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 (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 »

Asset Allocation Weekly (October 14, 2016)

by Asset Allocation Committee Given continued sluggish economic growth and fears that monetary policy has reached the point where it can no longer stimulate growth, a renewed attention has been brought to discretionary fiscal policy.  In the 1970s, discretionary fiscal policy fell out of favor due to a number of shortcomings: Public investment, if needed, should… Read More »

Asset Allocation Weekly (October 7, 2016)

by Asset Allocation Committee With the elections about a month away, we are fielding an increasing number of questions about the market impact of the result. Although some market commentators are raising concerns about a Trump victory, so far, market data doesn’t seem to suggest a high level of correlation. This chart shows Donald Trump’s average… Read More »

Asset Allocation Weekly (September 30, 2016)

by Asset Allocation Committee Last week, the FOMC left rates unchanged, as expected.  The statement was rather hawkish but the accompanying information, such as the “dots” chart, was mostly dovish. Note that three of the 17 members of the committee want to stand pat for the rest of the year and two want to raise rates… Read More »

Asset Allocation Weekly (September 23, 2016)

by Asset Allocation Committee Profit margins are off their highs but have started to improve. This chart takes total S&P 500 operating earnings as a percentage of GDP.  Excluding the financial crisis, operating earnings have been running between 5% and 6% of GDP for most of the past decade and a half.  In the middle of… Read More »

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