Perspectives Blog

Are municipal bond rating agencies shifting the goalposts (again)?

Columbia Management Municipal Investment Team, | September 30, 2013

…encies’ weighting of credit fundamentals. Given public rating and subsequent price volatility, thorough and independent credit research has become critically important for municipal bond investors. By Ty Schoback and Michael Taylor, Senior Analysts, Tax-Exempt Fixed-Income Research It has been just over three years since Moody’s and Fitch Ratings upgraded en masse, or “recalibrated,” tens of thousands of state and local government general obliga…

Puerto Rico’s double-downgrade

Michael Taylor, Senior Municipal Analyst | February 10, 2014

What’s behind the downgrade of Puerto Rico’s credit ratings by Standard & Poor’s and Moody’s? The double-downgrade puts pressure on Puerto Rico to shore up its finances in the coming weeks A future default or debt restructuring could rattle investor confidence and impact all municipal market issuers On February 4, Standard & Poor’s lowered its long-term credit rating on the Commonwealth of Puerto Rico’s (PR) general obligat…

Labor markets in the new digital age

Columbia Management, Investment Team | April 14, 2014

…Company consultants believe future productivity gains will significantly disrupt clerical and professional service jobs. Exhibit 1 Source: The Future of Employment: How Susceptible Are Jobs to Computerisation?, Carl Frey and Michael Osborne, September 2013 The rewards of this innovation fall disproportionately to business at first, as capital is substituted for labor particularly in low and middle-skill industries. In the last few decades, labor…

U.S. rates – Headwinds

Zach Pandl, Portfolio Manager and Strategist | March 17, 2014

…it standards, household balance sheet stress and capital market regulation (financial headwinds could be thought of as affecting the output gap directly or as impairing the transmission mechanism). Simple benchmarks like the Taylor Rule only consider the size of the output gap (and inflation gap) to determine the stance of policy. But what does it mean to say that monetary policy is “easy” if factors outside the Fed’s control prevent the output…

Building wealth through dividend investing

February 18, 2014

…h-quality companies that can sustain and grow their dividend over time. Higher quality stocks act to mitigate risk and offer downside protection during times of market stress. By Scott L. Davis, Senior Portfolio Manager, and Michael S. Barclay, CFA, Senior Portfolio Manager How can investors build wealth over time and consistently grow income in a relatively low risk equity strategy? We believe a disciplined dividend strategy that focuses on ris…

Predatory trading – Just how big an issue is high-speed trading?

Matt Waldner, Head of U.S. Equity Trading | April 7, 2014

…gement will continue to implement tools to protect our clients’ best interests. High-frequency trading (HFT) is a topic institutional investors and traders have been battling for years. A new book titled Flash Boys by author Michael Lewis of Moneyball fame, investigations out of U.S. regulators and a 60 Minutes spot on a recently developed exchange, IEX, brought this topic from Wall Street to Main Street. In this article, we’ll take a walk aroun…

U.S. rates — Data dependence

Zach Pandl, Portfolio Manager and Strategist | June 23, 2014

…ecasts, central tendency (%)  Exhibit 3: FOMC funds rate forecasts, central tendency (%) We can use these forecast changes to measure the degree of the Fed’s data dependency and compare them to some normal standard like the Taylor Rule. From December to June, the central tendency forecast for the 2015 unemployment rate declined by 40 basis points, and the central tendency forecast for the funds rate rose by 20 basis points. This implies a coeff…