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 (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 »
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 »
Asset Allocation Weekly (January 5, 2018)
by Asset Allocation Committee Equity markets had a very strong 2017, with the S&P 500 up over 20% for the year. Earnings rose more than expected, the economy continued to expand and investor sentiment was buoyant, all of which contributed to rising equities. The tax bill, signed in late December, will give equities a lift going… Read More »
Asset Allocation Weekly (December 22, 2017)
by Asset Allocation Committee (N.B. This will be the last Asset Allocation Weekly for 2017. We thank our readers and wish them a Merry Christmas and Happy New Year. The next report will be published on January 5, 2018.) As equity markets continue to trend higher, there are always worries about how long the bull market… Read More »
Asset Allocation Weekly (December 15, 2017)
by Asset Allocation Committee Last week, the Federal Reserve released its Financial Accounts of the United States, formerly called the Flow of Funds report. It is a broad set of data that covers many aspects of the economy. Here we present some key charts from the report. This chart shows key private sector debt as a… Read More »
Asset Allocation Weekly (December 8, 2017)
by Asset Allocation Committee We have received a number of requests to update our S&P 500/Fed balance sheet model. This chart shows the results from our S&P 500/Fed balance sheet model. We have projected the model’s forecast using the expected path of balance sheet reduction. It shows that the equity index tended to follow monetary policy… Read More »
Asset Allocation Weekly (December 1, 2017)
by Asset Allocation Committee Given the length of the current expansion, there is growing concern about the economy’s ability to avoid recession. So far, none of our indicators suggests the economy is near a downturn. Of all the indicators we monitor, the yield curve is the most reliable; however, there are potentially dozens of iterations of… Read More »
Asset Allocation Weekly (November 17, 2017)
by Asset Allocation Committee [Ed note: We will not publish an Asset Allocation Weekly Comment the week of November 24. The next comment will be published December 1.] Over the past three weeks, we have seen a rise in the yields on high-yield bonds. The Merrill Lynch High Yield bond effective index is up 40 bps… Read More »
Asset Allocation Weekly (November 10, 2017)
by Asset Allocation Committee Last week, we discussed our views of the debt markets. However, one item we didn’t examine was the dynamics of the yield curve. The U.S. Treasury market has both a domestic and an international component. While all sovereign debt markets have a domestic component, the international component is especially a factor for… Read More »