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    <title>The Capital Advisor Blog</title>
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    	<description>The Capital Advisor Blog</description>
 	<pubDate>Sat, 04 Feb 2012 07:15:40 +0000</pubDate>
    	<language>en-US</language>

	<item>
         	<title>The Changing Risk/Reward Landscape</title>
         	<link>http://www.capitaladvisors.com/corporate_cash_investments/the_capital_advisor.html</link>
		<category></category>
         	<pubDate>Wed, 01 Feb 2012 00:00:00 +0000</pubDate>
         	<dc:creator>Capital Advisors Group</dc:creator>
         	<guid>586</guid>
 		<description><![CDATA[
Portfolio examinations are typical activities for this time of year as year-end audits get underway. What may come as a surprise, however, is the additional scrutiny on valuation methodology that auditors are requesting. Supporting our clients for this additional scrutiny reminds us of the benefits that may be achieved through our broader Credit/Risk Management Oversight offering. This service, for companies with portfolios that aren&rsquo;t managed by Capital Advisors Group, evaluates the overall risk/reward of your portfolio structure and is designed to validate and support your cash investment strategies. Viewing risk/reward effectiveness from money market funds to separate account strategies may provide management with important validation for meetings with both outside auditors and one&rsquo;s own audit committee.&nbsp;
The changes to the regulatory landscape that are expected in 2012 will most likely impact the risk/reward profile of the majority of corporate cash investment practices currently in place. These changes range from the expiration of unlimited FDIC insurance coverage for non-interest bearing DDA bank accounts to an anticipated overhaul of current money market fund regulations. Understanding the impact of these events on your company&rsquo;s investments/portfolio before they unfold is just as important as having information to communicate risk/reward characteristics to one&rsquo;s auditors and the audit committee at year-end. Of course, identifying the impact to your investments/portfolio is just the first step. Crafting and implementing a plan to overcome the impact is vital and we believe that a separately managed account strategy provides a great solution to these challenges.
&nbsp;
Thismonth&rsquo;s research on identifying the risk/reward characteristics in corporate cash portfolios delves into some of the issues that should be examined to gain a clear understanding of the balance of risk and reward in one&rsquo;s cash investment strategies.he New Year has a way of prompting us to focus on priorities and agendas for the coming 12 months and as Treasurers plan their &ldquo;To Do&rdquo; lists for 2012, it is helpful to identify trends and events that will shape the short-term cash management environment. A view of the potential issues that could develop in the New Year may prove valuable and may perhaps help to preempt credit or liquidity difficulties that might arise as the year progresses.&nbsp;
Best regards,
&nbsp;
Ben Campbell
President &amp; CEO]]></description>
		<dc.keywords>The Changing Risk/Reward Landscape</dc.keywords>
 	 </item>
 	<item>
         	<title>January Economic Recap</title>
         	<link>http://www.capitaladvisors.com/corporate_cash_investments/the_capital_advisor.html</link>
		<category></category>
         	<pubDate>Sun, 01 Jan 2012 00:00:00 +0000</pubDate>
         	<dc:creator>Capital Advisors Group</dc:creator>
         	<guid>587</guid>
 		<description><![CDATA[Economic data released in January suggests that the U.S. economy is on the upswing, although growth still is expected to be modest in the coming quarters. The labor market has shown signs of improvement as businesses added 200,000 jobs in December. The unemployment rate fell to the lowest level in almost three years and initial jobless claims have been trending downward. Although the labor market appears to be heading in the right direction, the pace of job growth must increase to spur consumer spending. In response, the FOMC stated that the federal funds rate will remain at &ldquo;exceptionally low levels&rdquo; through at least late 2014, which is a change from the previous timeframe of mid-2013. Across the Atlantic, the European debt crisis continues to dominate headlines and, on January 13th, Standard &amp; Poor&rsquo;s downgraded the sovereign rating of eight Eurozone countries, including France, Italy and Spain. Currently, all eyes are focused on the negotiations between Greek and EU leaders to avoid the collapse of a second bailout package.
