Investment Insights Podcast – Back to School

miller_podcast_graphicBill Miller, Chief Investment Officer

On this week’s podcast, Bill gets in back-to-school mode and reflects on the summer events that impacted the markets and economy (recorded September 8, 2015):

Highlights include:

  • Both China’s growth slowing down and the Fed considering raising interest rates dominated summer headlines
  • Deutsche Bank feels that markets could be up between now and the end of the year regardless of interest rate hikes; upside outweighing the downside
  • Also feel that a rate increase by Fed will likely not harm the economy (employment, housing, and auto all strong)
  • China not dumping U.S. Treasuries so they don’t appear desperate at this time

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.

Investment Insights Podcast – June 8, 2015

Bill MillerBill Miller, Chief Investment Officer

On this week’s podcast (recorded June 3, 2015):

What we like: Higher interest rates mean the economy is improving; healthy doses of inflation; banks to lend more money to businesses

What we don’t like: If rates increase too quickly, it could stop people from borrowing money; disappointing mortgage applications; higher rates could impact stocks if people switch back to bonds

What we’re doing about it: Adding to financial sector; keeping a close eye on possible ill effects of higher interest rates and stronger U.S. dollar on emerging markets

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.

 

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.