CMI First Look: March Index Mostly Steady

The statement made by this month’s Credit Managers' Index, available now at, was essentially “steady as she goes.” The CMI fell by less than a point from February, with both favorable and unfavorable factor indexes dipping by roughly equal amounts. Some sub-factors showed significant movement, but there was no clear signal from any of the factors as far as financial stress is concerned, or anything to cause much confidence either.

Among areas of concerned is a notable decline in sales levels in March, though it not far off the pace of late 2012. “The main concern is that for the last year, the sales reading has been averaging in the low 60s and now there seems to be a struggle to get there again,” said NACM Economist Chris Kuehl, PhD. On the encouraging side, the new credit applications foretell a desire for expansion on the part of businesses.

“Businesses are starting to more aggressively pursue credit,” said Kuehl. “However, serious issues remain in balancing the desire for more credit and creditworthiness.” He also added that unfavorable factor index statistics indicated there are more companies in distress than was the case a month or two earlier, and that likely reflects the consternation regarding government inactivity on key issues.

Overall, the economist noted that the March CMI is “telling roughly the same story as other economic indicators of late…Nothing is suggesting a return to recession, but neither is there a sure sign of an imminent breakout in the manufacturing or service sectors.”

-NACM staff
For complete March CMI data and analysis, visit

BRICS 2013 Summit a Bit Quieter

The previously confident, almost boastful bloc of nations known as the BRICs (Brazil, Russia, India and China and recently added South Africa) seem to be making a lot less credible noise at its latest annual summit involving leaders. At least one expert believes it’s foretelling the reality that the bloc was an unnatural fit from the start, and more are coming to that realization.

News coming out of the BRICs meeting has not featured much in the way of firm policy being made other than the establishment of a $100 billion foreign currency pool to shield member nations from wild currency valuation swings caused by other nations struggling with recession or economic malaise. What was expected to be the big news heading into the meeting was a firm agreement to establish a BRICs development bank, one designed to challenge traditional economic powerhouses like the International Monetary Fund. However, reports indicate that some major obstacles have impeded a functional agreement between the BRICs themselves.

Octávio Aronis, an attorney with Brazilian law firm Aronis Advogados with deep involvement in credit and collections, characterized the BRICs as not being a real member bloc in their actions: "...We are all so completely different from each other. They’re four or five countries that are growing, but all with situations and numbers." It's similar to the context of a February NACM interview with Ludovic Subran, chief economist at Euler Hermes, Subran questioning how wise it is to consider them as a grouping or bloc given the many massive differences.

-Brian Shappell, CBA, NACM staff writer
See extended version of this story with more analysis in this week's edition of NACM eNews, available Thursday afternoon via email and at in the "Resources" pulldown menu.

Luxury Casino Files Expected Bankruptcy as a Prepack

Less than one year after its lavish opening, Revel AC Inc. has made official its filing for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Camden, NJ. The filing, heavily rumored since last month, was made following a debt-for-equity swap agreement for which secured lenders signed off. The bankruptcy hearing is tentatively slated for mid-May.

Revel, featured as a potential filer just days after NACM’s “Industries to Watch” series highlightied the potential problems that could be caused by a glut of gaming operations in the Eastern United States, saw rumors spread like wildfire that the operator of Atlantic City’s Revel casino/resort property sought high-powered attorneys specializing in bankruptcy filings to look at its finances. Such finances already include $1.5 billion of debt and just over $1 billion in assets at a time when economic growth seems to be easing, in addition to more competitors in neighboring states coming online with legalized gaming operations and the budgets of potential local customers still impacted by the lingering effects of Hurricane Sandy.  

Patrick Spargur, ICCE, credit and collections manager with Bally Technologies, Inc. speculated there could be two or three filings on the part of Atlantic City-based operations alone this year. Creditors selling directly to or downstream from Eastern-based gaming operations in any significant capacity need to be aware of the potential trend.  

-Brian Shappell, CBA, NACM staff writer

Obama Administration Takes First Steps toward New U.S.-EU Trade Agreement

Though there may be some budgetary hurdles in the future, this week the Obama Administration took the first step toward a Transatlantic Trade and Investment Partnership (TTIP) with the European Union by notifying Congress of its intent to start negotiations.

