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 Weekly (December 15, 2017)
by Asset Allocation Committee Last week, the Federal Reserve released its Financial Accounts of the United States, formerly called the Flow of Funds report. It is a broad set of data that covers many aspects of the economy. Here we present some key charts from the report. This chart shows key private sector debt as a… Read More »
Asset Allocation Weekly (December 8, 2017)
by Asset Allocation Committee We have received a number of requests to update our S&P 500/Fed balance sheet model. This chart shows the results from our S&P 500/Fed balance sheet model. We have projected the model’s forecast using the expected path of balance sheet reduction. It shows that the equity index tended to follow monetary policy… Read More »
Asset Allocation Weekly (December 1, 2017)
by Asset Allocation Committee Given the length of the current expansion, there is growing concern about the economy’s ability to avoid recession. So far, none of our indicators suggests the economy is near a downturn. Of all the indicators we monitor, the yield curve is the most reliable; however, there are potentially dozens of iterations of… Read More »
Asset Allocation Weekly (November 17, 2017)
by Asset Allocation Committee [Ed note: We will not publish an Asset Allocation Weekly Comment the week of November 24. The next comment will be published December 1.] Over the past three weeks, we have seen a rise in the yields on high-yield bonds. The Merrill Lynch High Yield bond effective index is up 40 bps… Read More »
Asset Allocation Weekly (November 10, 2017)
by Asset Allocation Committee Last week, we discussed our views of the debt markets. However, one item we didn’t examine was the dynamics of the yield curve. The U.S. Treasury market has both a domestic and an international component. While all sovereign debt markets have a domestic component, the international component is especially a factor for… Read More »
Asset Allocation Weekly (November 3, 2017)
by Asset Allocation Committee The 10-year Treasury yield has recently been trending upward. Since early September, yields have risen from 2.06% to 2.46%. What’s behind this rise and do we expect it to continue? We use our 10-year T-note model for guidance. It estimates the fair value level of the 10-year T-note yield based on the… Read More »
Asset Allocation Weekly (October 27, 2017)
by Asset Allocation Committee It is expected that over the next two weeks President Trump is going to appoint a new Federal Reserve Open Market Committee (FOMC) chair and vice chair. In this report, we will build scenarios of how policy could change depending upon whom the president appoints. This spreadsheet details our estimate of policy… Read More »
Asset Allocation Weekly (October 20, 2017)
by Asset Allocation Committee The Financial Accounts of the United States (formerly known as the Flow of Funds Report) is published by the Federal Reserve and provides data on the level of financial assets and liabilities by sector. Using this data, we can approximate the average asset allocation of American households over different periods. This accounting… Read More »
Asset Allocation Weekly (October 13, 2017)
by Asset Allocation Committee With the S&P making new highs almost daily, it is probably a good time to look at long-term trends to build some parameters. This is a simple trend chart of the S&P 500 Index. We have log-transformed the weekly Friday closes of the index data and regressed it against a time trend. … Read More »