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Don’t let your business be an easy target for fraud

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Fraud can come in many forms, from counterfeit checks to stolen credit cards and trusted employees to savvy hackers. For businesses, fraudulent activity is always bad news. According to the Association for Financial Professionals’ (AFP) 2015 survey, 62 percent of companies were targets of payments fraud in 2014 with financial losses that ranged anywhere from a relatively small amount to millions of dollars. The good news for businesses is that there are numerous measures out there that can help prevent and detect fraudulent activity. In addition, advanced technology is being developed and deployed now that will help companies better protect their operations and their bottom line.2015 AFP Payments Fraud and Control Survey

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The many forms of fraud

According to the AFP, the most common form of fraud businesses encounter is through checks, corporate credit/debit cards and wire transfers. Paper checks continue to be the payment type most vulnerable to fraudulent attacks and account for the largest dollar amount of financial loss, even though their use continues to decline. Credit and debit cards are the second most popular form of business fraud, although they experienced a decline in fraudulent activity, down from 43 percent in 2013 to 34 percent in 2014.  And lastly, wire fraud incidents almost doubled from 14 percent in 2013 to 27 percent last year.

The newest form of fraud is cyberfraud in which criminals create an email account for corporate executives or vendors and send emails with payment instructions to employees in the accounting department. Employees who are unaware of the fake or altered email account will follow the instructions and make payment.

Be prepared

While it may seem daunting, businesses can take steps to protect against fraudulent activity. Positive Pay is one example of how companies can get ahead of the game. Positive Pay is an automated fraud detection tool offered by most banks. Here is how it works: Companies cut checks every month and send the bank a list of all those checks, including check numbers, amounts and payees. As checks clear against the account, the bank makes sure the checks match up, eliminating any fraudulent or altered checks.

To protect against internal fraud, business owners should implement dual control and separation of duties. Understand who is in charge of what responsibilities on the financial side and make sure there are no gaps. Implement dual control over the businesses banking transactions, meaning the same person who is running payables should not be the same person who is reconciling accounts. Also, business owners should review financial statements on a weekly or monthly basis.

To mitigate compromise in these areas, businesses should review all areas of their operation and put the proper preventions in place to protect against fraud. For instance, businesses should ensure their employees have the proper education and training for fraud detection. They should install, maintain and update spam filters, anti-virus software and firewalls. Reducing check writing, outsourcing payroll and having dual controls are additional tips that can help prevent fraudulent activity.

New technology on the way
2015 Payments Fraud and Control Survey
In addition to being prepared, businesses will soon be able to rely on new technology to help protect against fraud. The latest and most anticipated technology is EMV (Europay, MasterCard and Visa) chip cards, which will have a major impact on lessening credit and debit card fraud. So much so that 92 percent of financial professionals believe EMV technology will be effective in reducing fraud at the point-of-sale.

Traditional magnetic stripe cards require a signature for security purposes, whereas the new chip cards will add an additional layer of sophisticated fraud protection through an embedded microchip that turns the cardholder’s information into a unique code that is difficult to duplicate or copy when used at a chip-enabled terminal.

Merchants and retailers are currently in the process of investing in new card reading technology that will accept EMV chip cards. If they do not update their technology, they could potentially be liable for fraudulent transactions and not the user or card issuer. Visa intends to institute a liability shift in the United States for domestic and cross-border counterfeit transactions effective Oct. 1, 2015. This shift will encourage Visa issuing banks to begin issuing EMV chip cards and merchants to begin deploying card swipe technology that can process the chip-on-chip transaction.

While new technology and preventative measures can help businesses protect against fraud, the truth is that it will always exist in one form or another. What businesses can do is educate their employees, make sure they are using the most up-to-date technology and work with their financial partners to ensure the best practices and protective measures are in place.

