The nation's economic slump may ease somewhat, but will not see full-scale recovery during the second half of the year, according to the third quarter market review by Dr. Abdur Chowdhury, chief economist of Capital Market Consultants LLC and First Business Bank Consulting Economist. First Business Financial Services, headquartered in Madison, operates several financial services firms, including First Business Bank-Milwaukee, First Business Bank-Madison and First Business Bank-Northeast.

Weak consumer spending, slower corporate earnings, a tighter credit market and lower capital spending will continue for the rest of the year, the report says. Strong government spending and demand for exports are expected to continue. Energy prices should stabilize and may lower. And interest rates will likely remain where they are.

"Given sluggish growth, a soft labor market, ongoing credit stress and a lack of broad inflationary pressure, neither the credit markets nor the economy warrant an interest rate hike this year," Chowdury's report states. "In the meantime, however, the Fed will continue to use its special lending mechanisms, meaning that easy monetary conditions are likely to persist."

The stock market has struggled in the first half of 2008, Chowdhury reports, and certain sectors of the market could already be discounting prices because of potential recession in early 2009. However, small cap stocks such as those contained in the Russell 2000 Index may be pointing to a recovering market.

"Historically, a small stock rally during an economic slowdown has often foreshadowed better times ahead," Chowdhury writes. "Not only are small stocks doing better, but the most economically sensitive small-cap sectors, e.g., energy stocks, have performed best of late." The yield curve, which was inverted in 2007, has turned to a more normal model, the report states, which may also point to an economic recovery.

"Today, the yield curve is sloped normally, with 10-year Treasury Bonds paying substantially more than 2-year notes," the report states. "This typically signals an economic turnaround ahead."

www.firstbusiness.com

Darrow Automotive Group, a Wisconsin-based auto dealership group, recently purchased the franchise and assets of Harrelson Mazda in Charlotte, N.C., and Carolina Mazda of Rock Hill, S.C. Terms of the purchases were not disclosed. In June, Darrow Automotive acquired six dealerships in the Augusta, Ga., market. It now owns 13 dealership locations in Illinois, North and South Carolina and Georgia.

The company has purchased many of its dealerships in the southeast U.S. because of the high growth there, Russ Darrow III, president and chief executive officer, said previously. "We've come to like that market (the Southeast) a lot," he said. "The government is adding billions to the military base there, an energy plant there is adding 15,000 jobs. The university is doubling the size of its campus. The local economy is very good. There's dynamic growth. That's why we're going to those markets."

PrivateBancorp's losses steepen
PrivateBancorp Inc., the Chicago-based parent company of Private Bank-Wisconsin, recently reported a second quarter net loss of $13.3 million, or 48 cents per share, compared with net income of $8.8 million, or 40 cents per share, in the same period a year ago.

The company's net loss for the first six months of the year was $22.2 million, or 82 cents per share. PrivateBancorp attributed its second quarter net loss primarily to expenses associated with the implementation of its previously announced strategic growth plan, an increase in its provision for loan losses and expenses with the correction of a prior-period accounting error. The company again managed to record increases in revenue, client deposits and loans, and the number of new clients.

"The second quarter results once again show success in the ongoing implementation of our strategic growth plan and the reported loss reflects the continued investments we're making to position our company for long-term success," said Larry Richman, president and chief executive officer of PrivateBancorp. "We made a number of opportunistic hires during the quarter, including professionals focused on building client deposits, and we have further strengthened areas such as risk management and operations. I am encouraged by the new business development we have seen from our bankers and the ongoing diversification of both our loan portfolio and sources of fee income, all critical to generating sustainable organic growth.  In the current credit environment, we have taken deliberate steps to ensure the quality of our loan portfolio as well as the rigor of our risk management practices."

Manitowoc Company selling marine division to Italian firm
The Manitowoc Company Inc. will sell its marine division to Fincantieri Marine Group Holdings, Inc., a subsidiary of Trieste, Italy-based Fincantieri - Cantieri Navali Italiani SpA, for $120 million. Lockheed Martin Corp. will be a minority investor with Fincantieri in the proposed acquisition. The transaction is an all-cash deal that is anticipated to close at the end of this year.

The division, called Manitowoc Marine Group, is a full-service shipbuilding, ship repair, and ship conversion organization that operates facilities in Sturgeon Bay, Marinette and Cleveland, Ohio. The division serves a broad base of commercial, military, and government customers and has about 1,600 employees.

"As our legacy business, Marine led the way in establishing Manitowoc's tradition of integrity, commitment to stakeholders, and passion for excellence -- the values that have driven the success for all three of our segments," said Manitowoc president and chief executive officer Glen E. Tellock. "In addition, this transaction expands the opportunities for MMG (Manitowoc Marine Group) to continue its industry leadership in the future. More importantly, it will allow MMG to become part of a growing, global organization that is exclusively focused on commercial and military shipbuilding."

This transaction will allow Manitowoc to focus its financial assets and managerial resources on the growth of its increasingly global crane and foodservice businesses. It also will allow us to invest the proceeds from the sale to generate additional shareholder value."

The sale is expected to generate a per-share, after-tax gain of approximately 60 cents. The company said it intends to use the after-tax proceeds for general corporate purposes, which includes paying down debt anticipated as a result of the pending acquisition of Enodis.

