5 02, 2014

Manufacturing activity a blip or more serious

By | 2017-03-06T12:04:51-04:00 February 5th, 2014|business advisory|0 Comments

The February 3rd report in the WSJ outlined continued decline in manufacturing activity in the US provided an insight into an economic slowdown.  It is not surprising to see the slowdown in manufacturing based upon GDP data that indicates inventory build has been a major contributor to GDP over the last few quarters.  What is concerning is a reading above 50 indicates expansion so the manufacturing sector is still expanding but the decline in January from 56.5 to 51.3 should put up some yellow lights.  This is the largest one month drop since May of 2011.  The new order index is down substantially creating concern about the coming months. Summary of Manufacturing data for January Index One month change Manufacturing activity 51.3 -5.2 New Orders 51.2 -13.2 Production 54.8 -6.9 employment 52.3 -3.5   This news is [...]

17 01, 2014

Holiday Retail Revenue a Mixed Bag

By | 2017-03-06T12:04:51-04:00 January 17th, 2014|business advisory, Uncategorized|0 Comments

This is a continuation of my blog on tracking holiday retail revenue together with detailed changes in retail sales by sector for December.  We continue to see inventory growth that is not a major concern today but tomorrow may bring a different response.  The holiday retail revenue results were a mixed bag as consumers continue to be cautious or is it a lack of disposable income.  Year end 2013 sales data is arriving from the commerce department.  Surprise we had downward adjustment of October and November sales data and early returns of the December data reveals a mixed bag.  Tuesday's retail-sales report also took some of the shine off prior figures. Retail sales were revised down to a 0.5% increase in October and a 0.4% gain in November. Solid economic growth with these types of gains is [...]

3 01, 2014

How do we protect ourselves

By | 2017-03-06T12:04:51-04:00 January 3rd, 2014|business advisory, fraud|0 Comments

Per Wired Magazine:  “The headline news is that the NSA has surreptitiously “burrowed its way into nearly all the security architecture” sold by the world’s largest computer networking companies, including everyone from U.S. mainstays Cisco and Juniper to Chinese giant Huawei”. On New Year’s day morning I am sipping my coffee and reading Yahoo when I see this article that outlines how our Country has implanted code into every devise we use making our private business communications available to NSA for storage and review.  No big surprise except it left me wondering how it is going to implode onto the business world.  Is the day coming when unscrupulous business people will have access to an app that allows them to enter a phone number and obtain all the data on that person’s phone or computer.  I am [...]

6 12, 2013

Inventories Swell by $116 Billion in 3rd QTR:

By | 2017-03-06T12:04:51-04:00 December 6th, 2013|business advisory|0 Comments

Today’s upward adjustment of GDP by .8% to 3.6% creates additional information in which to review your client / customers outlook.  The bulk of the increase in GDP was inventory build equating to “businesses accumulated $116.5 billion worth of inventories during the quarter, the most since the first quarter of 1998.” (Reuters) This is followed by lack luster retail sales (see previous blog).  With cheap credit and access to cash it appears the retailers have taken the risk of not losing that last sale as money is cheap so maybe they think the risk is limited.  I am not sure about that.   It all depends on the FMV of the goods after the holiday season.  Tech related products have a limited shelf life before being outdated and thus the value of that inventory declines shortly thereafter.  Earnings [...]

20 11, 2013

Economic Update from the Boston Fed

By | 2017-03-06T12:04:51-04:00 November 20th, 2013|business advisory|0 Comments

On November 12th the New England Commercial Finance Association held an Economic Update featuring an evening with Jeff Fuhrer, EVP and Senior Policy Advisor, Federal Reserve Bank of Boston. It was a very enjoyable hour and I will try to summarize the important facts delivered.  Upon arriving we received a one page handout comprised of GDP components, unemployment and payroll employment growth. First the component of GDP from 2009 Q3 to present. Line Component Average   during recover 2013 Q3 1 GDP 2.3 2.8 2 Final   Sales 1.8 2.0 3 Inventory   Contribution .5 .8 4 Government   contribution -.03 .0 5 Consumer   spending 1.5 1.0   I found two facts stunning Inventory growth comprises 28.5% of 2013 Q3 growth vs 21.7% on average for the period.  So about 20% of the GDP growth since [...]

