By Burt White Chief Investment Officer, LPL Financial
Jeffrey Buchbinder Market Strategist, LPL Financial
Weekly Market Commentary, July 10, 2015
Greece’s critical referendum took place this weekend and the Greek people resoundingly voted “no” — rejecting the latest bailout deal from creditors. The referendum result, which some interpreted as a vote to exit the Eurozone, throws Greece’s future in the currency union firmly in doubt. The unexpected result has led to a roughly 2% decline in the broad European indexes but only a modest decline in the S&P 500 (as of 3 p.m. ET today, July 6, 2015). The negative market reaction in Europe is not surprising, given polls heading into the weekend suggested a vote for the bailout was more likely. The modest decline in the U.S. may suggest markets are increasingly comfortable with the situation.
Here we try to answer the following questions:
1. Would a Greece exit (Grexit) from the Eurozone lead to contagion for
2. Will this latest Greece crisis result in a Lehman moment?
3. Is a deal that keeps Greece in the Eurozone still even possible?
4. Does anticipated weakness in European equity markets present a
We address these questions here and provide our playbook for investing in
ASSESSING CONTAGION RISK
We know the stock market does not like uncertainty, so the prospects of Greece’s exit, which is now potentially greater than a 50% probability, are unsettling. No country has ever left the Eurozone, and there is no blueprint for how to do so. As we list below, there are several reasons why we expect the risk of contagion to be manageable.
Little private ownership of Greek debt. More than 80% of all Greek government debt is held by government agencies and central banks. Given how little Greek debt is held by private investors, we believe the global financial system should be able to manage prospects of Greece defaulting on additional obligations (the next payment is 3.5 billion euros due to the European Central Bank [ECB] on July 20). Derivatives…
Given how little Greek debt is held by private investors, we believe the global financial system should be able to manage prospects of Greece defaulting on additional obligations.
exposure tied to Greek default cannot be precisely measured; however, we know banks are much better capitalized than they were when the Greek debt crisis bubbled over in 2012, and the data we do have for the banks suggest exposure is limited.
Bold ECB. The ECB’s willingness to “do whatever it takes” to keep the Eurozone together, and its aggressive bond buying program — which it can accelerate — suggest that it will step in to stem any signs of contagion. Should Greece’s problems remain simply Greece’s problems, the Greek crisis will be contained. Regardless of the path Greece takes, we expect the ECB could be very aggressive to ensure that markets beyond Greece continue to function as normally as possible.
Improved European economic backdrop. The European economy has been strengthening. European exporters, particularly Germany, have benefited from the..
By John J. Canally, Jr., CFA Chief Economic Strategist, LPL Financial
Weekly Economic Commentary, 7/9/2015
The “no” vote in the Greek referendum on July 5, 2015, will potentially raise the level of economic and financial market volatility in the coming weeks as global investors assess the market and economic risks associated with an increasingly likely Greek exit (Grexit) from the Eurozone and from the Eurozone’s common currency, the euro. We don’t view the potential Grexit as another “Lehman moment”; there is relatively little in the way of derivatives tied to Greek debt, and the vast majority of Greece’s debt itself is owned by supranational entities like the European Central Bank (ECB) and the International Monetary Fund (IMF), and not — as was the case with Lehman — by private investors. However, the next several weeks and months may see increased financial market and economic volatility in the Eurozone and across the globe.
From the perspective of the U.S. economy, the uncertainty surrounding the possibility of a Grexit may lead to:
Slower global economic growth, which, at the margin, may hurt U.S. export growth
A later liftoff for the Federal Reserve (Fed); and once hikes do begin, a shallower path for rates
A stronger U.S. dollar for longer, as the ECB will likely speed up its quantitative easing (QE) program
An increase in economic and market uncertainty in the U.S., which could, in turn, lead to modestly slower growth
The potential for a Grexit comes at a time when the Eurozone’s once-fractured financial transmission mechanism is on the mend, and as the Eurozone economy — aided by lowered expectations and a weaker currency — is accelerating and on track to add to global growth in 2015. Now, regardless of whether Greece stays or goes, the Eurozone’s recovery is threatened by lower consumer and business confidence in the Eurozone and a disruption in, but not the end of, the improvement in the Eurozone’s financial transmission mechanism, which has been healing for more than six months now. Although the financial system disruptions of a Grexit will likely be met by strong action from the ECB, the longer the uncertainty around Greece’s fate lasts, the greater the potential impact on the European and global economies. The net result could be a lower growth path for Eurozone and the globe. The Federal Open Market Committee (FOMC) and Fed Chair Yellen — who is slated to deliver a speech on Friday, July 10, 2015 — will be watching Greece closely. For now, our view remains that the Fed is on track to hike rates for the first time in this cycle in late 2015; but the longer the uncertainty around Greece lingers, …Read the Full Report here: Economic Commentary 07062015
On this Independence Day, commonly known as the Fourth of July where the United States commemorates the adoption of the Declaration of Independence, declaring our independence we are PROUD to be Americans. We are Proud for the rights we have and everything that we have worked so hard for as a nation.
