S&P/Case-Shiller: Housing Continues Improvement despite Concerns

Half of the 20 largest markets measured by Standard & Poor’s/Case-Shiller Home Price Indices suffered a loss between September and October. Still, the improvement between October 2012 and October 2013 continues to impress even as some uncertainty lies ahead.

All 20 cities posted annual growth since October 2012, with particularly strong gains in markets that had been damaged most during the last decade's housing market crash (Las Vegas, San Francisco, and Los Angeles). Even the smallest gainers (New York, Cleveland) posted gains nearing 5%. That said, nine markets actually showed negative movement on housing prices on a monthly basis between September and October, while another posted a flat performance. Factor in economic uncertainty tied to the Federal Reserve’s tapering of quantitative easing and its impact on mortgage rates as well as increasing common predictions of single-digit price growth in 2014, and housing’s future looks far from clear in the near term.

“Housing data paints a mixed picture suggesting that we may be close to the peak gains in prices,” said David Blitzer, of S&P Dow Jones. “However, other economic data point to somewhat faster growth in the new year.”

- Brian Shappell, CBA, CICP, NACM staff writer

December CMI Falls Dramatically, Erases Recent Gains

Market-watchers looking for holiday cheer will be hard pressed to find any in the December Credit Managers’ Index (CMI), scheduled to be published by the National Association of Credit Management (NACM) at 11:30 am today (EST).

The Combined Index fell dramatically, erasing most of the gains made in the last few months and taking the CMI back to levels not seen since the middle of summer. The manufacturing index fell significantly, and that was the better performing sector for the month, as a slow response to Christmas and a slowdown in the housing sector became apparent.

The CMI’s four favorable factors registered the biggest declines, as the gains made in the second half of the year seemed to evaporate. Particularly noticeable for market-watchers will likely be the sharp reduction in sales and new credit applications. The unfavorable factor index fell as well with dollar amount beyond terms taking a big dive in December.

What’s most alarming about the December CMI has more to do with the CMI in general than it has to do with any one particular factor. “The most concerning part of this month’s data is that the CMI is very often a predictor of what is to come in the near future given its ability to track the availability of credit,” said Chris Kuehl, PhD, NACM economist. “This month’s reading could signal that the economy is due to slow down substantially in the first quarter of the year.”

There were some reasons for optimisms, as noted by Kuehl. Mainly, that included only a small drop in amount of credit extended, which “gives some faint hope that many companies are still interested in making credit available to customers they trust,” and an improvement in rejections of credit applications. Additional, the sense that financial issues are of more recent origins could mean a turn in either a negative or positive direction in early 2014.
“The situation could get more serious and some of the longer-term issues could emerge, or this might be more of a curve in the road and just a delay in the response of the overall credit world and the economy,” said Kuehl.


For a full breakdown of the combined, manufacturing and service sectors, in addition to tables and graphs, view the complete CMI report for December 2013 online. CMI archives may also be viewed on NACM’s website.

European Roundtable Series on Ethics Highlights Need to "Know YourCustomer"

Earlier this month, the fourth of five events in FCIB’s European Roundtable series on the topic of Compliance & Ethics (C & E) hit Amsterdam. FCIB approached the topic from a credit risk perspective with a focus on the “KYC” element (Know your Customer) of the compliance policy. Those corporates with an American “parent” were more aware of KYC culture and its impact on deterring issues like money laundering and terrorist financing, whilst others were divided on who was responsible within their companies.

Some member corporates based within European Union nations were not quite as familiar with current legislation and, in particular, the EU 4th directive.  Broadly speaking, the EU Commission has adopted two proposals therein to update and improve the EU’s existing legal framework designed to protect the financial system against money laundering and terrorist financing. That said, the 4th directive has not been widely disseminated as yet and, in many cases, assumptions seem to have been made that this would be handled by in-house legal teams or a chief compliance officer, rather than credit managers there.

During the interactive programs, some of the key principles of the KYC element of C&E included the following:

  • Screening of customer’s company ownership, such as directors’ addresses.

  • Knowing where the goods’ final destination is.

  • Keeping everyone on the credit team familiar with things like embargo and sanction lists.

  • Knowing where payments are coming from.

  • Dealing with third-party payments.
The five-event series that began in September in London will culminate with the final event in Zurich on February 13.


So Much for Those Cheap Oil Prices

The supply of global oil is taking a hit, and the US will soon be experiencing its first real test of its ability to avoid the pressures of the oil market. Though newfound shortages have not reached critical levels yet, for now the price per barrel may increase.

The South Sudanese crisis is exploding and has already affected the production from that nation. This would not be such a big deal were it not for the fact that there have been problems with supply in Libya and Nigeria as well. Saudi oil production had already been reduced in the last few months, as demand had been low.

The big question is whether the US has become enough of an oil producer to protect itself against the ravages of global oil disruption. The US has become the world’s largest oil producer of late, in part because other major producers have been reducing their own output. Analysts are betting that traditional oil states will delay their response to what is happening with oil prices to see the global per barrel price rise back to a point where margins improve. In addition, there is a restriction on selling crude outside the US that will negate its ability to contribute to a general increase in the level of oil globally.

-Chris Kuehl, PhD, Armada Corporate Intelligence

S&P Makes Waves with Ratings Moves on EU, Mexico

Undeterred by apparent attempts of late by the European Union to control the message coming out of the three largest credit ratings agencies, Standard & Poor’s boldly cut the EU’s “AAA” credit rating late last week. Meanwhile, an emerging economy appears to be catching the agency's eye in a good way.

Citing ongoing, well-publicized concerns about European sovereign debt levels, the EU was cut to a rating of “AA+.” S&P, which was the only of the ratings agencies to cut the U.S. rating in recent years over debt and government gridlock, in previous months and years cut ratings and/or outlooks for a number of member nations in the EU. It comes on the heels of a European report that claimed massive deficiencies in how S&P, along with Moody’s Investors Service and Fitch Ratings, generates its ratings – the report is seen by many as setting the stage for the EU to fine and/or sue each of the three agencies. The EU also attempted to censor the agencies, essentially, by passing fast-tracked legislation about a year ago attempting to set up time frames for when the agencies could release information on sovereign ratings. It also opened the door for investors to sue them if ratings information caused them significant financial losses.

S&P did, however, uphold the sterling “AAA” rating for Britain, which is not on the euro as a currency even as it is member of the EU. Its government’s debt reduction efforts have impressed S&P analysts.

Also impressing S&P analysts is the direction of Mexico. As such, its sovereign long-term foreign currency rating was raised by one level to “BBB+.” Mexico’s latest rise is tied almost solely to the recent change there in energy policy in which private investment will be allowed within the oil/gas sector for the first time since the late 1930’s. As such, S&P sees massive new potential for Mexican growth levels that had already been rising impressively in years before this monumental policy announcement. Mexico had previously been building credibility because it was able to insulate its economic plight during the global downturn more so than most other emerging and traditional power nations.

-Brian Shappell, CBA, CICP, NACM staff writer

Industries to Watch: Retail, Coal

Long before Black Friday drew disappointing results, Industries to Watch warned that retail was in the midst of an uphill financial battle. Bruce Nathan, Esq., partner with Lowenstein Sandler LLP, called it quite possibly the biggest industry of concern regarding insolvency, especially for those late to the e-commerce party. Now, clothier Loehmann’s has become an unfortunate example of this very situation as it will shut its doors due to its Chapter 11 bankruptcy filing this week.

The filing was the company’s third, and an auction of assets is tentatively slated for December 30. Loehmann’s last reorganized a little more than three years ago. The near 100-year-old company never found its footing in an increasingly online-driven clothing marketplace, partially because it was among others “playing from behind,” those that waited too long to address the changing marketplace.

While Loehmann’s had its issues for many years, don’t expect this to be the last retail bankruptcy, especially in clothing. A number of issues continue to dog the sector, like a slow e-commerce response and over-leveraged financials. “The bottom line is you are going to see a shakeout in the retail area in the next few years,” Nathan said.

Another distressed industry, as Industries to Watch noted in September, is coal -- that was brought back to the headlines this week as a U.S. Bankruptcy Court judge approved the restructuring plan of one of the industry’s key players, Patriot Coal Corp. While there is much talk of a clean slate and a newfound liquidity infusion from the likes of Deutsche Bank and Barclays, concerns about Patriot’s business and that of competitors lingers.

Competition from natural gas presents “a permanent concern for the industry and a real obstacle,” said Adam Rosen, director of PricewaterhouseCoopers LLP’s financial restructuring group, in September. Little has changed since. In addition, there is the ever-present threat of mine closures and costly renovation mandates stemming from escalating federal regulatory efforts to address safety or environmental concerns.

“You’ve seen producers publicly say they think the worst is behind them, but they’re not overly bullish in the near term,” Rosen said. He added that deep struggles should be expected for at least another year. Those without solid cash standings to weather that storm are likely to face a solvency crisis.

“The sentiment is it will not be a fast recovery…but recovery is expected,” Rosen noted. Perhaps more than any other in that industry, the next several months of activity out of Patriot warrants close monitoring for anyone providing credit terms to the company or those downstream.

- Brian Shappell, CBA, CICP, NACM staff writer

Federal Reserve to Begin Tapering in January

The Federal Reserve finally answered the long-asked “when” question in regarding the beginning of the pull back on its asset buying-based stimulus efforts, announcing that a slight decrease in the pace of purchasing will begin early next year. NACM Economist Chris Kuehl, PhD predicted the move would “cause a ripple” in the business and investment worlds as the “money crutch” will start to vanish soon.

