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michiganchronicle.com
March 18-24, 2015
‘Watch the yield curve’ By Dennis A. Johnson, CFA After at least a year of debating back and forth about the probability of the U.S. Federal Reserve ending its “quantitative easing” program and then increasing short-term interest rates, the financial markets seem to be acknowledging that reality is setting in. The Federal Reserve ended its “quantitative easing” program and will begin to raise shortterm interest rates soon. In a recent survey by the National Association of Business Economists, 71 percent of 293 responDennis A. Johnson dents said they expect the Federal Reserve to increase interest rates this year. What are the implications of rising short-term interest rates? I am expecting to see interest rates increase across the yield curve, meaning both short-term interest rates and long-term rates should rise in tandem. Long-term interest rates may even increase at a faster rate than short-term rates. This is called a “steepening” of the yield curve when long-term interest rates increase faster than the short-term. The change in the Federal Reserve’s monetary policy to increase or “normalize” short-term interest rates is in response to a continuation of reports showing strong economic growth in the U.S. A continuation of this positive economic data should support rising interest rates across the yield curve. I will become concerned if interest rates do not rise across the yield curve. If short-term interest rates increase without a corresponding increase in long-term rates, this is called a “flattening” of the yield curve. This implies investors are expecting a modest increase in interest rates in the future from current levels. This expectation could be the result of investors expecting economic growth and inflation expectations to become more modest as a result of rising interest rates. Add to this scenario continued strength in the value of the U.S. dollar and all of a sudden this scenario begins to look quite plausible. A flattening of the yield curve will not be good for investors. Interest rates will remain low which will cause bonds to continue to provide income to investors at near historically low levels. Future total returns from bonds will remain low relative to long-term historical performance. Finally, let’s hope the yield curve does not become inverted, where short-term interest rates are higher than long-term rates. This condition is usually a prelude to a significant decline in the stock market. In addition, these conditions generally precede a recession in the U.S. We have always been forward looking and consistently stood by our view that the Federal Reserve will first end quantitative easing and then increase short-term interest rates. Now, we are looking beyond the debate of when and by how much the Federal Reserve will increase interest rates. We’re looking ahead at the steepness of the yield curve and expecting to see interest rates rise across the board. This is the best scenario for investors, in my opinion. Dennis A. Johnson, CFA, is chief investment officer for Comerica Asset Management Group. Comerica’s Wealth Management team consists of various divisions of Comerica Bank, Comerica Bank and Trust, National Association, and also subsidiaries of Comerica Bank. The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/ informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product or as personalized investment advice.
Native Detroiters bring professional talents
back home
By Donald James
SPECIAL TO THE CHRONICLE
In 1950, Detroit had a population of almost two million. However, over the past 65 years, many Detroiters have migrated to nearby suburbs, or left for perceived opportunities in major cities such as Chicago, New York, Atlanta, Houston, Los Angeles, and even smaller locales in the nation’s Sunbelt. Sparked by the severe downsizing of its once mighty automobile industry, as well as other major manufacturing and service industries, Detroit saw many of its people take their professional talents elsewhere. Yet, despite the coming and going of an emergency manager that ushered the city into a history-making bankruptcy, Detroit is on the rise, even as its population has now dropped to just under 700,000. Today, despite what has happened in and to the Motor City, good and bad, for sixplus decades, entrepreneurs and businesses are now streaming into the downtown and Midtown areas of Detroit, construction projects are widespread, neighborhoods are earmarked for reconfiguration, retail shopping is developing in ways not seen in decades, foreign investors are eyeing opportunities at an unprecedented rate, and yes, the population hemorrhaging has drastically slowed, and is in the process of a reversal, as people — Black, White, and other ethnicities — are moving into the Motor City. Thus, many of Detroit’s native sons and daughters have come home from across the United States. The following individuals are five entrepreneurs and represent other professionals that once again are calling Detroit home.
