Traditionally, infrastructure projects — road and bridge repair, public-transit expansion and port development — are funded by federal, state and local grants or loans, the municipal bond market and, in some cases, the Highway Trust Fund or international banks. But the federal government, suffering from political fracturing and financial austerity, won’t pony up as much as before. The Highway Trust Fund could soon face bankruptcy, and many banks have backed away from long-maturity project finance.
On a brighter note, money has recently flowed into municipal bond market funds, and bond issuers have increased offerings, with the Securities Industry and Financial Markets Association predicting $347 billion in issuance, while others forecast $360 billion.
This should be good news for infrastructure projects. Unfortunately, much of the issuance is for refinancing debt. Many states and municipalities are loath to take on additional debt because they’re unclear on revenue. Some investors hesitate to put in money because municipal bonds’ tax-free status could be jeopardized, because some see it as a “subsidy for the rich,” said George Friedlander, senior municipal strategist at Citigroup. (read more…)
Regulatory uncertainty, sub-par gross domestic product growth, an inventory of distressed residential properties and a Congress that sees compromise “as a four-letter word” — as Bernard Markstein, chief economist at Reed Construction Data, put it — all contribute to a feeling of uncertainty about the country’s economic growth, particularly in the architecture, engineering and construction industries hard hit by the recent recession. That was the consensus of three economists speaking at a recent webinar sponsored by Reed Construction Data.
In addition to problems in the housing market and severely repressed housing starts, office and retail construction have slowed and federal, state and local funding cuts negatively affect some needed infrastructure improvement and transportation work.
But not all is gloomy
Ken Simonson, the chief economist for the Associated General Contractors of America, said, “I have more good news than I’ve had in several years.” He proceeded to list several multibillion-dollar plant construction projects announced over the past few months — some that will start this year, some in a few years. (read more…)
“I’ve been delighted today to see a lot of optimism, but we don’t want to neglect the fact that a lot of businesses have been hit hard” by the recession and decreased access to capital, National Association of Women Business Owners President and CEO Diane Tomb said during a panel session on capital access at America’s Small Business Summit in Washington, D.C. There are many tough stories out there about businesses that had good credit and a good relationship with lenders but then couldn’t access credit.
Being able to access capital is a huge issue for small businesses, and it’s not one that applies only to companies in the startup phase, said panelist Roz Alford, founder and co-principal of ASAP Solutions Group. Every stage of growth for a business requires funding, so it’s an issue that keeps coming up.
In many cases, it seems the biggest restriction is a lack of education about capital access, Alford said. (read more…)
So Jamie Dimon is human after all. His firm has finally missed the fairway and found itself in the rough. His shareholders, employees and probably the White House are desperately hoping he can reach into his bag, grab his favorite club and pull off a Bubba Watson or a Phil Mickelson. Meanwhile, some rivals on Wall Street and antagonists in Washington are likely hoping he pulls a Jean van de Velde.
With Dimon facing some serious challenges in the coming days and weeks, a wise caddy would tell him to focus on these five key things.
- Keep your focus today. It is simply bad luck that this “tempest in a teapot” blew up right before JPMorgan’s annual shareholder meeting as I suspect Dimon will receive questions about little else. Accountability will be key with that audience, so Dimon must highlight the swift actions that have been taken in that regard.