The Federal Open Market Committee (FOMC) broke Wednesday from its two-day fiscal policy meeting, the last of 2013, with the announcement that it would leave rates untouched at a range between 0% and 0.25% and would roll back the its assets purchase pace by about $5 billion per month. The decision was made with acknowledgement that the economy is now expanding at a moderate pace, longer-term inflation expectation have remained stable and risks to the positive economic outlook have become more balanced.

“In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to modestly reduce the pace of its asset purchases,” the Fed posted in a statement on its website. “Beginning in January, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $35 billion per month rather than $40 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $40 billion per month rather than $45 billion per month.” It added that the FOMC would maintain its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities as well as rolling over maturing Treasury securities at auction.

FOMC member Eric Rosengren fought the decrease on the grounds that the unemployment rate remained elevated and the inflation rate tracking below its target rendered a change in the purchase program “premature.”

Kuehl said the move to begin tapering early next year is “no shock.” The economist believes markets could read the action as the Fed signaling a deeper adjustment in its thinking sooner than later. However, Kuehl also noted that the somewhat surprise deeper concern about deflation than inflation now appears to exist could cause the Fed to “keep its foot on the gas” more than it wants to during the next few policy meetings in 2014.

“The expectation was that inflation would become more likely the more money was dumped in the economy, but that has not been the case,” he said. “The last thing the Fed wants to do is invite Japanese-style deflation into the equation.”

-Brian Shappell, CBA, CICP, NACM staff writer

Judge Approves Visa-MasterCard Settlement

U.S. District Judge John Gleeson approved the controversial settlement in the Visa-MasterCard antitrust case last week, putting what might only be a temporary end to years of litigation over how the world's largest card networks set their interchange, or “swipe,” fees.

The final settlement will only cost Visa and MasterCard $5.7 billion, which is still the largest antitrust settlement in U.S. history, but lower than the price tag originally negotiated in July 2012 of $7.25 billion in direct payments and temporary interchange rate reductions. The cost of the settlement fell due to the fact that 8,000 merchants, among them retail titans like Amazon and Wal-Mart, opted out of the deal.

Opponents were swift to respond. “We are very disappointed that this deeply flawed settlement has been approved. It is not supported by the retail industry and would do nothing to reduce swipe fees or keep them from rising in the future,” said National Retail Foundation (NRF) Senior Vice President and General Counsel Mallory Duncan. “The settlement permanently ties the hands of thousands of businesses who wanted nothing to do with this misguided case, and a decision to approve it violates established law and common sense,” she added, noting that NRF will review the case and the ruling to figure out the opportunities for an appeal.

Final approval of the ruling comes just over a year after Gleeson preliminarily approved the settlement back in November 2012. That earlier ruling allowed merchants to surcharge their customers for paying with a credit card, a practice that first became permissible under Visa and MasterCard's acceptance agreements with merchants as of January 2013. The final ruling in some ways cements a merchant's right to pass down their processing costs, at least for the time being, although it still does not supersede state-law bans on the practice of surcharging, which have come under scrutiny following a recent ruling by another judge in New York that said the state's surcharging ban was unconstitutional. Similar challenges are expected in other states in 2014 which could pave the way for more widespread surcharging.

Still, retailers, for whose benefit the settlement seemed exclusively crafted, are not expected to partake in surcharging for fear that it would drive customers to other competitors who don't engage in the practice. Additionally, some have noted that as credit cards have come to dominate consumer purchase methods, retailers have already built their card processing costs into their pricing, meaning they won't latch onto surcharging simply because they've been surcharging this whole time.

For companies that sell to other businesses, surcharging can look considerably more attractive, and this final settlement provides some small measure of certainty, although again, every company must pay close attention to state restrictions and the specific language of the settlement before implementing any form of surcharging program on card-using customers. Learn more about surcharging and B2B sales in the upcoming January 2014 issue of Business Credit, and stay tuned to NACM's blog and eNews for more information on how the ruling's final approval affects commercial creditors.

- Jacob Barron, CICP, NACM staff writer

EU Prepping Lawsuit, Fine for Credit Ratings Agencies?

The three largest credit ratings agencies, all based in the United States, have faced plenty of criticism for its decision-making and publicly released outlooks both before and after the global economic downturn. But the European Union appears to be setting up to consider actually suing or fining the trio over damages and ongoing business practices.

The European Securities Markets Authority published a report this month that claimed numerous deficiencies were in play regarding the how sovereign ratings are generated by Fitch Ratings, Moody’s Investors Service and Standard & Poor’s. The report found that the agencies demonstrated problems that included conflicts of interest, confidentiality in disbursement of ratings information, timing of information releases and resource allocation (not enough qualified analysts, use of junior-level or newly hired employees, etc). The Authority warned that it has “required the CRAs to put in place remedial action plans to address the issues identified and will monitor their progress against these plans as part of its ongoing supervision.”

The three credit ratings agencies were criticized heavily for their performance in ratings of both companies and countries during the run-up to the worst global recession in more than half a century. In addition, European leaders continued criticism as the agencies in recent years routinely lowered ratings of and put on warning high-debt nations including all of the PIIGS (Portugal, Ireland, Italy, Greece, and Spain), even though all of which since proved to have deep-rooted fiscal issues.

The EU previously struck at the agencies with what amounted to an attempt to censure them or, at the very least, tightly control aspects of information releases. Last winter, the EU fast-tracked legislation that restricted the timetable in which any of the agencies could release news of sovereign credit ratings of any EU member. The regulations also empowered investors with the right to take legal action against the agencies if financial losses could be tied back to vague measures of “gross negligence” or “malpractice” on the agencies’ part.

-Brian Shappell, CBA, CICP, NACM staff writer

Important Online Payments Survey Deadline December 13 (Includes SampleResponses)

Update: Deadline for participation is today!

Credit professionals who wish to participate in a Federal Reserve survey that will help shape the future of electronic and other payment systems have until the end of the week to take part in the important initiative. Proposed solutions from which will be discussed as part of Credit Congress on June 11 in Orlando.

As part of the Fed effort, the agency has created an online survey about online payments, which NACM urges its membership to complete before its close on December 13, to assist it in learning directly from professionals about issues end users have or believe should be addressed. The survey can be accessed directly here.  Questions focus on topics such as increased potential/risk for fraud, international transactions, timeliness of funds availability and efficiency gaps. More details about the initiative are available in the Federal Reserve report titled Payment System Improvement–Public Consultation Paper.

The following is a sample of response answers, based off the experiences of a veteran credit and payments professional:

1. Yes.

2. Yes.

3. No comment.

4. I agree that it will take public authority and comprehensive changes in the banking system, including the likely elimination of private banking.

4ii. ERP's, Demographics, middleware service providers, etc., will need to play a larger role in the implementation of any solutions.  Monetization of the service will play a large role because implementation for the end user (BUSINESS) will be costly.

5ii. I agree but even then, only a small portion of the B2B payments will use this solution because of the divergence of all payment technologies.

6i. ll interesting ideas but which institutions die: Private banking? Debit Cards? Credit Card? ACH? I think they all coexist and seriously doubt the viability of a single solutions that is the answer to the large majority of B2B payment solutions

6iii. Near-real-time may not be good enough...might the product be out the door still if it is less than real-time?

6iv. B2B.

7. Both are necessary.

8. Near real time will not prevent most fraud.

8i. If I am able to access the account information, maybe I am out with the product even faster because the business assumes the account and funds are mine.

9. C2B (customer-to-business) good, B2B (business to business) unlikely changed.

10. Emergence of greater use of credit card technologies in B2B.

11. skip.

12i. Nervous populous about data security.

12ii. Virtually none because of the US appetite for private banking (which I also favor)

13i. Consumers -- I think most who will shift have shifted. Demographics will drive the balance of change over time. For Business -- I think the AP systems (human and technology) are the largest deterrent to change.

13ii. No.

14i. I believe demographics are now the greatest contributor to the adoption.  I do not think technologies will drive B2B payment behaviors.

14iii. B2B mindset of merchant or merchant expected payment behaviors.  If one expects electronic payment, one will likely receive it.  But, technologies must be available for B2B implementation of the expectation.

15, I do not believe it will be broadly used, no more so than it is used today.

16. Companies who need cross-border payments MAY use them, but security will be a huge issue.

17i. All are equally vulnerable.

18-19. Skip.

20. Cannot enact the "build it and they will come" mindset, thus, B2B solutions must include the merchants.

- Brian Shappell, CBA, CICP, NACM staff writer

Regulators Approve Tough New Volcker Rule

Federal regulators voted today to approve a new version of the Volcker Rule, a cornerstone of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) that strikes at how banks take risks with their own capital.

As expected, all five of the Federal regulatory agencies responsible for implementation and enforcement, the Federal Reserve, the Securities and Exchange Commission (SEC), the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC) and the Commodity Futures Trading Commission (CFTC), approved a tougher version of the rule than many on Wall Street had hoped. In particular the rule bars banks from trading for their own gain, limits their ability to invest in hedge funds and requires banks to change their compensation policies so that they don't inadvertently reward the kind of proprietary activity the rule specifically aims to end.

The newly-approved version also requires banks to identify the exact risk that they're aiming to hedge when they make certain trades or investment that they allege are aimed at alleviating risks. This ties back directly to JP Morgan Chase's $6 billion trading loss from 2012, wherein the bank alleged that it had taken certain steps in order to broadly hedge their risks, when in reality the trades were speculative and ultimately ended in the aforementioned loss. The regulators don't want banks hiding behind risk-hedging in order to make risky profit-driven trades, hence this provision's inclusion in the final rule.

