Perspectives Blog

The Yellen Fed

Zach Pandl, Portfolio Manager and Strategist | October 9, 2013

President Obama to nominate Janet Yellen for Fed Chair. Yellen has strongly supported the Fed’s unconventional easing measures in recent years, and we expect that her nomination will therefore be interpreted as favorable to duration and carry trades. Yellen has described an “optimal control” framework, which could indicate a coming revision to the current structure of the FOMC’s forward guidance. According to press reports, Preside…

Capture five tax benefits with a 529 college savings plan

Columbia Management, Investment Team | March 21, 2014

By contributing to a 529 plan, you may benefit from tax advantages — without giving up control of plan assets. As an estate planning tool, 529 plans may allow removal of significant assets from your taxable estate. Investment growth in a 529 plan, as well as distributions, is not subject to the new 3.8% net investment income surtax. Owning a home. A financially secure retirement. A college education for a child or grandchild. These are a…

U.S. rates – Headwinds

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

…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 gap from closing? A holistic view of policy should take into account all the other headwinds and tailwinds that drive the economy—it would not only consider the left side of the diagram above. Look…

Labor market takes center stage

Zach Pandl, Portfolio Manager and Strategist | October 15, 2013

…len’s basic framework is close to the mainstream, she comes down on the cautious side of current labor market debates. Plus, her policy bias generally tends toward the side of greater activism (see our earlier note on optimal control, for example). As a result, Yellen’s nomination likely raises the bar for Fed tightening, as long as inflation remains low. Related reading: “Optimal Control,” Global Perspectives The Yellen Fed See more Market Ins…

China’s reform announcement

Timothy Flanagan, Associate Portfolio Manager | November 21, 2013

…hould not upset the applecart in the short term. We believe the biggest reform drags will be on investment while consumption will see the biggest gain. *Easing of the “hukou” system: The country will relax overall control over farmers settling in towns and small cities, and relax restrictions on settling in medium-sized cities in an orderly manner. China should set reasonable requirements for rural residents to obtain hukou in large c…

Gifting strategies with 529 plans

Columbia Management, Investment Team | December 3, 2013

529 college savings plans allow parents and relatives to implement advanced gifting strategies. Contributions can be prorated over five years without incurring federal gift tax consequences. With a 529 plan the account owner maintains control of the assets in the account even though contributions are considered completed gifts. Parents and relatives can benefit from advanced gifting strategies available only with 529 plans. With the current an…

Finding the sweet spots in corporate spending

Robert McConnaughey, Director of Global Research | February 24, 2014

…ins farther from here and pressures from increasingly emboldened activist investors to return cash at an accelerated pace, there is an inevitable need to reinvest in one’s business. Driving earnings growth solely through cost control and shrinking the share base has some natural limits. Businesses that fail to keep pace with change, risk market share loss and revenue declines. Conversely, with borrowing costs low and many businesses still draggin…