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 (June 17, 2016)
by Asset Allocation Committee Our asset allocation process has generally favored longer duration fixed income instruments. We have expected inflation to remain low due to continued globalization and deregulation. Over time, low inflation brings low long-term interest rates. In recent weeks, domestic long-term interest rates have declined significantly. Although this isn’t a huge surprise to us,… Read More »
Asset Allocation Weekly (June 10, 2016)
by Asset Allocation Committee In our asset allocation process, we focus on cyclical trends—trends that tend to have three- to five-year time horizons. Two examples of these sorts of trends are the business cycle and the monetary policy cycle. Although both cycles can last longer or less than three to five years, in general, these types… Read More »
Asset Allocation Weekly (June 3, 2016)
by Asset Allocation Committee The prolonged weakness seen in capital spending is a concern for the economy and equity markets. This chart shows the yearly change in the three-month smoothed non-defense capital goods orders excluding aircraft. The Census Bureau changed how it calculates this series in 1992; we have overlapped the yearly change in the earlier… Read More »
Asset Allocation Weekly (May 27, 2016)
by Asset Allocation Committee As promised, this week we will discuss how President Clinton’s policies would likely affect the financial markets. It should be noted that, unlike Mr. Trump, Sen. Clinton has published most of her policy positions. However, there have been apparent shifts in her policy positions as Clinton adjusts her campaign to react to… Read More »
Asset Allocation Weekly (May 20, 2016)
by Asset Allocation Committee As promised, this week we will discuss how President Trump’s policies would likely affect the financial markets. It should be noted that Mr. Trump has not published any clear policy papers, so our descriptions are based on his public comments. Next week, we will discuss the expected policies and financial market effects… Read More »
Asset Allocation Weekly (May 13, 2016)
by Asset Allocation Committee With Donald Trump and Hillary Clinton becoming the presumptive nominees for the Republican and Democratic Parties, respectively, this week’s Asset Allocation Weekly will offer some of our initial thoughts on this election cycle. We will offer more in-depth analysis in the coming months but these highlights express our starting points about the… Read More »
Asset Allocation Weekly (May 6, 2016)
by Asset Allocation Committee In our latest adjustment to the asset allocation portfolios, we added to the REIT positions in three of the four models. One of the reasons we remain friendly to this asset class has been the steady increase in rental income. This chart shows rental income from the National Income and Product… Read More »
Asset Allocation Weekly (April 29, 2016)
by Asset Allocation Committee We recently completed our quarterly rebalancing process in our asset allocation models. One of our key assumptions is that the economy will avoid recession but growth will remain sluggish. Recently, two reliable recession indicators, one from the Philadelphia FRB and the other from the Chicago FRB, have confirmed our expectations. First, shown… Read More »
Asset Allocation Weekly (April 22, 2016)
by Asset Allocation Committee Although it is a widely held assertion that lower gasoline prices will lead to stronger consumption, this correlation has been mostly absent following the most recent decline in fuel prices. We suspect that household deleveraging has tended to weaken the expected impact of lower gasoline prices. However, there does appear to be… Read More »