CEOs of covered institutions must also attest to regulators, on an annual basis, that the bank itself has taken steps to comply with the new Volcker Rule, which is a new provision designed to make it harder for banks to find loopholes around the rule. However, reports noted that this provision could've been even tougher if it required CEOs to attest that their institutions were actually in compliance with the rule, rather than merely certify that they were making an attempt to comply.

Find out more about the new Volcker Rule and what it means for you in this week's upcoming edition of NACM's eNews.

- Jacob Barron, CICP, NACM staff writer

Survey: Corruption Problems Rampant, Emerging Economies Still Far Behind

More than two-thirds of the 177 countries tracked in the newly released 2013 edition of Transparency International’s Corruptions Perceptions Index were found to have serious problems in corruption levels. Perhaps even more troubling is the absence of any of the traditional power economies among the 10 best nations or much in the way of improvement in emerging economies of note.

The two best performing nations in this year’s Corruption Perceptions Index, Denmark and New Zealand, tied at a level of 91. They were followed closely by Finland, Sweden, Norway and Singapore, representing almost no change from last year. Tied for worst performance, at a level of 8, were Somalia, North Korea and Afghanistan. Just 54 nations scored at or above the floor level of 50 that marks a serious corruption problem for those below it.

“This indicates a serious, worldwide corruption problem,” said Huguette Labelle, chair of Transparency International. “The world urgently needs a renewed effort to crack down on money laundering, clean up political finance, pursue the return of stolen assets and build more transparent public institutions.”

Among the true power economies, Germany led the way by scoring a 78, which earned it a 12th place ranking. The United Kingdom wasn’t far behind in 14th (76), with Japan in 18th (74) and the United States in 19th (73). Straddling the line between power players and emerging economies, China again lagged with a score of 40, good for 80th position. It was equal to Greece, which despite the low level can take heart in the four-point improvement since last year, according to Transparency International’s data. Fellow European Union bailout-recipient Ireland posted a similarly impressive improvement and came just short of cracking the top 20. Spain represented one of the worst declines in the index, falling to 59 from a 2012 level of 65.

Other economies considered “emerging” continued to demonstrate that corruption was holding back their potential in the business world. Turkey registered a score of 50 (53rd place), followed by Brazil’s and South Africa’s 42 (72nd), India’s 36 (94th), Mexico’s 34 (106th ) and Russia’s typically poor 28 (127th).

- Brian Shappell, CBA, CICP, NACM staff writer

J.P. Morgan/Markit: Global Service Output, Orders Grow

The J.P. Morgan Global Services Business Activity Index, compiled in association with financial information services firm Markit, found a sizable uptick from 51.8 in October to 53.9 in November. J.P. Morgan/Markit noted the accelerated growth rate came largely from a hot rebound in services output and new growth activity in the United States, as the pace of acceleration in the euro zone lost some steam thanks to France and Italy.

The U.S. Services PMI recovered from an October performance that had been stunted by the federal government shutdown. New orders, outstanding business and backlog accumulation all increased for the month, as did service-sector employment. However, the total rate of job creation when including both manufacturing and service side jobs was at its weakest since March. Also disconcerting was that service providers’ level of optimism in November dropped to a one-year low, according to J.P. Morgan/Markit:

“More than half of all companies expected to see higher activity in the coming year…however, the survey saw a rise in the number of companies citing concerns that activity could weaken, often linked to uncertainty arising from further potential fiscal standoffs.”

J.P. Morgan/Markit also released the following November results for service sector PMI levels in other nations this week:

Brazil – 52.3  (52.1 in October)
China – 52.5 (52.6 in October)
France – 48 (50.9 in October)
Germany – 55.7 (52.9 in October)
Japan – 51.8 (55.3 in October)
Russia – 52.9 (52.5 in October)
Spain – 51.5 (49.6 in October)

- Brian Shappell, CBA, CICP, NACM staff writer

Visit http://www.nacm.org/enews.html#6 to view NACM’s eNews story this week about the latest manufacturing-side PMI data from around the globe.

U.S. Supreme Court Upholds Forum-Selection Clauses

A new Supreme Court ruling found that the venue of legal proceedings should be the one specified in a contract’s forum-selection clause in all but "extraordinary" and the "most unusual" cases of public interest.

The Supreme Court of the United States reviewed a lower court ruling in Atlantic Marine Construction Company, Inc. v. J-Crew Management, Inc. that revolved around a lawsuit filed over a withheld final payment from a Virginia-based general contractor, Atlantic Marine, to a Texas-based subcontractor, J-Crew, and an attempt by the sub to keep the case closer to its home (and where the work was performed) despite contract terms. The ruling, written by Justice Samuel Alito, found that a district-level judge should, as an "ordinary" course of business, transfer civil actions upon request when the destination court was agreed to by contract in a forum-selection clause. Only a very rare or "extraordinary" public-interest matter should be considered to break from terms agreed to in such a clause. J-Crew, which argued on a basis of convenience and costs for its small company, lost in its bid to have the case heard in Texas despite a lower court ruling that would have allowed it because the contract specified disputes would go forth in Virginia. Alito noted that, via the forum-selection clause terms, J-Crew "knew that a distant forum might hinder its ability to call certain witnesses and might impose other burdens" well in advance.

"Motion to transfer based on a forum-selection clause should not consider arguments about the parties' private interests," Alito wrote in the unanimous decision. "When parties agree to a forum-selection clause, they waive the right to challenge the preselected forum as inconvenient or less convenient for themselves or their witnesses, or for their pursuit of the litigation." The judge suggested that failure to honor the forum-selection clause in that way might encourage widespread venue-shopping and "gamesmanship" from either side of the general contractor-sub relationship. In essence, moving the case out of an agreed-upon court could give a local plaintiff an unfair advantage because of knowledge of state law. Alito also wrote of fairness regarding changing contract terms that may have been influenced by where disputes, should they arise, would be heard:

"When parties have contracted in advance to litigate disputes in a particular forum, courts should not unnecessarily disrupt the parties' settled expectations. A forum-selection clause, after all, may have figured centrally in the parties' negotiations and may have affected how they set monetary and other contractual terms; it may, in fact, have been a critical factor in their agreement to do business in the first place. In all but the most unusual cases, therefore, the interest of justice is served by holding parties to their bargain."

The Supreme Court also remanded the case back to the Court of Appeals for the Fifth Circuit to review whether any extraordinary public-interest factors were in play. STS National Sales Representative Chris Ring noted such a case also drives home the deep importance of having credit on the same page with upper management and sales where specific details of contracts are concerned, especially when large dollar values are in play. Granted, there are 24 states that have language limiting forum-selection clauses.

- Brian Shappell, CBA, CICP, NACM staff writer

Check back in the coming days for additional legal analysis of this Supreme Court case here at http://blog.nacm.org.

Federal Reserve: Growth in All 12 Districts Through Mid-November

The Federal Reserve’s Beige Book economic roundup noted growth that was either “modest" or "moderate” for all 12 districts from October through mid-November in a Wednesday release: 
“Manufacturing activity expanded at a modest to moderate pace in most Districts during the reporting period. Companies across a number of sectors in Philadelphia noted a reduction in activity due to the federal government shutdown, while defense contractors in Boston reported that sequestration has not yet affected them significantly. Chicago highlighted the motor-vehicle industry as a main source of strength due to a large number of new vehicle launches and increasing demand for medium- and heavy-duty trucks. Cleveland and St. Louis also reported increased motor-vehicle production. Steel producers in Dallas and San Francisco indicated that demand was steady, while producers in Cleveland and Chicago experienced a slight drop-off in production. San Francisco noted an increase in demand for semiconductors driven by demand for mobile-technology products. High-tech manufacturing firms in the Dallas District said that demand was flat to modestly weaker; however, respondents expect a gradual increase in demand over the next three to six months. Contacts expressed varying degrees of optimism about near-term business activity."

Consumer Spending
"Consumer spending increased in almost all Districts at a modest to moderate pace. A Boston retailer noted that sales performance during the 2013 holiday season will be a better test of what seems to be an improving trend. Philadelphia retailers reported hopeful, but very uncertain expectations…retailer expectations in the Atlanta District, Minneapolis and Kansas City are cautiously optimistic about the buying mood of holiday shoppers. Sales of new motor vehicles continued at a moderate to strong pace across most Districts, although Dallas reported a slight decline [and Kansas City’s were flat], which was attributed to a lack of consumer confidence and continued uncertainty. Motor-vehicle purchases in Kansas City were flat."

Real Estate and Construction
"Residential real estate activity improved in Boston, Philadelphia, Chicago, St. Louis, Minneapolis, and San Francisco, while remaining steady or softening in other Districts. Some slowing in single-family home sales was attributed to seasonal factors. Nonetheless, sales remain largely above year-ago levels. Increasing demand, low to declining levels of inventory, and slowly rising new-home construction were cited by almost all Districts as reasons for a continued rise in home prices, but at a slower pace than was observed earlier in 2013. Commercial real estate activity remained stable or improved slightly across many Districts. The technology sector drove demand for commercial real estate in the San Francisco District, and Cleveland saw gains in affordable housing and shale-gas-related activity. The outlook of market participants is for continued improvement in the Philadelphia, Atlanta, Kansas City, and Dallas Districts, while contacts were cautiously optimistic in Boston and Cleveland."

