Perspectives Blog

Interest rates in a highly indebted economy

Zach Pandl, Portfolio Manager and Strategist | October 13, 2014

…rates rise along forward path Another way to look at the deleveraging constraint is through the lens of private sector debt dynamics—a framework more often applied to government finances. Changes in debt ratios are a function of three variables: (1) average effective interest rates, (2) nominal income or GDP growth and (3) the savings rate (or in public sector terms, the budget balance; in either case, excluding interest payments). We again show…

Thoughts on navigating market volatility in today’s technology markets

Rahul Narang, Senior Portfolio Manager | April 28, 2014

…o the continued move towards e-commerce • Pivot of business models towards mobile • Growth in the China Internet sector • Industry consolidation • Content providers with growing abilities to monetize across new mediums So, within this approach, how do we respond to the recent painful move down in certain sectors of the technology space? In particular, cloud software stocks have borne the biggest brunt of the sell-off with many stocks down 40% ove…

Obamacare’s insurance exchanges

Columbia Management, Investment Team | December 9, 2013

…employers to offer a DC health plan outside of an exchange. Lastly, competition won’t be limited to the private sector; when Health-care.gov’s problems are solved, some employers may terminate private exchanges and shift employees to public exchanges. These dynamic shifts in the health insurance exchange markets are likely to persist for years, suggesting elevated risk and reward among the sectors and companies involved….

How bad is China’s credit crisis?

Weili Jasmine Huang, Senior Portfolio Manager | February 3, 2014

…il 2013 San Francisco Fed paper “Shadow banking in China: Expanding Scale, Evolving Structure”) • China’s trusts sector consists of 60 or so trust companies, which are largely owned by agencies of the states. That means the government still has a tight grip of the sector. • Total trust assets are estimated to be Rmb (US$10 trillion), only about 7% of total banking sector assets. Another shadow banking product is wealth management products issued…

Biotech’s beneficiaries: How outsourcing is improving the sector and spreading the wealth

Aaron Reames, Senior Equity Analyst | February 24, 2014

…quarters. Outsourcing offers biotech firms varied advantages, from cost reduction to enhancing credibility. The sector’s success and the outsourcing trend is fueling ancillary businesses, notably specialty REITs, CROs and research tools companies. As biotech indices continue to surpass all-time highs, one must contemplate if there is additional room to run. We continue to believe the sector will outperform the broader markets for at least a few…

Municipal market ghosts of past, present and yet to come

James Dearborn, Head of Municipal Bonds | December 9, 2013

…lose, lose, lose proposition if there ever was one. Ghost of Christmas Present: In so many places, this is where public sector unions and state and local politicians continue to stake out untenable positions regarding the fixes for dealing with looming unaffordable annual contributions to severely underfunded systems. These annual contributions appear poised to swamp budgets, likely resulting in large cuts in public safety, education or other vit…

A tepid cyclical lift

Tom West, Director of Equity Research | April 28, 2014

Cyclical investment and discretionary spending are on track to deliver earnings growth of 7% in the S&P 500. Strength in some consumer durables appears more of a “wallet share” gain than a general lift due to recovering wages or a release of excess savings. Construction and energy are poised for another year of growth, while “enterprise” spending and investment in the tech sector remain challenged. The S&P 500 Index should grow earning…