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The European Central Bank (ECB) exceeded market expectations by announcing a larger than anticipated program of quantitative easing last Thursday. The ECB has now joined the ranks of the Bank of Japan, the Bank of England, and the Federal Reserve as central banks that have employed the non-traditional policy device in the wake of the financial crisis.
 
With its announcement, the ECB not only embarked on an intensified effort to stimulate the Eurozone economy and lift inflation, but also asserted its independence and put to rest questions about the scope of its mandate, at least in its own eyes. For better or for worse, the bank is now in for a penny, in for a pound – or more accurately, in for a cent, in for a euro.
 



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Once again, it is all about central banks.
 
Last week, the Swiss National Bank shocked everyone by abandoning its three year effort to keep the franc from appreciating against the euro and slowing its export-oriented economy. Its rationale for doing so was perfectly understandable. In light of the ongoing weakness of the euro, the cost of suppressing the franc was becoming increasingly expensive. And in light of expectations that the European Central Bank (ECB) is about to launch a program of quantitative easing, the Swiss strategy threatened to become even more expensive.
 
Central banks change their minds. It happens. But recent statements from officials at the Swiss National Bank strongly suggested the strategy would continue. As a result, many investors were caught off guard, and on the wrong side of the rise in the value of the franc, which surged 20 percent versus the euro immediately following the announcement last Thursday. Even International Monetary Fund Managing Director Christine Lagarde expressed surprise at the news, saying policy coordination is preferred.



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• Bad weather along the West Coast and a rising tide of gift card giving likely weighed on December’s core retail results.

• Overall, consumers still have a lot going for them in the current environment and unless we’ve suddenly become a much thriftier society, people will eventually spend those extra dollars.

• Excluding gasoline sales, retail trends in general are healthy.


 

It would be a mistake, in our opinion, to look at the December retail sales report as an indication of deteriorating consumer trends. Consumers still have a lot of positives flowing in their favor, from rising incomes, to better balance sheets, to much lower energy costs.

Unless we’ve suddenly become a much more frugal society, people will eventually spend their extra dollars as their incomes grow, their costs moderate, and their confidence levels rise, all of which have clearly been occurring.



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With a few notable exceptions, stock markets around the globe have started the year with a pervasively negative tone. Through last Friday, the S&P 500 was fractionally lower, as were the Nasdaq Composite and the Russell 2000. Utility and healthcare stocks have bucked the trend, as have REITs and precious metals, but there are few bright spots elsewhere.

Stocks are also generally lower in Europe, although slightly less so in local currency terms, as the dollar continues to strengthen, or perhaps more accurately in the case of the continent, the euro continues to weaken. In Asia, the picture is a little more mixed. Stocks are slightly higher in Australia, Hong Kong, South Korea and India, but lower in Japan, Taiwan, Singapore and Malaysia.

The rally that drove equity prices higher between mid-October and early December, arguably triggered by expectations of continued central bank largess, has given way to a litany of worries that cumulatively call into question just how effective central banks can and will be.
 



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Now that the slate has been wiped clean and return comparisons have been reset to zero, one question that remains from 2014 is, how important will central bank policy be in determining investment outcomes in 2015? If we ask ourselves – seven years after the start of the Great Recession, and almost six years into the recovery – are the major developed world economies any less in thrall to the influence of central banks, the answer seems to be, no.

Certainly strides have been made across the global economy in the aftermath of the financial crisis, but at varying speeds, and central bank policies are consequently at varying stages. But at the start of 2015, it seems we are as preoccupied with central bank policy as ever.
 
In the U.S., the question revolves around if and when the Fed will first raise the overnight rate, and at what speed will subsequent increases occur? A strong case is to be made that the domestic economy no longer needs the extra stimulus of a zero bound official rate, even if inflation is a little too low for comfort. And if the Fed does initiate rate liftoff, presumably sometime around June, how will markets react? The end of the third round of quantitative easing (QE3) last fall caused barely a ripple.



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MINNEAPOLISDec. 23, 2014 – Ameriprise Financial, Inc. (NYSE: AMP), together with its employees and advisors, donated $12 million and volunteered more than 66,000 hours at nonprofit organizations in 2014. Support from the company and its people will aid programs that help individuals in need and build stronger communities, with particular focus on combatting domestic hunger. In continuation of its national partnership with Feeding America® and through support to hunger-relief nonprofits, Ameriprise has provided the equivalent of 10 million meals for families facing hunger. View More
MINNEAPOLIS – December 30, 2014 – Ameriprise Financial, Inc. (NYSE: AMP) plans to announce its fourth quarter and full year 2014 financial results on Wednesday, January 28, 2015 after the close of the New York Stock Exchange. The company will host a conference call to discuss the results on Thursday, January 29, 2015 at approximately 9:00 a.m. (ET).
 

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MINNEAPOLIS – November 25, 2014 – Ameriprise Financial, Inc. (NYSE: AMP) today announced that Jim Cracchiolo, chairman and chief executive officer, is scheduled to speak about the company’s business and strategy at the Goldman Sachs US Financial Services Conference in New York City on Tuesday, December 9, 2014 at approximately 9:20 a.m. (ET).
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Minneapolis – (November 19, 2014) – For the ninth consecutive year, Ameriprise Financial (NYSE: AMP) has earned 100 percent on the Corporate Equality Index (CEI), a national benchmarking survey and report that measures corporate policies and practices related to LGBT workplace equality. Ameriprise joins 366 major U.S. businesses that received top marks on the 2015 index from a total of 971 participating businesses. View More

Minneapolis(Nov. 13, 2014) – For the fifth year in a row, a surge of volunteers from Ameriprise Financial (NYSE: AMP) will turn out at food banks, warehouses and kitchens all over the U.S. to package and prepare meals for families in need. Beginning at 9:00 a.m. EST tomorrow, Friday, Nov. 14, nonprofits across all 50 states will open their doors to Ameriprise employees, advisors and clients who will roll up their sleeves and get to work at more than 500 events. By the end of the day, the company expects to easily exceed its goal of assembling more than 1 million meals for people in communities from coast to coast.
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