Mr. Norris oversees the wealth management and investment services for the company. He has over 19 years experience in the money-management industry. Prior to joining Oakworth, Mr. Norris was chief economist, chairman of the investment strategy committee, and a senior fund manager for Regions Financial Corporation's Morgan Asset Management (MAM) subsidiary. Prior to joining MAM, Mr. Norris served as chief investment officer for The Trust Company of Sterne, Agee & Leach, Inc. He started his professional career in 1991 with Mercantile-Safe Deposit & Trust Company in Baltimore, Maryland, as an institutional fixed income portfolio manager. Mr. Norris frequently appears in various national and local media as an expert on the economy and the markets, and is currently a guest columnist to the Montgomery Advertiser's Sunday business section. He was named to the Birmingham Business Journal's (BBJ) "Who's Who in Banking & Finance" for 2004, the BBJ's "Top 40 Under 40" for 2007, and served on the Birmingham Chamber of Commerce's Council of Economic Advisors for a number of years. Currently, he serves on the finance committee and as trustee for the IPC Foundation. He received his Bachelor of Arts in 1990 from Wake Forest University and his Master of Business Administration in 1994 from the University of Baltimore.

Mr. Norris oversees the wealth management and investment services for the company. He has over 19 years experience in the money-management industry. Prior to joining Oakworth, Mr. Norris was chief economist, chairman of the investment strategy committee, and a senior fund manager for Regions Financial Corporation's Morgan Asset Management (MAM) subsidiary. Prior to joining MAM, Mr. Norris served as chief investment officer for The Trust Company of Sterne, Agee & Leach, Inc. He started his professional career in 1991 with Mercantile-Safe Deposit & Trust Company in Baltimore, Maryland, as an institutional fixed income portfolio manager. Mr. Norris frequently appears in various national and local media as an expert on the economy and the markets, and is currently a guest columnist to the Montgomery Advertiser's Sunday business section. He was named to the Birmingham Business Journal's (BBJ) "Who's Who in Banking & Finance" for 2004, the BBJ's "Top 40 Under 40" for 2007, and served on the Birmingham Chamber of Commerce's Council of Economic Advisors for a number of years. Currently, he serves on the finance committee and as trustee for the IPC Foundation. He received his Bachelor of Arts in 1990 from Wake Forest University and his Master of Business Administration in 1994 from the University of Baltimore.

Norris: Get ready for massive changes in Alabama’s economy

In a recent letter to clients, I wrote how the investment industry will likely have to reassess how it defines industry sectors. For instance, Google (Alphabet) is obviously, and correctly, classified as a technology stock. However, Tesla gets lumped in with the rest of the automotive group, and Amazon is considered a consumer discretionary company just like, say, Tractor Supply Co.

We can discuss the merits of these classifications, but do investors really buy Tesla because it makes cars? Or because Amazon sells stuff which you used to buy at the store? Perhaps, but I would counter there are companies which are incredibly disruptive forces in their respective industries, and investors love them primarily for that reason. The three I mentioned are simply low-hanging fruit.

Intuitively, there will be a small number of true disrupters in any economy, which means there were be a lot of base companies. The former will develop new products, services, and technologies which will change how we live our lives and conduct business. The latter will battle it out for market share in what is left of any one economic sector. By the time the dust settles and the smoke clears, a large segment of current corporate America will be, as Charles Dickens might have said, “without a situation.”

The trick will be choosing the likely winners and avoiding the losers, but make no mistake about it: unless the government gets involved and/or there is an evaporation of capital in the global economy, there will be an enormous amount of consolidation in the U.S. economy over the next decade as corporate Darwinism weeds out those “stuck in the middle” firms.

Historically, this would suggest there will be an enormous amount of merger and acquisition activity, and there might be. However, I believe it is more likely the healthier firms in an industry will be far more apt to simply let lagging firms fail on their own, as opposed to buying their capacity. Why? Because there is already “too much” capacity in much of the economy.

