Newspaper article THE JOURNAL RECORD

Executives Offer Market Insights at UMB Bank's Economic Road Show

Newspaper article THE JOURNAL RECORD

Executives Offer Market Insights at UMB Bank's Economic Road Show

Article excerpt

About a year ago, the stock market started an upward path. And according to James Moffett, chief investment officer and chief equity strategist of UMB Bank, there are three drivers to the whole process - U.S. fiscal policy, U.S. monetary policy and U.S. currency policy.

This was one of several topics covered on Wednesday at UMB's annual Economic Road Show, during which executives offered insights into the economic climate. UMB Bank, which has locations in Oklahoma City and Tulsa, is owned by UMB Financial, based in Kansas City, Mo.

The fiscal policy, he said, is a major driver in stimulating the economy and basically comes from two sources - increased spending for national security and the war in Iraq, and the revenue shortfall, which comes from the recession and tax cuts.

But, he said, the administration alone can't be blamed for the spending. Congress plays a role as well.

This is an election year, Moffett said, and this is a great season for pork. Every congressman has his pet project & of course to him it's not pork, it's a necessity, Moffett said. But collectively it adds up to a lot of government expenditures.

The interesting thing, he said, is how this affects the economy as a whole.

The way we look at it is that corporate profits are the driver in this equation. They, in turn, drive capital expenditures, and capital expenditures is the swing factor in making the economy grow and finding new jobs, Moffett said.

Now corporate profits are up and, as that happens, companies are building their cash flow, and at some point, the economy gets just a little bit better.

Deficit spending should lead to a stronger economy, Moffett said. It already is producing rising corporate profits in some places, which should restore even more confidence in business and hopefully lead to capital investment and employment.

However, he said, the administration has been a bit ambiguous with regard to currency. They've said we believe in a strong dollar, but at the same time, they want the currency market to go down. There are a couple of reasons for this, he said.

One is that it makes American manufacturing more competitive on a price basis and that should produce a better business environment and more jobs. …

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