Perspectives Blog

Apparel retail doldrums

Mari Shor, Senior Equity Analyst | August 11, 2014

Since 2011, consumer spending has been below average overall, and spending on retail apparel has been especially poor. A host of factors, from shifting consumer priorities to poor inventory control have forced apparel retailers to compete on price, and sales and profitability have suffered dramatically. Premier global brands with differentiated product and strong, flexible supply chains are best positioned to manage through this challenging env…

Half-time report on the U.S. consumer

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | July 28, 2014

U.S. consumers have taken a more cautious attitude toward debt and been more selective about using it for discretionary purchases. With consumers using credit cards less and using debit cards much more, the supports for higher discretionary spending are keyed off income and wages and also employment. With low debt use and income growth holding back consumption and demand, households will require stronger job growth and real wage gains to accele…

A tepid cyclical lift

Tom West, Director of Equity Research | April 28, 2014

Cyclical investment and discretionary spending are on track to deliver earnings growth of 7% in the S&P 500. Strength in some consumer durables appears more of a “wallet share” gain than a general lift due to recovering wages or a release of excess savings. Construction and energy are poised for another year of growth, while “enterprise” spending and investment in the tech sector remain challenged. The S&P 500 Index should grow earning…

Retail sector outlook – It’s a share game

Mari Shor, Senior Equity Analyst | March 17, 2014

…ase in 2013, and the “wealth effect” (net equity gains in housing and stocks) should drive sustained strength in consumer confidence. Unfortunately, the negatives seem to outweigh the positives with 1) lower levels of growth in disposable income forcing allocations across spending categories; 2) the personal savings rate likely to rebound from near 20-year historical lows, thus eating into spending; 3) consumers’ reluctance to take on additional…

Defense industry outlook – Looking past the headlines

Ben Blomberg, Senior Equity Analyst | March 17, 2014

The outlook for U.S. defense contractors has been improving despite all the negative headlines. Army spending is under pressure, but Navy and Air Force spending remain well supported. The recent Ryan-Murray deal is a substantial positive, with a more predictable DoD outlook. Defense investors have had their share of bad news around the trajectory of defense spending, starting with the Budget Control Act of 2011, followed by the failure of the…

India’s new government fires investor enthusiasm

Natasha Ebtehadj, Fund Manager, Threadneedle International Limited | September 8, 2014

…their asset quality during the downturn and we anticipate that lending opportunities, particularly in corporate, consumer and infrastructure-related areas, will improve as economic activity accelerates and the new government puts incentives in place to encourage lending. 2. Consumption recovery: We are also targeting companies that should benefit from a recovery in consumer spending, particularly in urban areas where high inflation and a weak eco…

A tale of two labor markets

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | November 11, 2013

…proxy for underlying demand). There is no sign of near term acceleration yet, particularly in light of tempered consumer spending and curtailed business spending. But the lighter fiscal drag alone will pull the trend above 2% next year. If capex kicks in even a modest amount and the labor market advances enough to pull consumer incomes higher, underlying growth trend could move even higher. See more Market Insights from Columbia Management…