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 9, 2016)

by Asset Allocation Committee Milton Friedman postulated that inflation expectations are established through a lifetime of experience.  To some extent, the issue of inflation expectations is similar to other market gauges in our lives, such as the level of financial markets, interest rates and home prices.  What we have experienced is considered as “normal” in our… Read More »

Asset Allocation Weekly (September 2, 2016)

by Asset Allocation Committee At the recent Kansas City FRB’s gathering at Jackson Hole, the tone from policymakers turned surprisingly hawkish.  Vice Chair Stanley Fischer was quoted as saying that two rates hikes are possible this year and the upcoming FOMC meeting in September could generate a rate hike if the payroll numbers are on trend. … Read More »

Asset Allocation Weekly (August 26, 2016)

by Asset Allocation Committee As we noted last week, equity markets are trading at the upper end of the range defined by the relationship between the Federal Reserve’s balance sheet and equities.  To some extent, the level of the relationship is somewhat less important than what the expanded balance sheet signals, which is that monetary policy… Read More »

Asset Allocation Weekly (August 19, 2016)

by Asset Allocation Committee U.S. equity markets are showing impressive strength. This chart shows the S&P 500 Index along with the 200-day moving average.  The white horizontal line shows recent highs; note that the S&P 500 has recently moved above these highs.  Technically, this is a “breakout” and suggests the market will likely move higher. Still,… Read More »

Asset Allocation Weekly (August 12, 2016)

by Asset Allocation Committee We originally published the comments below in our Daily Comment on July 27.  However, we have received a number of questions on the widening of the TED spread and the rise in LIBOR to warrant updating the report for this week’s Asset Allocation Weekly. There has been some curious behavior in the… Read More »

Asset Allocation Weekly (August 5, 2016)

by Asset Allocation Committee Last week’s GDP data for Q2 came in below expectations, rising 1.2%.  Consumption was robust, accounting for 2.8% of GDP growth, but investment reduced growth by 1.7% and government peeled 0.2% from output.  Net exports added 0.2% to GDP, but we would not be surprised to see the sector revised downward due… Read More »

Asset Allocation Weekly (July 29, 2016)

by Asset Allocation Committee In the most recent rebalance of our Asset Allocation portfolios, we maintained an allocation to emerging market equities in the Aggressive Growth portfolio.  As we have noted in the past, there is a positive relationship between the dollar’s exchange rate and the relative performance of developed market equities and emerging market equities.… Read More »

Asset Allocation Weekly (July 22, 2016)

by Asset Allocation Committee In the most recent rebalance of our Asset Allocation portfolios, we introduced positions in gold.  Although the yellow metal is classified as a commodity, we view it more as a currency, admittedly one that is not backed by liabilities.  National fiat currencies are generally created in the credit process and are backed… Read More »

Asset Allocation Weekly (July 15, 2016)

by Asset Allocation Committee Since the recovery began, we have consistently favored duration in fixed income.  Our position has been that growth would remain sluggish in the developed world and global overcapacity would keep inflation contained.  The consensus of strategists and economists didn’t support our position. This chart shows the path of the 10-year T-note yield… Read More »

Asset Allocation Weekly (July 8, 2016)

by Asset Allocation Committee One of the great characteristics about working in financial services is that there are always surprises.  Recently, we came across a situation in the S&P earnings data that we had not noticed before.  It is well known that earnings have two variations—as reported and operating.  As reported earnings include all costs.  Thus,… Read More »

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