Magnetek acquires Saminco product line
Magnetek Inc., a Menomonee Falls-based designer and manufacturer of power control and delivery systems for the overhead material handling industry, has acquired the DDC Direct DC Drive product line from Saminco Inc. and the associated DDC technology, patent and intellectual property rights from co-owners Eaton Corp. and Saminco.

Magnetek had a brand label supply agreement with Eaton since 2006 to provide sales, support and service of direct DC drive systems, marketed under Magnetek's OmniPulse brand name, to the material handling industry. The crane control systems are used in DC-powered primary metal, foundry and heavy industrial cranes.

"Replacing traditional electromechanical controls with digital DC drive technology results in a combined energy and maintenance savings that easily justifies the return on investment," said Perry Pabich, vice president and general manager of Magnetek's material handling business.

"The acquisition of the DDC digital drive product line and technology provides Magnetek with a unique addition to our controls product portfolio and gives us greater presence in the international crane control market, as the DDC product line has an established distribution network in Europe and South America," Pabich said. Saminco is based in Fort Myers, Fla., and Eaton is based in Cleveland, Ohio.

German firm to acquire Cherry Corp.
Cherry Corp., which operates its global and North American headquarters in Pleasant Prairie, will be acquired by ZF Friedrichshafen AG of Germany. The German firm is expanding its worldwide automotive supplier position for driveline and chassis technology.

Cherry's corporate headquarters has seven employees, and its nearby North American headquarters has about 140 employees working in sales, administration and design, according to Dan King, the company's vice president of finance and administration.

Most of Cherry's manufacturing is in Germany, where it employs half of its 3,100 employees. Its North American manufacturing is based in Mexico, where it employs about 650 workers, King said.

Cherry will operate as an independent business unit of ZF, and no jobs will be lost in Pleasant Prairie, said Frank Buschemi, a spokesman with ZF. The company's name will change to ZF Electronics GMBH, but the Cherry brand name will remain for non-automotive parts.

In 2007, Cherry had sales of approximately $400 million with 3,100 employees worldwide. Cherry was founded in 1953 and develops as well as produces switches, sensors, control units, and electronics modules for the automotive industry, components for industrial and household applications, and computer input devices.

Peter Cherry, chairman and president of Cherry said, "This transaction has great strategic value; as it will allow Cherry to expand its current customer base and ZF will bring substantial additional resources for future growth in all of Cherry's product segments. There are many opportunities for incorporating Cherry's technologies into the broad range of ZF applications."

"With ZF Electronics, we are reinforcing our competence profile in the fields of mechatronics and electronics" said Hans-Georg Harter, ZF's chief executive officer and president. "In particular for our future tasks in driveline and chassis technology, we can swiftly apply Cherry's know-how." Financial terms of the transaction were not disclosed.

Baird study recommends investors be patient
Even the best investment managers underperform. That's the conclusion of a recent study by Baird Advisory Services Research. Baird studied more than 1,334 mutual funds with a 10-year performance record through Dec. 31, 2007, and found that 38 percent, or 505 funds, were high performers, meaning they had outperformed their benchmark by 1 percent annually over the 10-year period.

Eighty-one percent of the high-performing managers had experienced at least one three-year period of benchmark underperformance of 1 percent or more. Fifty-six percent had experienced benchmark underperformance of 3 percent or more and 31 percent had underperformed by 5 percent or more over a three-year period. It is important to note that despite these periods of underperformance, the high-performing managers all were successful over the full 10-year period, Baird said.

Tim Byrne, managing director and director of Baird's private wealth management research, products and services, said, "The implication for investors is not to give up on managers just because they hit a period of underperformance. The study reinforces a well-accepted concept about the cycles of investment performance. But our study goes a step further to provide concrete examples of what this has meant for investors and what they should do about it. Investors who buy or sell relying only on recent performance will invariably buy or sell at the wrong time."

Byrne added, "The best route for most investors is to exercise patience. With a well-researched, well-diversified portfolio, investors should be able to weather a period of underperformance, use these investment performance cycles to their advantage, and avoid the kind of behavior that can undermine long-term investment results." The full results of this study can be found at www.rwbaird.com/investorsparadox.

William B. Mayer, CPA, an accountant with Ritz, Holman, Butala, Fine LLP, a Milwaukee-based accounting firm, has been appointed treasurer of the Jewish Home and Care Center. The Jewish Home and Care Center, located in Milwaukee, offers long-term nursing care, comprehensive inpatient and outpatient rehabilitation and additional programs to older adults and other members in the community. Mayer, a partner and member of the firm's tax team, practices in all areas of taxation, including corporate, partnerships, individuals, trusts and estates. His areas of concentration include advising closely-held businesses and their owners, new business start-ups, and professional service and construction firms. Mayer also counsels individuals, fiduciaries and executors on trust, gift and estate matters. 

M&I Financial Advisors, Inc. recently promoted Neil Conway, a senior financial advisor, and Dean Urbanski, a national sales manager, to senior vice president.

Michael Crowell was recently promoted to vice president by M&I Equipment Finance. Crowell has been with M&I since 1996.

Alan (Al) W. Schwartz, director of institutional portfolio management with M&I Investment Management has been promoted to senior vice president.

Jefferson Wells recently hired Sal Mondelli as vice president, central region. Mondelli will be responsible for overseeing service, operations, and growth, and for developing long-term client relationships in the region.

Prior to joining Jefferson Wells, Mondelli was executive vice president of solutions sales for Wausau Financial Systems, a $100 million software and services firm based in Mosinee, Wis.