Research & News
Asset Allocation Weekly (January 18, 2019)
by Asset Allocation Committee Equity markets struggled in 2018; although new highs were achieved twice during the year, volatility was elevated compared to 2017. This is a chart of the CBOE VIX index, a measure of implied volatility from the equity options market. An elevated VIX means implied volatility is high, which implies a wider dispersion… Read More »
Asset Allocation Quarterly (First Quarter 2019)
Our expectations are that the U.S. economy will continue to grow, albeit at a more modest pace of 2.7% While we anticipate the current economic expansion will become the longest on record this March, the risk of a downturn rises toward the end of our three-year forecast period We expect the Fed to suspend its… Read More »
Weekly Geopolitical Report – Reflections on Inflections: Part II (January 14, 2019)
by Bill O’Grady (N.B. Due to Martin Luther King Jr. Day, the next issue of this report will be published on January 28.) In Part I of this report, we discussed the issues surrounding predicting inflection points, which are defined as reversals of long-term trends. In this week’s issue, we will examine two long-term trends that… Read More »
Asset Allocation Weekly (January 11, 2019)
by Asset Allocation Committee Does the Federal Reserve adjust policy for asset prices? This is perhaps one of the most controversial topics in U.S. monetary policy. Alan Greenspan faced this issue in the early 1990s. Both Volcker and Greenspan wanted to focus monetary policy on containing inflation. But, Larry Lindsey, a Fed governor at the time,… Read More »
Weekly Geopolitical Report – Reflections on Inflections: Part I (January 7, 2019)
by Bill O’Grady History seems to move in broad cycles. Beliefs come into and fall out of favor. Despite evidence of these cycles, people tend to “forecast with a straight edge.” In other words, we assume trends that are in place will remain in place forever. And, thus, it can come as a shock to society… Read More »
Asset Allocation Weekly (January 4, 2019)
by Asset Allocation Committee Quantitative easing (QE) was an element of unconventional monetary policy that emerged from the Great Financial Crisis. When the Federal Reserve lowered the fed funds target to zero (known as the “zero interest rate policy,” or ZIRP), policymakers decided that taking the policy rate below zero would not further stimulate the economy. … Read More »
Asset Allocation Weekly (December 21, 2018)
by Asset Allocation Committee (N.B. This is the last Asset Allocation Weekly for 2018. Have a Merry Christmas and Happy New Year. The next report will be published January 4, 2019.) The U.S. economy is performing in line with the rest of the world. This chart shows the yearly change in U.S. and world ex-U.S. GDP. … Read More »
Weekly Geopolitical Report – The 2019 Geopolitical Outlook (December 17, 2018)
by Bill O’Grady (N.B. This will be the last WGR of 2018. Our next report will be published January 7, 2019.) As is our custom, we close out the current year with our geopolitical outlook for the next one. This report is less a series of predictions as it is a list of potential geopolitical issues… Read More »
2019 Outlook: Red Sky at Morning (December 14, 2018)
by Bill O’Grady & Mark Keller |PDF Summary: Economy grows at 2.7%. Expansion makes a new duration record; no recession expected in 2019, although the risk of a downturn will be increasing. Core inflation max is 2.5% next year. Dollar weakens, although the direction is mostly dependent on administration trade policy. We expect preparations for… Read More »
Asset Allocation Weekly (December 14, 2018)
by Asset Allocation Committee Equity markets have come under pressure this autumn. The weakness has gained momentum in recent weeks. This chart shows the yearly change in the S&P 500 Index on a monthly average basis. We have added recession shading; in general, recessions tend to trigger bear market declines of 20% or more. In fact,… Read More »