Category Archives: Newsroom

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Weekly Market Commentary

Emerging Markets Opportunity
Still Emerging

The S&P 500 Index hit another set of fresh record highs last week (November 10 – 14, 2014) and has achieved the midpoint of our total return forecast (10 –15%) for the year with a 12% return year to date. While we continue to recommend keeping the majority of equity allocations in the United States, as we have for a while, we think it is a good time to look at opportunities that have lagged behind the strong U.S. stock market and may have become attractively valued, possibly setting the stage for a reversal. One such area is emerging markets (EM).

It has been another tough year for EM equities. The MSCI EM Index has returned just 1.4% year to date, far behind the S&P 500 (though MSCI EM Index has outpaced the developed foreign benchmark, the MSCI EAFE Index, which has returned -2.6% year to date) [Figure 1]. EM have struggled for many reasons, including but not limited to lackluster earnings, Federal Reserve (Fed) tapering and the subsequent end of quantitative easing (QE), related concerns about current account deficits due to trade imbalances and borrowing abroad, geopolitical unrest in Ukraine and the Middle East, the drop in commodity prices, a strong U.S. dollar, and growth fears in Europe and

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China. So with all of those challenges facing investors, is it time to buy EM? To answer that question, let’s look at fundamentals, valuations, and technicals.

Read Full Report here Weekly Market Commentary 11182014

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Weekly Economic Commentary

Japan Check-In: Will the Weak Q3 GDP
Reading Draw a Policy Response?

Japan reported a 1.6% annualized decline in real gross domestic product (GDP) in the third quarter of 2014 over the weekend of November 14 – 16, 2014. Policymakers in Japanese Prime Minister Shinzo Abe’s government and at the Bank of Japan (BOJ), as well as most market participants, expected a solid gain in GDP in Q3, not a decline. The consensus of economists polled by Bloomberg News was looking for a 2.2% gain in GDP in Q3, after the Japanese economy contracted more than 7% in Q2 2014 in response to a big value-added tax (VAT) increase imposed in April 2014. (We’ll discuss the VAT in more detail below.) As a result of the unexpected decline in GDP in Q3 [Figure 1], Japan’s economy has met the unofficial definition of recession (i.e., two consecutive quarters of negative GDP) and has entered its fourth recession since 2007. How long Japan’s economy remains in recession — and more importantly, the policy response to the latest recession — may help to determine the trajectory of global growth in 2015 and beyond.

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Japans Economy has entered its Fourth Recession since 2007 and awaits a Policy Response

The Consumer Disappoints

Consumer spending, which accounts for 60% of Japan’s economy, rose just 1.5% in the third quarter, after the VAT increase led to a 19% drop in consumer spending in the second quarter of 2014. Most market participants — and probably the BOJ and the Abe administration — expected…

Read the Full Report here Weekly Economic Commentary 11172014

Bruce R Habitat for Humanity 1

BRUCE REDENZ RECEIVES HABITAT FOR HUMANITY AWARD

FOR IMMEDIATE RELEASE

NOV 17, 2014

WASHINGTON, D.C. – Bruce Redenz of MDNA Member firm Madison Tool Inc. Bruce Redenz and Amy Matthewsreceived the Habitat for Humanity of Dane County, Wisconsin ‘Volunteer of the Year’ 2014 Award. In October of 2014 Bruce and other award recipients were honored at a special banquet that featured keynote speaker Amy Matthews, Host, HGTV’s Renovation Raiders.

On earning this achievement Bruce stated “Habitat is a really special organization that makes a huge difference each day in the lives of the families it serves and the communities it builds. I have witnessed first-hand the stability and quality-of-life which the opportunity to own simple, affordable, livable housing brings to our Habitat homeowners. With volunteers working alongside homeowners and their future neighbors, we become a family. Receiving this award is an honor which I am humbled by, but frankly, the excitement I see when a future Habitat homeowner tells a group of volunteers, “This is going to be my family’s home” is the greatest reward I could hope for.”

The Machinery Dealers National Association congratulates Bruce on this great achievement. MDNA Executive Vice President, Mark Robinson says “I’m thankful for this kind of dedication and drive from Bruce and from all of our members. MDNA is a volunteer run non-profit and our members serve not just our association but those less fortunate, in our communities and around the world and people like Bruce Redenz are setting a great example for the future leaders of MDNA.”

