Asset Allocation Reports
Asset Allocation Weekly (May 26, 2017)
by Asset Allocation Committee The dollar is in its third major bull market since currencies began floating in 1971. This chart shows the JPM dollar index which adjusts for relative inflation and trade. The previous two bull markets exhibited greater strength than the current one. Because of the dollar’s reserve currency role, there will always be… Read More »
Asset Allocation Weekly (May 19, 2017)
by Asset Allocation Committee One of the significant “known/unknowns” is the true condition of the labor market. The below chart highlights the issue. The blue line is the unemployment rate, while the red line is the employment/population ratio (scale inverted). From 1980 until 2010, these two series closely tracked each other. During the period since the… Read More »
Asset Allocation Weekly (May 12, 2017)
by Asset Allocation Committee Slow economic growth has plagued the West. Although the concern has been acute since the Great Financial Crisis (GFC), worries about slowing growth predated that event. Perhaps the most important factor contributing to sluggish growth has been tepid productivity growth. This chart shows the five-year change in productivity; we use this longer… Read More »
Asset Allocation Weekly (May 5, 2017)
by Asset Allocation Committee In our most recent quarterly asset allocation meetings, our analysis determined that emerging markets would not be added to the portfolios. Since this asset class has been this year’s best performer, some explanation is in order. One of the primary reasons we have refrained from adding emerging markets is the dollar’s strength.… Read More »
Asset Allocation Weekly (April 28, 2017)
by Asset Allocation Committee Last week, we discussed the impact of reducing the size of the Federal Reserve’s balance sheet on stocks and bonds. This week we will discuss the effects of QE on monetary policy. The FOMC dropped rates to near zero by January 2009. Although European central banks (including the ECB) have since taken… Read More »
Asset Allocation Quarterly (Second Quarter 2017)
The economy continues on a stable path, along with relatively low levels of inflation. In this cycle, tighter Fed policy involves not only raising short-term rates, but also reducing the size of the Fed’s balance sheet. The magnitude of growth of the Fed’s balance sheet in recent years was unprecedented. Its reduction is also unprecedented.… Read More »
Asset Allocation Weekly (April 21, 2017)
by Asset Allocation Committee Last week, we discussed the impact of reducing the size of the Federal Reserve’s balance sheet on the economy. This week we will discuss the effects of QE on financial markets. The relationship between the balance sheet and equities seems rather straightforward; expanding the balance sheet appears to be clearly supportive for… Read More »
Asset Allocation Weekly (April 13, 2017)
by Asset Allocation Committee The most recent Federal Reserve minutes indicated that the U.S. central bank is preparing to reverse its experiment with quantitative easing (QE) by reducing the size of its balance sheet. Although the eventual desire to reduce the size of the balance sheet is no real surprise, the timing was unclear. It now… Read More »
Asset Allocation Weekly (April 7, 2017)
by Asset Allocation Committee In our 2017 Outlook, our earnings forecast for the S&P 500 was $119.45 per share, up from $106.25 in 2016.[1] Based on new data and other trends, we are raising this forecast to $126.44 for this year. There are three reasons for the change. The spread between Thomson-Reuters and S&P operating earnings… Read More »