Research & News
Asset Allocation Weekly (March 31, 2017)
by Asset Allocation Committee Historically, recessions tend to come from three sources—overly tight monetary policy, geopolitical events and inventory overhangs. The latter has mostly become irrelevant due to improved inventory management, leaving overly tight monetary policy and geopolitical events as the typical causes of downturns. As our regular readers know, we monitor both quite closely. One… Read More »
Weekly Geopolitical Report – It’s Tsar, Not Comrade (March 27, 2017)
by Bill O’Grady February 12th was the 100-year anniversary of the Russian Revolution. Surprisingly, the Kremlin has taken a very low-key stance on the centenary. We believe the government’s decision to downplay this historical event offers an insight into Russian President Putin’s thinking. In this report, we will present a history of the Russian Revolution, showing… Read More »
Asset Allocation Weekly (March 24, 2017)
by Asset Allocation Committee In a recent Bloomberg Surveillance podcast,[1] Sebastian Mallaby made an interesting observation about the recent Fed tightening. He noted how the asset markets mostly ignored or cheered the move. Mallaby suggested that this isn’t necessarily a good outcome, meaning that central bank tightening should not be welcomed by the financial markets. When… Read More »
Weekly Geopolitical Report – The Rise of AMLO: Part II (March 20, 2017)
by Thomas Wash In their next general election, Mexicans will cast their vote for the 64th president of the country’s history. The two frontrunners are Margarita Zavala from the National Action Party and Andres Manuel Lopez Obrador (AMLO) from the National Regeneration Movement (MORENA). Although the election won’t be held until July 2018, current polls suggest… Read More »
Asset Allocation Weekly (March 17, 2017)
by Asset Allocation Committee The FOMC has moved on rates; as expected, the Fed lifted its target fed funds rate to a range between 75 bps and 100 bps. The projections are for a 1.50% rate by the end of 2017 and a 2.25% rate by the end of 2018. In this week’s report, we want… Read More »
Weekly Geopolitical Report – The Rise of AMLO: Part I (March 13, 2017)
by Thomas Wash Although many populist movements today, especially in the West, are viewed as a recent phenomenon, it is worth noting that Latin America has had a long history with populism. Populists in South American history include Hugo Chavez in Venezuela, Juan and Eva Perón, along with Nestor and Cristina Kirchner, in Argentina, Juan Evo… Read More »
Asset Allocation Weekly (March 10, 2017)
by Asset Allocation Committee As the FOMC prepares to raise interest rates, it’s a good time to update our views on long-term interest rates. The chart below shows our current estimate of fair value for the 10-year Treasury. The model uses fed funds, the 15-year moving average of CPI (an inflation expectations proxy), the yen/dollar exchange… Read More »
Weekly Geopolitical Report – The Assassination of Kim Jong Nam (March 6, 2017)
by Bill O’Grady On February 13th, Kim Jong Nam, the older half-brother of Kim Jong Un, the leader of the Democratic People’s Republic of Korea (DPRK), was assassinated at an airport in Malaysia. This event offers insights into the “Hermit Kingdom” and shows the audacious nature of the regime. In this report, we begin with a… Read More »
Asset Allocation Weekly (March 3, 2017)
by Asset Allocation Committee Since the election of President Trump, a number of sentiment indicators have risen strongly. There is concern that the improving sentiment isn’t warranted. In this week’s report, our research supports the conclusion that improving sentiment is better described as a reflection of the overall state of the economy. In other words, our… Read More »
Weekly Geopolitical Report – Germany: The Reluctant Superpower (February 27, 2017)
by Bill O’Grady Two recent articles caught our attention. First, the New York Times discussed growing worries in Germany about a post-American Europe,[1] given the potential withdrawal of the U.S. from the superpower role. Second, an op-ed in Der Spiegel went so far as to suggest that Germany should become the world leader of an anti-Trump coalition.[2]… Read More »