Here are just a few things that make us PROUD to be AMERICAN:
Freedom of speech
Freedom of religion
The right to own private property
The right to bear arms
Freedom to live or travel anywhere in our nation
Freedom to work at any job for which we can qualify
Freedom to marry and raise a family
Freedom to receive a free education in good public schools
Freedom to join a political party, a union, and other legal groups
MDNA’s New England Chapter has been targeting members of other chapters to attend their meetings with the objective to make more “deals” together. On June 18th they met with MDNA members from across the USA to kick things off with a tour of member firm Gold Machinery Group followed by dinner at Via RomaItalian Restaurant, where the meeting focused on doing more business together!
Read first-hand what guests had to say about this incredibly well-attended meeting and why it’s worth it to their business to attend these MDNA chapter meeting & events.
This was the first time I, along with my wife Erika in tow, had ever attended a MDNA New England chapter meeting. All I can say is my experience could not have been better. Starting with the warehouse tour of Gold Machinery, who was one of the sponsors, it was a great time with the fellowship of MANY of the chapter members. It is always nice putting a face with someone whom your only contact has been via phone or the keyboard. From Gold Machinery we went to Via Roma Restaurant where the fellowship continued during dinner with everyone introducing themselves, giving some of their highlights and networking. I would like to thank Pedowitz Machinery Movers for their sponsorship of the event. All in all it was truly a great event thanks to the efforts of Kevin and Julie Brewster. If you ever get the chance to visit another MDNA chapter meeting it can help not only in business but also in the personal relationships you get with other members. – Terry Yoder, Yoder Machinery Co.
“My wife, Helen, and I had a great time at the New England MDNA meeting held in Providence, RI! Gold Machinery rolled out the red carpet for
everyone, and the laser engraved demo/give away was a great idea and very fun.
I was blown away by the meeting run by Chairman Kevin Brewster. His presentation was super and his involvement of visitors (of which there were many) was great. And the content he included was applicable and appreciated. What a pleasure to travel to another chapter, meet dealers I have spoken with for years but never met, and come home with a pocket full of leads.” – Troy Clark, CEA, Clark Machinery Sales, LLC
I found the meeting to be very informative as well as dynamic….very well attended. It appears the NE Chapter is an active one! We are already working on a deal as a direct result of our attendance. Very pleased to have attended. – Pat Ryan, Ryan Machine Company
“I don’t recall ever having so many dealers from other chapters as we did at our last New England Chapter meeting. We had people from Baltimore, Toledo, Philadelphia, New York and California. It was a great networking opportunity as well as a great chance to meet some new faces.” – John Conroy, CEA, Machinery International Corporation
“After a long absence from attending our local New England MDNA chapter meetings, I am impressed with New England Chapter Chairman, Kevin Brewster and his wife Julie’s enthusiasm and energy that they bring to our organization. They have encouraged all of our members to attend the meetings in order to enhance our networking connections and to ‘make money together.’ It is also refreshing that Kevin extends an invitation to other MDNA chapters to attend our meetings. I had the opportunity to meet with many names in the industry that I have seen in advertising venues and have now put a face to the names and establish a real contact. Kevin has a well-planned agenda for the meetings that includes updates to our chapter as well as National. He also aligns a guest speaker with interests to our members such as Direct Capital Financing opportunities and Andy and AJ Conte from Pedowitz Machinery Movers with their capabilities. Finally, the members have an opportunity to introduce themselves and talk a little about their companies. Thank you Kevin and Julie for the tireless energy you put into this organization.” – Paul Gaffney, Industrial Surplus, Inc.
