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 (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 »

Asset Allocation Weekly (July 10, 2020)

by Asset Allocation Committee Equity markets, to a greater or lesser degree, tend to reflect social and political trends.  After all, the mood of investors plays a role in the propensity to move money into stock markets.  Unfortunately, the impact of social or political events on equities tends to be a mixed bag.  The chart below… Read More »

Asset Allocation Weekly (June 26, 2020)

by Asset Allocation Committee (N.B.  Due to the Independence Day holiday, the next report will be issued on July 10, 2020.) Since 2008, some central banks have implemented negative policy interest rates.  Standard economics suggests that negative nominal rates on deposits are impossible because holders could simply liquidate the deposit and “put the money under the… Read More »

Asset Allocation Weekly (June 19, 2020)

by Asset Allocation Committee By now, investors have rightly come around to the idea that the equity market’s strong rebound since late March can be largely ascribed to the aggressive monetary and fiscal policies put in place to counter the coronavirus crisis.  The economic downturn from the pandemic lockdown has been severe, pushing unemployment to its… Read More »

Asset Allocation Weekly (June 12, 2020)

by Asset Allocation Committee Although gold is the primary precious metal for investors, platinum, palladium and silver also can fulfill that role.  Complicating matters is that these three metals are dual-use products.  Unlike gold, which has few uses outside of monetary (store of value) purposes and jewelry, these other three have industrial uses as well.  About… Read More »

Asset Allocation Weekly (June 5, 2020)

by Asset Allocation Committee Last week, we discussed how equity markets, because of their anticipatory nature, tend to bottom in advance of the end of recessions.  Assuming that condition continues, if our expectations for a short recession (but probably a long recovery) are correct, it would make sense that the equity market would have already bottomed. … Read More »

Asset Allocation Weekly (May 29, 2020)

by Asset Allocation Committee The recent strong rally in equities has befuddled investors—how can equities rally with such vigor when the economy is historically weak?  We suspect there are two reasons for this recovery: Although the drop in economic activity is deep, it will likely be short. Supportive monetary policy is a powerful elixir for equities.… Read More »

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