Perspectives Blog

Labor markets in the new digital age

Columbia Management, Investment Team | April 14, 2014

…tal to technology which substitutes for (low-skilled) labor. This affords the benefits of lower costs and higher productivity which can keep earnings high. Exhibit 2 Source: BEA, December 2013 The benefits of productivity gains usually come first to capital, and income gaps tend to widen and persist. The benefits to labor come much later—a normal sequence in the evolutionary march of technology. Of course, this usually results in increasing soci…

Quality milestone in the European recovery story

March 17, 2014

…hi and the ECB’s inflation target is that while German wages are currently growing around 2% ahead of underlying productivity growth (so adding two percentage points to inflation), wage growth elsewhere in Europe is barely beating productivity growth, limiting inflationary pressures. This means that given the disinflationary pressure from emerging markets, we foresee a period of low inflation and low interest rates in Europe. Finally, we find the…

M&A in healthcare – Out with the old, in with the new?

Harlan Sonderling, CFA, Senior Healthcare Analyst | March 31, 2014

Recently the market has been quite optimistic about merger synergy promises. History suggests investors should be diligent about analyzing acquirers’ claims around merger benefits and returns. While attractive acquisitions may lie ahead, it is critical to continue to carefully evaluate acquirers’ strategies and claims. The “old” healthcare M&A In the “old days,” pharmaceutical Company A would announce its acquisition of Company B for stock…

Profit margin watch

Tom West, Director of Equity Research | October 13, 2014

Corporate profit margins can come under pronounced pressure from various forms of disruption. Firms need to invest in technology and distribution systems to support customer preferences and stay competitive. The key question is whether a company has adequately invested in next generation products, distribution or true advances in productivity. A mainstay of stock market appreciation over the last several years has been the ability of corporati…

Finding the sweet spots in corporate spending

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

Investors could find opportunity in capital expenditures. Strategic positioning in these areas is key to opportunity. Shale gas and automation are leading the charge in innovation. Cash balances at U.S. non-financials corporations have exploded in the post-crisis era, up 75% since the end of 2007. This is despite a rising return of cash to shareholders in the form of dividends and share repurchases. However, capital expenditures and reinvestme…

Every day is an Amazon delivery day

Paul DiGiacomo, Senior Analyst | December 19, 2013

With the rise of e-commerce, the revenue mix for parcel delivery is shifting from businesses to the consumer. Growth in residential packages helps UPS and FedEx volume but challenges profitability. If Amazon succeeds in disintermediating UPS and FedEx, other large shippers will follow. Recently, Amazon announced that it will partner with the United States Postal Service to deliver goods to its Prime subscribers on Sundays. The company will lau…

To infinity and beyond!

Colin Moore, Global Chief Investment Officer | October 13, 2014

Financial markets are now questioning the time limit on an infinite QE policy and what lies beyond its expiration. While volatility and corrections are unpleasant, they can motivate investors to focus on fundamental issues such as capital investment and labor productivity. The transition from our focus on extraordinary monetary policy may be painful, but it will be worth it. “To infinity and beyond!” is the catchphrase of Buzz Lightyear, the p…