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…

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…

U.S. rates — play for growth

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

200k (193k this month), and the payroll diffusion indexes pointed to a broadening of gains. We were also encouraged to see a further acceleration in construction and manufacturing employment. It bears mentioning that even the large rebound in household employment leaves the three-month average gain at just +72k. The participation rate also failed to recover all of last month’s large decline, suggesting that some of the weakness reflected more tha…

Fixed income outlook: From liquidity to growth

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

the first half of 2013, in which the Fed begins to provide the roadmap for its eventual exit from unprecedented stimulus. The market reaction has been quick and violent, but we believe this change of course by the Fed is now largely priced in. We believe the most likely next step may also be the one the market is not expecting: Growth. In the U.S., we must remember that the Fed is talking about tapering QE because they believe the economy can ha…

The bean counting on second quarter GDP

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

o with changes in the way GDP will be calculated. It will now include intellectual property as a sub-category of private investment. This will entail counting R&D, entertainment, and artistic and literary contributions as capital investment. Additionally, there will be a switch from cash to accrual accounting for defined benefit pension obligations, which should increase personal income measures and the savings rate. These are comprehensive r…

Opportunities in the middle ground

Columbia Management, Investment Team | July 2, 2013

some look to small-company stocks, which offer the potential for even more growth over time, though with increased short-term volatility. But the medium-sized companies in between – generally in the $2 billion and $10 billion capitalization range — are often overlooked by investors. Mid-cap companies have made it past the less stable start-up period, but are not yet fully mature. And while they may not yet be the established powerhouses of…

Why GDP deserves less attention

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

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 broker-dealers in New York. One of my primary functions was to maintain an ongoing estimate of growth in the nation’s GDP—a so-called GDP “bean count.” Most investors use GDP as their primary summary measure of overall…