Banking and Finance
"On balance, banking conditions remained stable in a majority of reporting Districts. Loan volume showed a modest increase. An increase in business-credit activity was seen in a number of Districts. Commercial real estate lending increased in New York, Cleveland, Atlanta, Chicago, Kansas City and San Francisco. Demand for commercial and industrial loans rose in the New York, Atlanta and Kansas City Districts, but weakened in St. Louis. C&I lending was unchanged in Chicago. Several Districts reported increased credit quality, as delinquencies have continued to decline and fewer problem loans have been reported."

Agriculture and Natural Resources
"Strong crop yields were reported, while in general, agricultural commodity prices fell and drought conditions stabilized or improved. Reports indicated a continued expansion in energy demand and production."

Source: Federal Reserve

Detroit Ruled Eligible for Bankruptcy, Largest in U.S. History

It might be a dubious claim to fame, but also a necessary step, for one of the nation’s worst debt-beleaguered cities: Detroit officially became the largest city to enter Chapter 9 bankruptcy in U.S. history today after the filing was cleared by a judge.

As predicted by NACM, U.S. Bankruptcy Judge Steven Rhodes ruled the city was, in fact, insolvent and that it was legally eligible for a municipal bankruptcy filing. Detroit's Chapter 9 endured months of heated court and behind-the-scenes wrangling. Unions and other groups representing retirees and current city employees repeatedly argued, to no avail, that a Chapter 9 on the part of the city violated the Michigan Constitution. However, city and state officials as well as the U.S. Justice Department defended Detroit's right to file, saying the filing does not amount to any state or federal constitutional violation. Supporters also argued bankruptcy is the only way back for a city nearing $20 billion in unfunded debt, primarily caused by massive entitlements (pension, health care) for public workers and retirees as well as years of mismanagement.

Rhodes intimated throughout the process that it was unlikely that the constitutionality argument would derail the proceedings.

- Brian Shappell, CBA, CICP, NACM staff writer

Better News from Global Manufacturing on B2B Buying

The latest data from the J.P. Morgan/Markit version of the Purchasing Managers’ Index shows that gains are still being made despite some of the challenges facing retailers. There is obviously enough demand somewhere to justify the expansion of the manufacturing sectors in Asia as well as Europe and the United States. Much of this demand is coming from business and industry as opposed to the demand from consumers.

For the fifth straight month, the index for the euro zone ceded the 50 mark separating expansion from contraction. It now stands at 51.6, and that is up from the previous flash estimate. The impetus for that growth came from a predictable source: Germany. The German reading was much higher than it was expected to be and is at the highest level seen in over two years. They were joined in this progress by the Netherlands and, to a lesser extent, Italy, whose 51.4 level market its highest point in over three years. France, however, was still a laggard in the euro zone. Even Spain and Greece had more to hang their hats on with improved export numbers.

The UK numbers are as good as they have been in many months, reaching a 58.4. This mostly stemmed from expansion in the Middle East and Africa. Of all the nations in Europe, the British have been the most aggressive in developing business in these new markets, and it is starting to pay off.

The Asian numbers also looked better than expected. China stayed about where it has been at 51.4 (official version) or 50.8 (according to Markit). The Chinese are not getting the boost from export business they are accustomed to, but there is evidence the domestic economy is making a bigger contribution these days. One of the most impressive changes took place in Japan, and there are many who assert that Abenomics is finally having the impact expected by the prime minister and his team. The PMI jumped to 55.1, the highest number registered in Japan in more than four years. The vast majority of that gain has come from expanded exports, which is likely the result of the yen’s changing value. The economic plan in Japan has resulted in a much lower currency value and that allows Japan to grab some of the market share lost to China over the years.

Does all this mean that happy days are here to stay? It probably does not, but there are some signals that these gains might continue under the right circumstances. Much of the growth this month seems anticipatory, as there has been a buildup of inventory and there has been more investment in capital equipment geared towards expansion and development of new markets. The sense is that 2014 will be better.

- Chris Kuehl, PhD, Armada Corporate Intelligence

November CMI Builds on Recent Optimism

The latest Credit Managers’ Index (CMI), published by the National Association of Credit Management (NACM), built upon the optimism from October’s CMI, when respondents shook off the government crisis in Washington to deliver the index’s best figures in over a year and a half. November’s readings, available now on NACM's website, pushed to a high not seen yet this decade and signify a newfound stability in businesses’ attitudes on the economy as well as a greater sense of security in their investments.

“There is a real sense that credit is more available than it has been in some time, which bodes well for the coming year,” said NACM Economist Chris Kuehl, PhD. “This is not to say that a shock to the economy would not force a decline, but more resilience has formed than has been the case in some time.”

Though there were negative seasonal issues at play within some favorable factors, sales almost single-handedly kept that side of the index somewhat stable. The noteworthy improvement was experienced in the unfavorable factors index (rejections of credit applications, accounts placed for collection). Also noteworthy is that CMI statistics suggest consumers, despite some studies that indicate the contrary, have gained enthusiasm.

“As retail sales and traffic numbers suggest, people are saying one thing, but doing another,” Kuehl said of increasing buying activity. He added that overall message from the unfavorable factors is that business does not seem to be in real distress at the moment. In short, most businesses are heading into 2014 on stable ground.

To view the full November CMI report, visit http://web.nacm.org/cmi/cmi.asp.

Case-Shiller Quarterly Figures Up Again

The latest numbers from the S&P/Case-Shiller Home Price Indices are encouraging for most of those directly involved in the U.S. housing market and their downstream suppliers. In all, 13 of the 20 major markets tracked showed year-over-year gains though there was a bit of a pause stemming from weakness during the final month of the third quarter.

In statistics through September unveiled by S&P (Standard & Poor’s) Dow Jones Tuesday, the S&P/Case-Shiller 10-City Composite and 20-City Composite each rose by 13.3% from 2012’s third quarter. Among the biggest gainers, albeit from historically depressed levels, were the Las Vegas, San Francisco, San Diego and Los Angeles markets. All four exceeded 20% annual increases and were the only metropolitan areas to do so above that level. Twelve cities posted double-digit improvements in all.

“The second and third quarters of 2013 were very good for home prices,” said David Blitzer, chairman of the index committee at S&P Down Jones Indices. He added that year-over-year improvements have reached the best level since February 2006.

One piece of concern, however, comes from the reality that monthly gains in 19 of the 20 markets were smaller, often by about half, in September than in August. Among the weakest markets in that regard were Charlotte, the only metro area to report a percentage loss between August and September, as well as Denver, Dallas, Cleveland and Chicago. Those five were also among the weakest eight in year-over-year growth, according to S&P/Case-Shiller. In addition, hot growth in the West has sparked newfound whisper of potential price bubble emergence. This is of concern because of the damage infamously caused by overheated and unsustainable conditions in some markets, notably in Florida, California and Nevada, during the run-up to the national and global recession last decade.

- Brian Shappell, CBA, CICP, NACM staff writer

Ukraine Nixes EU Deal Amid Reported Russian Pressuring

Last week, NACM Economist Chris Kuehl, PhD talked about Eastern Europe’s need to embrace further reform efforts to have any hope of closing the gap between it and the traditional power economies. It appears that Ukraine has taken a monumental step backwards after abruptly ending negotiations, apparently at the urging of Putin Russia, with the European Union after five year.

The EU and Ukraine had been working toward an “association,” though not as welcome a reception as other member states have received, and a free trade agreement that would have represented a significant step forward. Instead, Ukrainian leadership opted to hitch its economic wagons to Moscow. The Putin government had reportedly been pressuring Ukraine, independent from the Soviet Union for just over two decades, through blocking the flow of manufactured goods and other tactics in an effort to dull its interest in forging the EU deal.

The pull-out by Ukraine’s leaders sparked a rash of protests from a populous that still remembers the difficulties of life under Soviet rule. Now, it would be an understatement to say the future of one of Eastern Europe’s most important economies has been thrown into a state of utter upheaval. And, for a country that has been known to perform poorly in terms of adhering to credit terms, it has made the idea of granting credit to companies based there all the more risky.

- Brian Shappell, CBA, CICP, NACM staff writer

Can Eastern Europe Ever Catch Up?

The latest assessment of the economies of Eastern Europe from the European Bank for Reconstruction and Development (EBRD) is not very encouraging. The report flatly states that nations in Eastern Europe, on the whole, will remain far behind their western counterparts for a very long time unless there is a strong re-commitment to the reforms undertaken in the years right after these states made the break from Soviet influence.

The EBRD acknowledges that a big part of the stagnation problem today is that cheap credit emanating from the western states has dried up. The report also places considerable blame on the policy retreats that have taken place all over the region. The assertion is that economic and financial issues caused the governments to fall back into old patterns. That meant slowing down privatization in an attempt to preserve jobs, restricting the actions of local banks and backing the kind of white elephant projects that were the hallmark of the old days.

The nations of the eastern half of Europe are only barely connected to the rest of the continent. The trade between them has slowed, and there has been no replacement for that western connection. Some have tried to reassert their connections to Russia, which is becoming less and less of a wealthy nation these days, itself. Most have done very little to engage in trade with Asia or Latin America. Even the United States has been mostly untouched as a trade partner.

- Chris Kuehl, PhD, Armada Corporate Intelligence

Industries to Watch: Health Care

Few topics in American news media would realistically have the power to knock talk of the government shutdown almost completely off the pages and out of the public consciousness. But the epic failure of the advance of the Affordable Care Act (“Obamacare”) and associated rollout of the Heathcare.gov website did just that.

