Independence for Scotland and a UK haggis famine


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Furgeson Wellman

by Brad Houle, CFA
Executive Vice President

Haggis is a cuisine of Scotland characterized by Wikipedia as a savory pudding containing sheep’s pluck (heart, liver and lungs) minced with onion, oatmeal, suet, spices and salt mixed with stock. It is traditionally encased in the animal’s stomach and simmered for approximately three hours.

The often lampooned delicacy was featured in the 1993 film, “So I Married an Axe Murder,” staring Mike Meyers. In the comedy, Mike Meyers’ character of Scottish decent when as asked about his fondness for haggis responded, “I think it’s repellent in every way. In fact, I think most Scottish cuisine is based on a dare.”

On September 18, a referendum for Scottish independence from the United Kingdom will be put to a vote. Recently, polls suggest that it will be a close outcome. This situation is creating uncertainty and we have seen the pound sterling weaken as a result. At stake is revenue from the oil-rich North Sea which has been greater than 2 percent of the UK’s revenues down from over 6 percent of revenue in the 1980s. The North Sea fields are off the coast of Scotland and there is some question about which country would control the revenue after a split. There have been many comparisons of an independent Scotland and Norway based on the countries similar populations and potential energy wealth. While the North Sea fields are in a period of declining production, the revenue would be material to an independent Scotland.

If a vote for independence passes, the UK’s fragile recovery from the financial crisis will be called into question. The UK economy has slowly been crawling out of the economic downturn of the Great Recession in a similar fashion to the U.S. A split-off of Scotland would potentially stall the recovery.

The pending referendum has also created uncertainty relative to business investments in that there is a question about the political landscape should a split occur. In a similar situation, Quebec had a referendum for independence in 1995 that failed. However, the uncertainty that it could occur again was at least partly responsible for an economic malaise in the province and reduced business investment.

In Spain, the region of Catalonia has a referendum in November of 2014 for possible secession.  The impact of this would be negative for Spain as its economy is in far worse shape than the U.S. and the UK.

While not a catastrophe in the making, an independent Scotland or Catalonia destabilizes what is a tenuous recovery in Europe. Most of Continental Europe is suffering from anemic growth, continued high unemployment, massive indebtedness and the specter of deflation.  Above all, the financial markets hate uncertainty and these types of changes are potentially disruptive to the European recovery.

Other Takeaways for the Week

  • Apple introduced the iPhone 6, Apple Watch and Apple Pay this week, which were generally well received. The Apple Pay secure transaction using an iPhone rather than a physical credit card has the potential to revolutionize how items are paid for at retailers.
  • The late Joan Rivers often used humor regarding her financial life as part of her act. One memorable quote that bears mentioning is, “People say that money is not the key to happiness, but I always figured if you have enough money, you can have a key made.”


InvestmentNews Names Ferguson Wellman Top RIA Firm in Oregon


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PORTLAND, Ore. – September 9, 2014 – Ferguson Wellman Capital Management has been named the top registered investment advisory firm in the state of Oregon.

For the top RIA list, InvestmentNews qualified the list of firms based on data firms listed in Form ADV to the Securities and Exchange Commission in 2014. Many criteria were considered for the listing. Among them were total assets under management and financial planning services. Also, neither the firm nor its representatives can be actively engaged in business as a representative of a broker-dealer.

“It is always gratifying to be mentioned alongside your peers when it comes to assets under management and percentage gained year-over-year. Equally important to us is the trusting relationships we have earned with each of our clients. After all, it is their assets that have allowed us to be mentioned in the first place,” said James H. Rudd, principal and chief executive officer.

Founded in 1975, Ferguson Wellman Capital Management is a privately owned registered investment adviser that serves over 650 clients with assets starting at $3 million. The firm works with individuals and institutions in 35 states with a concentration of those clients in the West. Ferguson Wellman manages $4 billion that comprises union and corporate retirement plans; endowments and foundations; and separately managed accounts for individuals and families. In 2013, West Bearing Investments was established, a division of Ferguson Wellman, that serves clients with assets starting at $750,000. All company information listed above reflects 6/30/14 data.


InvestmentNews qualified 1,442 firms headquartered in the United States based on data reported on Form ADV to the Securities and Exchange Commission as of May 1, 2014. To qualify, firms must have met the following criteria: (1) latest ADV filing date is either on or after Jan. 1 (2) total AUM is at least $100M, (3) does not have employees who are registered representatives of a broker-dealer, (4) provided investment advisory services to clients during the most recently completed fiscal year, (5) no more than 50% of regulatory assets under management is attributable to pooled investment vehicles (other than investment companies), (6) no more than 25% of amount of regulatory assets under management is attributable to pension and profit-sharing plans (but not the plan participants), (7) no more than 25% of amount of regulatory assets under management is attributable to corporations or other businesses, (8) does not receive commissions, (9) provides financial planning services, (10) is not actively engaged in business as a broker-dealer (registered or unregistered), (11) is not actively engaged in business as a registered representative of a broker-dealer, (12) has neither a related person who is a broker-dealer/municipal securities dealer/government securities broker or dealer (registered or unregistered) nor one who is an insurance company or agency.

