VIDEO: Fratto on CNBC – New Poll on White House Shows a Very Close Race
AUDIO: Fratto on The Takeaway – Mitt Romney Minus Rick Santorum
Caution: Mergers Ahead
By Patrick Sims, (202) 822-1205, psims@hamiltonps.com
Click here to read the full report.
Merger activity in the banking sector faces a fundamental tension in the years to come: new regulation has made efficiency gains from mergers more attractive; and at the same time, regulatory scrutiny of mergers has increased, especially for larger firms. The implication of this dynamic is that firms that are better able to navigate public scrutiny and the regulatory approval process for mergers will be at a strategic advantage versus their competitors.
We expect an increase in mergers due to incentives in economies of scale and increased regulation:
- Operating efficiency and profitability favor large firms by 49 and 75 percent, respectively.
- Increased regulation disproportionately hurts smaller firms, as they have historically seen higher compliance costs than their larger peers.
- Consolidation will continue on its historical trend, as there were over 7,500 FDIC-regulated banks as of 2011, compared to roughly 9,700 just 10 years prior.
We expect that it will be harder for large firms to merge:
- U.S. banking markets have become more
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VIDEO: Fratto on MSNBC – Looking at Romney’s Road Ahead
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Client Note: And Let the Calls for QE3 Begin
By Russ Grote, (202) 822-1205, rgrote@hamiltonps.com
Read our cheat sheet here.
The March payroll report gives us very little to celebrate. The economy added only 120,000 jobs in March, 80,000 below expectations. Surprisingly in the household survey, the overall number of jobs actually fell by 31,000. And while the unemployment rate dipped to 8.2 percent, this was only due to a drop in labor force participation. The March payroll report adds to the toppling evidence that the current recovery is fragile and will up the pressure on the Federal Reserve to take action.
One explanation for the disappointing swing in jobs may be a result of weather-related affects on the January and February numbers as we noted earlier this week. Seasonal adjustments may have inflated in prior months due to warm weather boosting job creation in seasonally sensitive sectors. The construction and retail industries, two sectors very sensitive to weather patterns, lost over 40,000 jobs collectively in March.
However, just as the previous two months may not have been as strong as …
Jobs Day Fact Sheet: March 2012
Here is the HPS Jobs Fact Sheet for March 2012. Click to enlarge and right-click to save.
Read Russ Grote’s analysis of the jobs numbers, “And Let the Calls for QE3 Begin,” here.…
VIDEO: Fratto on CNBC – Jobs and Politics
Client Note: Econometeorology
By Matt McDonald, (202) 822-1205, mmcdonald@hamiltonps.com
A new economic discipline seems to have emerged over the past several months: econometeorology, the explanation of the economy through weather patterns.
Each month, jobs numbers are adjusted to account for seasonal variations. For example, there is typically a spurt of temporary hiring during the holiday season in retail, and there is typically a slowdown in construction over the winter months as snow and inclement weather prevent work. The seasonally adjusted number that we see every month helps smooth out those variations to make an apples-to-apples comparison of how the economy is doing. The effects of these seasonal adjustments can be seen in the chart below.
In the context of this seasonality, economists have been looking at this year’s warm winter. Goldman Sachs has estimated that the warm weather added between 50,000 and 70,000 jobs to the January number. If this proves to be the case, we would expect to see an overestimation of jobs growth in the winter, with a return to the “normal” slightly lower trend as …
Client Note: High Noon at the High Court
By Rustin Silverstein, (202) 822-1205, rsilverstein@hamiltonps.com
Today, the U.S. Supreme Court begins three days of arguments over the constitutionality of the 2010 health care reform act — formally known as the Affordable Care Act and referred to by its opponents and, as of this past weekend, the Obama reelection campaign as “Obamacare.” This will represent the high court’s most significant foray into a political debate since Bush v. Gore — except this time, the stakes may be even higher.
Like Bush v. Gore, the health care reform decisions could also upend the dynamics of a presidential election. But that’s just the beginning.
The Court will determine the fate of a bill intended to extend health care coverage to millions of uninsured Americans and slow the ever-rising costs of health care. It stands as President Obama’s signature legislative accomplishment and the fulfillment of a goal that had eluded every Democratic president since Franklin Roosevelt. Repeal of the health care reform bill is also the top priority of the Republican presidential candidates and GOP congressional leaders.…