. Jeffrey K. Lazo, Megan Lawson, Peter Larsen, Donald Waldman. December 28, 2010.

Hang Your Hat on This: Watermark Consulting’s Consumer Experience ROI Study

Sue Bergin@SueBergin

Lacking a crystal ball, many investors, advisors, analysts and researchers look for something dependable that may aid in their ability to predict stock performance.  The trends and studies sought out can range from analyzing relationships between the countries of origin of Sports Illustrated swimsuit models, Super Bowl Champion football teams, and Boston snow accumulations and the stock market.[1]

For a more enlightening stock market predictor, however, turn to Watermark Consulting’s 2013 Consumer Experience ROI Study.

Watermark’s research shows a substantial performance gulf between companies who deliver a positive customer experience and those that do not.

Using model portfolios of the Top 10 (Leaders) and Bottom 10 (Laggards) publicly traded companies in Forrester Research’s annual Customer Experience Index ranking, Watermark has demonstrated a compelling link between consumer experience and stock price.

Over a six-year period, customer experience leaders outperformed the broader market, generating a total return three times higher on average than the S&P 500.  By contrast, the Laggards trailed the S&P 500 by a wide margin.

As Watermark Founder Jon Picoult points out, the analysis reflects over half a decade of performance results spanning an entire economic cycle, from the pre-recession market peak in 2007 to the post-recession recovery that continues today.

Customer Experience Leaders Outperform the MarketWhile it’s important not to make investment decisions based solely off of one dataset, Watermark’s study is one that you can hang your proverbial hat on when considering investments in people or processes that enhance your clients’ experience.


[1] MSNBC’s 11 Most Shocking Stock Indexes. http://www.cnbc.com/id/29257460/page/1