Research & News
Asset Allocation Weekly (December 7, 2018)
by Asset Allocation Committee The election of Donald Trump has been characterized as part of a populist uprising. In the president’s inaugural address, he talked about the “forgotten” that would have a voice in his administration. At the same time, we work under John Mitchell’s dictum of “watch what we do, not what we say.”[1] In… Read More »
Weekly Geopolitical Report – The Malevolent Hegemon: Part II (December 3, 2018)
by Bill O’Grady In Part I, we examined the basic role of the hegemon and the unique model the U.S. has created, which we dubbed the “Benevolent Hegemon.” This week, we discuss why many Americans have become disenchanted with this model, which is pressuring policymakers to either jettison the superpower role or significantly redefine it. Next… Read More »
Asset Allocation Weekly (November 30, 2018)
by Asset Allocation Committee As the FOMC raises rates, there are increasing concerns about the credit markets. After a long period of low rates, credit spreads are starting to widen, raising fears of financial stress. In this report, we will look at these concerns. First, here is what we are seeing with credit spreads: This chart… Read More »
Weekly Geopolitical Report – The Malevolent Hegemon: Part I (November 26, 2018)
by Bill O’Grady Since the election of Donald Trump, there has been much discussion about the demise of the “Liberal International Order,” or LIO. Several books on the topic have been published recently[1] and the general tenor is that the U.S. is giving up global leadership and the world is in trouble. We have been making… Read More »
Asset Allocation Weekly (November 16, 2018)
by Asset Allocation Committee (NB: Due to the Thanksgiving holiday, the next report will be published on November 30.) Last year, we introduced an indicator of the basic health of the economy and added it to the many charts we monitor to gauge market conditions. The indicator is constructed with commodity prices, initial claims and consumer… Read More »
Weekly Geopolitical Report – Reflections on the Khashoggi Incident: Part II (November 12, 2018)
by Bill O’Grady (NB: Due to the Thanksgiving holiday, the next report will be published on November 26.) Last week, we discussed the issue of succession in the Kingdom of Saudi Arabia (KSA). In Part II, we will begin with a discussion of the regional power rivalry between Turkey and the KSA, then outline Turkish President… Read More »
Asset Allocation Weekly (November 9, 2018)
by Asset Allocation Committee In light of rising interest rates, this week we will take a look at credit spreads. But, before doing that, it makes sense to examine overall Treasury valuation. This chart is our 10-year T-note model. It incorporates fed funds, the Japanese yen exchange rate, German sovereign 10-year yields, oil prices, the fiscal… Read More »
Weekly Geopolitical Report – Reflections on the Khashoggi Incident: Part I (November 5, 2018)
by Bill O’Grady Jamal Khashoggi, a well-connected Saudi journalist, entered the Saudi consulate in Istanbul on October 2nd and has not been seen since. His apparent death (at the time of this writing, no body has been produced) has caused an international incident. The assumed death of Khashoggi highlights a number of issues for the Middle… Read More »
Asset Allocation Weekly (November 2, 2018)
by Asset Allocation Committee In light of the recent pullback in equities, there has been rising speculation that the FOMC might not increase rates as much as projected. Although possible, we are not seeing much evidence to support this position. This chart shows the fed funds target along with the implied three-month LIBOR rate, two years… Read More »
Weekly Geopolitical Report – Return of the Strongman: Part II (October 29, 2018)
by Thomas Wash The populist wave has officially made its way to Brazil. In a blow to the establishment, Brazilian voters have elected former military officer Jair Bolsonaro as president. As Brazil continues to struggle with its recovery from the country’s worst recession in its history, the public has turned its back on the mainstream political… Read More »