&nbsp;
Spending 
In the first reading of Q4 GDP, the U.S. economy expanded at a 2.8% rate. While this reading was above the third quarter&rsquo;s rate of 1.8%, it fell below economists&rsquo; expectations of 3.0%. Consumer spending climbed 2.0% in the fourth quarter compared to the 1.7% increase in the third quarter and, for all of 2011, the U.S. economy expanded 1.7%. Retail sales rose only 0.1% in December, but despite this weak reading, sales were up 7.7% in 2011, which was the fastest pace since 1999. Personal spending was flat in December and personal incomes grew 0.5%, a sign that consumers are focused on rebuilding their savings. The personal savings rate grew to 4.0% in December from 3.5% in November, while consumer credit levels rose in November by $20.4 billion, the most in 10 years. Revolving debt, such as credit card debt, increased by $5.6 billion in November, while non-revolving debt, which includes auto loans and educational loans, surged by $14.8 billion. The Conference Board&rsquo;s index of consumer confidence decreased in January to 61.1 from December&rsquo;s reading of 64.8, but the three-month average remains slightly above 60. The broad gauge of expectations for six months in the future, which historically has correlated more closely with consumer spending than the headline number, fell to 76.2 in January from 77.0 in the previous month. The University of Michigan&rsquo;s final reading of consumer sentiment increased to 75.0 in January, which was the highest in 11 months, from December&rsquo;s reading of 69.9.
&nbsp;
Manufacturing
Manufacturing activity strengthened in the fourth quarter as orders for durable goods surged by 3.0% in December and, combined with November&rsquo;s reading of 4.3%, marked the largest back-to-back gain in 11 months. Orders for non-defense capital goods excluding aircraft, a proxy for future business investment, grew 2.9% and shipments of such goods, a figure used in the calculation of GDP, also increased 2.9%. The Philadelphia Fed&rsquo;s survey of regional manufacturing activity grew to 7.3 in January and the outlook for the next six months was the best since last March. The ISM Manufacturing Index increased to 53.9 in December after November&rsquo;s reading of 52.7 and the ISM Non-Manufacturing Index rose to 52.6 from 52.0 in November. Industrial production grew by 0.4% in December, which was below the expectation of a 0.5% increase, but factory output, which makes up about 75% of the overall total, jumped 0.9%, which was the largest increase in a year. Capacity utilization, which measures the percentage of plants in use, rose to 78.1% from 77.8% in the previous month, but still remains below its long-run average.
&nbsp;
Housing
Data from the housing market was mixed in December, although there are some signs that housing may be close to bottoming out after one of the worst years on record. New home sales marked the first decline in four months in December, falling 2.2%, and capped off a year that was the slowest on record. Housing starts fell 4.1% in December and new construction of single-family homes also hit a historical low in 2011. Building permit applications shrank slightly by 0.1% to an annualized rate of 679,000 units last month from 680,000 in the previous month. On a more positive note, existing home sales in the U.S. increased in November, rising 5.0% to a 4.61 million annualized rate, which was the highest since last January. The supply of existing homes for sale dropped to 2.38 million, the fewest since March 2005, which represents 6.2 months of supply at the current sales pace and compared to 7.2 months&rsquo; supply in November. Distressed sales, which include foreclosures and short sales, comprised 32% of December&rsquo;s total.
&nbsp;
Labor 
The labor market continues to expand at a steady, albeit slow pace, and the unemployment rate gradually has moved lower. Non-farm payrolls climbed by 200,000 in December following November&rsquo;s downwardly revised gain of 100,000. The private sector added 212,000 jobs while the government trimmed 12,000 from the workforce. Manufacturing added 23,000 jobs while retail contributed 28,000 jobs. The unemployment rate decreased to 8.5%, which marked a three-year low, from 8.7% in the previous month and the underemployment rate, which includes people who have given up looking for work and those working part-time for economic reasons, decreased to 15.2% from 15.6%. First-time jobless claims for unemployment benefits in the week ended January 21th grew to 377,000, although the four week average declined to 377,500 from 380,000 in the previous week.
&nbsp;
Inflation
Inflation pressures remain well controlled, supporting the Fed&rsquo;s forecast that inflation will remain moderate going forward. The producer price index (PPI) fell 0.1% in December on lower food and energy costs while core PPI, which excludes food and energy prices, climbed 0.3%. For all of 2011, PPI has risen 4.8% and core PPI is up 3.0%, which is the largest gain since 2007 and 2008, respectively. The consumer price index (CPI) was unchanged in December and core CPI, which excludes energy and food prices, grew 0.1%. The index was up 3.0% in 2011, while core CPI was only 2.2% higher compared to a year earlier. The core personal consumption expenditures gauge, reportedly the Fed&rsquo;s preferred inflation measure, climbed 0.2% in December and it has gained 1.8% over the past 12 months.
&nbsp;
The next regular FOMC meeting will be held on March 13th. Market participants currently do not anticipate changes to the overnight lending rate until late 2014 at the earliest.]]></description>
		<dc.keywords>January Economic Recap</dc.keywords>
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