Asset Allocation Bi-Weekly
Confluence Investment Management offers various asset allocation products which are managed using “top down,” or macro, analysis. We publish asset allocation thoughts on a bi-weekly basis, updating the piece every other Monday.
Asset Allocation Weekly – The Prices We Don’t See (October 1, 2021)
by the Asset Allocation Committee | PDF For four consecutive months, consumer prices as measured by the Consumer Price Index (CPI) have risen 5% from the prior year. The pace of inflation has sparked concerns that the Federal Reserve may be wrong in describing inflation as being transitory. However, our research suggests there may be… Read More »
Asset Allocation Weekly – The Supply Side Worry on Inflation (September 24, 2021)
by the Asset Allocation Committee | PDF In the 1970s, the U.S. had a serious inflation problem. By the end of the decade, it had become the most critical economic policy issue. Although inflation can be a complicated topic, one way of simplifying it is to see it through the intersection of aggregate supply and… Read More »
Asset Allocation Weekly – Don’t Call It a Comeback! (September 17, 2021)
by the Asset Allocation Committee | PDF Last week, the federal government’s enhanced unemployment benefits of up to $300 per week expired nationwide. It has been speculated that the end of these benefits could lead to a surge of new entrants into the labor market. However, data from the Bureau of Labor Statistics (BLS) suggests… Read More »
Asset Allocation Weekly – Powell and Fed Independence (September 10, 2021)
by the Asset Allocation Committee | PDF Chair Powell’s term as leader of the FOMC comes to an end in early February 2022. It appears likely, at this time, that he will be reappointed for another four-year term. Decision markets currently put the odds of another term at 85%. Given all the policy actions that… Read More »
Asset Allocation Weekly – Are Strong Profits Sustainable? (September 3, 2021)
by the Asset Allocation Committee | PDF (Note: due to the upcoming Labor Day holiday, there will not be an accompanying podcast episode this week.) With the first update of Q2 GDP, the Commerce Department released its corporate profits for the economy. Using after-tax profits, which exclude inventory adjustment and depreciation, profits relative to GDP… Read More »
Asset Allocation Weekly – This Recovery is Different (August 27, 2021)
by the Asset Allocation Committee | PDF Since the Federal Reserve was granted independence in 1951 there have been 11 recessions. Although each recession and recovery are somewhat unique, analysts tend to compare them for clues about future economic activity and policy actions. In terms of monetary policy, Chair Powell has staked out a dovish… Read More »
Asset Allocation Weekly – The Impact of Older Americans on the Labor Market (August 20, 2021)
by the Asset Allocation Committee | PDF In analyzing the path for the economy, an important factor is separating the temporary effects of the pandemic from those that are longer lasting. The debate over whether inflation will be transitory is tied to this determination. The impact on the labor markets is another element. One change… Read More »
Asset Allocation Weekly – Intellectual Property Takes Over Fixed Investment (August 13, 2021)
by the Asset Allocation Committee | PDF It’s probably no surprise to anyone that information processing has become a bigger and bigger part of the economy over the last several decades. By now, we’ve all gotten used to seeing new kinds of computers and telephones every year, and we’ve struggled with learning new software programs… Read More »
Asset Allocation Weekly (August 6, 2021)
by the Asset Allocation Committee | PDF In last week’s report, we updated our views on long-duration Treasuries, using our standard 10-year T-note model. This week we are going to examine the impact of policy on long-duration Treasuries. First, let’s start with the model. The two most important variables in the model are fed funds… Read More »