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 (May 6, 2016)

by Asset Allocation Committee In our latest adjustment to the asset allocation portfolios, we added to the REIT positions in three of the four models.  One of the reasons we remain friendly to this asset class has been the steady increase in rental income.   This chart shows rental income from the National Income and Product… Read More »

Asset Allocation Weekly (April 29, 2016)

by Asset Allocation Committee We recently completed our quarterly rebalancing process in our asset allocation models.  One of our key assumptions is that the economy will avoid recession but growth will remain sluggish.  Recently, two reliable recession indicators, one from the Philadelphia FRB and the other from the Chicago FRB, have confirmed our expectations. First, shown… Read More »

Asset Allocation Weekly (April 22, 2016)

by Asset Allocation Committee Although it is a widely held assertion that lower gasoline prices will lead to stronger consumption, this correlation has been mostly absent following the most recent decline in fuel prices.  We suspect that household deleveraging has tended to weaken the expected impact of lower gasoline prices.  However, there does appear to be… Read More »

Asset Allocation Weekly (April 15, 2016)

by Asset Allocation Committee It is becoming apparent that the FOMC is using something other than the Phillips Curve to manage monetary policy.  The Phillips Curve postulates that there is a tradeoff between inflation and the labor markets.  Economists have developed models based on the Phillips Curve to determine what interest rate target the FOMC “should”… Read More »

Asset Allocation Weekly (April 8, 2016)

by Asset Allocation Committee One of our key investment decisions in terms of asset allocation has been to avoid emerging markets.   There are primarily two reasons for this call. First, as the U.S. pulls back from its superpower position, the emerging world, which tends to be more dependent on exports for economic development, faces two significant… Read More »

Asset Allocation Weekly (April 1, 2016)

by Asset Allocation Committee In the most recent GDP report, corporate profits plunged. The overall decline in profits was $153 bn in Q4, although some of this drop was due to an $83 bn settlement that BP had with the government over the 2010 Gulf of Mexico oil spill.  We have been noting for some time… Read More »

Asset Allocation Weekly (February 28, 2014)

by Asset Allocation Committee At the founding of our asset allocation process in the second quarter of 2000, the prevailing method of asset allocation was strategic, which is usually defined as an allocation based on a time horizon of at least 7-10 years.  However, in practice, strategic programs assumed that adjustments to the model were usually… Read More »

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