Research & News
Weekly Geopolitical Report – The End of the Carter Doctrine: Part I (October 14, 2019)
by Bill O’Grady In our 2018 Mid-Year Geopolitical Outlook we opened the report with an analysis of America’s evolving hegemony. We noted that America’s hegemonic narrative centered on containing communism. This factor united Americans to accept the burden of the superpower role. However, embedded in that commitment to contain communism was the “freezing” of three… Read More »
Asset Allocation Weekly (October 11, 2019)
by Asset Allocation Committee The financial markets have been roiled recently by the apparent shortage of liquidity in the repo markets. Our take is that the problem is twofold—there are regulatory problems that mean the banking system requires more in reserves than it did prior to the Great Financial Crisis, and there are likely industry concentration… Read More »
Weekly Geopolitical Report – The Japan-South Korea Dispute: Part II (October 7, 2019)
by Patrick Fearon-Hernandez, CFA In Part I of this report, we reviewed the history of Japanese-Korean relations over the last several centuries, highlighting the Japanese invasions of Korea in the 1590s and 1890s, Japan’s assassination of a Korean queen in 1895, and Japan’s colonization of Korea from 1910 to 1945. We also showed how Japanese… Read More »
Asset Allocation Weekly (October 4, 2019)
by Asset Allocation Committee Although the convention for measuring earnings is compared to shares, Standard and Poor’s also calculates the level of operating earnings for all the stocks in the S&P 500. The per-share value is calculated by dividing this number by the S&P divisor. The advantage of this number versus the per-share data is that… Read More »
Weekly Geopolitical Report – The Japan-South Korea Dispute: Part I (September 30, 2019)
by Patrick Fearon-Hernandez, CFA Since early July, the financial press has been reporting on a continued trade spat between Japan and South Korea. The reports have focused on a series of tit-for-tat trade restrictions the countries have imposed on each other, which are ostensibly tied to South Korean anger over Japan’s behavior in the runup… Read More »
Asset Allocation Weekly (September 27, 2019)
by Asset Allocation Committee Over the past few months, we have been on “recession watch.” Our position is that the odds of a downturn are elevated but it is too soon to fully position for a downturn. The inversion of yield curves is a reliable recession warning. On the other hand, the economic data continues to… Read More »
Weekly Geopolitical Report – Weaponizing the Dollar: The Nuclear Option, Part II (September 23, 2019)
by Bill O’Grady In Part I of this report, we reviewed the U.S. current account problem and examined how the persistent deficit affects the economy. We also discussed how the U.S. current account deficit is tied to American hegemony and ways the deficit could be addressed. This week, using the background established in Part I,… Read More »
Asset Allocation Weekly (September 20, 2019)
by Asset Allocation Committee Interest rates have increased since early September. The 10-year T-note yield dipped to 1.45% in early September but has risen strongly since then. What has prompted this rise? Some of the rise appears to be caused by a revaluation of the path of monetary policy. The chart on the left shows the… Read More »