While the auto industry is increasingly dear to the Alabama economy, how much capacity does it need in the United States and how much does it have? Would you say cars are still in a growth stage? Or would you think, overall, it is a relatively mature sector, which will grow more proportionately with the population than it did decades ago? At least in terms of units sold over a multi-year period? Yep, that would be my vote.

(Read the full article as previously published in the Montgomery Advertiser on June 12th, 2017)

John Norris: Media outlets give readers what they want

We seem to have entered the news doldrums, where our choices are: 1. an endless barrage of so-called analysis of the Administration’s perceived foibles and follies, or 2. stories which are the journalistic equivalent of delivery pizza. They might be tasty going down, but are ultimately forgettable.

While folks might bemoan what passes for news these days, the media is simply giving us what we want. Every news organization has the ability to track user reading patterns better than even the New York Times could 20 years ago. If a story about plastic milk jugs in Timbuktu gets a zillion reads, guess what? There will be a follow up story or fourteen. If a feature about an obscure Auburn football recruit gets 500 shares, you can expect another article about a different young man in a day or two. However, an article about extraterrestrials breeding mutant grizzly bears in Lowndes County will end up in File 13 if enough folks don’t click, comment, share, and like.

Frankly, it is a numbers game. A news outlet with, say, 500,000 unique user visits, subscriptions, shares, and clicks will command a higher dollar amount for ad space than one with only 5,000. That makes sense. So, it should come as no surprise the media industry simply provides that which pays the bills.

(Read the full article as previously published in the Montgomery Advertiser on June 5th, 2017)

Some Common Cents for June 2nd, 2017

This morning, the Bureau of Labor Statistics (BLS) released The Employment Situation report for the month of May 2017. I will cut to the quick, and tell you it might be one of the more boring releases of its type I have ever read. So much so, I felt sorry for the folks who had to compile the data by the time I finished reading the thing.

In a lot of ways, I found it similar to, say, one of Nicholas Sparks’ books. Yep, I kind knew how the report would end when I first picked it up. Except the ending of The Employment Situation was ‘Table B-9. Indexes of aggregate weekly hours and payrolls for production and nonsupervisory employees on private nonfarm payrolls by industry sector, seasonally adjusted,’ as opposed to a well-telegraphed, melodramatic plot machination (usually involving either the death or sickness of a loved one/interest). Indeed. To say there was an element of ‘déjà vu all over again’ would be an understatement.

But, wasn’t there anything in the report which shed some kind of new light on the economy, etc.? Absolutely not. It suggested a modestly growing GDP, coupled with modest earnings growth. It was the economic report equivalent of conference/banquet chicken.

With that said, it is/was likely decent enough to keep the Federal Reserve on track to raise the overnight lending target at its next official FOMC meeting on 6/14/2017. In all probability, according to the futures market, the Fed will increase the overnight lending target rate between member banks 0.25% (25 basis points) to take the ‘range’ to 1.00-1.25% from the current 0.75- 100%. In fact, the odds are so overwhelming the Fed will do just that the markets will likely freak out a little if it doesn’t. The direction will depend on what the official statement says after the meeting. …Read More…

The opinions expressed within this report are those of John Norris as of the initial publication of this blog. They are subject to change without notice, and do not necessarily reflect the views of Oakworth Capital Bank, its directors, shareholders, and employees.

Some Common Cents for May 26th, 2017

This week, a reporter friend of mine asked my thoughts on the prospects of traditional banks and credit unions getting into, what can only be called, the payday lending space IF the Administration’s regulatory reform proposals get through the Congress. It seems some banks have made overtures about doing just that, but this is very anecdotal and far from the norm. Frankly, I am kind of professionally ambivalent on the matter, but I still gave these bullet points to him:

