Asset Allocation Quarterly

Asset Allocation Quarterly (Third Quarter 2019)

We maintain our sanguine view of the economy and markets, though it is more guarded than last quarter. We expect the Federal Reserve to implement easier policy in the third quarter, marking its first rate reduction since 2008. In the absence of a recession, which is not in our forecast, the rate reduction should lead… Read More »

Asset Allocation Quarterly (Second Quarter 2019)

The Federal Reserve shifted fully from its hawkish stance at the beginning of the year. We anticipate that the committee will maintain its newly dovish stance with the potential for further monetary accommodation. Though the employment/population ratio has improved, we find it still indicates slack in the labor force, blunting the full impact of wage… Read More »

Asset Allocation Quarterly (First Quarter 2019)

Our expectations are that the U.S. economy will continue to grow, albeit at a more modest pace of 2.7% While we anticipate the current economic expansion will become the longest on record this March, the risk of a downturn rises toward the end of our three-year forecast period We expect the Fed to suspend its… Read More »

Asset Allocation Quarterly (Fourth Quarter 2018)

The U.S. economy is stable and growing, with sentiment indicators remaining high. A recession is not included in our cyclical forecast. The Fed’s tightening policy has thus far had modest effects. We expect a continuation of increases in the fed funds rate in tandem with a reduction of the Fed’s balance sheet. Though unemployment is… Read More »

Asset Allocation Quarterly (Third Quarter 2018)

We expect that Fed policy will continue tightening through year-end, with as many as two additional increases in the fed funds rate in tandem with a measured reduction in the size of the Fed’s balance sheet, but the prospect for a recession is not included in our cyclical forecast. Our expectations are for continued GDP… Read More »

Asset Allocation Quarterly (Second Quarter 2018)

Near-term expectations for earnings growth resulting from the Tax Cuts and Jobs Act of 2017 remain heightened. Continued Fed policy tightening, through measured increases in the fed funds rate and reductions in the size of the Fed’s balance sheet, is not expected to weigh on the economy over the next two years. Our outlook for… Read More »

Asset Allocation Quarterly (First Quarter 2018)

The passage of the Tax Cuts and Jobs Act of 2017 significantly increased our earnings forecast for the S&P 500 for 2018 from $129.82 to $144.84. We do not expect major changes to economic growth stemming from the tax legislation. Fed policy should continue to tighten through increases in the fed funds rate and a… Read More »

Asset Allocation Quarterly (Fourth Quarter 2017)

Our inflation outlook remains benign and economic data continues to be modestly positive. We do not anticipate a recession in the near term. Though the composition of the Fed will change over the next four months, we expect policy to continue toward tightening through increases in the fed funds rate and a reduction in the… Read More »

Asset Allocation Quarterly (Third Quarter 2017)

Economic data remain supportive and the inflation outlook is currently benign. Though the economic expansion is elongated, we do not anticipate a near-term recession. Fed policy is expected to tighten in terms of rising short-term rates and the reduction in the size of the Fed’s balance sheet. We expect the Fed to commence the reduction… Read More »

Asset Allocation Quarterly (Second Quarter 2017)

The economy continues on a stable path, along with relatively low levels of inflation. In this cycle, tighter Fed policy involves not only raising short-term rates, but also reducing the size of the Fed’s balance sheet. The magnitude of growth of the Fed’s balance sheet in recent years was unprecedented. Its reduction is also unprecedented.… Read More »

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