 

Source: 2015 Association for Financial Professionals (AFP) Payments Fraud and Control Survey

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Financial Word of the Week: Generation-skipping transfer tax

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Financial Word of the Week - Generation-skipping transfer tax

The generation-skipping transfer tax (GST tax) is a separate transfer tax that is imposed on certain transfers and may apply in addition to any gift or estate tax due. The purpose of the GST tax is to tax the transfer of assets passing to a person more than one generation beyond the donor (i.e., “skipping” a generation). This flat-rate tax is calculated at the maximum estate tax rate applicable at the time of the transfer. (In 2015, the maximum estate tax rate is 40 percent.) However, like the gift and estate tax, there are certain exemptions that may apply to help avoid or minimize the impact of the GST tax. For example, there is a lifetime exemption that allows you to transfer a certain dollar amount of assets without incurring this tax. In 2015, the exemption amount is $5,430,000. In addition, there is an annual exclusion available that currently allows for the transfer of $14,000 to any individual without the GST tax being imposed.

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One of the keys to the GST tax rule is that it is designed to only tax certain transfers – those involving a transfer of assets to a person one or more generations down the line. For family members such as grandchildren, this is straightforward. For example, a gift from a grandparent to a grandchild would skip the donor’s child’s generation and would, absent an applicable exemption, be subject to the GST tax. However, for non-family members, whether a transfer skips a generation is not always as apparent. For gifts to unrelated individuals, the Internal Revenue Code deems a gift to someone more than 37 ½ years younger to have “skipped” a generation and is therefore subject to the GST tax.

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Simply a correction or a looming bear market?

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Our Investment Management team is hosting an exclusive webinar and conference call Friday at 10 a.m. (CST) to discuss recent market noise and reconsidering long term economic themes. To join us at this web conference, click here, or dial in (at least five minutes prior to the call) to 1-888-466-9845 and passcode: 9381 467#

Corrections

Stock market corrections (a decline of 10 percent) are a normal and healthy part of a bull market. We have all been concerned that we haven’t seen a correction since 2011, as the markets went virtually straight up with very little volatility. And then came August 2015.

We think this is a correction: a violent reaction to four primary factors.

  • Valuations — Currently the market trades at a slight premium, as measured by Price-to-Earnings (P/E) multiples. Prior to last week’s trading, the market traded at approximately 17 times earnings. We think the market will trade at 16 times earnings, and if you assume the S&P 500 will earn $120 in 2016, the S&P 500 should trade at 1920.
  • Earnings scare — Perhaps the market is now fairly valued; however if earnings estimates are in question, then the valuation of the market is wrong and prices may move lower.
  • Global economic slowdown–China and other emerging markets are clearly slowing. China represents 14.1 percent of global nominal GDP.
  • Lack of confidence in central bankers– Most historical bear markets have come from Federal Reserve tightening and upcoming economic recessions.
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U.S. economy

The recent economic news was surprisingly good for the United States and even for Europe, perhaps suggesting that China is not the be-all and end-all of the world economy. U.S. housing data was especially strong this week with housing starts and existing-home sales reaching post-recovery highs. Those strong numbers should have a trickle-down effect on the U.S. economy as those homes are financed, furnished and remodeled.

China

China’s economy has slowed throughout the past few years and clearly is not growing at a 7 percent rate, the country’s official GDP growth estimate. Other variables such as electricity consumption, rail car volumes and airline traffic all point to a growth rate slowdown, but not a collapse. The question is how will China’s slowdown affect the U.S. economy?

U.S. exports to China account for 8 percent of total exports and only 1.2 percent of GDP. Admittedly, exports to other Asian economies account for another 15 percent of exports, but the risks of a widespread Asian financial crisis resembling what happened in 1997 and 1998 are quite low.

Many have cited the Chinese stock market as an indicator of their economic outlook. The 40 percent decline in the Chinese stock market since June has nothing to do with any deterioration in the Chinese economy, just as the 58 percent surge in the first half of this year didn’t reflect a genuine improvement in economic fundamentals. It’s worth remembering that the Shanghai composite index is still up by 38 percent throughout the past 12 months.

Central bankers

The Federal Reserve (the Fed) has been clear that its decision to hike rates will be data-dependent. But is it also market dependent? We don’t think the Fed will ignore what is happening in the financial markets. The probability of liftoff in September has been reduced significantly. Most bear markets (a decline of 20 percent) come from Fed tightening and upcoming economic recessions. The Fed doesn’t want to commit a “policy mistake” and be blamed for a bear market or a recession.

