Asset Allocation 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 weekly basis in a special section within our Daily Comment report, updating the piece every Friday.

Asset Allocation Weekly (September 21, 2018)

by Asset Allocation Committee In this week’s report, we will focus on the U.S. economy.  Since the 1987 crash every major equity market decline has coincided with a recession.  Thus, we pay close attention to the economy with the goal of projecting the next recession. This expansion, which began in June 2009, is now the second… Read More »

Asset Allocation Weekly (September 14, 2018)

by Asset Allocation Committee Emerging markets have fallen in recent weeks.  The decline is being driven by a couple of factors.  First, the dollar has appreciated due to concerns that tariffs will restrict foreign country access to the U.S. consumer and the dollars they spend.  In other words, if the U.S. restricts trade, countries will struggle… Read More »

Asset Allocation Weekly (September 7, 2018)

by Asset Allocation Committee Traditionally, the election season kicks off with Labor Day so, with last Monday’s holiday, the election cycle is upon us.  The midterm election year tends to be lackluster for equities until Q4, when a strong rally usually develops. The data for this chart is developed by taking the weekly closes for the… Read More »

Asset Allocation Weekly (August 31, 2018)

by Asset Allocation Committee In light of the recent conviction of Paul Manafort and the guilty pleas by Michael Cohen, along with the upcoming midterm elections, we have been receiving questions about the political landscape going into winter.  In this report, we will discuss our baseline expectations for political trends and their potential effect on financial… Read More »

Asset Allocation Weekly (August 24, 2018)

by Asset Allocation Committee What is price stability?  The working definition for the Federal Reserve was crafted by Alan Greenspan in 1994, when he suggested that price stability has been achieved when “…households and businesses need not factor expectations of changes in the average level of prices into their decisions.”[1]  In other words, a central bank… Read More »

Asset Allocation Weekly (August 17, 2018)

by Asset Allocation Committee Last week, the Bureau of Labor Statistics released the CPI data for July.  Inflation continues to rise; the overall rate rose 2.9% and the closely watched core rate (the rate less food and energy) rose to 2.4%, the highest rate since September 2008.  Rising inflation raises policy concerns.  In this week’s report,… Read More »

Asset Allocation Weekly (August 10, 2018)

by Asset Allocation Committee Last year, 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 with 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 Weekly (August 3, 2018)

by Asset Allocation Committee At the end of June, we published a study of how the equity and bond markets reacted to the inversion of the yield curve.  This week’s report takes that inversion data and compares it to how the 10 sectors of the S&P 500 perform.[1]  For this report, we will use the two-year/10-year… Read More »

Asset Allocation Weekly (July 27, 2018)

by Asset Allocation Committee Last week, in a wide-ranging interview on CNBC,[1] President Trump ended a 25-year détente with the Federal Reserve, openly criticizing the current path of monetary policy.  The president followed up the interview with numerous social media tweets, further criticizing policy tightening. Although it’s been a long time since a president weighed in… Read More »

Asset Allocation Weekly (July 20, 2018)

by Asset Allocation Committee Although earnings are rising, equity markets have been range-bound since February. This chart shows the S&P 500; after peaking around 2870, prices have been in a range roughly from 2600 to 2800.  Although monetary policy tightening is partly to blame, the Fed was lifting rates during the period when the market was… Read More »

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