About HABITAT FOR HUMANITY- WI, DC:

Habitat for Humanity of Dane County provides simple, decent, affordable housing for families who might not otherwise become homeowners. Eligible families pay monthly mortgage payments on a 0% interest loan, and contribute from 325 to 375 hours of sweat equity in the building of their homes. Habitat for Humanity has served more than 225 families in Dane County. For more information on Habitat for Humanity of Dane County, call 608-255-1549 or visit www.habitatdane.org

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FOR PRESS RELATED INQUIRIES:

Jennifer Gray

Phone: 703.836.9300

Email: jgray@mdna.org

IMAGES BELOW 

Bruce Redenz,  HFHDC CEO Valerie Johnson (middle), Heather HFHDC office. Bruce R. with construction manager Dennis, (former) volunteer coordinator, Kristine Jansen, Habitat For Humanity Dane County, Wisconsinhabitat dc

 

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Weekly Market Commentary 11/6/2014

S&P Is Not GDP

U.S. economic growth has been subpar — right around 2% — during much of the ongoing economic expansion. Yet, the S&P 500 has returned nearly 230% cumulatively since the bear market low on March 9, 2009. How did that happen and is it justified?

Before trying to answer to those questions, it is worth pointing out that this situation is not all that unusual. In fact, since 1950, the S&P 500 median return is 13% (average is 12%) when real gross domestic product (GDP) grows less than 3%, with the S&P generating a positive return 68% of the time. However, a good portion of those returns come during recessions — historically, the best time to buy stocks is at recession troughs. But even if we take those periods in and around recessions out of the equation and look at annual returns when GDP growth is between 1–3%, the median (and average) S&P 500 return is a respectable 7–8%. Stocks tend to like average (or slightly below average) growth, which is not strong enough to generate worrisome inflation.Market Image 11314

Now back to the question of what has driven this stock market to far outperform economic growth. Some might say quantitative easing (QE), which ended at the end of October 2014 in the United States (the Bank of Japan expanded its QE program last week on Halloween). While QE has benefitted U.S. stocks (how much is up for debate) by helping keep interest rates low and encouraging investors to buy riskier assets (see this…

Read Full Report here Weekly Market Commentary 11032014

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Weekly Economic Commentary 11/6/14

QE Ended, Now What?Economic image 11314

The Federal Reserve’s (Fed) policymaking arm, the Federal Open Market Committee (FOMC) met last week (October 27 – 31, 2014) and decided, as was widely expected, to end its bond purchase program known as quantitative easing, or QE. While the FOMC retained its promise to keep rates low for a “considerable time” after QE ends, it set the bar fairly high for restarting another round of QE. At the end of this week’s commentary, we’ll present some metrics to help answer the question many are asking in the wake of last week’s announcement: Did QE work? Our view is that it is probably too soon make the final call as to whether QE “worked,” and we’ll leave it to the economic historians, pundits, and politicians to debate that in the years and decades to come. One thing we know for sure is that no one can ever know what would have happened to the United States and global economies had the Fed (and other central banks) not embarked on QE during the uncertainty generated by the collapse of Lehman Brothers and its aftermath in late 2008 and early 2009.

QE Is Still Needed in Japan and the Eurozone QE was also in the news in Japan last week, as that nation’s central bank, the Bank of Japan (BOJ), ramped up its QE program, surprising markets, which had mostly expected the BOJ to wait until early 2015 to dial up its QE program. Late this week, November 3 – 7, 2014, the Eurozone’s central bank, the European Central Bank (ECB), will hold its monthly policy meeting. We continue to expect the Eurozone to expand its QE program, but in our view, that expansion is not likely to be announced this week. Although the results of the bank stress tests conducted by the ECB (which will take over this week, for the first time, as the bank regulator across the Eurozone) were released last week, the ECB is likely to wait to see some progress on the fiscal front (i.e., more government spending and tax cuts to help support the Eurozone economy) before it proceeds with the expansion of its QE program. We acknowledge, however, that the earlier than expected action from the BOJ to expand QE puts additional pressure on the ECB to do more — and sooner rather than later. As we noted in our recent (September 25, 2014) Weekly Economic Commentary, “Central Bankapalooza”:…..

Read Full Report here Weekly Economic Commentary 11032014

Jerry Blumberg

Q&A With Jerry Blumberg

Member Spotlight Interview
Jerry Blumberg
Jerry Blumberg, President of Blumberg Machinery Co.

