4/11/2012	Q1 2012 Economic and Capital Market Summary To us, it feels like we are in a perpetual state of waiting. Waiting for the equity markets to rally like they did in the 1990’s. Waiting for the “all clear” sign that the economy is back on track. Waiting for financial regulatory reform to be finished. Waiting for Northwestern University to finally make the NCAA basketball tournament. And, waiting for businesses to start hiring again so employees can trade up to better jobs with higher pay. As we wait for a return to normalcy in the capital markets, it just seems that we are in a prolonged state of uncertainty.
1/9/2012	2012 Economic and Capital Market Outlook As we look at 2012, our view remains consistent with last year’s. We are cautious on the fragile state of the U.S. economy and believe that some markets are not pricing risk efficiently due to the Federal Reserve’s intervention. We are in the throes of a global debt crisis and world leaders have not been effective in addressing the problems. And, we believe volatility will remain at last year’s escalated levels.
10/18/2011	Q3 2011 Economic and Capital Market Summary We are coming up on the three year anniversary of the Financial Crisis marked by the decision to let Lehman Brothers fail and then, the very next day bail out AIG. At this point in time, the progress we’ve made as a country in addressing the myriad of issues that brought us to the brink of financial collapse is truly disappointing. And, as we “whistle pass the grave yard” and pretend that things are just ok, we believe the foundation of the economy and capital markets continues to erode. With the Dow Jones Industrial Average down 12% last quarter and the credit rating of the United States downgraded from AAA to AA+ by S&P, the last quarter proved to be one of the most volatile for investors since early 2009. If the markets could talk, they are telling us to deal with our structural problems.
7/12/2011	Q2 2011 Economic and Capital Market Summary While the memory of the financial crisis of 2008 is becoming more distant, the road back toward economic prosperity has not been smooth. The uncertainty created from the massive reregulation resulting from the financial crisis has hurt business formation, employment growth and consumption. As we have articulated before, we believe we need to see three things occur before we experience sustained economic growth and become more constructive on the economy and investment in financial assets.
4/1/2011	Q1 2011 Economic and Capital Market Summary While we are making progress toward a sustainable economic recovery, there still is much that is broken and the structural problems that exist in the economy and capital markets are effectively detours and road blocks on our journey. Our guess is that it will be a long and bumpy journey. Excess liquidity in the capital markets has helped to raise prices of both stocks and bonds and is helping to mask the risks inherent in the market. As a result, we believe investors have become complacent as portfolios recovered from their low levels in 2008.
1/10/2011	2011 Economic and Capital Market Outlook There is little doubt that investors are feeling better about things. Many of these people have good paying jobs, have been able to refinance their mortgage this past year and have seen their investment portfolio and retirement savings increase in value. Similarly, corporations across the country are flush with cash and have posted record profits. For the year, the equity market posted a 15.06% return measured by the S&P 500, and the bond market, measured by the Barclays Aggregate Index posted a solid return of 6.54%.
10/8/2010	Q3 2010 Economic and Capital Market Summary It was two years ago that Lehman Brothers was allowed to fail and the US government stepped in to bailout AIG. And, it has been almost two years since the Troubled Asset Relief Program (TARP) was established as a means to prop up our failing financial system, and to lend money to General Motors and Chrysler. Two years later we have made significant progress in structural reform of our financial system and its regulation. Time will tell how meaningful that reform truly is.
7/8/2010	Q2 2010 Economic and Capital Market Summary We believe that we operate now in capital markets that have severe structural barriers that will impede the appreciation of financial assets and economic growth over the long term. And, until many of these structural issues are addressed, economic growth will suffer, we will remain range bound in stocks, and interest rates will stay low.
4/12/2010	Q1 2010 Economic and Capital Market Summary You won’t receive a memo from the government describing the changes that have been made, but we believe that the world we learned about in our graduate level Money & Banking and Financial Markets classes is vastly different. As a result, we operate and invest in capital markets that have structural barriers and a sustained, heightened level of risk.
1/11/2010	2010 Economic and Capital Market Outlook We believe that the inherent risks to investors are high in today’s markets given the lingering government intervention in our capital markets, the huge budget deficit, the muted outlook for sustained economic growth and the lack of business formation that currently exists. Our concern is that a massive global debt crisis is forming and the remedies to fix it will ultimately be painful and likely impact our standard of living. Our investment theme for 2010 is “protect what you’ve got.”
10/1/2009	Q3 2009 Economic & Capital Market Summary The U.S. economy, which we expected to show signs of growth midway through 2009, is offering reasons for being mildly optimistic. Ben Bernanke has declared the recession over. After a GDP contraction of –1.9% for the first half of the year, we expect to see GDP growth of 2.9% or more for the third quarter.
7/1/2009	Q2 2009 Economic & Capital Market Summary This is a very scary time in our economic history. With the government orchestrated bailouts of the U.S. banking system, the two largest mortgage originators Fannie Mae and Freddie Mac, and the auto industry, we have reversed a 25 year trend toward smaller government, instantly reverting back to government playing a bigger role in our economy. What is unsettling to us is that no one knows the new rules since, in a large part, they haven’t been created.
3/31/2009	Q1 2009 Economic Summary We are moving to a new paradigm in both our economy and our capital markets. Over the past decade, we have built more retail stores, restaurants, factories and distribution centers than could be supported by demand—all with cheap and easy credit...
1/1/2009	Capital Market Outlook 2009 he year 2008 will no doubt go down in history as one of the worst investment environments for individual and institutional investors. The carnage left in the wake of turbulent capital markets included banks, insurance companies, brokerage firms and hedge funds...
1/1/2009	Q4 2008 Economic Summary The economy is facing severe headwinds and will struggle for much of 2009. We expect the economy to continue to contract through the first two quarters and remain flat for the remainder of 2009.
10/1/2008	Q3 2008 Economic Summary A major shock is hitting our economy and the result will inevitably be a recession. Economic growth slowed during the third quarter as the financial crisis accelerated and spread around the globe. A growing lack of investor confidence combined with the expectation of additional writedowns continued to plague the financial system...
7/1/2008	Q2 2008 Economic Summary Growth in the U.S. economy continued to slow during the second quarter of 2008 and it now faces challenges from two fronts: a rise in the pace of global inflation and the continued deterioration of the U.S. Financial system. During the second quarter, GDP grew by an estimated 0.7%, following a 1.0% growth rate for the first quarter. At the same time, oil spiked over $140 a barrel, the Dow Jones Industrial Average declined to 11,350 and the yield on the ten year U.S. Treasury climbed to 4.20%...
4/1/2008	Q1 2008 Economic Summary The U.S. economy experienced a dramatic slowdown during the first quarter of 2008. One of the pillars of growth over the past two decades has been the consumer sector which represents 70% of U.S. economic activity. Through a combination of rising stock prices, increasing wages, and rising home values the U.S. consumer has experienced an increase in their general level of wealth that is virtually unprecedented in history. While there have been periods of slow economic growth during this time frame, the consumer has continued to purchase houses, cars, computers and flat panel televisions at an increasing rate. Until now. February retail sales declined 0.6% as Americans grapple with high gasoline and food costs...