Capital Transactions - The Road to Recovery

Aaron Zeide, Elliott Davis Capital Partners

Although talk of “glimmers of hope” and “green shoots” has died down somewhat since the first quarter of 2009, market participants found reasons for cautious optimism. The United States, Canada, Mexico, and Great Britain all reported either smaller than expected declines or outright growth. All the usual leading and concurrent indicators showed improvement, most notably a resilient stock market. However, concerns over inflation, unemployment, and the unavailability of capital may continue to depress a recovery. Treasury Inflation-Protected Securities (TIPS), which are typically used to hedge portfolios against the effects of inflation, are especially in demand now that retail investors’ portfolios are increasingly concentrated in fixed-income securities. Some economists see this as a worrying sign which may preemptively increase inflationary pressures on consumers.