Asset Allocation Reports

Asset Allocation Weekly (July 21, 2017)

by Asset Allocation Committee In the past few years, we have generally avoided allocations to non-U.S. markets for our asset allocation portfolios due to two primary concerns.  First, the dollar was rising as a result of an improving U.S. economy and policy divergences between the U.S. and the rest of the world.  The Federal Reserve was… Read More »

Asset Allocation Quarterly (Third Quarter 2017)

Economic data remain supportive and the inflation outlook is currently benign. Though the economic expansion is elongated, we do not anticipate a near-term recession. Fed policy is expected to tighten in terms of rising short-term rates and the reduction in the size of the Fed’s balance sheet. We expect the Fed to commence the reduction… Read More »

Asset Allocation Weekly (July 14, 2017)

by Asset Allocation Committee One of the mysteries of this expansion has been the slow pace of wage growth.  Despite the plethora of evidence that labor markets are tight, including hires-to-openings ratio below one, low unemployment, low initial claims and a low unemployment rate, wage growth has remained stunted.   The chart below is one we have… Read More »

Asset Allocation Weekly (July 7, 2017)

by Asset Allocation Committee One of the relationships we persistently monitor is the expectations of 10-year Treasury yields compared to the actual level of yields.  To do this, at the beginning of each year, we plot the rate forecasts from the Philadelphia FRB’s Professional Forecaster Survey.  The record of the forecasters has not been stellar. The… Read More »

Asset Allocation Weekly (June 30, 2017)

by Asset Allocation Committee For equity investors, there is always a concern about the major market declines; being able to reduce market exposure prior to crashes like the ones in 2000 or 2008 is always desirable.  Although large declines have occurred outside of economic recessions, they have become increasingly rare.  The last major market pullback absent… Read More »

Asset Allocation Weekly (June 23, 2017)

by Asset Allocation Committee The FOMC did raise rates at the June meeting, which was fully expected.  The dots chart suggested that we would see one more hike this year and three next year.  In addition, the central bank gave some indication of how it would shrink its balance sheet.  Although the statement didn’t signal when… Read More »

Asset Allocation Weekly (June 16, 2017)

by Asset Allocation Committee Last week, the Federal Reserve published its Financial Accounts of the United States report, more commonly called the “Flow of Funds” data.  The report offers a plethora of insights into the economy.  This week we want to examine the household debt situation. In Q1, household debt reached $15.1 trillion, up 3.4% from… Read More »

Asset Allocation Weekly (June 9, 2017)

by Asset Allocation Committee We have been monitoring the S&P 500 performance relative to new GOP administrations.  Based on the historical pattern, the market has reached the average peak level a few weeks early. This chart shows the performance of the S&P 500 on a weekly close basis, indexed to the first Friday of the first… Read More »

Asset Allocation Weekly (June 2, 2017)

by Asset Allocation Committee In the last FOMC minutes, policymakers signaled another hike at the upcoming June 14th meeting.  We continue to closely monitor financial conditions but, so far, financial markets are rather sanguine about the impact of policy tightening. The blue line on the chart shows the Chicago FRB Financial Conditions Index, which measures the… Read More »

Asset Allocation Weekly (May 26, 2017)

by Asset Allocation Committee The dollar is in its third major bull market since currencies began floating in 1971. This chart shows the JPM dollar index which adjusts for relative inflation and trade.  The previous two bull markets exhibited greater strength than the current one.  Because of the dollar’s reserve currency role, there will always be… Read More »

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