Research & News
Weekly Geopolitical Report – China’s Foreign Reserves: Part III (June 18, 2018)
by Bill O’Grady This week, we will conclude our study on China’s foreign reserves. In Part I, we discussed the evolution of foreign reserves from gold to the dollar, with a historical focus. In Part II, we used the macroeconomic saving identity to analyze the economic relationship between China and the U.S. This week, using this… Read More »
Asset Allocation Weekly (June 15, 2018)
by Asset Allocation Committee The last topic in our series on secular trends is the dollar. It is arguable as to whether or not exchange rates are actually an asset class. In our asset allocation, we don’t treat it as one. On the other hand, the behavior of the dollar affects most of the other asset… Read More »
A Primer on Fiscal Policy, Government Debt and Deficits (June 13, 2018)
by Bill O’Grady & Mark Keller | PDF In our travels we are almost always asked about the government debt and deficits. If there is any area of confusion and misunderstanding, public finance could easily top the list. In response to these persistent questions, we are publishing this Frequently Asked Questions paper to address some… Read More »
Weekly Geopolitical Report – China’s Foreign Reserves: Part II (June 11, 2018)
by Bill O’Grady In the first part of this report, we discussed the evolution of foreign reserves from gold to the dollar, with a historical focus. This week, we will use the macroeconomic saving identity to analyze the economic relationship between China and the U.S. Next week, using this analysis, we will discuss the likelihood that… Read More »
Asset Allocation Weekly (June 8, 2018)
by Asset Allocation Committee This week, we examine commodities in our fourth installment on secular trends. Commodity prices challenge the notion of “secular.” This chart shows a trend model for real (inflation-adjusted) commodity prices, represented by the Commodity Research Bureau (CRB) commodity index, deflated by CPI. We prefer this commodity index for its long history (over… Read More »
Weekly Geopolitical Report – China’s Foreign Reserves: Part I (June 4, 2018)
by Bill O’Grady We often get questions about China’s foreign reserves. The fear is that China’s massive “pile” of foreign exchange reserves is a risk factor for U.S. markets. In the first part of this report, we will discuss the evolution of foreign reserves from gold to the dollar, with a historical focus. In Part II,… Read More »
Asset Allocation Weekly (June 1, 2018)
by Asset Allocation Committee Last week, we discussed secular cycles in the Treasury market. This week we will discuss equities. The rule for secular cycles in equities is rather simple: the price/earnings (P/E) is the critical factor. In general, profits tend to rise over time. Driving the secular trend in equity markets is what investors are… Read More »
Asset Allocation Weekly (May 25, 2018)
by Asset Allocation Committee Last week we discussed the general idea of secular versus cyclical trends. This week we will look at these concepts with regard to longer duration fixed income. The goal of theory is always to simplify. Theorizing is all about taking complex phenomena and reducing it to basic elements that can guide us… Read More »
Weekly Geopolitical Report – Reflections on Cyberwar (May 21, 2018)
by Bill O’Grady (Due to the Memorial Day holiday, our next report will be published on June 4.) On Saturday, May 11, the New York Times ran an article on the threat of Iranian cyberattacks.[1] Although the report didn’t necessarily break any new ground, cyberwar does pose some interesting issues for American hegemony. In this report,… Read More »
Asset Allocation Weekly (May 18, 2018)
by Asset Allocation Committee In our asset allocation process, we focus on cyclical trends; that doesn’t mean we pay no attention to secular trends but it isn’t our primary emphasis. The lack of clarity around what these terms mean can lead to confusion. And so, over the next few weeks, we will examine the difference between… Read More »