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April 22, 2013


Economic themes: Housing, Earnings Season, CPI, Industrial Production


  • Housing: Existing home sales in March declined 0.6% to a 4.92 million unit pace, with supply up slightly to 4.7 months.  Fewer distressed properties are contributing to weaker inventory, which has aided in the rising median sale price, up 11.8% over the past year.  March housing starts increased 7.0% led by the multifamily component, up 31.1%, though the single family component declined 4.8%.  Permits fell 3.9%.  Low interest rates continue to support the housing sector, though tough credit standards and a lack of low priced inventory persists.
  • Earnings Season: Of the 106 S&P 500 companies that have reported thus far, 72 have beat estimates, showing that prior downward revisions in forecasts have been beneficial, though profits have declined 1.1% across the board.  Companies are continuing to adjust to weakness in Europe, and to impacts from sequestration.
  • CPI: The consumer price index fell 0.2% in March, largely attributed to a decline in gasoline and energy prices, with apparel, furniture, and tobacco also contributing to the declines.  Increases were seen in autos, health care, personal care, and airline fares.  On a year-over-year basis, the index is up 1.5%, well within the Fed’s comfort zone.
  • Industrial production: Utilities output helped increase industrial production 0.4% in March, due to cold weather.  The manufacturing component fell 0.1%.  While the figure is generally positive, signs of a slowdown are beginning to form.
  • Economic highlights for the week ahead:
    • Tuesday, 4/23/2013: New Home Sales.
    • Thursday, 4/25/2013: Jobless Claims.
    • Friday, 4/26/2013: GDP, Consumer Sentiment.

Municipal market themes: California Redevelopment, San Francisco, Puerto Rico, BABs.


  • California redevelopment: A multitude of bills continue to circulate throughout Sacramento to reignite tax allocation financing, though the Governor, Controller, and Treasurer seem focused on winding down existing obligations of former redevelopment agencies first.
  • San Francisco: Standard & Poor’s revised the outlook on San Francisco’s general obligation and certificate of participation bonds to stable, from negative, citing good general fund reserves, strong financial management, and a moderate debt burden.
  • Puerto Rico: Fitch followed suit with other ratings agencies, downgrading the Puerto Rico Aqueduct and Sewer Authority to ‘BBB-’, bringing further attention to the Commonwealth’s enterprise level debt.  Investors are eyeing upcoming infrastructure financing needs, and how successful future rate increases will be to fund such capital improvements.
  • Build America Bonds: Cuts to subsidy payments under sequestration has triggered certain extraordinary redemption provisions for some Build America Bonds, enabling certain issuers to refinance at current interest rates, independent of call provisions.



This report is prepared for informational purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or service.  Market prices and other data may be obtained from outside sources and is not warranted as to completeness or accuracy. Any comments, statements and/or recommendations made herein are subject to change without notice, and may not necessarily reflect those of Alamo Capital.  Past performance does not guarantee future results.  Alamo Capital has no affiliation with any political party. Investing involves risk. Consult with a Financial Professional for additional information to determine the suitability of this or any other financial product or issue as it relates to your particular situation.



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