Asset Allocation Reports

Asset Allocation Weekly (February 21, 2020)

by Asset Allocation Committee In 2017, we introduced an indicator of the basic health of the economy and added it to the many charts we monitor to gauge market conditions.  The indicator is constructed using commodity prices, initial claims and consumer confidence.  The thesis behind this indicator is that these three components should offer a simple… Read More »

Asset Allocation Weekly (February 14, 2020)

by Asset Allocation Committee The data on U.S. residential real estate has been improving in recent months.  Housing tends to have an outsized effect on the economy.  Not only do housing purchases trigger follow-on buying of consumer durable goods (e.g., furniture and furnishings, etc.) but non-durables as well (e.g., basic household items).  A house is an… Read More »

Asset Allocation Weekly (February 7, 2020)

by Asset Allocation Committee The Commerce Department recently released its first iteration of Q4 GDP.  The overall growth rate, at 2.1%, was mostly on forecast but the composition of the growth showed some unexpected developments.  In this week’s report, we will examine the most interesting changes and what it may be telling us about future economic… Read More »

Asset Allocation Weekly (January 31, 2020)

by Asset Allocation Committee Last week, we updated our thoughts about a melt-up in equity markets.  We observed that retail flows had diverged from equity market performance and noted that if sentiment shifts and retail investors come into equities, the market could rise rapidly to levels that may not be sustainable.  This week, we are dealing… Read More »

Asset Allocation Weekly (January 24, 2020)

by Asset Allocation Committee One of the risks we noted in the 2020 Outlook: Storm Watch was the potential for a “melt-up.”  On the one hand, seeing a parabolic rise in equities seems like a positive.  On the other, a rise of significant magnitude only occurs because of a surge of late buyers; these latecomers usually… Read More »

Asset Allocation Quarterly (First Quarter 2020)

The U.S. election season and the more dovish composition of the Federal Reserve Board of Governors should ensure policy accommodation continues in the near-term. The recent resolution of trade policies with China and the prospect for finalization of USMCA produces an environment where corporate capital can be deployed with less uncertainty. Although we hold a… Read More »

Asset Allocation Weekly (January 17, 2020)

by Asset Allocation Committee The December employment data showed three interesting developments that are worth discussing.  They are wage growth, hours worked and the level of “out of the workforce.” Wage growth:  For most of last year, production and non-supervisory wage growth was outpacing that of overall workers.  This development suggested that ordinary workers were finally… Read More »

Asset Allocation Weekly (January 10, 2020)

by Asset Allocation Committee In our 2020 Outlook, we discussed three risks to the forecast, with one of them being a “melt-up” or a dramatic rise in stock prices.  One of the key factors that could bolster higher prices for risk assets would be the idea that the FOMC has engineered a soft landing, which is… Read More »

Asset Allocation Weekly (December 20, 2019)

by Asset Allocation Committee (N.B.  This is our last Asset Allocation Weekly for 2019.  The next edition will be published January 10, 2020.) Did the Fed engineer a soft landing?  That is the critical question for 2020.  If the Fed, through its rate cuts last year,[1] has rescued the economy, it would be one of the… Read More »

Asset Allocation Weekly (December 13, 2019)

by Asset Allocation Committee The recent employment report was very strong, with payroll growth rising more than forecast and the unemployment rate declining more than expected.  One uncertainty that develops when labor markets tighten is the point at which wage growth begins to lift inflation. This chart shows yearly wage growth and the unemployment rate (inverted… Read More »

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