Research & News
Weekly Geopolitical Report – The Marshall Plan: A Review (May 14, 2018)
by Bill O’Grady We occasionally run across a book that we deem important enough in the arena of geopolitics to warrant a full report dedicated to its review. Recently, we happened upon a book that fits this requirement, The Marshall Plan: Dawn of the Cold War by Benn Steil.[1] This book details the history of the… Read More »
Asset Allocation Weekly (May 11, 2018)
by Asset Allocation Committee Recently, U.S. equities have outperformed emerging market equities. The chart above shows the relative performance of emerging market equities against U.S. equities. A rising line indicates that foreign equities are outperforming. Questions are being raised as to whether this recent decline is the end of what has been a strong relative uptrend… Read More »
Asset Allocation Weekly (May 4, 2018)
by Asset Allocation Committee The continued rise in long-term interest rates, with the 10-year T-note breaking above a 3.00% yield, is becoming the focus of financial markets. Here is our updated 10-year T-note model. The model’s core variables are fed funds and the 15-year moving average of inflation, which we use as a proxy for inflation… Read More »
Weekly Geopolitical Report – Generational Change in Cuba? (April 30, 2018)
by Bill O’Grady On April 18, the Cuban National Assembly elected Miguel Diáz-Canel as the new president of Cuba. On the following day, he was sworn into office. There has been much media conversation about a generational shift in Cuba. In this report, we will discuss the potential for change on the island nation, which has… Read More »
Asset Allocation Weekly (April 27, 2018)
by Asset Allocation Committee In our recent rebalance, the Asset Allocation Committee added a position in gold. There were two reasons behind the decision. First, we estimate that gold prices are undervalued compared to relevant fundamental factors. The chart on the left is our gold valuation model. It uses the balance sheets of the Federal Reserve… Read More »
Weekly Geopolitical Report – Reflections on Globalization: Part III (April 23, 2018)
by Bill O’Grady This week, we will conclude our series on globalization with a discussion of how China and Russia threaten U.S. hegemony, the potential responses and close with market ramifications. China, Russia, the U.S. and Hegemony U.S. policymakers, heeding the Washington Consensus, assumed that developing nations would eventually adopt both market economics and representative democracy. … Read More »
Asset Allocation Weekly (April 20, 2018)
by Asset Allocation Committee The Trump administration has made it a key policy goal to reduce the trade deficit. The reasoning is that reducing the trade deficit will boost jobs in areas that have been adversely affected by foreign competition. Although this might be true (trade is very complicated), the risk is that trade restrictions will… Read More »
Keller Quarterly (April 2018)
Letter to Investors As you well know, the U.S. stock market has been selling off for about ten weeks now. From some of the calls I’ve been getting, one would expect that another Great Crash is upon us. There is little evidence to suggest, however, that this is anything more than a normal correction in… Read More »
Asset Allocation Quarterly (Second Quarter 2018)
Near-term expectations for earnings growth resulting from the Tax Cuts and Jobs Act of 2017 remain heightened. Continued Fed policy tightening, through measured increases in the fed funds rate and reductions in the size of the Fed’s balance sheet, is not expected to weigh on the economy over the next two years. Our outlook for… Read More »
Weekly Geopolitical Report – Reflections on Globalization: Part II (April 16, 2018)
by Bill O’Grady Last week, we introduced this topic by discussing the Cold War. This week, we will continue our analysis with a reflection on markets, an examination of hegemony and a discussion of the expansion of globalization and the rise of meritocracy and its discontents. What about Markets? Market economics is based on how humans… Read More »