Europe just initiated a quantitative easing program earlier this year. This should bolster both its economy and investor sentiment, and mitigate downside pressure on its markets.

China’s policymakers also have plenty of scope for further stimulus, both monetary and fiscal. In fact, as I write this, China has lowered interest rates.

U.S. Stock Market

The last time we saw a correction using closing prices was in 2011, when from May to August the S&P 500 declined 11.1 percent. Last year we saw a correction in October; it was slightly less than a 10 percent correction and recovered quickly. Following are current returns as of this writing:
current returns 8/26/15

Some markets, such as commodities, are in a bear market:
commodities in a bear market

There is clearly a revaluation of global growth.

Conclusion

What does this mean for equities? Based on the recent market correction, it will be difficult for the S&P 500 to reach new highs in 2015. However, the average decline of all corrections greater than 5 percent since the 1920s may indicate that we are close to the lows for this year. The average peak-to-trough decline during a 5+ percent correction is -12 percent, which implies a low of 1870 on the S&P 500 or 3 percent lower at the time of this publication. Potential positive catalysts for the market to go back to recent highs include clarity on the Fed and China.

What does this mean for interest rates? Clearly, the Federal Open Market Committee (FOMC) might use recent turbulence as a reason to postpone initiation of liftoff for rates — the risk of being accused of making a policy mistake will likely mean there is no adjustment of rates at the September meeting. However, if we are correct that recent market turbulence has merely been a valuation reset, and longer-term economic outlooks remain reasonably stable, we expect rates to begin an upward move in the near future.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

 

DISCLOSURE AND IMPORTANT CONSIDERATIONS:

UMB Investment Management is a division within UMB Bank, n.a. that manages active portfolios for employee benefit plans, endowments and foundations, fiduciary accounts and individuals. UMB Financial Services, Inc.* is a wholly owned subsidiary of UMB Financial Corporation, and an affiliate of UMB Bank, n.a. UMB Bank, n.a., is an affiliate within the UMB Financial Corporation.

This report is provided for informational purposes only and contains no investment advice or recommendations to buy or sell any specific securities. Statements in this report are based on the opinions of UMB Private Wealth Management and the information available at the time this report was published.

All opinions represent our judgments as of the date of this report and are subject to change at any time without notice. You should not use this report as a substitute for your own judgment, and you should consult professional advisors before making any tax, legal, financial planning or investment decisions. This report contains no investment recommendations and you should not interpret the statements in this report as investment, tax, legal, or financial planning advice. UMB Private Wealth Management obtained information used in this report from third-party sources it believes to be reliable, but this information is not necessarily comprehensive and UMB Private Wealth Management does not guarantee that it is accurate.

All investments involve risk, including the possible loss of principal. This information is not intended to be a forecast of future events and this is no guarantee of any future results. Neither UMB Private Wealth Management nor its affiliates, directors, officers, employees or agents accepts any liability for any loss or damage arising out of your use of all or any part of this report.

“UMB” – Reg. U.S. Pat. & Tm. Off. Copyright © 2015. UMB Financial Corporation. All Rights Reserved.

*Securities offered through UMB Financial Services, Inc. member FINRA, SIPC, or the Investment Banking Division of UMB Bank, n.a.

 

Insurance products offered through UMB Insurance, Inc. You may not have an account with all of these entities. Contact your UMB representative if you have any questions.

Securities and Insurance products are:

NOT FDIC INSURED * NO BANK GUARANTEE * NOT A DEPOSIT * NOT INSURED BY ANY GOVERNMENT AGENCY * MAY LOSE VALUE


K.C. Mathews joined UMB in 2002. As executive vice president and chief investment officer, Mr. Mathews is responsible for the development, execution and oversight of UMB’s investment strategy. He is chairman of the Trust Investment, Asset Allocation and Trust Policy Committees. Mr. Mathews has more than 20 years of diverse experience in the investment industry. Prior to joining UMB, he served as vice president and manager of the portfolio management group at Bank of Oklahoma for nine years. Mr. Mathews earned a bachelor’s degree from the University of Minnesota and a master’s degree in business administration from the University of Notre Dame. Mr. Mathews attended the ABA National Trust School at Northwestern University and is a Chartered Financial Analyst and member of the CFA Institute. He is past president of the Kansas City CFA Society and a past president of the Oklahoma Society of Financial Analysts.



