Perspectives Blog

Interest rates in a highly indebted economy

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

…fixed cap on the level of interest rates. Any increase in interest rates must be consistent with tolerable debt service ratios, the existing stock of debt and private sector savings. It’s in this context where Fed officials’ delicate approach to the exit process looks most understandable. The deleveraging constraint Last week the Federal Reserve reported that U.S. households’ mortgage debt service ratio—the share of disposable income dedicated…

Death, taxes and Medicaid expansion

Harlan Sonderling, CFA, Senior Healthcare Analyst | September 8, 2014

…the expensive new hepatitis C medicine. A small minority of Medicaid managed care simply provides administrative services and healthcare provider network access to the state, which assumes all the risk. About 60% of Medicaid enrollees are in managed healthcare plans, with as many as 70% of new enrollees in such plans, both non-profit and for profit. No matter their coverage, newly-insured individuals tend to consume more healthcare services and g…

Specialty pharmaceuticals – The fastest growing category of healthcare spending

Harlan Sonderling, CFA, Senior Healthcare Analyst | January 27, 2014

A complex industry has developed to manage the delivery and costs of the therapeutic innovations in specialty pharma Healthcare payers are focused on managing specialty pharma spending, their most rapidly growing medical cost The accelerating pace of change and disruptive therapeutic advances create significant opportunities across healthcare delivery Pharmaceuticals are central to the effort to improve medical outcomes and control medical cos…

Detroit bankruptcy — One year later

Ty Schoback, Senior Municipal Analyst | August 18, 2014

…dated to carry through with the bond indenture pledge to “levy ad valorem property taxes sufficient to meet debt service, without limit as to rate or amount.” There is no question Detroit’s tax base has suffered significant erosion. However, that argument remains an open question when considering the full terms of the settlement. While 100% of the voter-approved property tax levy for UTGO debt service payments will remain in force, post-bankruptc…

Every day is an Amazon delivery day

Paul DiGiacomo, Senior Analyst | December 19, 2013

…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 launch the program in cities to minimize operating losses, but the spread of Amazon’s warehouses across the country ensures that more and more customers will have Sunday delivery as an option. As Dave Clark, Amazon’s president of customer service, stated, “W…

Labor markets in the new digital age

Columbia Management, Investment Team | April 14, 2014

…certain industries that are less vulnerable (Exhibit 1). It is noteworthy that impacts will be felt across many service industries going forward. McKinsey & 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…

How will California’s drought affect water utility revenue bonds?

Ty Schoback, Senior Municipal Analyst | November 5, 2014

…ly becomes stressed. Several other credit characteristics to review when analyzing a water utility bond include service area demographics, debt service coverage, liquidity, leverage and capital needs. However, we believe the political willingness to adjust rates sufficiently is indicative of how well a water utility’s overall credit strength will be fare. While we generally consider water utility revenue bonds in California to be sound investmen…