David Wagner hops on the phone with customers these days prepared to offer them advice that may seem contradictory.
Wagner, executive vice president at Roosevelt and Cross and leader of its branch in Buffalo, is an expert in municipal bonds and corporate taxes.
He knows that people are looking at potential inflation – and the ways the Federal Reserve may respond – and expecting interest rates to rise for years.
That would make bond customers want shorter-term maturity dates because of the correlation between bond prices and interest rates.
But Wagner’s economic thesis is different. He believes the economy is experiencing an artificial economic sugar rush that will subside as government stimulus measures run their course. The Fed won’t need to continue raising interest rates. And investors who place a long-term bet on those levers now stand a big payoff.
“I’m telling every individual customer and institutional guy, buy as long as you’re comfortable buying in the marketplace,” Wagner said. “I’m not a believer that, over the long haul, interest rates are going to go much higher.”
Roosevelt and Cross opened its office in Buffalo in 1980 and has remained a regional sales hub for more than four decades. Each of the firm’s three specialists serve between 50 to 100 retail or individual customers, though it’s been tough sledding recently given the returns investors are earning on stocks.
More fruitful have been sales to banks, which are swimming in cash and need to do something with it, Wagner said.
“The community banks around Buffalo and around New York state are all flush with cash right now,” he said. “They’re buying up all the bonds now, and our strategy is to continue going back to them.”
Roosevelt and Cross is at a comfortable staffing level — each employee has been there 15 to 20 years. At some point, Wagner might look to bring in new generations of talent.
They’d be entering an industry with notable stability. Wagner said the company received an onslaught of calls from customers last year worried about whether the pandemic would affect the municipal bonds they held.
“People saw headlines about shortfalls and issues with tax collections and started wondering, ‘Are my bonds going to pay?” he said. “But these places are so well capitalized that as a bond holder, you are taken care of and never have to worry about it.”