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UMB: Insights – What ag means to UMB

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UMB Industry Insights
Beginning with the Kemper family’s love affair with agriculture, UMB has had a rich history with agriculture.

Continuing our UMB: Insights series, Mariner Kemper, our Chairman and CEO, and Bill Watson, president of UMB Bank’s Agribusiness Division, share why we focus on agriculture.

“UMB’s been in agribusiness for all of the 102 years we’ve been in business. It’s part of our roots. It’s part of our connection to the community.”

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Financial Word of the Week: Gift tax annual exclusion

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Financial Word of the Week - gift tax annual exclusion

The gift tax is a transfer tax imposed on any gift you give someone during your lifetime. However, the Internal Revenue Code provides each individual with a gift tax annual exclusion. The annual exclusion is the amount of property one individual may give each year to another individual without incurring any gift tax consequences. This number is adjusted annually for inflation and is currently $14,000 per donor per donee in 2015. “Per donor per donee” means that each individual donor may give $14,000 each to as many individuals as the donor wishes. For example, in 2015, each parent can give to each of their three children $14,000 in gifts, for a total of $ 28,000 per child.

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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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What doesn’t matter: the non-drivers of the economy

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In a world where a constant stream of economic data and commentary is the norm, it’s crucial to be able to sift through what really matters (see my post from last week for those insights) to make better-informed investment decisions. Now, let’s look at what doesn’t really matter when assessing the driving forces of the economy. We’ll assess why “Fed Talk” and high frequency economic data are oftentimes deemed important, yet have very little relevance.

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Fed Talk
The Federal Open Market Committee (FOMC) consists of 12 members. All of them have their own opinions on the state of the economy.  As the old joke goes, if you have 12 economists in a room you will get 14 opinions.

The Fed develops forecasts like many Wall Street prognosticators, and their track record is very similar: not better, but not worse.  One would think since they hold the cards, their track record should be superior. However, you don’t need to be glued to your computer waiting for the next Fed press conference. Watch what they actually do, not what they say.

High-Frequency Economic Data
The high-frequency weekly indicators are meant to be accurate in observing economic trends in real time.  However, these data points can be misleading when observed point-to-point.

Take mortgage applications in 2015 for example; this data is released every Wednesday. Looking at one week in January, it indicates mortgage applications were up 49 percent. Then, a week in February recorded applications down 13 percent. The point is that just because you can track the data, doesn’t mean it is a helpful economic indicator.

The variety of data points we have at our fingertips today is nearly unfathomable. As investors look for more efficient ways to use the data at hand, remember to track the U.S. dollar, employment and global GDP. Take what the Fed says with a grain of salt and rather, watch what they do. And if you have high-frequency economic data in front of you, remember – just because it can be tracked, doesn’t mean it’s delivering information that should be used.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

 

DISCLOSURE AND IMPORTANT CONSIDERATIONS:

UMB Private Wealth Management is a division within UMB Bank, n.a. that manages active portfolios for employee benefit plans, endowments and foundations, fiduciary accounts and individuals.  UMB Financial Services Inc * is a wholly owned subsidiary of UMB Bank, n.a. UMB Bank, n.a., is an affiliate within the UMB Financial Corporation. Banking and trust services offered through UMB Private Wealth Management, a division within UMB Bank, n.a.

This report is provided for informational purposes only and contains no investment advice or recommendations to buy or sell any specific securities. Statements in this report are based on the opinions of UMB Private Wealth Management and the information available at the time this report was published.

