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VOL. 8 | NO. 19 | Saturday, May 02, 2015

Economic Microscope

Century Wealth's Jay Healy puts Memphis economy in perspective

By Andy Meek

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Back in 2012, Century Wealth Management president and founder Jay Healy was telling the firm’s clients that the U.S. stock market was behaving like a coiled spring.

Century Wealth Management president Jay Healy keynotes The Daily News' upcoming seminar, "Money & Markets:  State of the Economy." The event, which also features a question-and-answer panel discussion, takes place Thursday, May 7, at the Brooks Museum.

(Keith Renard)

The stock market seemed, at least at the time, to have a low valuation, and corporate earnings were on the cusp of accelerating. It’s a good position to be in, the financial equivalent of anticipating the arrival of spring as opposed to settling in for the long slog of winter.

The question is: Where are we now on that scale?

Depending on the metric, that question about the economy’s current footing is easy to address. In the Memphis area, for example, unemployment right now is around 7 percent, though Healy says that should be viewed in the context of the city having fewer people employed today that during the recession of 2008.

Some of that dip in the workforce, he goes on, could be attributed to baby boomers retiring. Some of it may also be the result of people dropping out of the workforce – giving up, essentially, on finding new job prospects.

There are plenty of other routes to go down and composites of figures and anecdotes to assemble, which is what Healy will attempt as the keynote speaker at The Daily News’ Money & Markets: State of the Economy seminar Thursday, May 7, at 3:30 p.m. in the auditorium of the Memphis Brooks Museum of Art.

The seminar, moderated by The Daily News/The Memphis News publisher Eric Barnes, will also feature a question-and-answer session with Healy and panelists Kent Wunderlich, chairman, CEO and general counsel of Financial Federal; Matthew R. Crow, president of Mercer Capital; and Mark D. Puckett, senior director of BDO USA LLP.

A wine-and-cheese reception will follow.

‘They never would have predicted this’

On the surface, the stage would seem to be set for a presentation bubbling with positivity. The Great Recession is seven years in the past. The U.S. stock market is close to all-time highs, and interest rates around the world remain near the basement – in some cases dropping below zero.

The U.S. dollar is on a bull run, and oil is in a bear market.

“I think we find ourselves, and have found ourselves, over the last six years in unprecedented territory,” said Healy, whose firm is celebrating its 15th anniversary this year.

His firm’s clients include former business owners, high net worth families and the like. Its philosophy is to position its professionals as “evidence-based investors,” not so much focused on predicting what’s going to happen next, but looking at what markets have done over the last 100 years as indicators of what they’re likely to do going forward.

“You’ve got the Fed pursuing quantitative easing,” Healy said. “Short-term interest rates are basically at zero, and long-term rates are as low as we’ve ever seen them in our lifetime. You’ve got interest rates in Europe that are negative in places, but at the same time you’ve got the U.S. stock market close to all-time highs.

“If you just back up to the middle of the Great Recession and would have asked people what they thought the next five or six years would look like, they never would have predicted this.”

Different thoughts

Beauty, though, is in the eye of the beholder – and so is an assessment of the economy, Healy acknowledges.

Consumers may not have predicted the economy we have today, he says, but that’s not to say that reality doesn’t refract differently depending on where one is looking.

“On the local level, our unemployment level is around 7 percent, which isn’t that far from the state level,” Healy said. “But I don’t think that really reflects the disparity within ZIP codes. Anecdotally, you can look at how long it takes to get a table at Jim’s Place East or the value of the cars in your kid’s private school parking lot and it looks like we’re in growth mode. But that doesn’t reflect certainly some of the struggles some of the poorer ZIP codes have. The opportunities to work your way out of poverty are as slim as they’ve always been for some folks in town.”

There’s an economic tinge to the current mayoral election underway, with contenders in the still-forming city mayor’s race offering stark contrasts in their views on the state of things.

At an April 27 forum at the Tennessee Brewery that drew a crowd of around 150 people, City Council member and mayoral hopeful Jim Strickland described a city he says is losing residents “because we are more blighted, we are more littered and we’re more violent than we were three years ago.”

Incumbent Mayor A C Wharton Jr., on the other hand, pointed to the opening of Bass Pro Shops’ new destination store inside The Pyramid and the jobs and retail boost it creates.

Forward momentum

Taking a broader view of things, from the perspective of money managers like Healy, there’s a lot to like in the economy of the moment.

“The economy has been growing for six years now,” he said. “We’re all waiting with bated breath on when the Fed is going to raise interest rates. But the economy is very pliable, very flexible, has a ton of forward momentum, and that’s going to keep going.

“On the ground level, things look better now than they have in years. Anecdotally, credit is more freely available. Profits are growing. I think that's eased a lot of pain and concern we had about what the future might look like going forward.”

That flow of credit can manifest itself in many ways, such as a Kroger affiliate recently spending almost $4 million to buy 80 parcels totaling about 18.2 acres in the Washington Bottoms neighborhood near Downtown. Memphis-based AutoZone Inc., meanwhile, at the end of March said it would spend $750 million buying back more company stock. And among startup teams that participated in the 2014 round of accelerator programming hosted by Start Co. in Memphis, they’ve raised more than $1.8 million in follow-on funding.

According to Healy, corporate balance sheets and corporate cash flows are healthy. Consumer net worth is higher than it’s been in the recent past, unemployment is at a reasonable level and consumer confidence is back in strong territory.

“From an economic point of view, we think things are moving along just fine,” said John Phillips, chief investment officer of Red Door Wealth Management in Memphis. “On the U.S. domestic front, we believe the stock market’s fully valued, and there are pockets internationally we like – we definitely like Europe. From a client point of view, the feeling I get in my gut is they’re OK with how things are going, but they’re still concerned with being burned in the stock market. They have a quick trigger finger.”

Closer to home

On the home front, Healy says, the data reveal some important takeaways about the state and local economies. On the state level, he thinks Tennessee “has been very hospitable to industry.”

“I think we’re very competitive on a regional basis,” he said. “From an employment perspective, on the state level we have more people employed now than before the recession in 2008. But here’s the interesting thing – on the national level, you can basically say all the job growth since the recession has been in Texas. In Tennessee, all job growth since the recession has basically been in Nashville. Nashville has added about 100,000 jobs over where they were in 2008.

“Memphis is down about 20,000 to 30,000. What a coincidence they’re the state capital – they’ve got a lot of tailwind at this point, but everything ebbs and flows. Let’s hope we get our moment in the sun.”

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Blog News, Training & Events
RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 78 342 10,184
MORTGAGES 73 374 11,888
FORECLOSURE NOTICES 0 0 0
BUILDING PERMITS 139 755 21,724
BANKRUPTCIES 59 235 7,045
BUSINESS LICENSES 33 112 3,581
UTILITY CONNECTIONS 41 222 7,664
MARRIAGE LICENSES 14 89 2,552

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