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…

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…

Fixed income outlook: From liquidity to growth

Gene Tannuzzo, CFA, Senior Portfolio Manager | July 10, 2013

Bond market performance weakened following Fed comments on tapering QE. Over the next couple of quarters, we expect a transition from a market priced for liquidity to one priced for growth. We believe markets will eventually begin to focus less on the Fed and more on the fundamentals of a slowly improving global growth story. Global bond markets have been under siege for much of the past two months. Looking back to April, the bond market, in o…

U.S. rates — play for growth

Zach Pandl, Portfolio Manager and Strategist | December 10, 2013

More signs that U.S. growth is accelerating; with 7% unemployment rate, look for qualitative communication changes at next FOMC meeting. Higher odds of December taper but we still think January is more likely (with possible hint in December press conference). We wonder whether front-end rates can remain anchored as growth picks up. The November employment report brought more positive news on U.S. activity, with a healthy gain in nonfarm payrol…

Looking for diversification in emerging markets

Columbia Management, Investment Team | July 30, 2013

Emerging markets have become a significant component of the global economy, with higher GDP growth rates compared to developed markets. The wide range of local conditions and growth drivers present in emerging markets makes them particularly interesting as a diversifier for investors already exposed to developed markets. We believe that, for diversification, investors should consider small-mid cap emerging markets investments. By the Columbia…

The bean counting on second quarter GDP

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | July 25, 2013

Second quarter GDP data looks soft, including a wider trade deficit and cuts in government spending. Positive factors include steady consumer spending and upcoming changes in the way GDP will be calculated. Growth is poised to improve in the second half, but the Fed’s models and forecasts seem overly optimistic. Final second quarter GDP data reports are trickling in, putting the footprint of economic growth into focus. It looks soft, weighed d…

Why GDP deserves less attention

Zach Pandl, Portfolio Manager and Strategist | August 12, 2013

In our view, gross domestic product (GDP) data are deeply flawed. To form a more accurate assessment of the economy, investors should include other measurements, such as gross domestic income. Official GDP growth was relatively soft in the first half of this year, but the broader set of activity data suggests the U.S. economy is doing just fine. Before joining Columbia Management I worked for several years as an economist at a few of the large…