Originally teased in last month's State of the Union address, the TTIP has quickly become one of the President's top trade priorities, along with the Trans-Pacific Partnership (TPP), which last week gained a new potential member as Japanese Prime Minister Shinzo Abe announced that Japan hoped to join TPP negotiations in earnest. Taken together, the TTIP and TPP signal an effort by the Obama Administration to build on the United States' existing trade relationships that are already some of the strongest in the world.

In particular, the economic relationship between the U.S. and the EU currently generates goods and services trade flows of about $2.7 billion a day, according to a 2012 estimate. Exporters on both sides of the Atlantic already have few hoops to jump through in order to sell to their cross-ocean counterparts, but since the volume of trade between the U.S. and the EU is already so high, any further reduction in trade barriers could provide exponential increases.

"The decision to launch negotiations on the Transatlantic Trade and Investment Partnership reflects the broadly shared conviction that transatlantic trade and investment can be an even stronger driver of mutual job creation, growth and increased competitiveness," said Demetrios Marantis, Acting U.S. Trade Representative, in his notification letter to Congress. "With average U.S. and EU tariffs already quite low, new and innovative approaches to reducing the adverse impact on transatlantic commerce of non-tariff barriers must be a significant focus of the negotiations."

- Jacob Barron, CICP, NACM staff writer


European Bank Cyprus Stumble a Damaging Mistake

As the Cyprus Parliament rejected almost universally-panned bailout terms that even the ECB’s staunchest supporters were hard pressed to defend, and the aftermath of the ham-handed bank rescue is being felt around the world.

Markets saw a mass sell-off and banks a run on deposits as the ECB’s terms sought to tax deposits within Cypriot banks. Though intended to punish and raise money from what amounts to rich Russian tax-dodgers keeping money there, the average Cyprian would soon find their own formerly unassailable savings coming under a tax, something legally in a gray area, at best, in the EU.  

“It would be very hard to overestimate the damage caused by the weekend decisions by the ECB, Cypriot leaders and leaders of the euro zone,” penned NACM Economist Chris Kuehl, PhD in his daily column for FCIB members. “The decision to rescue the banks of Cyprus on the backs of depositors may have triggered the biggest bank meltdown Europe has yet seen, and it is simply beyond comprehension that the authorities involved in this decision could not have foreseen the reaction. Prior to this decision there was a sense that the powers that be in the ECB, IMF and euro zone at least knew what they were doing, even if their course of action was unpopular. That veneer of confidence has taken some very significant hits.” He added that, short of a reversal, people in other EU countries could find themselves asking: "Why wouldn't they do this to us?"

-Brian Shappell, CBA, NACM staff writer
Extended story will be available in this week's edition of NACM eNews, available Thursday afternoon at, in the Resources section.

Chinese Manufacturer Cash Troubles Show Deep Solar Glut a Worldwide Issue

It was noted in last week’s edition of new NACM feature “Industries to Watch” that solar producers in the United States were facing issues that included too many players operating in the industry with respect to actual demand. The problems have also been notable in the European Union. Perhaps ironically, the latest solar company in trouble is based in China and was among the key examples of allegations of price dumping and illegal government subsidies that have hurt U.S. and EU-based operations.

Suntech generated the most press about a solar company since the collapse of California-based Solyndra, a firm that garnered millions in U.S. government grants before fraud allegations and financial mismanagement derailed its operations, just before the weekend when it missed its bond payments. Suntech, one of the largest solar manufacturers in the world, has been widely speculated to have experienced a cash crunch likely to spiral into some sort of insolvency-based restructuring in the near future. Such troubles underscore the out-of-balance ratio of solar product manufacturers/service providers and consumers willing to pay for them.

However, the news could actually, in a roundabout way, be helpful for U.S. and EU-based producers. With such a large producer stumbling significantly, that is one more competitor (and an important one) that is potentially out of the saturated pool or at least not in a position to grow market share for a time. Granted, that’s not to say the problems facing solar producers in the U.S. or EU have gone away…far from it.

-Brian Shappell, CBA, NACM staff writer

Import Uptick Widens Trade Deficit

Despite continually strong export figures, the U.S. trade deficit widened more than expected in January, driven by an uptick in oil imports.