Shannon Cason, 39, professional storyteller/spoken word artist, returned from Chicago in 2014. Cason moved from Detroit to Chicago in 2006, where he blossomed into one of the Windy City’s best storytellers and spoken word artists. He was also a host, main stage storyteller and grand slam champion with The Moth, a prominent New York-based organization dedicated to promoting the art of storytelling on national and international levels. Cason was so good in Chicago that he was a regular guest on National Public Radio’s “Snap Judgment,” a weekly radio program that mixes storytelling with music to create funny, dramatic and compelling presentations. While Cason was doing very well in Chicago, his move back to Detroit was inevitable. “Moving back to Detroit was a very cool experience, because a lot of my stories are about Detroit,” said Cason, who grew up in Detroit and Ecorse. “So being back home allows me to tell my best stories to Detroiters.” A product of the Detroit’s hip-hop and underground rap movement of the early 1990s, Cason, along with his 31st Century Crew had a major impact on the scene, which he said helped him to become a better storyteller and spoken word artist. He is proud of what Detroit stands for artistically. “Detroit has always been top quality as far as the arts;
Jelani Karamoko
Shannon Cason Tanisha R. Strong
Michael Anthony Page Quinn Hamilton we stand for no nonsense,” Cason said. “People don’t mess with this city because we are leaders in so many art forms.” Cason message to other native Detroiters who are artists, and other professionals, living elsewhere. “Come home and totally invest in the good things that are going on in Detroit,” he said. “Connect with the movement and bring back what you’ve learned in other cities that will help make Detroit even stronger.”
Quinn Hamilton, 31, founder and owner, Firebrand Candle Company, returned from Ann Arbor, Michigan in 2011. After graduating in 2005 from Yale University in New Haven, Connecticut, Hamilton, armed with a bachelor’s degree in women and gender studies, with a minor in premed, was unable to find a job in her field after returning to Detroit. She moved to Ann Arbor to accept employment as a research assistant at the University of Michigan’s Department of OBGYN. She ultimately moved up the ranks to become a clinical research coordinator. While, Hamilton was very well paid, and working in the field that she loved, she wasn’t totally happy. “I wasn’t using my creative and innovative sides,” said Hamilton, who grew up in the Davidson/Livenois and Rosedale Park areas of Detroit. “I was following strict guidelines. I felt that I was withering away in my cubicle. I wanted more…and I wanted to move back to Detroit.” In 2011, Hamilton followed her heart back to Detroit, but carpooled five-days a week to her job in Ann Arbor. The commute became tiresome,
which motivated her to resign from U of M. In 2013, Hamilton founded Firebrand Candle Company, a candle-making entity that designs and makes candles named for and inspired by Detroit streets. The company operates online, but it will be housed in a brick and mortar facility before the end of the year. On her move back home: “I am a hometown girl, through and through,” said Hamilton, who lives within Detroit city limits. “Things are changing for the good and at a rapid pace. I see great innovation happening. I saw this great movement in Detroit while I was living in Ann Arbor. I knew I had to get back home to live and work, and I thank God for His favor and blessings to be able to do so.”
Jelani Karamoko, 30, principal attorney, Detroit Land Bank Authority, returned from Cambridge, Massachusetts in 2013, after living in New York and Atlanta respectively for four years. In September, 2013, Karamoko returned to his hometown of Detroit. He was gone for more than a decade. A graduate of Renaissance High School, Karamoko went on to attend Morehouse College in Atlanta where he received a bachelor’s in economics and, subsequently attended Harvard University Law School in Cambridge, Massachusetts to earn a law degree. After graduating from Morehouse in 2006, Karamoko headed to New York to work as a bonds trader for Bank of America on Wall Street. In 2009, in the midst of the well-publicized financial crisis, Karamoko enrolled in the Harvard Law School. He
graduated in 2013 and could have gone almost anywhere in world, but moved back to Detroit. Karamoko currently serves as principal attorney for the Detroit Land Bank Authority. In this capacity, he oversees a team of nine attorneys, whose mission is to handle legal issues and civil court litigations as they pertain to the acquisition, management and disposition of the tens of thousands vacant homes and commercial structures in Detroit that have been reverted and acquired due to severe tax circumstances. Karamoko’s message to others contemplating a move back to the Motor City is, “Come on home and be a part of the history that’s being made. There are other cities that have a lot going on, but they can’t offer a chance to build an American city. It’s a once-in-a-lifetime opportunity.”
Chef Michael M (Michael Anthony Page), 42, owner, Grandma Told Me So Eatery, returned from New York in 2014. Page moved from Detroit to New York in 2005. IHis his desire to become a professional chef bloomed once he got to New York. “I never knew that I wanted to cook professionally until the God of my understanding told me who I was, what I was supposed to be doing and what I was passionate at,” said Page. “I knew that I always cooked, but I didn’t know that I really loved cooking until I got to New York and realized that this is what I should be doing.” In the Big Apple, Page de-
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