All opinions represent our judgments as of the date of this report and are subject to change at any time without notice. You should not use this report as a substitute for your own judgment, and you should consult professional advisors before making any tax, legal, financial planning or investment decisions. This report contains no investment recommendations and you should not interpret the statements in this report as investment, tax, legal, or financial planning advice. UMB Private Wealth Management obtained information used in this report from third-party sources it believes to be reliable, but this information is not necessarily comprehensive and UMB Private Wealth Management does not guarantee that it is accurate.

All investments involve risk, including the possible loss of principal. This information is not intended to be a forecast of future events and this is no guarantee of any future results. Neither UMB Private Wealth Management nor its affiliates, directors, officers, employees or agents accepts any liability for any loss or damage arising out of your use of all or any part of this report.

“UMB” – Reg. U.S. Pat. & Tm. Off. Copyright © 2012. UMB Financial Corporation. All Rights Reserved.

*Securities offered through UMB Financial Services, Inc. member FINRA, SIPC, or the Investment Banking Division of UMB Bank, n.a.

 

Insurance products offered through UMB Insurance, Inc. You may not have an account with all of these entities. Contact your UMB representative if you have any questions.

Securities and Insurance products are:

NOT FDIC INSURED * NO BANK GUARANTEE * NOT A DEPOSIT * NOT INSURED BY ANY GOVERNMENT AGENCY * MAY LOSE VALUE


K.C. Mathews joined UMB in 2002. As executive vice president and chief investment officer, Mr. Mathews is responsible for the development, execution and oversight of UMB’s investment strategy. He is chairman of the Trust Investment, Asset Allocation and Trust Policy Committees. Mr. Mathews has more than 20 years of diverse experience in the investment industry. Prior to joining UMB, he served as vice president and manager of the portfolio management group at Bank of Oklahoma for nine years. Mr. Mathews earned a bachelor’s degree from the University of Minnesota and a master’s degree in business administration from the University of Notre Dame. Mr. Mathews attended the ABA National Trust School at Northwestern University and is a Chartered Financial Analyst and member of the CFA Institute. He is past president of the Kansas City CFA Society and a past president of the Oklahoma Society of Financial Analysts.



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What really matters: the drivers of today’s economy

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Every day we are bombarded with data and opinions meant to help investors manage their portfolios. Much of the data can be ignored, because unfortunately most of it is just that—data. As investors, we only want to explore the kind of data that becomes useful information. My team and I will figure out what you need to know to grasp where the market is heading by uncovering what really matters when forecasting economic activity. In a world where a constant stream of economic data and commentary is the norm, it’s crucial to be able to sift through what really matters to make better-informed investment decisions.

The important variables to monitor over the next year will be the U.S. dollar, employment and key global issues.

I visited The Streetrecently to share my insights.

Watch…

 

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The U.S. Dollar

The U.S. dollar (the dollar) has become increasingly important because of two key functions.

1) its impact on corporate earnings in the United States.

2) global economic conditions and its ability to provide insight into relative interest rates.

Let’s take a look at the short-term and long-term impact of the dollar on the economy.

Short-term:

With the recently-strengthened dollar, the fast increase is what had a meaningful impact on our economy. A strong dollar makes exported goods and services that are produced in the United States more expensive. Numerous conglomerates have cited the strong dollar as a headwind that has negatively affected corporate earnings, stating that this will be a driver putting downward pressure on earnings and stock prices due to the translation impact1 and competitive concerns2. However, small businesses which typically do not have as much international exposure will not be as negatively affected by a strong dollar. Also, the United States is a net importer; in the first quarter we exported $2.08 trillion and imported $2.63 trillion. Commodities are negatively correlated with the dollar and as it strengthens, commodity prices will fall. This will be a positive for companies that use commodities as an input variable and for the general consumer.  We expect continued strength in the dollar.

Long-term:

We see that the dollar typically strengthens when the U.S. economy is outpacing its peers. In addition, we think the United States will soon be hiking interest rates while lowering rates is popular elsewhere around the world. This would suggest more upside for the dollar. However, we think Europe will show signs of economic growth and this should cause the dollar to stabilize. It is imperative that we pay attention to the dollar. It matters more than investors realize.