“Thank you very much for putting together one of the best and well attended MDNA meetings. It was great to be back at Gold Machinery’s warehouse to see all the equipment he offers for sale. The dinner meeting was perfect and I was glad that all those in attendance got to tell a little MDNA history and share a brief introduction of their company. Kudos to you and Julie for getting a few out of town guests to come as well. Lastly, thanks to Pedowitz Machinery Movers for sponsoring this event.” – Ross Finn, Joseph Finn Co. Inc.
“Great meeting and thanks for pulling this one off- nice job! The boys had fun and appreciated the networking!” – Nathan Smith, CEA, Absolute Machinery Corporation
“Great meeting last Thursday. It was a real treat for everyone to visit Gold Machinery!” – Paul Lashin,CEA, Prestige Equipment Corp.
“The recent MDNA New England chapter meeting was another success. Kevin and the rest of the officers are doing a great job of generating interest in chapter activities, not just from New England but neighboring chapters as well. It is a welcome opportunity to meet face to face the people I have done business with for many years.” – Marc D. Mazzalupo, ASA, CEA, The Branford Group, LLC
“I want to thank you for coordinating the MDNA New England Chapter meeting on June 18th. Although it was only my second meeting, my first as an MDNA member, I was made to feel welcome by all of the members! It was great to catch up with old business partners, some of whom I have not seen in months, and in some cases years. The plant tour prior to dinner was fantastic…many thanks to David Gold for hosting that. I was amazed by the ‘out of town’ members in attendance, coming in from California, Maryland, Ohio, Pennsylvania and New York. It was great to network with these members. Looking forward to future meetings!” – Tom Lowkes, Fabricating & Production Machinery, Inc.
“Great and lively meeting. Made some new contacts and renewed old ones from out of town. Well worth the time to attend.” – John Bouley, Furnace Brokers Inc.
“Thanks for putting the effort in to hopefully bring back the interactive benefits that have always existed.”- Thomas Gagliardi, Jr., Thomas Industries, Inc.
“Awesome MDNA New England chapter meeting in Rhode Island…A very well attended meeting with MDNA officers and included members from California, Philadelphia, New York ,Conneticut, Massachusetts..”- David Gold, CEA, Gold Machinery Group
“I had a productive time at the MDNA New England Chapter meeting hosted by Kevin Brewster, On Target Machine Brokers. It started off by taking a tour of Gold Machinery and meeting David Gold – an impressive operation! Dinner followed in Providence where I was able to personally meet and network with some of the participants that listed assets into our MDNA/Liquidity Services/GoIndustry DoveBid sale. I had the chance to speak about our partnership. The meeting was well organized, people were friendly, and I am glad I had the opportunity to attend.” – James Spencer, Liquidity Services
MDNA’s next Young Gun first came onto the machinery scene 5 years ago after leaving Hollywood and the movie production industry behind to start a family. Chuck Radtke, now with Wisconsin Metalworking Machinery, Inc., reminiscences on his former life…
“I worked in Hollywood on several live action feature films on the production side. My first job in LA was on the set of the original SAW movie. It really wasn’t that scary… with the lights on. Then I got into more family friendly movies by working for Disney on films like: Princess Diaries II, Sky High, and Race to Witch Mountain.”
We know what you must be thinking…”Why would he leave behind that exciting life for working in the machinery industry?” Chuck had other dreams, ones that many of you may relate to. It all started with a young woman named Amy, who he met in college at the University of Wisconsin. Shortly after graduating the pair moved to LA to pursue their post college dreams. Fast forward seven years later, Chuck and Amy get married and they come to the realization that LA, (far from other family) is not where they want to raise their family. So they find themselves moving back to Wisconsin.
“Amy’s job allowed her to work from home and thankfully JR offered me a position at Wisconsin Metalworking Machinery.
I initially started working on our website, producing videos, and revamping our online marketing strategy. Then I started to dabble in sales, answering the phone when nobody was paying attention and trying to sell a machine. Now, 5 years in, I’m doing sales full time and still trying to sell a machine.” – says Chuck
Chuck’s background in video production and marketing has made him a huge asset to the growth of Wisconsin Metalworking Machinery. He is now producing all of the videos.