Get To Know Your Fellow Members 

Jerry Blumberg is the President of Blumberg Machinery Corporation, a family owned and operated stocking dealer located in the small town (est. population of 1,583, 2010 census) of Bannockburn, Illinois which is just under an hour’s drive from the city of Chicago. Some of you may also know Jerry as the father of Ryan Blumberg, CEA, (MDNA Director at Large/ Locator Services, Inc. Past President). Jerry Blumberg has been a member of MDNA since 1972.

To help us get to know the man behind the Blumberg name MDNA Member, John A. Josko, CEA, Industrial Asset Appraisals & Consulting, Inc. caught up with Jerry as part of his assignment on the MDNA PR Committee and asked him questions like how he started out in the biz, advice he would like to pass on, what challenges he faces in the industry today and what he likes to do for fun…

What was your first Job with the company and how did you get it?

“I started as a salesman in the used machinery business for Adams Machinery Company.” (Adams Machinery Company- An MDNA Founding Member Firm)

What is the biggest challenge for your company in the next 5 years and do you have any tips on how you will conquer it?

“Staying up to date with the technological changes to both business and the Machine Tool Industry. You must keep an open mind and always be looking at the future.”

What is one thing you would you pass on to MDNA’s younger next generation leaders about this business or industry?

“Get involved, develop good communication skills with old and new association members, learn your job and your industry, try to improve your skills every day.”

What’s your favorite thing to do in your spare time?

“Spending time with my family, playing a little golf and interacting with people.”

What would be your best achievement to date?

“My family and the interaction and time spent with my fellow dealers.”

What is your favorite type of machinery or machine tool and why?

“Large CNC Machine Tools. I love all aspects of the buying and selling of the big machinery.”

What do you like about your job?

Blumberg Family
Blumberg Family

“Working with my son Ryan. The diversity & interaction with my fellow MDNA Members…and I love the thrill of the chase in this industry.”

What is the most useful thing you have participated in or attended that you can apply to your job or has helped your career?

“During the MDNA Weekend with the Pros, seeing the interaction with the other dealers, their warehouses, touring the manufacturing facilities and networking.”

If you were on an island and could only bring three things, what would you bring?

“Cell Phone, MDNA Directory, Food.”

What’s your first thought upon waking up?

“What do I have to do today?”

 

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MDNA News Fall 2014 Edition

Read the latest copy of the MDNA News here! This new digital magazine allows you to click on elements within the magazine for more information online.

Read the latest copy of the MDNA News here! This new digital magazine allows you to click on elements within the magazine for more information online.

Fed BEIGE BOOK

Weekly Economic Commentary 10/24/14

Beige Book: Window on Main Street

No Signs of Global Growth Scare Impacting Main Street as Modest to Moderate Economic Growth Continues

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 Beige Book, released last Wednesday, October 15, 2014, ahead of the October 28 – 29, 2014, Federal Open Market Committee (FOMC) meeting, was timely, given the increasing concerns in global financial markets about a slowdown in global growth. The qualitative inputs for the October 2015 Beige Book were collected through October 6, 2014, and thus captured at least three weeks or so of the elevated market concerns around global growth centered around Europe, the rise of the Islamic State in Iraq and Syria (ISIS), the social unrest in Hong Kong, and the concerns about the spread of Ebola to the United States.

Fed BEIGE BOOK
Fed BEIGE BOOK

In our view, the latest Beige Book reflected a picture of the U.S. economy that was largely unaffected by any of the concerns noted above, and again described “modest to moderate economic growth (in the U.S. economy) at a pace similar to that noted in the previous Beige Book” (September 3, 2014) and that “employment continued to expand at about the same pace as that reported in the previous Beige Book.” However, as it has over the past year or so, the October 15, 2014, Beige Book noted that “some employers had difficulty finding qualified workers for certain positions” and that some reported “upward wage pressures for particular industries and occupations, such as skilled labor in construction and manufacturing.” In the past, these characterizations of labor markets have been a precursor to more prevalent economy-wide wage increases. In general, optimism regarding the economic outlook far outweighed pessimism, as it has for the past 18 months or so. The “modest to moderate” description of the overall economy has now been used in the last 12 Beige Books and in 13 of the past 14 dating back to March 2013.

