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 Bi-Weekly – The Importance of the Policy Mix (March 13, 2023)
by the Asset Allocation Committee | PDF Based on the strong U.S. economic data so far this year, investors have again become worried that the Federal Reserve will continue to hike interest rates aggressively and keep them high for a prolonged period. We agree that is a significant risk, and the rate hikes to date… Read More »
Asset Allocation Bi-Weekly – Federal Reserve Policymakers in 2023: Hawks or Doves? (February 27, 2023)
by the Asset Allocation Committee | PDF The Federal Reserve surprised markets when it raised its benchmark fed funds interest rate by a total of 450 bps in 2022, the most rapid increase in over 40 years. Weighed down by technology stocks, equities had their first annual decline in over a decade. The weak stock… Read More »
Asset Allocation Bi-Weekly – Reflections on Inflation (February 13, 2023)
by the Asset Allocation Committee | PDF [Note: There will be no accompanying podcast with this report.] Several advisors and their clients have been asking questions about inflation, which suggests there is a degree of uncertainty surrounding the issue. This uncertainty is understandable as inflation is a very complicated subject and, unfortunately, economic theory has… Read More »
Asset Allocation Bi-Weekly – Secular Trends In Bond Yields (January 30, 2023)
by the Asset Allocation Committee | PDF [Note: The podcast that accompanies this report will be posted later this week.] Secular trends in markets are trends that have an extended life. Their length can be different across various markets, but they are usually measured in years and sometimes decades. It is not uncommon for shorter-term… Read More »
Asset Allocation Bi-Weekly – The Master of Surprise (January 17, 2023)
by the Asset Allocation Committee | PDF [Note: The podcast that accompanies this report will be delayed until Friday, January 20.] They don’t call Haruhiko Kuroda the “Master of Surprise” for nothing. The Bank of Japan (BOJ) Governor lifted the yield cap on 10-year Japanese government bonds (JGB) by 25 bps last month. The bank… Read More »
Asset Allocation Bi-Weekly – Forecasting Financial Stress (December 5, 2022)
by the Asset Allocation Committee | PDF [Note: The podcast that accompanies this report will be delayed until 12/12. Also, this report will go on holiday hiatus following today’s report; the next report will be published on January 16, 2023.] One of the challenges of market strategy is the problem of financial stress. In colloquial… Read More »
Asset Allocation Bi-Weekly – The Impossible Trinity (November 14, 2022)
by the Asset Allocation Committee | PDF The U.S. Dollar Index hit a 20-year high in September as the greenback gained against other global currencies. The climb in the U.S. dollar (USD) began in the post-pandemic recovery. Investors flocked to the greenback for safety as the U.S. economy outgrew its peers in the OECD. Aggressive… Read More »
Asset Allocation Bi-Weekly – The Inflation Adjustment for Social Security Benefits in 2023 (October 31, 2022)
by the Asset Allocation Committee | PDF Even for dedicated, successful investors who have built up a substantial nest egg, Social Security retirement and disability investments can be an important part of one’s financial security. For many Americans, Social Security benefits may be the only significant source of income in old age. On average, Social… Read More »
Asset Allocation Bi-Weekly – An Update on Bonds (October 17, 2022)
by the Asset Allocation Committee | PDF Our starting point for examining bond yields begins with our yield model. The key components are fed funds, the 15-year average of CPI (which is a proxy for inflation expectations), the five-year rolling standard deviation of CPI (a measure of inflation volatility), German Bund yields, oil prices, the… Read More »