14 11, 2013

Are we facing a lost decade for middle market companies

By | 2017-03-06T12:04:51-04:00 November 14th, 2013|business advisory|0 Comments

Are we facing the lost decade for middle market. Over the last few weeks three distinct situations have come to my attention.  All three have the same underlying issues; loans classified as current with much too much gray hair. A real estate project is poorly managed and cannot make its loan payments Potential buyer uncovers a secured lien from a large bank with no payments in five years Bank asks customer to engage a professional to provide guidance on improving cash flow and operations The common thread through all the loans is that they are classified as current.  Let’s take a quick look at the three situations. In “1” the international bank engaged a colleague not as a turnaround / restructuring expert but as a knowledgeable person in the specific market. The bank has been rewriting the [...]

24 10, 2013

Intercreditor Agreements

By | 2017-03-06T12:04:52-04:00 October 24th, 2013|business advisory|0 Comments

On  October 17th I attended a CFA presentation sponsored and presented by  Burns and Levinson on intercreditor agreements.  With more and more lenders sharing risk it is important for us at CRL to understand what is under the hood of those intercreditor agreements and what to look for during times of corporate stress.  It is better to have spent time and money writing the agreement than trying to protect your interest when you pull it out of the dusty draw in time of need.  In our role we often are looked upon to assist in the negotiations to hopefully keep the waters calm as we look for a financial solution to the challenges at hand.  That said what you will find below is a short summary and thoughts on what we learned that evening. A quick thank [...]

15 10, 2013

Local Economy

By | 2017-03-06T12:04:52-04:00 October 15th, 2013|business advisory|0 Comments

Summer has come to a conclusion and the news coming out of Cape Cod is not all wonderful.  In addition, GAP and others reported a decline on same store sales in September.  In isolation none of it is concerning but taken as a whole it is not providing a clear picture of a recovery in full swing. While the Cape was very crowded and many of us found it much more congested than in prior years (remember hurricane Sandy destroyed the NJ shore) the dollars did not flow to the service sector.  According to local CPAs and Restaurateurs  volume was down from the previous year.  How this all plays out for your customers and clients we are not sure, but it is clear that folks are not parting with whatever cash remains in their pockets. Does this [...]

12 09, 2013

Budgeting Done Right

By | 2017-03-06T12:04:52-04:00 September 12th, 2013|business advisory|0 Comments

Getting the Annual Budgeting Process Right An article in the WSJ over the summer criticized the annual budgeting process as leading to bad decisions.  The author Mr. Merchant, is the chair of accountancy at USC.  His research indicates that many managers find the process a waste of time filled with endless meetings discussing historical data in today’s dynamic world. Too many budgets look back to make decisions on what is going to happen today.  At the same time Mr. Merchant comments that the best users of the budgets are opportunists that work the system to enrich their personal bonuses. Others spend foolishly to avoid a reduction in future budgets.  Mr. Merchant contends the process is too infrequent, inflexible, and easily manipulated. He talks about dynamic planning to avoid stale plans before they are instituted, flexibility in allocation of [...]

15 08, 2013

Fed’s Concerned Over Risk in Lending

By | 2017-03-06T12:04:52-04:00 August 15th, 2013|business advisory|0 Comments

WSJ 6/13/13 - U.S. regulators are grilling banks over lending standards and warning them about mounting risks in business loans.... But regulators worry that banks have sweetened loan terms too much, which could put them in jeopardy if corporate borrowers can't repay. In private meetings with bankers in recent months, regulators from the OCC, FDIC, and the FRB  focused heavily on commercial lending. Regulators are concerned with leveraged loans and they question whether some banks are doing enough to gauge risk in March. In April large banks told the Fed they had relaxed a variety of lending standards in the first quarter. At the same time the country needs lending to stimulate the economy. All this oversight puts pressure on a Bank's resources human and otherwise. No lender, I know, wants to book a loan that is [...]

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