  • Due to the costs associated with extending credit, it is hard to imagine banks falling over themselves to start making a bunch of $300 two week loans for business purposes.
  • There is a difference between making a small, short-term loan for an established client and making one to a stranger off the street.
  • At a 10% annual rate, a $500 two-week loan generates about $2 in interest for the lender. Can they originate, underwrite, and service the thing for that of money, let alone overhead? Candidly, it makes more business sense to let people bounce checks.
  • There is a difference between what the company spokespeople say and the what the CFO offices think. Guess who normally wins that argument.
  • Those banks which enter this lending arena will do so up to the point where they maximize their Community Reinvestment Act rating, and probably not much more than that. That is cynical but honest, and better than nothing. …Read More…

Norris: Corporate America can’t hit snooze button on economy

Recently, a reporter called to ask my thoughts about the ongoing scandal in Washington surrounding former FBI Director Jim Comey, the Russians and the White House. Is it enough to cause the stock market to crash? In so many words, my response was simple: “only if it causes a slowdown in economic activity and a corresponding drop in corporate profitability. Absent that, long-term, no.”

Obviously, his follow up question was whether the turmoil would put the Administration’s tax reform proposals in jeopardy on Capitol Hill. Basically, would the rest of the GOP jump from a sinking ship, or something along those lines? That was fair enough, and I hope my response was as well: “I have a better chance of being named Pope by Christmas than that package has of getting through the Congress as is.” Not surprisingly, that quote didn’t make it into his column.

In truth, I probably came across as amazingly cavalier, and we will see if he calls me again anytime soon.

(Read the full article as previously published in the Montgomery Advertiser on May 23rd, 2017)

Some Common Cents for May 19th, 2017

This week, I had a brief discussion with a very bright individual regarding future economic growth and potential investment opportunities in the United States. His comments were in complete alignment with my thoughts: moving forward, there will be two types of companies which will matter: 1) disrupters, which are companies providing technologies, products, and/or services which fundamentally change our lives and how we conduct business, and; 2) base, which are those providing the essentials of our day to day lives.

Frankly, we agreed this is already the way it is.

Intuitively, there will be a small number of true disrupters, which means there were be a lot of base companies. As a result, the competition between the latter will simply be for market share, as opposed to absolute growth in any one economic sector. By the time the dust settles and the smoke clears, a large segment of current corporate America will be, as Charles Dickens might have said, “without a situation.” The trick will be choosing the likely winners and avoiding the losers, but make no mistake about it: unless the government gets involved and/or there is an evaporation of capital in the global economy, there will be an enormous amount of consolidation in the US economy over the next decade as corporate Darwinism weeds out those ‘stuck in the middle’ firms.

Historically, this would suggest there would be an enormous amount of merger & acquisition activity, and there might be. However, I believe it is more likely the healthier firms in an industry will be far more apt to let lagging firms fail on their own, as opposed to buying their capacity. Why? Because there is already ’too much’ capacity in much of the economy. Currently, Sears Holdings is a perfect example. …Read More…

The opinions expressed within this report are those of John Norris as of the initial publication of this blog. They are subject to change without notice, and do not necessarily reflect the views of Oakworth Capital Bank, its directors, shareholders, and employees.

John Norris: Value is in the eye of the beholder

Recently, I was at my parents’ house, and my father pointed to a smallish watercolor on the wall. He said that it had been a wedding present for my grandmother during the Great Depression, and that it could possibly be the most valuable thing in their house. That certainly piqued my interest.

Frankly, the painting seemed pretty pedestrian to me, but I am admittedly no expert. So, I googled the artist’s name on my phone, and found there to be no shortage of their work available for sale for about the cost of an oil change. Apparently, these had been somewhat mass produced back in the day, and popular with young homeowners and newlyweds.

When I showed him the results and suggested the real value of the painting was sentimental, the old man wasn’t thrilled. However, I wasn’t trying to be difficult. I simply had access to pertinent information in the palm of my hand with very little effort. At a yard sale, I would put a $25 price tag on the thing, but I would never do that. (Read the full article as previously published in the Montgomery Advertiser on May 16th, 2017)

Some Common Cents for May 12th, 2017

To read the headlines, you would assume the French Presidential election and the Administration’s sacking of Jim Comey as the Director of the FBI were the big stories for the week. However, both were sort of non-events for investors, or should be. First, the French election was basically a foregone conclusion. The issue wasn’t whether Macron would win, as everyone expected he would. The bigger issue was by how much he would win. It was an appropriate amount to suggest the status quo would remain the status quo, if you catch my drift.

