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 (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 »
Asset Allocation Weekly (July 27, 2018)
by Asset Allocation Committee Last week, in a wide-ranging interview on CNBC,[1] President Trump ended a 25-year détente with the Federal Reserve, openly criticizing the current path of monetary policy. The president followed up the interview with numerous social media tweets, further criticizing policy tightening. Although it’s been a long time since a president weighed in… Read More »
Asset Allocation Weekly (July 20, 2018)
by Asset Allocation Committee Although earnings are rising, equity markets have been range-bound since February. This chart shows the S&P 500; after peaking around 2870, prices have been in a range roughly from 2600 to 2800. Although monetary policy tightening is partly to blame, the Fed was lifting rates during the period when the market was… Read More »
Asset Allocation Weekly (July 13, 2018)
by Asset Allocation Committee Earnings season is upon us. We normally don’t report on earnings season since we discuss it every day and update the P/E chart weekly, but we are seeing significant growth in earnings which warrants some reflection. The primary reason for the jump in earnings has been the decline in corporate tax rates.… Read More »
Asset Allocation Weekly (July 6, 2018)
by Asset Allocation Committee Over the past quarter, emerging market equities have weakened; the primary culprit was a strengthening dollar, although concerns about softer non-U.S. growth likely played a role as well. The dollar’s strength appears to be caused by one of two factors. The first possibility is interest rate differentials, which are partly due to… Read More »
Asset Allocation Weekly (June 29, 2018)
by Asset Allocation Committee With the recent narrowing of the yield curve, we have been receiving a number of questions about the impact of inversion. Defined, yield curve inversion is when short-duration interest rates rise above long-duration interest rates. The yield curve is arguably the single best indicator of recession. Therefore, with various calculations of the… Read More »
Asset Allocation Weekly (June 22, 2018)
by Asset Allocation Committee Cycle studies are common in analyzing markets. Such studies can be quite useful in some markets that are affected by seasonal factors, such as commodities. We all know it gets cold in the winter and rains in the spring, and measuring the timing of when market participants discount these events can offer… Read More »
Asset Allocation Weekly (June 15, 2018)
by Asset Allocation Committee The last topic in our series on secular trends is the dollar. It is arguable as to whether or not exchange rates are actually an asset class. In our asset allocation, we don’t treat it as one. On the other hand, the behavior of the dollar affects most of the other asset… Read More »