According to the U.S. Commerce Department, the monthly gap between goods and services imported and goods and services exported hit $44.4 billion in January, which was about $2 billion higher than analysts had expected. December's figures were also revised downward, with Commerce lowering the trade deficit from $38.5 billion to $38.1 billion.

The $6.3 billion jump between December and January was the largest increase in the trade deficit since last March, as exports, although still hitting historically high levels, fell by 1.2%. Imports also rose 1.8% to $228.9 billion in January, an increase driven primarily by industrial supplies and materials, the imports of which increased by $4 billion.

Exports of cars, capital goods, consumer goods and food, feeds and beverages marked slight gains, but not enough to offset the slump in exports of industrial supplies and materials. Imports of crude oil increased by more than 13%, from about $22 billion in December to more than $25 billion in January, as the price for a barrel of imported oil dropped to its lowest level since July ($94.08).

On a country by country basis, the U.S. ran trade surpluses in January with Hong Kong ($2.7 billion), Australia ($1.2 billion), Brazil ($900 billion) and Singapore ($700 million), while its goods deficit with China continued to grow, hitting $27.8 billion. Continuing at this pace, the U.S. could break its record annual deficit with China, which hit $315 billion in 2012.

- Jacob Barron, CICP, NACM staff writer


Jacob Barron
Jacob Barron, CICP
Staff Writer, NACM
Jake's Blog Posts

Chris Kuehl
Chris Kuehl, Ph.D.
Managing Director,
Armada Corporate
Intelligence, USA

Brian Shapell
Brian Shapell, CBA
Staff Writer, NACM
Brian's Blog Posts


Jacob Barron, CICP has been with NACM since 2006. In addition to serving as a staff writer, he also plays an active role in NACM’s Advocacy program as the organization’s government affairs liaison. He was born in Baltimore and educated at Virginia Tech, where he graduated with a double major in communications and English. In 2011, he successfully completed FCIB’s International Credit & Risk Management (ICRM) course and was awarded the Certified International Credit Professional (CICP) designation.

Chris Kuehl, Ph.D. Managing Director, Armada Corporate Intelligence, USA is the co-founder (with Keith Prather) and Managing Director of Armada Corporate Intelligence, a company created in 1999 to provide strategy foundation, competitive intelligence, business analysis and economic forecasting for corporate clients. Chris is the Chief Economist for Fabricators and Manufacturers Association. This includes writing Fabrinomics and serving as a keynote speaker for their conferences and meetings through the year. Chris is a frequent commentator for the media-locally and nationally. He is a regular economic/business analyst for KMBZ radio, KSHB-TV (local NBC affiliate) and has been extensively quoted in national newspapers, magazines and trade publications. He holds a Masters Degree in Soviet and East European Studies, a Masters in East Asian Studies and a Ph.D. in Political Economics from the University of Kansas. He has been on the faculty of universities in the US, Hungary, Estonia, Russia, Singapore and Taiwan. He has been on the local steering committee for the Society of Competitive Intelligence Professionals and has been active with a number of business and finance organizations.

Brian Shappell, CBA is a staff writer at the National Association of Credit Management. Born in New Jersey and a Rutgers University graduate, he started his journalism career at Rolling Stone Magazine before spending about six years working the breaking and crime news beats at various newspapers in the Mid-Atlantic region, winning more than a dozen awards including a regional Associated Press distinction for “Best Breaking News Story” in 2003. Prior to coming to NACM, he spent nearly five years working for a Washington DC-based web and newsletter publisher covering Capitol Hill politics, business and the volatile housing market. Brian has followed/written on topics such as corporate bankruptcy and exporting closely at NACM, and has also worked to expand the association’s social media offerings and reach. 

FCIB New York Roundtable Offers Creative Financing Solutions

Credit professionals looking for unique financing solutions should see where investors want to put their money. That was just one of the many insights offered during yesterday's FCIB New York International Roundtable, held at the offices of Lowenstein Sandler, LLP. During the event-ending panel, titled "Non-Traditional and Creative Methods for Receivables Management and Working Capital Finance," professionals from the brightest corners of commercial trade financing offered attendees some new ideas on how to approach managing their receivables.

