Perspectives Blog

Special report – 2014 mid-year review and outlook

Columbia Management, Investment Team | June 16, 2014

…imism about the global economic recovery, as well as easy monetary policy from the Federal Reserve, European Central Bank and Bank of Japan. Outlook: The U.S. economy has made considerable progress in the five years since the recession ended. Inflation, unemployment and broader measures of labor utilization have all moved closer to the Federal Reserve’s targets. Against this macroeconomic backdrop, interest rates in most developed markets look un…

Missing links and multipliers

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | June 9, 2014

Several forces are colliding now and causing a downshift in the trajectory of the U.S. housing recovery. Household formations remain at multi-year lows due in large part to mediocre income and job gains in combination with high student loan debt by 25 – 45 year old homebuyers. Fewer homeowners mean missing multipliers for growth. As a result, housing will prove less of an accelerator for economic growth in the period ahead. Having witnessed a…

What to make of the rebound in emerging market equities

Dara White, Senior Portfolio Manager | April 14, 2014

…s the market is getting excited a little too early about the prospects of change. With reservoir levels running at historic lows, the country will very likely face energy rationing, which may push the economy into a technical recession. Finally, valuations are not as cheap as they might first appear at 10x earnings and 1.5x book value. If you take a closer look at the index constituents and exclude the Chinese banking and Russian energy sectors w…

U.S. rates — play for growth

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

…e level of the unemployment rate and total job gains. After the meeting policymakers added the condition that tapering required “convincing evidence that progress will continue”. Because we doubt officials are worried about a recession, we took this communication to mean that tapering could only occur in the context of “fast growth”. With Q4 GDP growth tracking below 2%, we suspect officials will still not see enough evidence to begin the process…

Labor market takes center stage

Zach Pandl, Portfolio Manager and Strategist | October 15, 2013

…conomic fluctuations—by stabilizing real activity. I thus translate the ‘maximum employment’ proviso of the Federal Reserve Act as a mandate for the Fed to lean against the wind, stimulating the economy when the economy is in recession or unemployment is clearly in excess of the NAIRU (the non-accelerating inflation rate of unemployment—the minimum rate of unemployment consistent with stable inflation), and restraining the economy through tighter…

The Fed’s decision tree

Zach Pandl, Portfolio Manager and Strategist | October 8, 2013

…l need to wait for more communication to get a clearer picture on the direction for policy. For the time being we are thinking about the QE outlook as a simple decision tree as shown in the diagram (for simplicity we ignore a recession scenario). If incoming data appear strong over the next few months, we think the outlook for QE would be straightforward: the Fed would begin to taper at the December or January FOMC meeting. This would certainly b…