Sentiment Snapshot

To provide a snapshot of the sentiment behind the entire Beige Book collage of data, we created our proprietary Beige Book Barometer (BBB) [Figure 1]. In October, the barometer ticked down to +82, down from a +97 reading in September and the +102 readings seen in both June and July. The +82

Read Full Report here Weekly Economic Commentary 10202014

Oil Pumps

Weekly Market Commentary 10/24/14

Oil Hits the SkidsOil Pumps

The S&P 500 fell 1% last week (October 13 – 17, 2014) in volatile trading, leading market participants and media pundits to speculate on how far the stock market slide—now just over 6% from the September 18, 2014, closing high — might go. In last week’s Weekly Market Commentary, “Pullback Perspective,” we cited the economic backdrop, central bank support, and valuations as reasons the pullback was unlikely to turn into a bear market (a 20% decline). This week we turn to an area that has already entered bear market territory and discuss our outlook for oil and the energy sector.

Why Does Oil Matter?

Oil has a significant impact on several key sectors of the economy:

  • ƒƒ Consumer spending. Consumers spend, on average, 4% of their income on energy (including oil, natural gas, refined gasoline, etc.). As a result, a sharp drop in energy costs can help provide a boost to consumer spending, particularly important as holiday shopping and winter heating season approach.
  • ƒƒ Capital spending. Energy accounts for one-quarter of all capital spending globally, more than any other sector. Oil and gas exploration and production is very capital intensive, and significant infrastructure investments are needed to support the U.S. energy boom.
  • ƒ Transport sector. Oil influences transports as a cost (fuel for airlines,shippers, trucks, etc.), but it also provides growth opportunities as an increasing amount of oil and petroleum products are transported by truck and rail due to the boom in U.S. energy production [Figure 1].

Keys to Finding a Floor

After falling 25% from its summer 2014 highs, West Texas Intermediate (WTI) crude oil, a long-accepted benchmark for U.S. oil prices, began to find its footing in the $81 – 82 range late last week (October 13 – 17, 2014). We believe this lower range may hold for several reasons: Slower global growth is already reflected in oil demand forecasts.
Expectations for global oil demand have fallen significantly in recent months in response to slower growth in Europe, which is teetering on the brink of another recession. The International Energy Agency (IEA) cut its outlook for 2014 oil demand growth by 200,000 barrels per day, or 22%, from the agency’s prior forecast of 900,000. To give some perspective,…

Read Full Report here Weekly Market Commentary 10202014

troy clark

Q&A With Troy Clark

Member Spotlight Interview

troy clarkInterview Conducted by: Kim Khoury
Person Interviewed: Troy Clark
Title/Position: Owner/President
Company: Clark Machinery Sales
Company’s website: www.clarkmachinerysales.com
What year did you join the MDNA: 2007

Q: What was your first Job with the company and how did you get it?

A: I was living in Chicago looking for part time work and answered an ad in the Chicago Tribune.  I started working for Machinery Marketing Incorporated in 1997 doing telemarketing and then moved onto a position in sales.

Q: What is the biggest challenge for your company in the next 5 years and do you have any tips on how you will conquer it?

A: Maintaining our Diligence at doing the mundane -Having employees stay sharp, being engaged, inspired and diligent in tasks in down markets.  If the Clark Machinery team is constantly improving their process they hope to stay busy when the market isn’t hot.

Q: What is one thing you would you pass on to MDNA’s younger, next generation Chicago-Tribune-10-11-2012leaders about this business or industry?

A: When selling and buying machinery- sincerity with your customer and acting in a timely manner goes a long way

Q: What’s your favorite thing to do in your spare time?

A: Exploring and dining at great restaurants with my wife.

Q: What would be your best achievement to date?

A: Finally developing the Desire for Endless Process Improvement

Q: What is your favorite type of machinery or machine tool and why?

A: Any type of Haas equipment.  It’s refreshing that a manufacture is transparent.  They take the guesswork out of the replacement cost.  They are willing to show how their machines are originally equipped.  They have great tools for used machinery dealers in the secondary market.haas-2010-machines

Q: What do you like about your job?

A: Coming to work and solving problems with employees and for customers.

Q: What is the most useful thing you have participated in or attended that you can apply to your job or has helped your career?

A: The last weekend with the Pros put on by the Cleveland and Ohio Valley Chapters.  From the manufacturing tours, to visiting the dealer’s warehouses and most importantly the networking with other dealers, the event was first class from start to finish.

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Pictures- 2013 Weekend with the Pros, MDNA Educational Event

Q: What did you want to be when you grew up?

A: To sing bass in a gospel quartet.   I remember thinking as a child, “now that’s a real man.”

Q: If you had a year off, what would you want to do?

A: If money was no object, I would love to travel through Europe with my family, refining my foreign language skills, reliving history.  And of course, lots of eating and drinking.