Panelist John Barone of JP Morgan noted that credit professionals often fail to see the big picture in terms of how receivables are securitized and financed, cutting themselves off to a number of financing options. In essence, he made the point that creditors and their companies should look to areas where investors want to put their money, and investors are currently looking to invest in so-called high-yield markets. "When we discuss high-yield we mean any company that is rated BBB or less," said Barone. "If you were to look at a group of European high-yield names and you also look at the default rate and how those names as a portfolio have traded, the spread was astronomical."

Ultimately, the idea is that the greater the risk, the greater the reward, a fact that means greater profits for investors and thus greater access to unique financing solutions for companies looking to finance sales to this area. "Many of the credit professionals that we talk to don't look at this," said Barone. "They analyze those individual customers and they tend to not step back and think about things on a more macro basis. The market for high-yield risk in Europe is growing. Investors are looking to put their capital somewhere and they're looking for something they can also get a yield on their capital." Europe is one place where creditors can hope to increase sales while hedging their risks because investors are more interested in taking the risk of securitizing such transactions with puts and other financing options.

See more about this year's New York Roundtable in today's edition of NACM's eNews. For more information on FCIB's other educational and networking opportunities, click here.

- Jacob Barron, CICP, NACM staff writer


Industries to Watch: Solar

As predicted in a 2011 Business Credit magazine article, the United States’ solar energy industry has taken its share of lumps over the last two years, but there are still those purporting the massive potential that solar holds. Whether true or not, there are real and continuing risks for everyone involved in the industry, and the government budget fight and “sequester” only adds a whole new dimension to potential problems, especially for survivors of the first wave of domestic solar-related bankruptcies.

U.S. product manufacturers are contending with what they see as unfair assistance to competing solar manufacturing sectors in Asia by their governments, especially that of China. The U.S. placed tariffs on Chinese imports, but the measures were seen as somewhat weak and coupled with evidence that some Chinese firms are simply off-shoring operations to areas like Singapore where such tariffs aren’t in play. In addition, the glut of U.S. producers left over from the cheap lending days of the financial boom of the late-2000s caused an industry saturation that became a real problem when demand fell during lower growth years. The two issues led to several high-profile bankruptcy filings headlined by that of Solyndra, which had ties to key Obama Administration fundraisers investigated for widespread fraud and reaping huge amounts in government grants.

Michael Joncich, manager of the business insolvency department for NACM affiliate Credit Management Association for NACM affiliate Credit Management Association, was among those who predicted the problems in 2011. He now speculates that reduced federal subsidies, grants and other assistance aren’t likely to help current matters. “Government can make or break an industry. I don’t really know if the shakeout is done yet,” he said.

Joncich noted that a colleague in the liquidation business recently learned everything he could about green businesses, thinking it was a bubble ready to pop, especially once it became apparent that the government was retracting its “generous funding” of those industries, including solar. “The observation is that they can’t seem to fund themselves,” he said. “When the government pulls back because of federal budget cutbacks, many can’t survive it,” he said.

It doesn’t mean all solar manufacturers are doomed, but there are enough red flags that virtually all creditors dealing with customers related to the solar industry should be paying close attention to them, their accounts and their terms.

- Brian Shappell, CBA, NACM staff writer

Reasons That Companies Come "Home"

There are many reasons for a company to establish in a certain area, and the motivations are as varied as the companies and their markets. That said, there are some motivations that appear more often and, in the last few years, they have grown in importance as the United States has become more familiar with concepts like “onĂ¢€shoring,” “re-shoring” or “nearĂ¢€shoring.”

The first motivation has always been a factor, but in the past 50 years it had faded somewhat. The great advance in the 1960s and 1970s was the ability to mass produce, and that produced an era driven by the need to make the same item for every market as cheaply as possible. Japan was the first nation to ride that wave. However, the consumer began to demand far more unique goods. Thus, it is more important to be as close to the market as possible so that full use of the ability to customize could take place. As such, many American companies are migrating back to be closer to core markets.

The second motivation is connected to the ability to manage. As the consumer has become more demanding and the production process has become more complex, the control issues have become more important, and it is simply harder to retain the preferred level of quality control when the core operations are thousands of miles away.

The third motivation is the deterioration of the original advantage. The vast majority of companies that elected to locate production overseas did so for reasons including cheaper price of labor or to escape regulation of labor or environmental protections. These costs have increased in the developing world, narrowing the gap. It’s a notable issue in China, particularly.