As for Comey, I have been doing this a pretty long time, and I can’t remember an instance when the Director of the FBI was a topic of serious consideration or debate for investors. They are generally not in a position to directly impact corporate profitability, let alone monetary or even fiscal policy. Certainly, you can make some ‘slippery slope’ arguments, and take the ramifications of Comey’s firing to an illogical conclusion. However, where the rubber meets the road, this was/is more of a political story, as opposed to either economic or financial.

So, what was the big news?

Lost in shuffle were the earnings reports of some old-school, retail heavyweights. J.C. Penney (JCP), Macy’s, Dillard’s, and Kohl’s, basically the last of the publicly traded, significant, anchor department stores, with the exception of Sears, all announced their 1Q earnings. I will cut to the quick: the numbers weren’t great, particularly for JCP and Macy’s. Kohl’s and Dillard’s were arguably better than you might have expected, even if only in private. Even so, the markets have taken the sector out back this week, quite possibly more than the results would warrant. Actually, you can strike the phrase “quite possibly.” …Read More…

The opinions expressed within this report are those of John Norris as of the initial publication of this blog. They are subject to change without notice, and do not necessarily reflect the views of Oakworth Capital Bank, its directors, shareholders, and employees.

Some Common Cents for May 5, 2017

Years ago,  I tied myself in knots over little league baseball. Gosh, it seemed so important at the time, and my son was a pretty decent player. However, I resisted the siren song of hiring batting and fielding coaches for my son, despite much advice such things were absolutely necessary for his success. Perhaps he would still be playing the game had I done so. Only The Shadow knows, but I doubt it.

My contention was, and still would be, a batting coach will potentially improve an already good hitter, but, and here is a country cliché for you, you can’t make a silk purse out of a sow’s ear. If a kid doesn’t have some minimum level of eye-hand coordination, no amount of ‘coaching’ is going to turn them into a great player. For my part, I thought it an extraneous expense in the 2nd and 3rd grades, but would have willingly shelled it out had my son stuck with the sport up to middle school. He didn’t, and I didn’t force him to do so.

That old bumpkin phrase about silk purses and sow’s ears is pretty appropriate for a lot of things in life, whether it be elementary school athletes, local economies, or even individual companies. There has to be something from which to build. …Read More…

The opinions expressed within this report are those of John Norris as of the initial publication of this blog. They are subject to change without notice, and do not necessarily reflect the views of Oakworth Capital Bank, its directors, shareholders, and employees.

John Norris: Alabama has two economies

Over the years, readers have asked me to be more of a homer in my columns, meaning I should accentuate the positive to a much greater degree than I do. When I respond, I typically say I can rah rah with the best of them. However, in my opinion, we get enough of that already. Besides, ignoring problems doesn’t make them go away.

We know our state lags the national averages in a lot of economic measures. There is little reason to list all of them here. Still, the data suggests Alabama basically has two economies: one for our metropolitan areas and another for everyone else.

If you happen to live in one of the five largest metro areas in our state, life is actually pretty good. These are: Birmingham, Huntsville, Mobile, Montgomery, and Tuscaloosa (the Big 5). According to the data I could glean from the Census Bureau and the Bureau of Economic Analysis, the Big 5 represented 53.9% of the state’s population and 67.8% of its economic output in 2015.

That year, if my math is correct, the Big 5 had a per capita Gross Domestic Product (GDP) of $46,238 in constant 2009 dollars. This would have ranked somewhere between Kansas and Wisconsin, which aren’t our normal comparisons, and be good enough for 28th place nationally. Further, it would be well above Georgia, Tennessee, Florida, and, as you might imagine, Mississippi. Rah rah, right?  (Read the full article as previously published in the Montgomery Advertiser on May 9th, 2017)