He says “We’ve found that they are an invaluable way to portray the condition of the machine, and one of the biggest selling tools besides having a customer come in and inspect the machine in person. Many times a customer cannot travel to inspect, or it is too cost prohibitive. I’ve sold several machines to foreign buyers simply by answering their questions with a string of videos.”
Chuck’s editing software of choice is Final Cut Pro, and his preferred avenue for distribution is YouTube. He uses the Adobe Creative Suite for his photo editing.
Chuck says “I’m constantly critiquing our advertising options on all the different equipment websites, mass email communications, SEO of our website, and will use almost every Google tracking website for monitoring. I also help facilitate our website’s interaction with online Locator (CIMS.)”
Wisconsin Metalworking Machinery recently celebrated their 30th year in business. WMM is one of the largest stocking dealers of used metalworking machine tools in the country. They have over 300 machine tools in their 50,000 square foot warehouse in Waukesha, WI. They specialize in used metalworking equipment, about 1/3 of inventory consists of fabrication (press brakes, shears, rolls) 1/3 CNC chip making, and 1/3 miscellaneous metalworking equipment.
Today, Chuck and Amy are the proud parents of 2 young children. They live in Hartland, Wisconsin, just 7 minutes away from grandparents, JR and Debbie. Chuck’s passion outside of work is baseball. Chuck plays softball in several leagues, including one with Amy on the local Co-Ed team: “WMMSC” – Wisconsin Metalworking Machinery Softball Club.
Chuck adds “I pretend to golf, I’m good enough to be dangerous on the course, I hit my driver far and crooked, as anyone at past MDNA golf outings can attest.”
Chuck is currently serving the MDNA Milwaukee / Minneapolis Chapter as the Treasurer and Secretary.
Washington, D.C. – Government Update –Friday, June 12, 2015, our elected officials are preparing to vote on the Trade Promotion Authority Act of 2015 (TPA) and the Trade Adjustment Assistance Act (TAA) of 2015. Machinery Dealers National Association (MDNA) association partner and voice in Washington, NAM (National Association of Manufacturing) is calling for passage of TPA and TAA.
“The House of Representatives now faces a simple decision: vote in support of TPA and expand opportunities for manufacturers to sell our products overseas, increase global competitiveness and fuel our ability to grow and create jobs, or vote to keep manufacturers on the sidelines and at a global disadvantage. A vote for TPA is a vote to support the 12 million men and women working in manufacturing in the United States.”– Joint statement from NAM President and CEO Jay Timmons and NAM Vice Chair of International Economic Affairs Policy and Emerson Chairman and CEO David Farr.
Hear NAM President and CEO Jay Timmons’ appeal here.
In support of these measures NAM recommends calling your representative now at: 202-224-3121
The fast track negotiating authority for trade agreements is the authority of the President of the United States to negotiate international agreements that Congress can approve or disapprove but cannot amend or filibuster. Also called trade promotion authority (TPA) since 2002, fast track negotiating authority is a temporary and controversial power granted to the President by Congress. The authority was in effect from 1975 to 1994, pursuant to the Trade Act of 1974, and from 2002 to 2007 by the Trade Act of 2002. Although it expired for new agreements on July 1, 2007, it continued to apply to agreements already under negotiation until they were eventually passed into law in 2011. In 2012, the Obama administration began seeking renewal of the authority. Learn more here.
The Trade Adjustment Assistance Act of 2015 reauthorizes the Trade Adjustment Assistance (TAA) program through 2020 and renews the program’s 2009-2010 eligibility and benefit levels. Trade Adjustment Assistance provides necessary assistance for workers who have lost their job due to trade. The Department of Labor (DOL) estimates that since 1975 over two million workers have relied on the TAA program to receive benefits to make ends meet and the training necessary to find new employment. Congress included a short term TAA extension in the omnibus bill last year, but the statutory authority for the program expires entirely at the end of this fiscal year. Learn more at: house.gov
By Burt White Chief Investment Officer, LPL Financial Jeffrey Buchbinder Market Strategist, LPL Financial
Weekly Market Commentary, Posted June 12, 2015
The upcoming Supreme Court decision regarding premium subsidies for the Affordable Care Act (ACA, aka Obamacare) may create a buying opportunity for the healthcare sector. We believe the odds favor the status quo (all subsidies legal regardless of the state), meaning that any selling pressure related to the risk of losing insured patients may present a buying opportunity. However, a court ruling in favor of the challenger (against the administration), which would likely be met with even more selling pressure and remains a possibility, may create an even better entry point for the sector.
