ELFF: Equipment Finance Confidence Continues to Rise

Overall, confidence in the equipment finance market is 65.5, an improvement from the October 2010 index of 58.8, according to the Equipment Leasing & Finance Foundation’s release of the November 2010 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI).

“The optimism shared by the speakers and attendees at the ELFA Annual Convention may be one of the best leading indicators that the industry is on the rebound,” said survey respondent Adam Warner, president, Key Equipment Finance. “This annual gathering always provides a glimpse into the overall equipment finance industry, and this year both attendance and energy were high. Our experience at Key Equipment Finance is also in sync with the survey results that show increasing confidence in the market. We’ve seen a recent increase in new business activity, and I join the ranks of those who are cautiously optimistic about the state of the industry.”
When asked to assess if their current business conditions would remain the same in the next four months, 38% of executives responding said they believe business conditions will improve, an improvement from 26.8% in October. No respondents believe conditions will get worse (compared with 7.3% in October), and 61.9% believe business conditions will remain the same in the next four months, down from 65.9% in October.
43% of survey respondents, up from 34% in October, believe demand for leases and loans to fund capital expenditures (capex) will increase, while 55%, down from 61%, in October, believe demand will “remain the same” during the same four-month time period. 2.4% believe demand will decrease, a drop from 4.9% in October.
64.3% of survey respondents indicate they expect the “same” access to capital to fund business, a significant decrease from 78% in October. 35.7% of executives expect more access to capital to fund equipment acquisitions, up from 22% in October. No one expects “less” access to capital, an improvement from 4.7% last month.
When asked, 40.5% of the executives reported they expect to hire more employees, up from 22% in October, and 47.6% expect no change in headcount in the next four months, while 12% expect fewer employees, up from 7.3% in October.
100% of the leadership still evaluate the current U.S. economy as “poor” or “fair,” at 33.3% and 66.7%, respectively.
40.5% of survey respondents believe that U.S. economic conditions will get “better” in the next six months, an improvement from 17% in October. 59.5% said they believe the U.S. economy will “stay the same” in the next six months, down from 75.6% in October. No one responded they believe economic conditions in the U.S. will worsen over the next six months, down from 7% who believed so in October.
In November, 45.2% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 36.6% in October. 54.8% believe there will be “no change” in business development spending, down from 63% last month.
Survey results are posted on the Foundation website, http://www.leasefoundation.org/IndRsrcs/MCI/. Survey respondent demographics and additional information about the MCI are also available at the link above.

Quantitiative Easing- Struggling to Make Sense of it.

What exactly is the point of quantitative easing? Two weeks after the U.S. Federal Reserve decided to buy $600 billion of government bonds, the debate still rages. The U.K. has already purchased 30% of the existing stock of national debt, and the Monetary Policy Committee is clearly willing to countenance buying much more.
The question is what all this government bond-buying is supposed to achieve? The Chinese believe the U.S. is using QE to attempt an underhand devaluation of the dollar, a view apparently shared by former Fed chairman Alan Greenspan. Others believe the purpose of QE could and should be to provide liquidity to the banking system, both via the accumulation of cash deposits and the increased supply of funds to buy bank bonds. Given so many competing views, it's no wonder people are confused. Some economists have concluded the attitude of central banks to QE is to shoot first and declare whatever they hit is the target.
But that is hardly a recipe to instill confidence, perhaps the most important channel through which QE is likely to work. In fact, confusion over motives could even act to damage confidence if the markets start to question a central bank's commitment to fighting inflation and willingness to unwind QE. It is hard to feel confident about how QE will end if you don't know why it was begun.

Mazuma Capital: FDIC Steps Up Investigations at Failed Lenders; 'T...

Mazuma Capital: FDIC Steps Up Investigations at Failed Lenders; 'T...: "The Federal Deposit Insurance Corp. is conducting about 50 criminal investigations of former executives, directors and employees at U.S. ban..."

FDIC Steps Up Investigations at Failed Lenders; 'These Numbers Will Increase'

The Federal Deposit Insurance Corp. is conducting about 50 criminal investigations of former executives, directors and employees at U.S. banks that have failed since the start of the financial crisis.
The agency responsible for dealing with bank failures is stepping up its effort to punish alleged recklessness, fraud and other criminal behavior, as U.S. officials did in the wake of the savings-and-loan crisis a generation ago. More than 300 banks and savings institutions have failed since the start of 2008, but just a few have led to criminal charges being filed against bank officials.

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Machinery Makers See Increased Demand 'Across the Board'

Machinery Demand on the Rise

Companies have seen increased demand across the board in the Farm and Construction Machinery sector. Several factors are combining to create a good earnings season for many companies within the sector. Emerging and developed markets have both seen strong growth in the recent quarter. While many companies have focused most of their investments on emerging economies like China, Latin America has actually been one of the strongest markets recently. Countries there, especially Argentina and Brazil, have experienced high double digit growth in equipment sales as compared to last year. Some economists predict the global economy will grow 3.5% next year, with 6.5% growth in emerging markets. The weak U.S. dollar has also been helping sales for American companies.

On the agricultural side of things, machinery companies have seen a huge boost from growing corn prices. Demand for corn has been high due to a projection that 37% of this year's crop will be used for bio-fuels. It's expected that the profits gained from high prices should trickle down to the Farm and Construction Machinery sector as farmers look to upgrade and repair equipment they had been putting off due to weak markets.
Renewed levels of spending are also taking place in the mining equipment industry. After putting off upgrades and repairs due to weak commodity prices, miners are beginning to spend money on equipments now that coal, copper, and iron ore prices have recovered.