Perspectives Blog

Income inequality, disinflation and profit growth – the role of globalization

March 10, 2014

…l profits are around 7.3% of gross domestic product (GDP) — around 1.6% above their long-term average — total profits generated by U.S.-based firms outside the United States (shown in Exhibit 2) has risen from less than 1% of GDP to around 2.5% of GDP. Exhibit 2: Profits generated outside the U.S. by U.S. firms as % of U.S. GDP Source: Bureau of Economic Analysis, Threadneedle, September 2013 The economic, policy and investment implications are…

U.S. growth — better than most estimates

Zach Pandl, Portfolio Manager and Strategist | September 6, 2013

…owth rates edged up to 2.6% from 2.2% last month. As many of you know, the current narrative in the market about U.S. growth is significantly more downbeat than the message from our indicator. This reflects a greater focus on GDP by most analysts. While I think 3.4% probably overstates current growth momentum, I also believe the economy is doing better than the sub-2% growth rates seen in GDP bean counts from the street. Columbia Management Activ…

Signs point to an improving U.S. economy

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | December 9, 2013

Data shows economy is improving Job growth is continuing GDP is not as good as the report would make you think The first week in December was a data goldmine for anyone hoping for news that the economy maintained momentum through the early autumn government distortions. The payroll report continued to post moderate and steady payroll gains consistent with a sustained improvement in labor markets. The interruption from the government shutdown i…

A tale of two labor markets

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | November 11, 2013

…t from the shutdown, and much depends on where the participation rate settles in the next few months. This leaves me thinking the Fed will also wait and allow the foggy labor data to clear. One final note on the third quarter GDP report released this week. The advance reading of 2.8% was flattered by an inventory build which will likely reverse next quarter. The inventory contribution is always a potential swing factor and often overstates growth…

Is Japan’s economic rebound for real?

Daisuke Nomoto, Senior Portfolio Manager | May 23, 2013

…h “Abenomics” and “Shock and Awe Easing” have had a positive effect in that the bold monetary easing has resulted in a shift in sentiment that the Japanese economy will finally come out of the long, dark tunnel. First quarter GDP came in ahead of market expectations at an annualized rate of 3.5%. However, the demand deflator (the amount of GDP growth attributed to price changes) suggests that inflation is still conspicuously absent. Despite weak…

European equities – Should investors care about periphery vs. core anymore?

Dan Ison, Portfolio Manager | January 13, 2014

…certainly hinders Italy’s ability to reform. I am often reminded that despite being the world’s 8th largest economy, Italy hasn’t grown in more than a decade. While the UK has likely enjoyed the strongest European GDP growth in 2013, her equity market has lagged many of the major markets in Europe. Here we find a simple explanation — market structure. With 25% of the UK market comprising commodities and oil, and a further 28% in defen…

What should U.S. bond investors expect in 2014?

Zach Pandl, Portfolio Manager and Strategist | January 6, 2014

…nd half growth rate of 3.25% would be significantly higher than forecasters expected just a few months ago. Our proprietary measure of U.S. economic growth—which is based on a broader set of data than those used to calculated GDP—also shows growth of more than 3% in recent months. If this brisk pace continues, investors should expect further increases in longer-term interest rates. At the moment, the yield curve is being anchored down by what Fed…