Visit for more complete profiles and financials.

Somebody’s Watching Me


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Jason Norris of Ferguson Wellman

by Jason Norris, CFA
Executive Vice President of Research

There were two high profile data breaches this week which highlighted the importance of cyber security, as well as “implied privacy.” Home Depot announced that they had a breach where credit and debit cards used at its stores may have been compromised. Initial speculation was that this may have just happened within the last few weeks; however, some reports indicate the breach may extend back to April of 2014. There were also reports from Goodwill, Dairy Queen and Supervalu that some of their locations may have experienced a data breach. What this shines a light on is the importance of corporate security, as well as vigilant consumers. One potential solution to this problem would be the implementation of “chip and pin” debit/credit cards. Most of the world has already implemented this means of transaction, but the U.S. has not. The main difference between “chip and pin” cards and standard debit cards is, when using a chip card, there is no magnetic strip to swipe. The card is put in a Point of Sale (POS) terminal, the chip is read, and the consumer has to input a PIN number. The security for these transactions is much more reliable. The chip cannot be copied like a magnetic strip can (as we saw in the Target case, and it looks like the Home Depot breach as well.) Visa and MasterCard are big proponents of this technology; however, it has been very slow to roll out in the U.S. The Netherlands company NXP Semiconductor is a key player in the technology for these cards.

The distribution of several celebrities’ nude pictures this week has also highlighted the importance of personal cyber security. Over the weekend, more than 100 personal iCloud accounts were hacked and private photos were leaked to the media, with several prominent actresses being victimized. Apparently, this was a case of hackers easily decoding individuals’ passwords. While this action is not condoned, individuals have to remember that any material that is stored in the cloud runs the risk of being compromised.

Less Than Zero

The European Central Bank continued to take rates lower this week by reducing its deposit rate to -0.2 percent from -0.1 percent. You are reading that correctly, that is a negative number. This seems to be more symbolic, rather than having much of an impact on the market. The market impact decision came in the same announcement that the ECB will increase its purchase of ABS (Asset-Backed Securities). This is very similar to what the U.S. Fed had been doing with its purchase of mortgage-backed securities. The key item missing is that the ECB did not announce a plan to purchase sovereign debt. The ECB is hoping banks will sell their ABS to them and in its place, make loans. Europe continues to sputter out of recession with expectations of GDP growth and inflation below 1 percent. This move by the ECB showed the market that it is willing to support European economies, although one has to wonder if they have enough power to do so.

Why Worry

The employment report this morning was a disappointment with the U.S. only adding 142,000 jobs in the month of August; expectations were for over 200,000.  Ferguson Wellman believes this data will eventually be revised upward.  The economic data the last few months has been very robust and is not consistent with this weak jobs number.  Therefore, we aren’t concerned about the number unless other economic data starts to signal a slowdown.


With the Seattle Seahawks opening game win Thursday, it reminds us of the Super Bowl stock market prediction. Some may recall when we highlighted the belief that if the Seattle Seahawks won the Super Bowl this year it would foretell a positive year to the market. So far so good with a 9 percent+ gain in the S&P 500 to date. Even with this strong run, we believe that earnings growth and low inflation will continue to be tailwinds for equities, pushing them higher to year-end.

Our Takeaways for the Week

  • Internet security will become more of a focus for companies and individuals
  • Global central banks are supporting economies – coupled with strong earnings, this is a positive for stocks


Resources Worth Routing: Corporate Tax Inversions


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Jason Norris of Ferguson Wellman

by Jason Norris, CFA
Executive Vice President of Research

Corporate tax inversion searches on Google have spiked the last few months as the public looks to educate itself on the recent announcement of U.S. companies acquiring foreign companies and moving their headquarters outside the U.S. to a lower tax region. CNBC recently aired an interview with Abbott Labs CEO Miles White about the topic from a corporate perspective. We hope you find this video informative and insightful. Click here to see the video.

During the interview, there will be references to global tax rates. Click here for the link to KPMG’s corporate tax rate table for reference.

NOTE: You will find links to websites that are not managed by Ferguson Wellman or West Bearing. We do not take any responsibility for reviewing, updating or insuring accuracy of information on other websites. Ferguson Wellman and West Bearing disclaim responsibility for the legality of materials and copyright compliance on other websites. This is provided for informational purposes only.