Perspectives Blog

U.S. rates — The Draghi floor

Zach Pandl, Portfolio Manager and Strategist | September 8, 2014

…om the governing council. Thus, investors should infer the existence of a “Draghi Floor” on inflation expectations—struck at around 2.1% for 5y5y inflation swaps (Exhibit 1). Below this level the ECB will act. Exhibit 1: 5y5y eurozone inflation swap rate So has the ECB done enough? Perhaps not. Unlike the Fed’s use of unconventional monetary policy over the last six years, there was no “shock and awe” moment—something definitively convincing inv…

Inflation — The usual suspects

Zach Pandl, Portfolio Manager and Strategist | August 11, 2014

…2% in 2010 to 0.8% as of the first quarter of this year (unweighted average of gross domestic product (GDP) deflator inflation for the countries shown in the next chart). We think this slowing very likely reflects the second eurozone recession and the resulting increase in slack in labor and product markets. This point comes across most clearly when looking at the differences in inflation across countries. Exhibit 2 shows inflation in the GDP pr…

Global Asset Allocation Outlook (as of February 24, 2014)

Columbia Management Global Asset Allocation Team, | March 10, 2014

…luations in relation to large caps. European countries presented a slightly different picture with core economies such as Germany and France deteriorating, while those on the periphery of the continent improving. Overall, the eurozone declined somewhat on our scorecard as earnings growth weakened. Ever since the speech by European Central Bank President Mario Draghi which promised to do “whatever it takes” to support the monetary union, European…

Emerging Markets: Waiting on exports

Anwiti Bahuguna, Ph.D., Senior Portfolio Manager | March 31, 2014

…oup Part of the reason for the sluggishness of EM exports is the subpar nature of global growth. True, the developed world is recovering, but it has been a weak recovery. U.S. growth has not broken out of the 2%-3% range, the eurozone is no longer contracting but expectations are for growth of only about 1%, and there are questions regarding Japan’s ability to sustain any growth rebound with the advent of the new consumption tax. Global growth ha…

What to make of the rebound in emerging market equities

Dara White, Senior Portfolio Manager | April 14, 2014

…10 and have stagnated at or below zero in recent quarters. The developed world (the core of the export consumer market) is recovering, but it has been an anemic recovery. U.S. growth has not broken out of the 2%-3% range, the eurozone is no longer contracting but expectations are for growth of only about 1%, and there are questions regarding Japan’s ability to sustain any growth rebound with the introduction of the new consumption tax. So EM grow…

Harvesting a New Moderation in Asia

Soo Nam Ng, Head of Asian Equities | June 23, 2014

…ex Japan Index tracks the performance of equity securities in eleven countries in Asia, excluding Japan and taking into account local market restrictions on share ownership by foreigners. The EURO STOXX 50 is a stock index of Eurozone stocks designed by STOXX, an index provider owned by Deutsche Börse Group and SIX Group. International investing involves increased risk and volatility due to potential political and economic instability, currency f…

January asset allocation update

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | February 3, 2014

…attractiveness of U.S. equities. Instead, we opt for more geographic diversification and find better valuations in select markets abroad. While short-term valuations have run up recently, we continue to favor both the UK and eurozone on better economic momentum. In addition, we maintain our strong overweight to Japan as we see both favorable monetary and macro conditions continuing. EM equities present a challenge. While global liquidity and val…