Asset Allocation Reports

Asset Allocation Weekly (November 8, 2019)

by Asset Allocation Committee The Federal Reserve, in its Financial Accounts of the United States database,[1] has created a Distributional Financial Accounts sub-database that measures household wealth by percentile groups.  The data is only reported in four broad categories (Top 1%, 90% to 99%, 50% to 89%, and bottom 50%) and has a fairly short history,… Read More »

Asset Allocation Weekly (November 1, 2019)

by Asset Allocation Committee We continue to hold a favorable outlook toward gold despite evidence that current prices may be getting a bit ahead of themselves.  Our gold model puts fair value at 1391. In the coming months, we expect the fair value to rise; both the ECB and the Federal Reserve have resumed expanding their… Read More »

Asset Allocation Weekly (October 25, 2019)

by Asset Allocation Committee For nearly two years, the energy sector has dramatically underperformed the overall equity market and oil prices. This chart shows our S&P energy sector model.  We regress the overall S&P 500 and oil prices against the energy sector.  For most of the index’s history, these two variables explained much of the behavior… Read More »

Asset Allocation Weekly (October 18, 2019)

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 Quarterly (Fourth Quarter 2019)

The U.S. Federal Reserve and other central banks are expected to continue their accommodative postures, especially considering issues stemming from trade impediments. While we retain a relatively sanguine view of the U.S. economy over our three-year cyclical forecast period, we recognize there is increased potential for an economic downturn. Each strategy reflects a more neutral… Read More »

Asset Allocation Weekly (October 11, 2019)

by Asset Allocation Committee The financial markets have been roiled recently by the apparent shortage of liquidity in the repo markets.  Our take is that the problem is twofold—there are regulatory problems that mean the banking system requires more in reserves than it did prior to the Great Financial Crisis, and there are likely industry concentration… Read More »

Asset Allocation Weekly (October 4, 2019)

by Asset Allocation Committee Although the convention for measuring earnings is compared to shares, Standard and Poor’s also calculates the level of operating earnings for all the stocks in the S&P 500. The per-share value is calculated by dividing this number by the S&P divisor.  The advantage of this number versus the per-share data is that… Read More »

Asset Allocation Weekly (September 27, 2019)

by Asset Allocation Committee Over the past few months, we have been on “recession watch.”  Our position is that the odds of a downturn are elevated but it is too soon to fully position for a downturn.   The inversion of yield curves is a reliable recession warning.  On the other hand, the economic data continues to… Read More »

Asset Allocation Weekly (September 20, 2019)

by Asset Allocation Committee Interest rates have increased since early September. The 10-year T-note yield dipped to 1.45% in early September but has risen strongly since then.  What has prompted this rise?  Some of the rise appears to be caused by a revaluation of the path of monetary policy. The chart on the left shows the… Read More »

Asset Allocation Weekly (September 13, 2019)

by Asset Allocation Committee In recent reports, we have discussed the yield curve and its value in signaling the business cycle.  One of the problems for investors with using the various permutations of the yield curve as a signaling device is that it gives such early warnings that it may not be all that useful. This… Read More »

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