Market Commentary - Focus

Vital information about the markets, the economy, rates, and more.

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Basel III Proposed Regulatory Capital Changes Webinar

FinSer is pleased to provide a replay of a webinar we held jointly with the Accounting Firm of Fisher, Herbst & Kemble in September 2012 on the proposed changes to

Regulatory Capital, Implementation of Basel III, Minimum Regulatory Capital, Capital Adequacy and Transition provisions 

Regulatory Capital Rules: Standardized Approach for Risk-Weighted Assets; Market Discipline and Disclosure Requirements

To view the replay select this link.

Economic Outlook - APRIL 2015


The headwinds from a stronger dollar are becoming more apparent in a widening array of economic data. The impact of currency movements on the trade balance is well documented. A stronger dollar hinders exports and helps imports, widening the trade gap and subtracting from GDP. The indirect impacts, such as diminished foreign earnings and reduced competitiveness tend to be harder to discern. Many of the first quarter’s earnings releases have noted margin compression due to a flood of cheap imports and multiple factory-sector gauges have materially downshifted. Additionally, the weak March employment report implied that slack demand among manufacturers was taking a toll on the labor market. 

Some of the economic slowdown in the first quarter, as was the case last year, may be due to the residual impact from the inclement weather and also to the supply disruptions from the West Coast port partial shutdown. The decline in oil prices has not materially spurred consumer spending, but rather has pushed those dollars into savings by cautious households. In contrast, to date the decline in oil prices has had a significant negative impact on business investment, as oil exploration and development activity has declined substantially. To a lesser degree, layoffs in the energy sector should also affect the labor market. And, as stated above, the stronger dollar looks to be a bigger drag on economic activity than initially expected. The Fed signaled its concern at the March 17-18 FOMC meeting that the economy was losing momentum.

That concern was reiterated at the April 28-29 FOMC meeting in the statement that was released. “Information received since the Federal Open Market Committee met in March suggests that economic growth slowed during the winter months, in part reflecting transitory factors. The pace of job gains moderated, and the unemployment rate remained steady. A range of labor market indicators suggests that underutilization of labor resources was little changed. Growth in household spending declined; households’ real incomes rose strongly, partly reflecting earlier declines in energy prices, and consumer sentiment remains high. Business fixed investment softened, the recovery in the housing sector remained slow, and exports declined.” 

The Committee continues to be concerned about employment and even inflation as illustrated further in the following statement. “Although growth in output and employment slowed during the first quarter, the Committee continues to expect that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced. Inflation is anticipated to remain near its recent low level in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of declines in energy and import prices dissipate."


Lack of certainty in the economic picture increases the likelihood that the Fed will remain on the sidelines. However, recent comments from Fed officials underscore the FOMC’s determination to move away from zero interest rate policy (ZIRP) and get the process of rate normalization started, even if it is low and slow. Persistent labor market slack points to a slow pace of rate hikes. Another reason to expect a gradual and shallow glide path in rates is the weak link between wages and prices. The loose transmission mechanism from wages to price inflation reduces the odds of an inflation scare. Thus, September remains the target date for the FOMC’s rate liftoff and is well anticipated by the markets. The only thing that could derail the Fed’s plan to tighten in September would be a significant downgrading in the economic forecast, and given the recent weak data, particularly in the area of durable goods orders, that remains an outside possibility.