Concerns that the cost to businesses of offering insurance to every America haven’t gone away, nor has the debate become any less peppered with vitriol. That is especially the case among lawmakers, and it isn’t likely to change soon, said NACM Economist Chris Kuehl, PhD. That notwithstanding, the fact that a myriad of problems were unearthed at the time when Americans were supposed to be able to enroll for health care plans online has pushed the timetable back and will only continue to do so. That’s dangerous for product and service providers, according to Kuehl and Deborah Thorne, Esq., a partner in the Chicago office of Barnes & Thornburg LLP.

“There have been a lot of complaints,” Thorne said. “Hospitals and institutions thought it would be all organized by now. They made decisions on things like expansion thinking it would be up and running. I’m hearing people say ‘maybe we shouldn’t have done that,’ right now.” That said, the problems haven’t shown up in companies’ respective bottom lines yet, but Thorne believes the numbers could start to bear this out by the next quarter.

In addition, there is the possibility that companies will be exposed to fraud as a result of the new health care law. According to Thorne, much higher demand could mean more fraud. “Things fall through the cracks,” she said. “With all these people eligible that didn’t have access before, there may be people who take advantage of the system. I think it opens the door. There certainly will be opportunities for fraud within the increased volume.”

In short, if selling on terms to a doctor’s group, hospital, manufacturer or service provider that is highly dependent on various aspects of the law for business, credit professionals need to know who these customers are, how they are faring and what their future prospects look like.

- Brian Shappell, CBA, CICP, NACM staff writer

Texas Supreme Court Hears Arguments in Case on "No Damages for Delay" Clauses

On November 6, 2013 the Texas Supreme Court heard oral arguments in Zachry Construction Company v. Port of Houston Authority of Harris County, Texas, a case that could have severe ramifications for contractors and subcontractors state-wide.

At issue is whether or not an owner can include clauses in their contracts that essentially protect them from ever having to pay delay damages, even when the owner's actions are intentionally or unintentionally responsible for the delay. In other words, the Texas Supreme Court will eventually rule whether "no damages for delay" clauses in construction contracts extend to delays caused, willfully, by the owner.

A lower court, the 14th Court of Appeals of Texas, ruled that they did in August 2012: according to the American Subcontractor's Association (ASA), the court found that Zachry Construction Co. could not recover damages related to a delay that was caused by the owner's breach of contract because of the presence of a "no damages for delay" clause. The court argued that "parties strike the deal they choose to strike and, thus, voluntarily bind themselves in the manner they choose."

According to Chris Ring of NACM's Secured Transaction Services (STS) "general contractors, subcontractors and material suppliers need to pay particular attention to and support ASA's arguments to overturn the 'no damage for delay ruling,' for if this ruling stands, an owner has the ability to willfully and negligently delay a project with limited or no recourse from downstream contractors and suppliers."

Subscribers to the STS Lien Navigator receive late-breaking updates on construction law changes in all 50 states and Canada. To be one of the first people to know when the Texas Supreme Court actually issues a ruling in this case, learn more about the Lien Navigator and STS' other services here.

- Jacob Barron, CICP, NACM staff writer

ECB Cuts Main Rate on Deflation Concerns, but Effect on Corporates Expected to Be Negligible

The European Central Bank (ECB) made a surprise cut to its benchmark interest rate last week, reducing the 0.5% main rate, which was already at a record low, by another 25 basis points to 0.25%.

The move arrives on the heels of diminishing inflation in the euro zone. In October, inflation fell to an annual rate of 0.7%, whereas the ECB has aimed to keep inflation at 2%. While lower inflation might not sound like such a bad thing, especially for cash-poor consumers, October's decline could suggest a greater risk of deflation, which some say poses a greater threat.

"In the euro zone as a whole, sovereigns, banks and households are still heavily indebted, which means that deflation poses a higher risk to recovery than inflation," said AIG Chief Country Risk Economist Carolyne Spackman. "When consumers expect falling prices, they tend to hold off discretionary purchases, which erodes corporate profits and puts downward pressure on both wages and government revenues. Deflation is pernicious in that it makes it even harder for debtors to service their debts, and it can also trigger the need to post additional collateral against secured loans."

In announcing the decision, ECB President Mario Draghi noted that the rate cut aligned with the Bank's prior guidance regarding inflation, but warned that low inflation could be a lasting issue. "We may experience a prolonged period of low inflation, to be followed by a gradual upward movement towards inflation rates below, but close to, 2% later on," he said. "Accordingly, our monetary policy stance will remain accommodative for as long as necessary. It will thereby also continue to assist the gradual economic recovery as reflected in confidence indicators up to October."

Spackman agreed that the response of Draghi and his cohorts suited the severity of the deflation threat. "Easing monetary policy is appropriate to prevent deflation from setting in, and this helps to understand why the ECB cut interest rates after inflation was only 0.7% in October," she said, "but with the re-fi rate at 0.25%, there is little further room to cut, especially as the deposit rate is already 0%."

While some of the latest news from the euro zone has given some analysts reason for optimism, particularly Germany's manufacturing numbers and Spain's outlook upgrade, the ECB's future efforts to stimulate the economy will almost have to focus on extending liquidity to banks rather than cutting rates any further. Still, whatever steps Draghi chooses to take in 2014 and beyond, the results might not trickle down to non-financial companies. "Banks are still focused on balance sheet repair, and the increased liquidity may not be transmitted to firms," Spackman said. "The rate cut will do little to stimulate lending, and as long as this trend continues, it means that credit managers have to be vigilant, because customers in the euro zone may continue to have difficulty accessing credit."

- Jacob Barron, CICP, NACM staff writer

Opposition, Obstacles to Trade Pact Escalate

Criticism is mounting about the lack of transparency in the negotiations for the Trans-Pacific Partnership (TPP), a trade agreement that represents a greater interest in Southeastern Asia on the part of notable nations in North and South America, among others.

Part of an alleged TPP draft unearthed by WikiLeaks and printed in Australia’s Sydney Morning Herald in the last week suggested plans to strengthen the stronghold of U.S.- and Japanese-based pharmaceutical and computer technology multinationals, as well as impose tougher restrictions and heavier enforcement on copyright/intellectual property “infringement” of various kinds, all of which could mean a spike in prices, especially outside of the U.S., for products in such areas. Additionally, some analysts argue that some portions of the plan amount to limits on Internet free speech.

Meanwhile, two letters made public in the last week from Congressional groups, one from within each party, called for more power, involvement and “checks and balances” on the part of federal lawmakers in the trade negotiation process. A November 8 letter drafted by a dozen Democrats noted the administration “must ensure that Congress plays a more meaningful role” in the reauthorization of the Trade Promotion Authority (TPA), also known as “fast track” authority. President Barack Obama wants this in order to ease and speed up the TPP agreement, as well as another free trade agreement with the European Union. The last TPA agreement ended in 2007.

The U.S. Congress, known throughout the world for its partisan-fueled inability to come to nearly any significant long-term policy agreement, in its attempt to garner more power and involvement in talks that already include nearly a dozen other nations, does not bode well for speedy enactment of a trade pact that once appeared to be on the fast track.  The TPP also includes Vietnam, Singapore, Malaysia, Peru, Chile, New Zealand and Australia.

- Brian Shappell, CBA, CICP, NACM staff writer

Devastation in the Philippines

The latest super storm to capture the world’s attention slammed in the Philippines and will likely become the most expensive and tragic of any storm to hit anywhere even though it struck a part of the country that was less populated. At one point it was aimed squarely at Manila, and that would have caused destruction that would be incalculable.

Economically, the Philippines was having a very strong economic year. Growth rates were the envy of the region and the world. That growth is now likely to falter for a few quarters. Again, the good news is that most of the business sector of the country was spared, but handling the recovery will tax the economy beyond what it can easily stand. The level of international aid will have a lot to do with that recovery, but so far the response has been meager given the magnitude of the crisis.

- Chris Kuehl, PhD, Armada Corporate Intelligence

S&P Slaps France with Credit Downgrade

Though news out of Spain and Germany in recent days has painted a more hopeful picture of recovery prospects in the European Union, Friday’s French credit rating downgrade illustrates that many issues still complicate the potential of a consistent rebound.

Standard & Poor’s (S&P) lowered France’s long-term foreign and local currency sovereign credit ratings to “AA” from “AA+.” Though not new critiques, S&P rationalized the decision by attacking the French government’s approach to budgetary and structural reforms to taxation. That, along with weakness in manufacturing and labor markets, “is unlikely to substantially raise France’s medium-term growth prospects,” S&P noted. “We see France’s fiscal flexibility as constrained by successive governments’ moves to increase already-high tax levels and what we see as the government’s inability to significantly reduce total government spending.”  It added that double-digit unemployment would likely continue acting as a drag on growth and reform efforts through 2016.

However, S&P set France’s outlook at stable on Friday, noting that the probability of another change in the French sovereign ratings was unlikely (less than one-in-three) within the next two years.

- Brian Shappell, CBA, CICP, NACM staff writer

ECB Cuts Main Rate on Low Inflation Figures

The European Central Bank (ECB) made a surprise cut to its benchmark interest rate today, reducing the 0.5% main rate, which was already at a record low, by another 25 basis points to 0.25%.

The move arrives on the heels of diminishing inflation in the euro zone. In October, inflation fell to an annual rate of 0.7%, whereas the ECB has aimed to keep inflation at 2%. While lower inflation might not sound like such a bad thing, especially for cash-poor consumers, October's decline could suggest a greater risk of deflation, which can eat into business profits and contribute to higher unemployment.

