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 (September 28, 2018)
by Asset Allocation Committee Since late August, interest rates have been steadily rising. The 10-year T-note yield made its recent low at 2.82%[1] on August 4th. Since then, yields have moved above 3.00%. Our 10-year T-note model suggests rates are a bit elevated. This model includes fed funds and the 15-year moving average of inflation (a… Read More »
Asset Allocation Weekly (September 21, 2018)
by Asset Allocation Committee In this week’s report, we will focus on the U.S. economy. Since the 1987 crash every major equity market decline has coincided with a recession. Thus, we pay close attention to the economy with the goal of projecting the next recession. This expansion, which began in June 2009, is now the second… Read More »
Asset Allocation Weekly (September 14, 2018)
by Asset Allocation Committee Emerging markets have fallen in recent weeks. The decline is being driven by a couple of factors. First, the dollar has appreciated due to concerns that tariffs will restrict foreign country access to the U.S. consumer and the dollars they spend. In other words, if the U.S. restricts trade, countries will struggle… Read More »
Asset Allocation Weekly (September 7, 2018)
by Asset Allocation Committee Traditionally, the election season kicks off with Labor Day so, with last Monday’s holiday, the election cycle is upon us. The midterm election year tends to be lackluster for equities until Q4, when a strong rally usually develops. The data for this chart is developed by taking the weekly closes for the… Read More »
Asset Allocation Weekly (August 31, 2018)
by Asset Allocation Committee In light of the recent conviction of Paul Manafort and the guilty pleas by Michael Cohen, along with the upcoming midterm elections, we have been receiving questions about the political landscape going into winter. In this report, we will discuss our baseline expectations for political trends and their potential effect on financial… Read More »
Asset Allocation Weekly (August 24, 2018)
by Asset Allocation Committee What is price stability? The working definition for the Federal Reserve was crafted by Alan Greenspan in 1994, when he suggested that price stability has been achieved when “…households and businesses need not factor expectations of changes in the average level of prices into their decisions.”[1] In other words, a central bank… Read More »
Asset Allocation Weekly (August 17, 2018)
by Asset Allocation Committee Last week, the Bureau of Labor Statistics released the CPI data for July. Inflation continues to rise; the overall rate rose 2.9% and the closely watched core rate (the rate less food and energy) rose to 2.4%, the highest rate since September 2008. Rising inflation raises policy concerns. In this week’s report,… Read More »
Asset Allocation Weekly (August 10, 2018)
by Asset Allocation Committee Last year, we introduced an indicator of the basic health of the economy and added it to the many charts we monitor to gauge market conditions. The indicator is constructed with commodity prices, initial claims and consumer confidence. The thesis behind this indicator is that these three components should offer a simple… Read More »
Asset Allocation Weekly (August 3, 2018)
by Asset Allocation Committee At the end of June, we published a study of how the equity and bond markets reacted to the inversion of the yield curve. This week’s report takes that inversion data and compares it to how the 10 sectors of the S&P 500 perform.[1] For this report, we will use the two-year/10-year… Read More »