Research & News
Asset Allocation Weekly (February 23, 2018)
by Asset Allocation Committee Last week, we discussed the impact of the growing fiscal deficit on the economy and markets. We did note that fiscal deficits have tended to weaken the dollar. This week, we want to expand on that analysis. To start, we note that fiscal policy does not operate in a vacuum. To measure… Read More »
Asset Allocation Weekly (February 16, 2018)
by Asset Allocation Committee Do fiscal deficits matter? This is one of the more polarizing topics in economics. The recent tax bill and budget agreement will increase the deficit, which has led to all sorts of worries and claims. Here are a few observations: Politically, deficits matter to the party out of power. Protesting against deficits… Read More »
Weekly Geopolitical Report – The Italian Elections: Part I (February 12, 2018)
by Bill O’Grady (Due to President’s Day, the next report will be published on February 26.) Italy will hold elections on March 4, 2018. Given that recent elections in the Eurozone have run an emotional gamut, it is difficult to predict the outcome. There was great fear before last year’s elections in France that a National… Read More »
Asset Allocation Weekly (February 9, 2018)
by Asset Allocation Committee The continued rise in long-term interest rates is clearly grabbing the attention of financial markets. Stronger than expected wage growth was the proximate cause of the recent lift in yields. Although overall wages rose 2.9%, wages for production and non-supervisory workers grew only 2.4%. Still, it is clear that fears of inflation… Read More »
Weekly Geopolitical Report – Trump & Trade: The First Year (February 5, 2018)
by Bill O’Grady President Trump has been in office for just over one year, having been inaugurated on January 20, 2017. He campaigned on a populist agenda—anti-globalism was a core message. Specifically, his “America First” mantra railed against free trade deals, suggesting they were poorly negotiated, supported immigration restrictions and called on allies to shoulder more… Read More »
Asset Allocation Weekly (February 2, 2018)
by Asset Allocation Committee The World Economic Forum in Davos was held recently and various comments were made about the dollar during the meetings. Treasury Secretary Mnuchin seemed to imply that the administration was talking the dollar lower, a violation of unwritten protocols that make it acceptable to have a weaker currency in support of growth… Read More »
Weekly Geopolitical Report – Thinking the Unthinkable (Again): Part II (January 29, 2018)
by Bill O’Grady Last week, we published the first part[1] of this report looking at how the U.S. and other nations are changing their policies toward nuclear weapons. This is something of a refresh of a report we did seven years ago.[2] Since we published this earlier report, we have seen an increase in actual and… Read More »
Asset Allocation Weekly (January 26, 2018)
by Asset Allocation Committee Equity markets have been steadily rising, with the major indices making a series of new all-time highs. The recent impetus to equities has been the tax law. As we detailed in our recent addendum to our 2018 Outlook,[1] the tax bill will shift about 1.3% of GDP to after-tax corporate profits. This… Read More »
Asset Allocation Quarterly (First Quarter 2018)
The passage of the Tax Cuts and Jobs Act of 2017 significantly increased our earnings forecast for the S&P 500 for 2018 from $129.82 to $144.84. We do not expect major changes to economic growth stemming from the tax legislation. Fed policy should continue to tighten through increases in the fed funds rate and a… Read More »
Weekly Geopolitical Report – Thinking the Unthinkable (Again): Part I (January 22, 2018)
by Bill O’Grady Seven years ago we published a WGR on nuclear war and civil defense.[1] Over the past seven years, we have seen an increase in actual and potential nuclear proliferation. Both the Obama and Trump administrations have either reviewed or are reviewing their policies on nuclear weapons and we are clearly seeing a departure… Read More »