Not Your Typical Charterholder: Jeff Branstad, CFA

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jbranstad_NYTCHInterview #2: Jeff Branstad, CFA

Jeff Branstad is a Senior Investment Product Specialist at Thrivent Financial, where he serves as an expert on investment products, portfolio construction and asset allocation strategies as well as serving as a resource for economic, financial market and specific asset class commentary. He also supports other areas including product management, product development and product marketing. He received his undergraduate degree from Luther College in 2004 and later earned his MBA from Augsburg College in 2007. He received the CFA Charter in 2010.

Tell me a little bit about yourself, where did you go to school?
I received my undergraduate degree from Luther College in Decorah, Iowa, where I majored in Economics and Accounting. The business department did not have a specific “finance” degree, but I was able to take a handful of finance courses. I was always interested in the investment industry and my dad is a Financial Advisor, so I had been exposed to the industry to some degree. However, I wasn’t certain what I wanted to do when I left school except that I knew I didn’t want to be an accountant. Continue reading →

Mall Rats Abandoning Ship

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We’re a guy, so we only go to the mall when one of two things occur:

1)      A kid’s birthday party at the Mall of America

2)      When we need underwear

However, we need to focus on consumer spending for investment purposes despite our lack of fashion élan. One thing we have noticed is the number of retailing companies that are mentioning weak traffic and heavy discounting. It seemed to start with the teen retailers, but the trend seems to be more systemic than we thought. Even some of the better performing names in the group and even certain ecommerce companies are discussing weakness. That got our attention.

The question we have is why is this happening? One argument is the government shutdown. Perhaps, but some retailers, especially the teen retailers, were seeing less traffic/conversion well before the shutdown. Could it be the sequester causing the slowdown? We would like to see results out of broader areas of the economy this earnings season, such as manufacturing, before we lay credence to that theory. Could it be employers are adjusting hours in advance of the Affordable Care Act? We have seen some companies such as Forever 21 adjusting hours downward to limit the number of full time workers. Others such as Walgreens are moving their employees to private healthcare exchanges, and some other companies are doing the same for their retirees. Could it be tax increases earlier in the year now affecting the consumer? Is it the consumer trying to tell us something about their future spending and job prospects that are not showing up in the data yet? Could it be a combination of all of the above? Or are there a lot of people like us that have plenty of underwear and don’t need to go to the mall? What do you think?

Supporting links:

http://money.msn.com/now/post–forever-21-caught-in-obamacare-controversy

http://www.reuters.com/article/2013/09/18/us-healthcare-exchanges-private-idUSBRE98H03120130918

Something’s Got to Give

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And so, after weeks of bluster around the budget / debt ceiling impasse, something did finally give. No political comments here, but we seem to be right back where we started, with just a little breathing room. Nevertheless, with the possibility of an imminent U.S. default off the table, risk markets reacted favorably, and Credit was among them – the index was tighter by 4-5 basis points. This doesn’t seem fair, in some ways. Equities at least traded lower during the uncertainty, before rebounding to new highs. But cash credit spreads have been tightening all along. Lack of supply, continued strong demand – it feels like a very technical market to me right now, but spreads just keep grinding in. Continue reading →

Computer Literate

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During this time of year in the Upper Midwest one can say if you don’t like the weather—wait a day. With the jet stream bouncing above and below us in rapid order like so many Vikings passes, our weather can go from frustrating to fine in the short-term often before we can react to it. It reminds us of the market.

The question we have is that with the rise of computerized trading and artificial intelligence, are we mere humans getting beat in short-term investing? Despite The Rise of the Machines, these devices do have to be programmed by some lowly carbon-based life form somewhere. But the software can be programmed without the personal biases of humans and can take into consideration several different investment styles modeled after some of the best investors in those styles. Continue reading →

Nothing to be done

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It was another week of waiting for Washington, and there was little movement in time to help credit markets along. It’s not that spreads were especially weak – a few basis points wider until Thursday, and the street seemed happy to engage in any activity that came along. In other words, odd lots traded well. But the new issue calendar was extremely quiet for the second week in a row, and secondary markets seemed to slow to a crawl. Thursday was a little better – word of a potential compromise late in the day helped to push spreads tighter, the rally pretty much in line with equities. But by that time, most new issuers had gone home for the week, ready to take off for a long holiday weekend. Yes, equity friends, the bond markets are closed on Monday in recognition of Columbus Day.

So here’s the recap. There was about $12 billion in Investment Grade supply for the week, with large deals from Sinopec (a Chinese oil refiner), Centrica PLC (the parent company of British Gas), Codelco (copper mining), and our U.S. domestic entry for the week, Berkshire Hathaway. The dominance of foreign issuers was notable – we will assume it is due to earnings season and not because U.S. issuers are busy searching for a more stable political climate to call home.

We are expecting another $10-15 billion in supply next week, but the banks are a bit of a wild card. As we start to move through earnings, we might see some of them hit the market, pushing that supply number higher. A lot will be contingent on progress in Washington – which is starting to feel like waiting for Godot.