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 (January 6, 2017)

by Asset Allocation Committee Over the holiday, I had the pleasure of reading Sebastian Mallaby’s recent biography of Alan Greenspan.[1]  The book was thoroughly researched and well-written, and I recommend it to our readers, albeit with fair warning—it’s long and the endnotes are critical to fully understanding the points of the work. Here are the key… Read More »

Asset Allocation Weekly (December 23, 2016)

by Asset Allocation Committee Due to the upcoming holidays, the next edition of this report will be published on January 6, 2017. The Fed gave us a modest hawkish surprise last week, calling for three rate hikes in 2017 rather than two.  The news has boosted Treasury yields and lifted the dollar.  Equities mostly absorbed the… Read More »

Asset Allocation Weekly (December 16, 2016)

by Asset Allocation Committee Equity markets are expensive by numerous measures and have become even more extended in the wake of the “Trump Rally.”  As noted in our weekly P/E update (found in the last section of the Daily Comment), our four-quarter measure of the P/E is elevated.  Another well-known derivation of the “Buffet Indicator” has… Read More »

Asset Allocation Weekly (December 9, 2016)

by Asset Allocation Committee The rapid rise in longer duration Treasury yields since the presidential election has been surprising.  As of December 8, the 10-year T-note yield was approximately 2.40%.  Although President-elect Trump’s policies will probably be inflationary, it is still unclear how much of his arguably vague plans will get passed.  It is possible the… Read More »

Asset Allocation Weekly (December 2, 2016)

by Asset Allocation Committee Last week, we discussed the likely implications of President-elect Trump’s policies on the debt markets.  This week, we will look at the impact on the dollar.  Since the election, the dollar has generally moved higher. Using the Bloomberg dollar index, a broad-based currency measure, the dollar rose nearly 5% after the election. … Read More »

Asset Allocation Weekly (November 18, 2016)

by Asset Allocation Committee Trumponomics looks as if it will be a combination of fiscal stimulus, trade restrictions and deregulation.  It looks very likely that environmental regulations will be reversed and there have been promises of financial deregulation as well.  The first two will likely reflate the economy.  Proposed deregulation may help hold down energy prices… Read More »

Asset Allocation Weekly (November 11, 2016)

by Asset Allocation Committee The Trump victory has significant ramifications for the economy and markets.  The president-elect’s platform is somewhat ambiguous, which isn’t all that unusual; candidates want to build in some degree of flexibility that a detailed platform can reduce.  Despite this lack of clarity, there are elements that are emerging that offer a guide… Read More »

Asset Allocation Weekly (November 4, 2016)

by Asset Allocation Committee With the elections coming next week, it seems like a good time to look at how markets have historically performed during election cycles.  We will compare the current election cycle against previous cycles. The blue line in the chart above shows the indexed market return for the period 1928-2015.  To create this… Read More »

Asset Allocation Weekly (October 28, 2016)

by Asset Allocation Committee My weekend exercise is to take my dogs on long walks.  Both dogs seem to enjoy these walks and I use the time to listen to podcasts.  I recently listened to a long podcast that interviewed Sebastian Mallaby, a British journalist and senior fellow at the Council on Foreign Relations.  He has… Read More »

Asset Allocation Weekly (October 21, 2016)

by Asset Allocation Committee The dollar has been strengthening over the past few weeks; we believe much of this appreciation is due to expectations of tighter monetary policy.  Fed funds futures suggest that there is a 60+% chance of a rate hike at the December FOMC meeting.  Although the FOMC is divided and there are prominent… Read More »

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