To learn more about the value of the U.S. dollar, check out my video from earlier this year.

Employment
Jobs are one of the most important variables to an economy.  As jobs are created, consumer confidence increases and over time, wages increase.

Short-term:

What matters are jobs, jobs and more jobs. Job creation is the critical component in breaking the U.S. economy free from being “stuck in the mediocre-growth-mud.” In the short run, it is not critical what kinds of jobs are created, or whether they are high or low paying. Rather, it’s more important to focus on job growth and a low unemployment rate. Those variables alone will increase consumer confidence and move the markets. This year we expect that an average of 250,000 jobs will be created per month, similar to 2014.

Long-term:

The quality of jobs and wage growth remains in question. It appears there are some structural changes developing.

The U-6 is one of the ways the Bureau of Labor Statistics more critically measures long-term growth. The U-6 is calculated by adding the marginally attached workers (people who have become discouraged and stopped looking for employment) and part-time workers to the unemployment rate. This puts the U-6 at 10.8 percent, almost twice the rate of the unemployment rate (5.5 percent).

The jobs created have been in lower-paying industries, such as retail and leisure and hospitality. In addition, part-time employment due to economic reasons has not improved since 2010. This indicates a skill mismatch and a potential structural change developing.

The labor market appears to be tightening; unemployment has improved significantly since 2009, yet there appears to be limited wage pressure.  We think once the U-6 breaches 10 percent, wage inflation will appear on the horizon. Employment matters.

Global Gross Domestic Product (GDP)
We operate in a global economy.  What happens overseas can have a material impact on the U.S. economy.

Short-term:

All eyes are on Europe. Whether Europe can successfully manage Greece and enter a recovery phase is up in the air. Europe’s economy has been growing very slowly. Similar to the United States in 2009, lower interest rates and quantitative easing by the European Central Bank are now critical to global economic and market activity. Approximately 10 percent of our exports go to the Eurozone. The consensus GDP growth in Europe is 1.5 percent in 2015.  As monetary stimulus and green shoots of growth sprout in Europe, risk-based assets should perform well around the globe.

Long-term:

China is important to the global economy for two primary reasons:

  1. China represents the second largest economy in the world. The U.S., the largest economy, has a $16.8 trillion economy, while China’s economy is only $13.3 trillion.
  2. Even more important than size is growth rate. In 1985, China represented 3 percent of global GDP and the U.S. represented 25 percent. Today, China represents 14 percent and the U.S. has dropped to 19 percent. Even though the Chinese economy is smaller than the U.S. economy, it has been growing at a faster pace.  In 2010, China was growing at a pace of 10.5 percent.  Growth in 2014 slowed to 7.4 percent, although the data from their government has been questioned by many.

The real risk is if China’s economic activity slows to less than 6 percent growth. For a country with 1.4 billion people a slowdown would send a ripple throughout the world’s economy, as China’s imports will wane. We operate in a worldwide economy and ignoring these global variables is not an option.

Remember to check back for “What Doesn’t Matter: The non-drivers of the economy” next week!

[1] Translation is negatively impacted because sales generated outside the U.S. must be converted into dollars for financial reporting purposes. Therefore, a higher dollar = lower sales in dollars. So focus on sales ex-currency impacts.

[1] Example: Airbus, a European airline manufacturer, becomes price competitive versus Boeing, a U.S. airline manufacturer when the Euro weakens relative to the Dollar.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

 

DISCLOSURE AND IMPORTANT CONSIDERATIONS:

UMB Private Wealth Management is a division within UMB Bank, n.a. that manages active portfolios for employee benefit plans, endowments and foundations, fiduciary accounts and individuals.  UMB Financial Services Inc * is a wholly owned subsidiary of UMB Bank, n.a. UMB Bank, n.a., is an affiliate within the UMB Financial Corporation. Banking and trust services offered through UMB Private Wealth Management, a division within UMB Bank, n.a.

This report is provided for informational purposes only and contains no investment advice or recommendations to buy or sell any specific securities. Statements in this report are based on the opinions of UMB Private Wealth Management and the information available at the time this report was published.