Joblessness continues to be one of Europe's most nagging economic problems. "Real incomes have benefited recently from generally lower energy price inflation," said ECB President Mario Draghi. "This being said, unemployment in the euro area remains high, and the necessary balance sheet adjustments in the public and private sectors will continue to weigh on economic activity."

In announcing the decision, Draghi noted that the rate cut aligned with the Bank's prior guidance regarding inflation, but warned that low inflation could be a lasting issue. "We may experience a prolonged period of low inflation, to be followed by a gradual upward movement towards inflation rates below, but close to, 2% later on," he said. "Accordingly, our monetary policy stance will remain accommodative for as long as necessary. It will thereby also continue to assist the gradual economic recovery as reflected in confidence indicators up to October."

Indeed, some of the latest news from the euro zone has given some analysts reason for optimism, particularly Germany's manufacturing numbers and Spain's outlook upgrade. Still, the ECB's sudden decision to cut its rates in reaction to Europe's most recent inflation figures could end up undermining some of the confidence on which Draghi and his colleagues are eager to build.

Stay tuned to NACM's blog and eNews for further updates and analysis on this story.

- Jacob Barron, CICP, NACM staff writer

German Manufacturing Foreshadows European Improvement

German manufacturing continued to regain its trademark strength in October, which is of massive importance to the recovery of the European Union economically. It’s noteworthy on the world stage as well because of the historic importance of German exporting activity outside of Europe to its economic performance.

“October data signaled a solid increase in new work received by services providers,” financial research firm Markit said in a statement Wednesday tied to the release of the German and Eurozone Composite PMI results. “The latest expansion was the most marked since January and widely linked to improving business and consumer confidence.” Markit added there was a surge in new orders in October and “the strongest business outlook for [the last] six months” in Germany.

Also of note, was manufacturing growth in the United Kingdom. The European economy is by no means healthy or out of the woods yet. Still, news of increasing orders and activity in Germany and the United Kingdom, as well as Austria and the Netherlands, is being treated as a potential marker of a turnaround for the beleaguered region.

- Brian Shappell, CBA, CICP, NACM staff writer

Court Ruling Could Open Up Door for Stop Notice Statute Challenges in Western States

Mississippi's Fifth Circuit Court of Appeals' decision last month that rendered its Stop Notice statute unconstitutional could very well foster challenges in at least five other states with similar laws on the books. That includes California.

"I'm sure some GC will take a shot at it," said James Reed, Esq., partner at Baird Williams & Greer LLP. However, there could be enough statutory language distinctions that would likely render such challenges unsuccessful.

The case is of interest in Mississippi and anywhere a challenge is presented because, in many instances, the only means of placing any payment pressure on debtors is to file a Stop Notice. Without this option, material suppliers and subcontractors are more likely to be reluctant in extending credit for construction projects.

- Brian Shappell, CBA, CICP, NACM staff writer

MLBS customers can find deeper analysis on this story and many more affecting the construction industry in the Lien Navigator’s “News Makers” section at www.nacmsts.com.

Spain Gets First Upgrade in Years

Days after exiting its deep and lengthy recession, Spain also earned itself an outlook upgrade, the first in a long time, by one of the three major U.S. credit rating agencies.

Noting that Spain emerged from its recession well ahead of the predicted pace, Fitch Ratings revised Spain’s outlook from negative to stable. Spain's actual rating, however, remained unchanged. Though noting some weakness in medium-term growth prospects because of troubled industry sectors and high unemployment, the list of encouraging signs was surprisingly lengthy on the part of Fitch. Noted positives included the nation addressing its debt ratio problems at a faster-than-expected pace, improved credit financing conditions, noticeable adjustment following the bursting of its credit and real estate bubble and, perhaps most importantly, a more sustainable policy track.

“Authorities have made significant reforms of the labour market, pension system, fiscal framework and financial sector,” said Fitch in its statement. “The pace of reform is likely to slow in 2014-15 as external pressures ease and 2015 elections loom, but the effort made to date should put the economy on a surer footing.”

Last week, the Iberian nation finally provided long-absent hope in the form of its first quarterly economic growth since 2011's first quarter. Spain's gross domestic product in the third quarter increased by 0.1% over the previous quarter. Lackluster as the quarterly increase may seem, the bump could foreshadow real hope of long-awaited stabilization and, perhaps, a true rebound within a few years. After all, Spain has posted a quarterly GDP gain only five times since 2009, when the recession and EU debt crisis was just beginning.

- Brian Shappell, CBA, CICP, NACM staff writer

Exports Stay Healthy in August

The United States exported $189.2 billion worth of goods and services in August 2013, slightly lower than July's total of $189.3 billion and June's all-time record high of $190.5 billion, according to data released by the Commerce Department's Bureau of Economic Analysis this week.

Export-Import Bank Chairman and President Fred Hochberg singled out manufacturing as one particular slice of the economy that continues to grow through increases in international sales. "Our exporters continue to drive the U.S. economy and employ more American workers in high-paying, skilled export-related jobs, especially in the manufacturing sector," he said. "Every month brings us closer toward achieving President Obama's ambitious goal of doubling U.S. exports by 2015."

While that goal might still remain just out of reach, exports from the U.S. have continued to be a remarkably resilient economic figure despite continued global uncertainty and seemingly biennial fiscal crises here at home. Over the last 12 months, exports of goods and services have totaled $2.2 trillion, which is 42.2% above the levels of exports in 2009 and signifies growth at an annualized rate of 10.1% compared again to 2009.

Among major export markets, meaning countries with at least $6 billion worth of annual imports of U.S. goods, the list of countries registering the largest annualized increases in U.S. goods purchases when compared to 2009 is dominated by Latin American economies. Panama (28.8%), Peru (20.9%), Chile (20.3%), Colombia (19.3%), Argentina (17.8%) and Ecuador (17.6%) have all registered regular increases in goods purchases from U.S. sellers.

- Jacob Barron, CICP, NACM staff writer

Brazilian Oil Bankruptcy Largest in Latin History

Brazilian oil and gas company OGX earned the dubious distinction of becoming the largest bankruptcy filing in the Latin world Wednesday after it failed to reach a deal with secured creditors.

OGX reportedly needed upwards of a half-billion dollars to stay out of insolvency, and the company’s once brazen leader Eike Batista apparently tried to negotiate for a little more of half of that amount from creditors with no success. The record filing was not a surprise even before the former giant missed debt payments a month ago or since it predicted publicly this week that it would likely run out of money before 2014 hits.

The filing is significant not just because of its size. The fall from grace of OGX is similar in some ways to the decline from Brazil’s hot economic growth at the beginning of the decade that earned labels like “the Pearl of Latin America” and a power position within the powerful BRICs bloc with other emerging economies Russia, India and China. Now, both secured and especially unsecured creditors are expected to take on massive losses, even if its debt restructuring plan is ultimately successful and leads to a prosperous OGX rebound. Even with a plan filing due within 60 days, Brazil has a notoriously poor reputation for speed of bankruptcy proceedings compared to other nations or for hope of a creditor-friendly recovery.

To wit, Brazil’s Business Restructure Law (Law 11.101) that was enacted in 2005 gave a lot more leverage and leeway in paying off debt following insolvency problems. The periods in which they can pay, judging from an increasing number of cases since them, can be stretched for many years.

“The law there is terrible to the creditors,” said Octavio Aronis, an attorney at Brazilian firm Aronis Advogados, in a spring 2013 interview with NACM. “The Brazilian version of Chapter 11 can go on for 10 or 15 or 20 years. It’s hard for international clients to understand that. Can you imagine how hard it is to explain to those who have $1 million owed to them, and have to tell them they may receive that in 20 years?” Aronis, who is the speaker in an upcoming FCIB webinar on “Doing Business in Brazil,” added that the best course of action often is agreeing to take something like 40%, for example, or even less in the near-term rather than holding out for a better payout that could come in years or decades later. As such, this bankruptcy could serve as a giant reminder of the importance of knowing the health of a customer in Brazil as well as the potential of using more restrictive terms or credit insurance to reduce risk.

- Brian Shappell, CBA, CICP, NACM staff writer

October Credit Managers' Index Mostly Unfazed by Political Turmoil

Despite the threat of a political impasse in the United States that some thought could derail the entire global economy, October’s Credit Managers’ Index (CMI), issued by the National Association of Credit Management (NACM), was largely unfazed. The combined CMI actually improved slightly in October, marking the highest reading in over a year and a half.

The October CMI may have been the most watched in years, according to NACM Economist Chris Kuehl, PhD. "The dominant story for the bulk of the last quarter was the political impasse that resulted in a government shutdown for three weeks and posed a threat to the U.S. credit rating," he said. "Everyone was hanging onto the edge of their seats to see what this would do to the economy.”

Look for surprising data in the October CMI’s favorable factors index, and particularly positive readings in new credit applications and amount of credit extended. Kuehl believes some of the activity means companies confidently expect improvements in the economy by 2014.

If the October CMI reflected any of the negative economic effects of the political brinksmanship in Washington, it did so in the unfavorable factors, specifically in categories like rejections of credit applications and accounts placed for collection. Still, the overall unfavorable index has by and large remained somewhat stable and trended in the right direction.


The complete CMI report for October 2013 will be available Thursday at the NACM website and contains more commentary, complete with tables and graphs. CMI archives may also be viewed on NACM's website.