The fourth motivation is that getting the production from these nations to the markets where they will be sold is not cheap, and anything transportation-related grows more expensive all the time.

Finally, there is a growing awareness of where a product is made, and consumers are starting to react. Granted, there is realistically a limit to how much the consumer is going to alter their spending habits. This is as close to a level playing field as U.S. manufacturers of consumer goods have gotten in decades.

-Armada Corporate Intelligence

Fed Beige Book: Improvement Widespread, But Government Bumbling Threatens

The Federal Reserve’s Beige Book economic roundup this week illustrated an economy improving and a pace of growth quickening. Reports from the 12 Fed Districts found, overall, a “modest to moderate” expansion since the Beige Book release just short of two months ago. Importantly, consumer spending is up, perhaps foreshadowing an uptick in all-important confidence.

However, two key districts – Boston and Chicago – showed much slower growth amid its industries that are more sensitive to ongoing problems with Congress and the Obama Administration simply not being able to work through issues like the budget/debt/”Sequestration.” San Francisco performed better than the two previously mentioned districts, but has some similar concerns of note.

Also threatening potential spring growth of the St. Louis and Kansas City regions is continued uncertainty within the agricultural sector. Both districts are heavily dependent on it, and optimism for a strong crop year, especially in a Kansas City district struggling with drought conditions, doesn’t seem to be especially high.

Still, the majority of district had much more positive news than negative on expansion in areas including sales (especially automotive), demand for services (notably technology and logistics-based), residential real estate, manufacturing (albeit modestly), labor market conditions and post-Hurricane Sandy reconstruction (New York and Philadelphia districts, primarily). To keep the overall good news rolling and growth pace accelerating though, the U.S. government is going to have to find ways to avoid the type of brinksmanship that has been all the rage on Capitol Hill over the last few years, NACM Economist Chris Kuehl, PhD hinted:

“In general, the Beige Book report holds that the economy is doing relatively well, but the stress in each report is that conditions would be far better were it not for the anchor of the budget crisis. The uncertainty factor is still a big concern nationwide.”

-Brian Shappell, CBA, NACM staff writer

NACM Unveils Certified Credit and Risk Analyst Designation to Focus on Advanced Financial Analysis

New learning tracks and the evolution of professional designations are part and parcel for keeping up with the varying and progressing needs of today’s business professionals, including those in credit. After a review of existing programs, and careful consideration and development, NACM announced in March the latest in a long line of world-class program designations: The Certified Credit and Risk Analyst (CCRA).

The CCRA is unlike NACM’s other longtime designation programs in that it is a standalone program. It exists outside of NACM’s “Career Roadmap” that includes the Credit Business Associate (CBA), Credit Business Fellow (CBF) and Certified Credit Executive (CCE), the latter of which is still NACM’s top-level designation for members.

The CCRA was created after Financial Statement Analysis II was removed from the CBF designation, with the new requirements effective January 1, 2013. NACM’s Education Department updated the extracted course and renamed it Financial Statement Analysis, Interpretation and Credit Risk Assessment to better reflect its emphasis. The updated version is now considered by NACM to be the cornerstone of the CCRA.

“We realized that Financial Statement Analysis II wasn’t for everyone, and that it served as a bit of a roadblock to the CBF for some members. However, we also recognized that some credit department personnel need that in-depth, advanced financial analysis background, which is why this standalone designation was created,” said NACM President Robin Schauseil, CAE.

As with other designation courses, Financial Statement Analysis, Interpretation and Credit Risk Assessment can be taken by itself as a certificate session. However, earning the CCRA requires the completion of three courses: Basic Accounting, Financial Statement Analysis I and the new Financial Statement Analysis, Interpretation and Credit Risk Assessment. The methods available to complete each course vary and can be found under “Education” at The first opportunity to take Financial Statement Analysis, Interpretation and Credit Risk Assessment is a five-segment session and exam held at Credit Congress from May 18-23.

Though separate from the “roadmap” lineup of certifications, the CCRA will serve as key program for credit professionals tied to deeper financial analysis responsibilities, and for those who will be in the future. It is also designed to build background and add key skill sets for those already pursuing a designation. “If you’ve earned your CBA and want, or need more financial analysis skills, this is for you,” Schauseil said. “It’s a great precursor to the CCE even though it’s not a part of the NACM career roadmap. It’s also a great precursor for NACM's Graduate School of Credit and Financial Management.”