All opinions represent our judgments as of the date of this report and are subject to change at any time without notice. You should not use this report as a substitute for your own judgment, and you should consult professional advisors before making any tax, legal, financial planning or investment decisions. This report contains no investment recommendations and you should not interpret the statements in this report as investment, tax, legal, or financial planning advice. UMB Private Wealth Management obtained information used in this report from third-party sources it believes to be reliable, but this information is not necessarily comprehensive and UMB Private Wealth Management does not guarantee that it is accurate.

All investments involve risk, including the possible loss of principal. This information is not intended to be a forecast of future events and this is no guarantee of any future results. Neither UMB Private Wealth Management nor its affiliates, directors, officers, employees or agents accepts any liability for any loss or damage arising out of your use of all or any part of this report.

“UMB” – Reg. U.S. Pat. & Tm. Off. Copyright © 2012. UMB Financial Corporation. All Rights Reserved.

*Securities offered through UMB Financial Services, Inc. member FINRA, SIPC, or the Investment Banking Division of UMB Bank, n.a.

Insurance products offered through UMB Insurance, Inc. You may not have an account with all of these entities. Contact your UMB representative if you have any questions.

Securities and Insurance products are:

NOT FDIC INSURED * NO BANK GUARANTEE * NOT A DEPOSIT * NOT INSURED BY ANY GOVERNMENT AGENCY * MAY LOSE VALUE


K.C. Mathews joined UMB in 2002. As executive vice president and chief investment officer, Mr. Mathews is responsible for the development, execution and oversight of UMB’s investment strategy. He is chairman of the Trust Investment, Asset Allocation and Trust Policy Committees. Mr. Mathews has more than 20 years of diverse experience in the investment industry. Prior to joining UMB, he served as vice president and manager of the portfolio management group at Bank of Oklahoma for nine years. Mr. Mathews earned a bachelor’s degree from the University of Minnesota and a master’s degree in business administration from the University of Notre Dame. Mr. Mathews attended the ABA National Trust School at Northwestern University and is a Chartered Financial Analyst and member of the CFA Institute. He is past president of the Kansas City CFA Society and a past president of the Oklahoma Society of Financial Analysts.



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Second quarter 2015 earnings explained

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We released our second quarter 2015 earnings  recently, and our Chief Financial Officer is here to share the highlights, including the much-anticipated acquisition of Marquette Financial Companies.


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Mr. Walker is the Chief Financial Officer and Chief Accounting Officer at UMB Financial Corporation. He joined UMB in 2007. He earned a Business Administration (Accounting) degree at Kansas State University and his Masters of Business Administration degree at Rockhurst University. In addition to his involvement with several community and charitable organizations, he is also the treasurer for the Big Bash Foundation, a not-for-profit foundation focused on providing financial assistance and increasing visibility for local not-for-profit organizations.



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Financial Word of the Week: Power of Attorney

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Financial Word of the Week - power of attorney

A durable power of attorney is a legal document where you as the “principal” designate an agent to handle the matters described in the document during your lifetime. A power of attorney is “durable” only if it provides that your agent may act even if you are disabled. In addition, there are many different kinds of power of attorney:

  • ordinary – revocable and automatically terminates upon the death or incapacity of the principal
  • springing – become effective only when needed, at some future date or upon some future occurrence, usually the principal’s incapacity
  • general – authorizes an agent to transact business for the principal
  • special – limits the agent’s authority to only a specified matter.
  • durable – remains in effect during the principal’s incapacity

Powers of attorney are central part of most estate plans, and provide a mechanism outside of court guardianships and conservatorships for management of your affairs. It can be a useful complement to a revocable trust, as the trustee would not have powers regarding assets not held in the trust. Rather, the agent can deal with assets held outside of the trust and other business that the trustee may not be able to handle, such as signing your income tax returns or dealing with a retirement asset.

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Books or eBooks: Who’s Winning? {infographic}

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Get the word on who’s leading the book industry. Are you Team Book or Team eBook?
eBooks vs. Traditional Books - infographic

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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