Federal Reserve Stays Course on Rates, Purchases

The Federal Reserve emerged from its economic policy meeting Wednesday with little news of change on interest rates or its current securities purchases policy. That said, it did attempt to offer some clarity on what could cause a change of policy direction.

The Fed’s Federal Open Market Committee left rates untouched at a range between 0% and 0.25%. The FOMC also gave some guidelines for when that would change, and it’s unlikely in the next year. In fact, the FOMC noted highly accommodative monetary policy will stay in place “for a considerable time after the asset purchase program ends and the economic recovery strengthens.”

“This exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6.5%, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2% longer-run goal and longer-term inflation expectations continue to be well anchored,” the Fed said in a statement.

Meanwhile, the committee decided to continue purchasing agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at $45 billion. The FOMC believes these actions and continuing to reinvest principal payments from current debt holdings “should maintain downward pressure on longer-term interest rates, support mortgage markets and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery.”

- Brian Shappell, CBA, CICP, NACM staff writer

Federal Reserve VP to Speak Directly to NACM Members

As part of the Federal Reserve's continuing effort to study and improve electronic and other payment systems, NACM will host a free teleconference for its members next week.

The teleconference, Collaborating to Improve the U.S. Payment System, is slated for November 5 at noon (EST) and will feature Fed Senior Vice President of Industry Relations Sean Rodriguez discussing the Payment System Improvement: Public Consultation Paper report. The study outlines aspects of payment systems the Fed sees as problems, and is the start of a lengthy effort to improve systems. Rodriguez will also discuss the associated open study/questionnaire about payment systems, which is now available for business professionals including trade credit managers, to complete online. Areas of particular Fed concern therein include fraud potential, international electronic payments and timeliness of funds availability. Rodriguez will also take member questions at the end of the hour-long event.


For more information on the NACM teleconference or to register, click here. For the full Fed report, visit FedPaymentsImprovement.org. For more information on each of the six associated Fed Town Hall meetings, click here.

Chapter 9: The Crisis of the Cities

As the Detroit Chapter 9 bankruptcy eligibility hearings have gotten underway, the situation has illuminated that more and more urban areas are starting to resemble the Motor City. The travails of the federal government have dominated the analysts time for the last few years and, now, it is the turn of the cities as more of these entities slip further toward or into insolvency.

The solutions to the budget crisis have ranged from additional taxes and fees for almost every aspect of city service to deep budget cuts that affect these services. One of the more challenging issues is the massive burden that previous city governments have left for the current administrations. The primary cause of that has been an unresolved pension debt.

It was far too common in decades past to mollify the public sector employees with extremely generous retirement programs. The cities could not afford to pay competitive wages and, instead, they promised generous benefits later. That worked fine as long as most of the workers were not drawing these pensions. Now they are, and far more beneficiaries exist than had been anticipated. Many cities now are struggling, and will well into the future, because they simply do not have the money to pay these benefits and take care of day-to-day business at the same time.

- Chris Kuehl, PhD, Armada Corporate Intelligence

Fed Goes beyond Basel in New Liquidity Requirements

The Federal Reserve proposed its first-ever standardized minimum liquidity requirement for large and internationally-active banks this week. The new rules would also apply to systemically important non-bank financial companies as designated by the Financial Stability Oversight Council and ultimately subject U.S. financial institutions to more stringent reserve requirements than they would face under the dictates of the global Basel III framework.

Each institution covered by the proposal would be required to hold minimum amounts of high-quality liquid assets (HQLA) that can be converted quickly into cash. Things like central bank reserves and government and corporate debt would count toward the liquidity buffer, while other items such as private-label mortgage securities, covered bonds and municipal debt would not. Still other types of assets would count toward the buffer but only at a fraction of their value.

Firms would have to hold HQLA in an amount that's equal or greater to each institution's projected cash outflows minus its projected cash inflows during a short-term stress period. The ratio of the firm's liquid assets to its projected net cash outflow is its "liquidity coverage ratio," or LCR, which would apply to all internationally active banking organizations, which the Fed considers generally those institutions with $250 billion or more in consolidated assets, or $10 billion or more in on-balance sheet foreign exposure, as well as to the previously-mentioned systemically important non-bank financial institutions. A less stringent LCR will apply to bank holding companies and savings and loan holding companies that aren't internationally active but have more than $50 billion in total assets.

The proposal mirrors Basel III, but also diverges in important ways, most notably in how compliant institutions will have to calculate their assumed rate of outflows. The Fed will require banks to calculate their LCR using whatever particular day when the bank's outflows are at their highest, and since these outflows can vary greatly over the course of a month, this could result in a relatively large reserve requirement. Basel III would require banks to calculate a similar ratio, but on a much more lenient basis.

Another noteworthy difference is that the Fed's proposal puts banks on an accelerated timeline for compliance, which, according to the Fed, is due in part to the fact that many U.S. banks have already begun to stockpile these assets in the wake of the financial crisis. Whereas under Basel III institutions would have to comply by 2019, the Fed's transition period begins on January 1, 2015 and requires banks to be fully compliant by January 1, 2017.

"Since financial crises usually begin with a liquidity squeeze that further weakens the capital position of vulnerable firms, it is essential that we adopt liquidity regulations to complement the stronger capital requirements, stress testing and other enhancements to the regulatory system we have been putting in place over the past several years," Federal Reserve Gov. Daniel Tarullo said. "This rule would help ensure that the liquidity positions of our banking firms do not weaken as memories of the crisis fade."

Many have voiced concerns that the Fed's proposals, which have tended to skew towards not risk-weighting assets when calculating a bank's reserve requirements, could reduce credit availability in the U.S., particularly for low-risk transactions such as those involving trade financing. Stay tuned to NACM's eNews, blog and Business Credit magazine for more analysis on how the Fed's proposals could affect trade creditors.

- Jacob Barron, CICP, NACM staff writer

Fed Unveils Town Hall Meetings, in Electronic Payments Project

As part of the Federal Reserve’s effort to study and improve payment systems, it has set six Town Hall meetings for members of various industries, including trade credit and collections to begin on November 12.

As noted in the October 3 and October 10 editions of eNews, the Fed is trying to identify key gaps and opportunities to improve U.S. payment systems in an effort to craft solutions for the business-to-consumer and business-to-business areas that will avoid unintended consequences. Spokespeople with the Fed’s Financial Services division reiterated in discussions with NACM this week that they are keenly interested in the B2B side of discussion and in fostering a relationship with credit managers regarding the payment systems improvement effort. The following dates and host cities for the Town Hall meetings, which require advanced registration, have been confirmed, and more information is available on each here:

  • November 12      1:00-4:00pm (EST)       Federal Reserve Bank of Atlanta

  • November 13      1:00-4:00pm (EST)       Federal Reserve Bank of Cleveland

  • November 14      8:30-11:30am (CST)     Federal Reserve Bank of Chicago

  • November 15      8:30-11:30am (PST)     Federal Reserve Bank of San Francisco

  • November 18      8:30-11:30am (EST)     Federal Reserve Bank of Boston

  • November 20      8:30-11:30am (CST)     Federal Reserve Bank of Dallas
NACM strongly encourages credit managers to attend one of these events and have their voices heard to help shape the future of electronic payments.

- Brian Shappell, CBA, CICP, NACM staff writer
Much more on this topic including information on a free November 5 NACM teleconference with a Federal Reserve VP in this week's edition of eNews, available weekly late Thursday afternoons.

Which is the Bigger Threat in Europe' Inflation or Deflation?

The answer may vary based on location, but ask almost any German if inflation or deflation is the bigger threat to Europe and the answer will be an emphatic "inflation." The Germans have a particular sensitivity to inflation and are prepared to react to any threat as soon as it even hints at manifesting. The historical connection between rampant inflation and the rise of the Nazi Party in the 1930s is etched into the German psyche. Besides that, wealthier societies, like Germany, are far more sensitive to inflation than others anyway

If you ask the rest of Europe which of these two are causing the most concern, you will likely hear the other response. Even the European Central Bank is starting to become more concerned that inflation targets are consistently undershot. It is not as if people want inflation to come back, but a little inflation can be something of a tonic to an ailing economy, at least in the short run.

The latest statistics show that consumer prices rose by just 1.1%, indicating the sluggish economy of Europe is still mired in high unemployment and weak growth. The factors that tend to drive inflation include wage pressure, higher producer prices and more expensive commodities. In the beginning, this kind of price hike is welcome news, as it signals that some of the damage from a recession has eased. There is not much chance for wage inflation as long as unemployment rates are in the double-digits. The price of products will not rise when the consumer is too broke to afford the current prices.

Therefore, the ECB is under no real pressure to hike rates. There is even some possibility the ECB would cut rates except for the fact that there is no real evidence that this would provoke growth. The real message from all these low inflation predictions is that the ECB will stand firm for a while longer.

- Chris Kuehl, PhD, Armada Corporate Intelligence

Canada-EU Finalize Trade Pact

By finalizing the details of a free trade agreement (FTA) with the European Union that has in the works since 2008, Canada has forged the largest trade pact in its nation’s history.

Holdups within a couple of industries, mainly food-related, were overcome on the way to the Friday announcement of the comprehensive agreement, dubbed the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). It eliminates about 98% of tariffs between the two nations. A 2008 joint study concluded that such an agreement could increase Canada’s income by $12 billion annually. Canadian Prime Minister Stephen Harper called the deal a “historic win” for both his nation and the more than two dozen nations tied to the EU. “It represents thousands of new jobs and a half-billion new customers for Canadian businesses,” he said. It is expected that the agreement will be ratified and enacted by 2015.

