Perspectives Blog

Gaps, not growth

Zach Pandl, Portfolio Manager and Strategist | February 25, 2014

Monetary policy is primarily about “gaps” not growth: the Fed is trying to reduce spare capacity in the economy, not bring about a rapid expansion per se. Despite concerns over cyclical weakness in labor force participation, the unemployment rate is sending similar signals as most other output gap proxies. The output gap improved despite a relatively slow expansion, suggesting weak potential growth. While it’s far too soon to revise any medium…

Scarce growth – Can the tortoises continue to outpace the hares?

Robert McConnaughey, Director of Global Research | May 19, 2014

Recent selloff has tested stance that investors would benefit from seeking scarce growth, so long as that growth did not become wildly overvalued. We appear to be moving into a “sorting out” stage where investors begin to more granularly assess both the fundamentals and the incremental opportunities. Patience and tolerance for ongoing bouts of volatility are crucial, but we believe that investors who focus on the underlying fundamentals will ul…

October — It always seems to happen in October!

Ted Truscott, CEO, Global Asset Management | October 20, 2014

Markets are now asking what happens if growth slows again in the U.S. and/or weak and slowing growth in Europe, Russia and China drags down U.S. and U.K. growth? The stock market downturn is a reaction to changes in growth expectations and the volatility of that growth. Market assumptions for steady growth did not necessarily account for all the other risks. While we continue to see equities as an important pillar of longer term allocation stra…

Are financial markets priced for secular stagnation?

Columbia Management, Investment Team | December 15, 2014

…istent with some probability of secular stagnation, and could therefore still deliver generous returns if global growth recovers. By Toby Nangle, Head of Multi Asset Allocation and Zach Pandl, Portfolio Manager and Strategist The idea that economies may be undergoing a long period of slow growth has been attracting an increasing amount of attention. Data shows fairly definitively that potential growth has been low for a number of years, includin…

Emerging Markets: Waiting on exports

Anwiti Bahuguna, Ph.D., Senior Portfolio Manager | March 31, 2014

Exports by emerging market economies are the most important factor in explaining long-term growth. EM exports have remained sluggish for the past three years due in part to the subpar nature of global growth. As emerging markets struggle to overcome the challenges to their growth story, the EM landscape will likely face significant challenges ahead. Equity markets in the developed world did very well in 2013 while the picture was far more mixe…

Bond yields are too low somewhere

Zach Pandl, Portfolio Manager and Strategist | July 14, 2014

…forward rates are not just a U.S. phenomenon: there’s been a similar shift in the relationship between rates and growth across developed markets. If global rates remain persistently low, financial conditions will eventually need to tighten in other ways to offset this unexpected stimulus. The big surprise in bond markets this year has been the low level of long-maturity rates despite continued economic growth. To see these changes most clearly i…

Harvesting a New Moderation in Asia

Soo Nam Ng, Head of Asian Equities | June 23, 2014

Companies with competitive strengths still intact should have positive profit growth once adaptive change gets underway. The ability to control cost is essential to surviving the growth slowdown in Asia Pacific ex Japan. We do not just need companies to be adapted; we also need them to be positioned for adapting. A New Moderation in Asia In my previous article, I argued that conditions are in place for the slowdown in Asia to evolve into a sus…