Research & News

Asset Allocation Weekly (August 23, 2019)

by Asset Allocation Committee Recession worries have increased due to falling long-duration interest rates and the short-lived inversion of the two-year/10-year T-note spread.  Although this spread is important, it is merely one in a whole series of permutations of the yield curve.  Our preferred measure is the 10-year/fed funds spread because it measures the long end… Read More »

Daily Comment (August 23, 2019)

by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA [Posted: 9:30 AM EDT] Happy Friday!  It’s quiet this morning in front of Chair Powell’s presentation.  Here is what we are watching: BREAKING: China to levy tariffs on another $75 bn of U.S. exports.  Bonds and gold rally, while equities, oil and copper decline.  Oil, soybeans… Read More »

Daily Comment (August 22, 2019)

by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA [Posted: 9:30 AM EDT] We cover the Fed minutes below!  The G-7 summit is this weekend.  Tensions between Japan and South Korea are rising.  Quietly, overnight, the CNY fell to an 11-year low.  Here is what we are watching: The Fed minutes: There were three points… Read More »

Daily Comment (August 21, 2019)

by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA [Posted: 9:30 AM EDT] It’s Fed minutes day!  Equities are higher this morning, in what we are dubbing the “Seinfeld rally” because it seems to be driven by…nothing!  Although there was news overnight (which we discuss below), none of it reasonably explains the rally we are… Read More »

Daily Comment (August 20, 2019)

by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA [Posted: 9:30 AM EDT] Markets are mostly quiet this morning, more typical of late August.  Here is what we are watching: G-7 Summit: Japanese government sources say the Group of Seven (G-7) summit this weekend in France will probably not adopt a joint communiqué because of… Read More »

Weekly Geopolitical Report – Weaponizing the Dollar: Part II (August 19, 2019)

by Bill O’Grady Weaponizing the Dollar: Part I In Part I, we began our analysis with a discussion of Mundell’s Impossible Trinity.  We also covered the gold standard model and Bretton Woods model.  This week, we will examine the Treasury/dollar standard and introduce what could be called Bretton Woods II.  Finally, we will conclude with… Read More »

Daily Comment (August 19, 2019)

by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA [Posted: 9:30 AM EDT] Happy Monday!  Equity futures are pushing higher again this morning after the U.S. gives Huawei (002502, CNY 2.95) a 90-day extension.  It’s a big week—Fed minutes, the Jackson Hole meeting and the G-7 next weekend.  Treasury yields are higher and gold is… Read More »

Asset Allocation Weekly (August 16, 2019)

by Asset Allocation Committee As the 10-year T-note yield tumbles, we are reaching a point where the market looks overvalued based on current fundamentals. Our yield model uses fed funds and the 15-year average of the yearly change in CPI[1] along with the JPY/USD exchange rate, oil prices, the yield on 10-year German bunds and the… Read More »

Daily Comment (August 16, 2019)

by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA [Posted: 9:30 AM EDT] Happy Friday!  Equity futures are higher this morning on hopes that the president is further retreating on tariffs.  Treasury yields are higher and gold is retreating.  Central banks around the world are moving to ease.  Here is what we are watching: Backing… Read More »

Daily Comment (August 15, 2019)

by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA [Posted: 9:30 AM EDT] Equity futures have rebounded in the past hour, likely on news that President Trump and Chairman Xi are exchanging letters and talking on the phone.  Economic worries continue to dominate.  And, how will we remember the Hickenlooper campaign?  Here is what we… Read More »

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