It’s not the only major trade pact either nation is pursing. Among others, Canada remains a player in the Trans Pacific Partnership (TPP), which also includes the United States and several Southeast Asia/Pacific Rim economies. Meanwhile, the EU has been hard at work throughout the year with the U.S. on improving its massive existing trade agreement, which already involves a fairly short list of business-stymieing obstacles.

- Brian Shappell, CBA, CICP, NACM staff writer

Regional Manufacturing Outlook Paints Bright Future

A bellwether regional report out of the Philadelphia Federal Reserve Bank shows positive signs for growth in manufacturing for the greater region and possibly beyond.  Its monthly Business Outlook Survey found that firms reporting increased activity (36%) more than doubled firms that responded about diminished activity for the last month. The category measuring demand for manufactured goods, increased to its highest level since March 2011 (27.5, up six points). Statistics tracking manufacturer optimism also tracked upward, by three points, to a level of 60.8. That mark was last reached in 2009.

“All the broad indicators were positive, with firms reporting improvements in new orders and hiring,” The Philadelphia Fed said in its report. “Firms’ outlook [sic] has shown notable improvement in recent months, with a majority of firms now expecting to expand manufacturing activity over the next six months.” The Fed added that more than one-third of those polled in October plan to increase hiring by early 2014.

Though the overall diffusion index actual fell from a two-year high reported in September, the number (19.8) was still considered highly encouraging. In fact, the performance and outlook for manufacturing far exceeded experts’ projections.

- Brian Shappell, CBA, CICP, NACM staff writer

Brinksmanship Puts U.S. Back on Ratings Agency Radar

Just as it did earlier in the Obama Administration, partisan-based political gridlock on the part of the U.S. Congress has caught the ire of at last one of the three major credit ratings. The continued fighting that led to the government shutdown and a tight window to raise the debt ceiling could result in a downgrade to the United States’ pristine credit ratings for the second time since 2011.

Fitch Ratings essentially warned Congress Tuesday by putting the U.S.’ longer-term foreign and local currency issuer default ratings, as well as all sovereign debt securities, into the “rating watch negative” category. And a deal that pushes the debate off until mid-February likely won’t do much to reduce the ire. Though noting the economy’s resilience, its standing on the world stage and ability to absorb shocks, Fitch predicted that continued delays in raising the debt ceiling could further “dent confidence in the effectiveness of the U.S. government” and send shockwaves throughout domestic and global markets.

“Although Fitch continues to believe that the debt ceiling will be raised soon, the political brinksmanship and reduced financial flexibility could increase the risk of a U.S. default,” Fitch explained in a statement. “The U.S. risks being forced to incur widespread delays of payments to suppliers and employees as well as social security payments to citizens—all of which would damage the perception of U.S. sovereign creditworthiness and economy.”

Some believe that, even with a deal this week, the dispute already has caused what are sure to be ongoing problems. “Even if one of the stop gap measures is put in place to keep the U.S. economy from falling off a cliff, there has been considerable damage done to the economy—enough to threaten the recovery and perhaps enough to throw the whole system back into recession,” said NACM Economist Chris Kuehl, PhD. Kuehl added that he believes the cost of credit borrowing will increase, regardless of the outcome in the next few days.

- Brian Shappell, CBA, CICP, NACM staff writer
More in this week’s edition of eNews, available late Thursday afternoon at www.nacm.org.

Surprises in Asia

Just a month ago, it appeared China was righting the ship economically. At the same time, there appeared to be some creeping concerns regarding Singapore. What a difference a matter of weeks can make.

Chinese exports for September came in well below the expected gains, with a 0.3% decline for the month, according to the Chinese General Administration of Customs. With problems still somewhat apparent in markets like the European Union and Brazil, the confidence-jarring government shutdown in the United States could fuel another disappointing month for trade out of export-dependent China in October, if not beyond.

On the flip side, news out of Singapore was much more positive and quite bit surprising. Third quarter gross domestic product (GDP) growth was more than 5% better than the same period in 2012. The improvement came largely on the back of exporting activity. Wells Fargo Securities Global Economist Jay Bryson said the news was significant because Singapore, often one of the first nations globally to report its quarterly data, is somewhat of a “bellwether for trends in global trade.” The Wells Fargo report predicted that any sustained growth in the improving export activity out of the nation would likely foster itself into noticeable improvements to lackluster consumer spending there.

- Brian Shappell, CBA, CICP, NACM staff writer

More Moves to Boost Global Use of Chinese Currency

For several years, there has been a question of how long the US dollar will remain the global currency of choice. The likelihood is very low that countries will replace the good old greenback with something else, but it is highly likely the dollar will get additional company as other currencies are accepted more readily in terms of trade.

The latest move has the European Central Bank arranging a currency swap with the Chinese. This swap line of about $57 billion will be the third largest China has been involved in, behind only the swap lines arranged in Hong Kong and South Korea. It is not seen as a real substitute for the way that trade is handled right now, but it provides a kind of currency backstop and continues to move the renminbi forward as a true global currency.

The chief motivation for the swap agreement is that there has been a dramatic increase in bilateral trade between Europe, mostly Germany, and China. As downturns affected EU member nations, the United States and Eastern Europe, German companies needed to look elsewhere, such as China and other Asian markets, for growth. China is now the euro zone’s second biggest trading partner—behind only the zone itself.

The day of the dollar is anything but over, as the vast majority of global transactions continues to be handled with the greenback. There is no evidence that most nations have any interest at all in trying to trade with Chinese currency. If anything, the dollar has gained strength as a global currency given the travails of the euro. The point is that China and other nations want options that can make trade and investment easier.

- Chris Kuehl, PhD, Armada Corporate Intelligence

Cash Flow Stats Stabilize, but Revenues Signal Economic Slowdown

While cash flow trends stabilized in the most recent readings from the Georgia Tech Financial Analysis Lab, a continued decline in company revenues and a drop in capital spending suggest a looming economic slowdown for the U.S.

The lab, led by NACM Graduate School of Credit and Financial Management (GSCFM) Instructor and Georgia Tech Accounting Professor Charles Mulford, examines cash flow trends on a quarterly basis, measuring free cash flow, meaning a company's discretionary cash flow that can be used for acquisitions, debt retirement, stock buybacks and dividends without affecting the firm's ability to grow and generate more revenue. Each quarterly report produces a free cash margin index by surveying nearly 3,000 companies, all with a market capitalization of at least $50 million, and dividing their free cash flow by their revenue.

Put simply, according to the report, the second quarter of 2013's decline of 1.39% from the prior quarter and decline of 2.19% from the prior year signal a slowdown for the U.S. economy, as the reduction in selling, general and administrative (SG&A) expenses and capital spending observed in recent reports is not sustainable in the long term. "Free cash margin has ticked up, just as it did during the recession, but for all the wrong reasons," the report warned.

"As we complete this report, so-called 'nonessential' operations of the U.S. government remain closed as members of Congress debate aspects of the Affordable Health Care Act specifically, and overall government spending generally. Making discussions difficult is the added pressure of the upcoming debate focused on increasing the debt limit," the report said. "Such high-level brinksmanship does not foster business confidence and weighs on business activities."

- Jacob Barron, CICP, NACM staff writer

A full copy of the most recent report can be found here and a more in-depth version of this story is available in this week's eNews at http://www.nacm.org/enews.html#3.

NACM and FCIB Launch GSCFM International

Recognizing the growing importance of international business, NACM is pleased to announce the Graduate School of Credit and Financial Management International (GSCFMI) beginning in June 2014. Developed in partnership with FCIB, the new, four-day program will run concurrent to the traditional Grad School program.

"Dealing cross-border and cross-culture can result in many pitfalls that, if not managed correctly, can negatively impact the value and collectability of receivables and, as a result, a company's balance sheet," said Craig Schurr, senior vice president and manager of international banking at FirstMerit Bank and instructor for GSCFM International. "The speed of business today, facilitated by technology and a seemingly endless sea of information heightens the importance of getting 'it' right every time. The added pressure of dealing with new and ever-expanding regulatory environments makes the job of today's international credit and finance professional even more challenging. It is more critical than ever that international businesspeople have up-to-date information, tools and connections to facilitate flawless performance of their responsibilities."

GSCFM alumni, CCE, CICP and ICCE designation-holders are encouraged to attend the program, which includes 24 hours of total educational programming on top of various networking opportunities. Michelle Sparks, CCE, a regional credit manager with Allied Building Products Corporation who recently completed Grad School, said she believes there is a need and demand for continuing education opportunities focused on international business and credit developments. "So many companies are international today, and the way credit is handled when dealing out of the country is so different. A program of this nature will be very helpful," Sparks said.

The schedule of classes and instructors list for GSCFMI is as follows:
  • Export Compliance: Lizbeth Rodriquez, Esq., Holland & Hart LLP
  • Investigation & International Business Ethics: Harry Brandon and Gene Smith, Smith Brandon International, Inc.
  • Foreign Exchange: Kevin Hebner, JPMorgan Chase Bank
  • Sovereign & Political Risks and the Role of International Credit Insurance: Jim Dezell, Marsh USA, Inc.
  • Payment Methods and Legal Structures: Craig Schurr, FirstMerit Bank
  • Incoterms and Their Applicability: Michael Ford, BDP International
For more information on GSCFMI, visit http://www.nacm.org/gscfm-international.html.