Later this month, in the case of King v. Burwell, the Supreme Court will rule on whether ACA premium subsidies (via tax credits) are legal for individuals with Obamacare policies in states that chose to use federal health insurance exchanges rather than setting up their own state-run exchanges. When the law was written and subsequently passed in 2010, the hope in Washington was that all states would set up their own insurance exchanges for their citizens. Were this achieved, it would have eliminated the question of whether any subsidies that made insurance premiums more affordable were legal. The law is quite clear about the legality of premium subsidies in states with exchanges. However, the law is ambiguous about states that opted not to set up exchanges, which is the crux of this case.
WHICH WAY WILL IT GO
Our sources in Washington see 60% odds of the status quo (a ruling in favor of the administration), while we believe, based on the points below, that the odds may
even be a bit higher. A favorable ruling for the administration could be based on three potential arguments:
1. The court may think the intent of the law and the broad context — including consideration for the conditions under which the law could reasonably function economically — are enough to essentially prove the IRS’s intention and uphold the status quo. The section of the law that allows for the federal government to set up an exchange if a state does not, points in this direction.
By John J. Canally, Jr., CFA Chief Economic Strategist, LPL Financial
Weekly Economic Commentary, May 9, 2015
BEIGE BOOK SUGGESTS CONTINUED MODEST ECONOMIC GROWTH
The latest Beige Book suggests that the U.S. economy is still growing at a pace that is at or above its long-term trend, indicating that some of the “transitory factors” that held the U.S. economy back in the first quarter of 2015 have faded and that some upward pressure on wages is beginning to emerge. Overall, the Beige Book described the economy as expanding at a “modest or moderate” pace in most districts. In general, optimism regarding the economic outlook far outweighed pessimism throughout the Beige Book, as it has for the past two years or so.
The Beige Book is a qualitative assessment of the U.S. economy and each of the 12 Federal Reserve (Fed) districts. We believe the Beige Book is best interpreted quantitatively by measuring how the descriptors change over time. The latest edition of the Fed’s Beige Book was released Wednesday, June 3, 2015, ahead of the June 16 – 17, 2015, Federal Open Market Committee (FOMC) meeting. The qualitative inputs for the June 2015 Beige Book were collected from early April 2015 through May 22, 2015; thus, they captured a period of:
Increasing market concern around Greece
A disappointing bounce back in the U.S. economic data for March and April
following the disruptions of the first quarter (port strike, bad weather, strong dollar)
Falling U.S. dollar (decline began in mid-April) that remains elevated relative to
year ago levels
Some stability in oil prices
Improving economic activity in the Eurozone and Japan, but ongoing concern over
weakness in China
Dealers how frustrated do you get trying to keep up with the ever-changing marketing trends in order to compete? We found these excellent whitepapers (specifically designed for equipment dealers) provided by EDA (Randall-Reilly) and we recommend you take a look!
The first is titled, Marketing 101: An Overview
Dealer Marketing 360 Series | 1 of 6: via EDA
Inside they go over:
Achieving Efficiency and ROI with Direct Marketing
A Practical Overview of CRM Systems
Market Analysis: Who’s Buying What?
Uncovering Opportunities and Getting off the Cowpath
It’s completely free to download they just ask you for a little bit of basic information before you can access it.
This next whitepaper covers the steps to maximize your online presence and we thought it was on point!
It’s titled, Getting Started with eMarketing: Maximizing Your Online Presence and Marketing ROI
Dealer Marketing 360 Series | 6 of 6: via EDA
In this whitepaper they start with a broad overview of the basics: your dealership’s website, email marketing campaigns, and product video that you’re providing to your customers and prospects. Then they drill down on each of these (below) and show some best practices later in this white paper.