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 Federal Reserve’s Big Policy Mistake (September 19, 2022)
by the Asset Allocation Committee | PDF If you look at how stocks and other risk assets have lost value since Fed Chair Powell’s short, hawkish speech at Jackson Hole last month, it’s clear he has succeeded in resetting expectations for monetary policy. Investors now seem to accept that the Fed plans to hike interest… Read More »
Asset Allocation Bi-Weekly – Storm Warning (September 6, 2022)
by the Asset Allocation Committee | PDF Throughout this year, there has been much talk (and confusion) about recession. Officially, the National Bureau of Economic Research is the formal arbiter of recession. This private group of economists assesses when there is a broad-based decline in economic activity and when that activity recovers. It then tells… Read More »
Asset Allocation Bi-Weekly – The Inflation Surprise (August 22, 2022)
by the Asset Allocation Committee | PDF July inflation came in below expectations. On a yearly basis, the market expected an overall rate of 8.7%, while the actual reading was 8.5%. For core CPI, the actual was 5.9% compared to expectations of 6.1%. Perhaps the most bullish part of the report was the monthly change,… Read More »
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 »