Research & News
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 »
Asset Allocation Weekly (January 19, 2018)
by Asset Allocation Committee Since the beginning of the year, long-term interest rates have moved higher. The constant maturity 10-year Treasury yield ended 2017 at 2.40%. That yield climbed to 2.60% in January, which is above our recently released 2018 Outlook forecast. We are not adjusting our forecast quite yet because the driving factor behind our… Read More »
Keller Quarterly (January 2018)
Letter to Investors Welcome to 2018! The stock and bond markets did much better in 2017 than most participants expected, by my reckoning. This has led to an unusually large proportion of the forecasts for this year predicting dire outcomes, also by my reckoning. Predicting the future is impossible, of course, but that doesn’t stop… Read More »
Asset Allocation Weekly (January 12, 2018)
by Asset Allocation Committee Last week, we issued an addendum to our 2018 Outlook[1] to take into account the recent tax law changes. Our top-down analysis suggests there will be a significant increase in corporate earnings which will translate into higher S&P 500 earnings. Our original forecast was for $129.82[2] for 2018; we have increased our… Read More »