To learn more about the CCRA, visit Education at, or call 410-740-5560.

Trade Gap Widens to Start 2013

Driven largely by a notable increase in imports of foreign oil products, the U.S. trade gap grew to $44.4 billion in January, the Commerce Department announced Thursday. The troubling, near 17% surge from December in the trade gap was about $2 billion more than forecast.

Oil pricing didn’t change that much, perhaps keeping the trade gap from worsening by more than it did, though the rise was already the largest increase in 10 months. Overall, exporting activity also fell, by about $1.2% despite small gains in categories like automotive and food products.

Despite that, expectations are still high for sign cant export growth in 2013. Still, the more than $27 billion deficit to China in just the first month of the year is troubling coming off the record nation-to-nation deficit posted in 2012.

-Brian Shappell, CBA, NACM staff writer

How Long Does the Car Market Sustain the U.S. Economy?

The U.S. love affair with the car shows little sign of deterioration, but the consumer generally has started to show some signs of buyer fatigue. There is now a battle of sorts between the motivations that lead to more car purchases and those that would signal a slowdown. The average age of a car now exceeds 11 years, which would have meant massive replacement only a few years ago. Today, the older car is perfectly serviceable, and people are far less likely to be forced to buy a new one.

The latest statistics indicate a 3.7% increase in the last month -- that would suggest that there will be around 15 million cars sold this year. While not awful, it remains far of the pace of heady recent years. The big question is whether that pace will be sustained with all the seeming consumer uncertainty evident these days.

Another pressing question revolves around what the banks will do. Up to the present, banks have been unusually active in terms of car loans because these have been about the only reliable place for them to expand. However, car loans have been packaged in the same way as that of mortgages last decade. As such, concern is rising that banks have been getting into risky territory with such lending, leading experts to ponder when said willingness to lend will come to a crashing halt. That would have an impact on more than just those seeking to purchase cars.

-Armada Corporate Intelligence

Energy "Independence" and Exporting Debate on the Horizon

Talk of whether or not the United States’ natural gas holdings are bringing the nation closer to energy independence hasn’t been a true top-headline-grabber to date. That could change though as the push seems to be growing that is calling for the exporting of liquefied natural gas products in the near future as well as proclamations of some type of energy renaissance. However, some analysts believe talk of “independence” is way off the mark even as steps (perhaps baby steps) have been taken.

A bipartisan group of lawmakers including Sens. James Inhofe and Mary Landrieu addressed U.S. Department of Energy Secretary Steven Chu last week in a public letter highlighting the findings of the NERA Economic Consulting Report on natural gas exporting. The lawmakers attacked critics of increased exporting of natural gas and expansion of production amid report findings that it would be in the best economic welfare of the country to do so. They also note that production is expected to well outpace demand as infrastructure needs catch up, meaning price gouging on domestic turf remains somewhat unlikely.

Days later, the American Petroleum Institute – who noted “an energy revolution is underway in the U.S. – rolled out an increased media campaign talking of the job creation benefits of exporting natural gas. Meanwhile, U.S. Energy Information Administration noted the country’s energy intensity, the amount of energy it takes to produce $1’s worth of economic output, continues to drop for a number of reasons. Part of that stems from changes in U.S. energy production and consumption as well as structural economic changes. However, NACM Economist Chris Kuehl, PhD, is among many suggesting that those talking of energy independence should pump the brakes a bit, so to speak.

Kuehl noted in a recent column for FCIB that all the talk of more energy independence, including the boost in domestic oil production, fails to address that the United States still imports huge amounts of oil. He estimated that of the 20 million barrels per day consumed domestically, about 14 million barrels come from international sources. About 25% of that comes directly from the Middle East. That’s only likely to grow as when the economic recovery, long stalled, actually kicks into a higher gear inevitably.

“The U.S. is not energy independent and may never be given the needs of an expanding economy,” said Kuehl. “When the recession still gripped the country, oil consumption was down. But, as the economy recovers, the gap between energy the U.S. can produce and what it needs will widen.”  In short, he estimated the United States is very unlikely to approach anything that even resembles true energy independence any time in the near future.

-Brian Shappell, CBA, NACM staff writer