Asset Allocation Bi-Weekly

Confluence Investment Management offers various asset allocation products which are managed using “top down,” or macro, analysis. We publish asset allocation thoughts on a bi-weekly basis, updating the piece every other Monday.

Asset Allocation Bi-Weekly – The Devil Is in the Details (August 8, 2022)

by the Asset Allocation Committee | PDF U.S. policymakers used deregulation and globalization to corral inflation from 1966 to 1982.  Unfortunately, that policy was at odds with America’s superpower role, which required the U.S. to act as global importer of last resort.  If the U.S. didn’t consume all the goods the world wanted to sell… Read More »

Asset Allocation Bi-Weekly – The Puzzle of the Labor Force (July 25, 2022)

by the Asset Allocation Committee | PDF In the June 27 report, we discussed the idea that the FOMC may focus on reducing job openings rather than raising the unemployment rate as a way to ease labor-market tightness.   The consensus from the establishment survey portion of the June payroll report, which questions employers, was that… Read More »

Asset Allocation Bi-Weekly – The ECB Dilemma (July 11, 2022)

by the Asset Allocation Committee | PDF When the Eurozone project began, investors assumed that the credit risk for individual countries would be shared equally among the group’s members. This notion unraveled after the collapse of Lehman Brothers set off a chain of events that triggered the European Sovereign Debt Crisis in 2010. As the… Read More »

Asset Allocation Bi-Weekly – The Selling of Austerity (June 27, 2022)

by the Asset Allocation Committee | PDF Politics is the art of the possible… — Otto Von Bismarck Although there have been attempts to treat it as a science (hence the study of political science), the necessary art of politics is to convince people to accept policies that may be contrary to their best interest. … Read More »

Asset Allocation Bi-Weekly – Homebuilders Versus Apartment Builders (June 13, 2022)

by the Asset Allocation Committee | PDF After two years of press reports about skyrocketing home prices, we assume investors are well aware that the housing market has been hot.  However, “housing” includes at least two main asset types: single-family homes and apartment properties.  A deep dive into the data reveals significant differences between these… Read More »

Asset Allocation Bi-Weekly – The Problem of Financial Conditions (May 31, 2022)

by the Asset Allocation Committee | PDF Among the financial pundit class, there has been a growing call to weaken financial conditions.  What are financial conditions?  They include credit spreads, the level of interest rates, the level of equities, the level of market volatility, the dollar’s exchange rate, etc.  Weaker financial conditions mean that borrowing… Read More »

Asset Allocation Bi-Weekly – The FOMC Speaks (May 16, 2022)

by the Asset Allocation Committee | PDF On May 4th, the FOMC announced its policy changes.  The Fed moved its fed funds target by 50 bps, the fastest increase in 22 years; the last hike of this amount was in May 2000.  In the press conference, Chair Powell scotched the notion of a greater than… Read More »

Asset Allocation Bi-Weekly – The Tale of Two Surveys (May 2, 2022)

by the Asset Allocation Committee | PDF The Conference Board Survey of Consumer Confidence and the University of Michigan Survey of Consumer Sentiment are two closely followed reports about the American consumer. Domestic consumption makes up about two-thirds of the U.S. economy, so insights into consumer attitudes may predict changes in the business cycle. The… Read More »

Asset Allocation Bi-Weekly – The Bank of Japan Cocks the Trigger (April 18, 2022)

by the Asset Allocation Committee | PDF In Hollywood movies, the classic device to convey a menacing threat is to have the tough-guy cop pull back the hammer on his revolver and cock the trigger.  It’s not enough that the cop just points his gun at the criminal.  Once you hear that “click,” you know… Read More »

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