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 18, 2020)

by Asset Allocation Committee | PDF In June, we published a WGR on the EU’s decision to issue a Eurobond, a financial instrument backed by the full faith and credit of all the member states of the European Union.  One of the reasons the U.S. dollar remains the global reserve currency is because the world… Read More »

Asset Allocation Weekly (September 4, 2020)

by Asset Allocation Committee | PDF (NB: Due to the Labor Day holiday, the next report will be published on September 18.) The U.S. economy is driven primarily by consumer spending.  In 2019, for example, personal consumption expenditures on goods and services accounted for 67.9% of U.S. gross domestic product (GDP).  For the economy to… Read More »

Asset Allocation Weekly (August 28, 2020)

by Asset Allocation Committee | PDF As people think about the supplemental federal unemployment benefit of $600 per week that was in place through July, most would assume that if the total benefits exceed a person’s actual wages, they will choose to be unemployed instead of accepting employment. Anecdotal reports suggest that companies are running… Read More »

Asset Allocation Weekly (August 21, 2020)

by Asset Allocation Committee | PDF One of the relationships we monitor is retail money market levels (RMMKs).  In theory, any available liquidity could conceivably end up purchasing equities.  But, RMMKs are used by investors in their brokerage accounts and thus are probably “closer” to equities compared to other forms of “near money,” such as… Read More »

Asset Allocation Weekly (August 14, 2020)

by Asset Allocation Committee | PDF Precious metals prices have risen recently, making new highs. This is a monthly chart for the nearest gold futures contract.  As the chart shows, we have recently moved above the 2011 highs.  In this report, we will discuss two areas that have supported this rise—the prevalence of negative real… Read More »

Asset Allocation Weekly (August 7, 2020)

by Asset Allocation Committee | PDF Investors often fall into the habit of sloppy thinking about government spending and its relation to the economy.  For example, it’s easy to focus only on total government-sector expenditures.  According to the White House Office for Management and Budget, total government outlays in the U.S. averaged 32.3% of nominal… Read More »

Asset Allocation Weekly (July 31, 2020)

by Asset Allocation Committee | PDF The pandemic has clearly affected the economy.  The decline in economic activity in Q2 will be historic.  However, it is still unclear what effects will be temporary and what will be long-lasting.  A recent paper suggests that one permanent change may be a reduction in older workers.  COVID-19 has… Read More »

Asset Allocation Weekly (July 24, 2020)

by Asset Allocation Committee | PDF In the Federal Reserve’s 107-year history, it has used a number of different methods to manage monetary policy.  In its early years, it relied on the discount rate and reserve requirement adjustments as policy tools.  During WWII, it managed the yield curve to a specific interest rate to support… Read More »

Asset Allocation Weekly (July 17, 2020)

by Asset Allocation Committee | PDF One of the burning issues about the current path of policy is its inflationary impact.  In other words, will the massive increase in fiscal spending and the Fed’s balance sheet lead to higher price levels?  To discuss this issue, we return to the equation of exchange: M x V… Read More »

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