WLN Articles

2011: A Bit of Optimism…But Not Without Cautiousness

I am not a planner. Never have been. So how do I write an article on what I think the year ahead will bring to the leasing industry? I can certainly look at the past as we all can, and I can tell you that it’s been an “interesting” two years…or is it three? The economy has been in the tank, spending is down for both consumers and businesses, banks have money and they aren’t spending it, putting the squeeze on many small and medium sized businesses and it’s not just the United States of America…it’s a global situation. But despite everything that has been going on (or not going on, depending on your point of view) the leasing industry has done okay. We’re alright…or better than many other industries I read about. What I hear from my peers is that business has been flat and I am really tired of hearing the term “flat is the new up” aren’t you? Flat is flat…it’s just better than being down.

It’s the week between Christmas and New Years, December 29th and I am in the office waiting for two contracts to come back signed….while I sit and wait I started cleaning my files. I found several articles and notes from the seventies and eighties that my dad had saved regarding the future of the leasing industry. In 1989 I read that “The industry is maturing” that there is now “Too much money chasing deals” that “undercapitalized companies are being forced to seek our deeper pocketed sources”…sound familiar? We’re alright…we’re just history repeating itself…just a bit differently yet the same.

Many years ago in another life, I worked in the stock brokerage industry. Back then Peter Lynch of Fidelity Investments was just making a name for himself as one of the most successful portfolio managers in Fidelity history. His method was to invest in companies that you understood. Make your decision based on products that you know or use. So I did. I bought Nike stock (I should have held onto it you think?) when Nike was not yet a household word but I loved their sneakers. Same with the Gap and believe it or not Club Med stock because I went there on vacations. Why am I telling you this? Well…I base my thoughts on the year ahead on the basics, what I know and understand.

The articles that I have read the past few weeks about the basics have told me this; FedEx has raised its outlook for its fiscal year end in May. Demand is picking up. FedEx is one of the bell weathers of our economy…it tells us people are shipping…they’re only shipping if people or companies are buying. Simple. The same is true of UPS, they expected to deliver 23 million shipments in 24 hours the day before Christmas, a 9% increase over last year. Most of these deliveries are from online purchases. On the same page in the WSJ it mentions how Oracle is “buoyed By Tech Rebound”. Oracle’s profit jumped 27% on a 47% rise in revenues. This tells me that corporate spending on technology is rebounding after a few years of pent up demand.

I have also had some time to do some post Christmas sale shopping and noticed that there seems to be a lot more people out and about with multiple shopping bags. I remember last year about this time there were a lot of people out and about but not carrying a lot of bags. I make it a habit when I am in the stores talking to boutique owners and sales people, asking how business is and most have said better than last year.

I talk to cab drivers. A good source of information. I have found many of them happy to talk to you about the economy. People don’t spend money on taxis when money is tight, they don’t travel as much so airport pickups slow down. Tourism is a big contributor to their business as well. So far they have for the most part expressed to me that fares in 2010 are better than they have been the past two years. Another area that helps fuel growth and employment is the venture capital industry. They provide the much needed capital for startup and emerging growth companies to grow. They were fairly cautious in 2009, less so in 2010 and according to the NCVA (National Venture Capital Association) survey that was just released; two thirds of the VCs and Executives surveyed expect to see more companies going public in 2011 and that they will invest more capital in the coming year. What follows of course is more hiring and more buying of equipment for expansion. This tells me that the VCs have more confidence in the economy than the previous two years. A few reasons are that innovation is spreading across so many different fields, alternative energy, mobile phones and life sciences. Many young people who are having difficulties finding employment are turning to their own creativity and ceasing the moment to give their start up ideas a try.

My last report I read each year is the annual study done by Duke University in collaboration with CFO Magazine. The gist of the study is that CFOs are becoming more optimistic. They expect earnings to be up, wages to increase and …..good for us…..more spending on capital equipment!

Of course I have only picked out the positives, I like to see the world through the proverbial “rose colored glasses”….there are still many concerns regarding outside forces that will affect our businesses. Certainly the impending accounting changes, continued weak consumer demand or any protectionist type policies would negatively affect the economy. So, what do I think the year ahead brings? I think we enter 2011 with a bit of optimism, but not without cautiousness. I don’t make predictions I can only hope that all of our collective optimism can help move the economy in the right direction. It’s an effort on every individual and every business to do its part. I know we will do ours and put on as many lease deals as possible and I wish the same for all of you as well! Best wishes for 2011 to all my leasing friends out there…stay positive!

As a last “prediction”… I think the Red Sox and Yankees in the ALCS, Philly and Giants in the NLCS with Philly & Sox in the World Series….Sox win it all.

p.s. Those two lease I was waiting for to come back signed…have not yet been received as of January 3 but I am confident they will both get done by the end of this week!