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 – 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 »

Asset Allocation Bi-Weekly – The Gold Paradox (October 3, 2022)

by the Asset Allocation Committee | PDF Gold prices have been weak in recent months despite high levels of inflation.  Gold is often considered an inflation hedge, and so the lack of strength is puzzling to many investors.  In this report, we will take a look at gold and try to explain why prices have… Read More »

Asset Allocation Bi-Weekly – The Federal Reserve’s Big Policy Mistake (September 19, 2022)

by the Asset Allocation Committee | PDF If you look at how stocks and other risk assets have lost value since Fed Chair Powell’s short, hawkish speech at Jackson Hole last month, it’s clear he has succeeded in resetting expectations for monetary policy.  Investors now seem to accept that the Fed plans to hike interest… Read More »

Asset Allocation Bi-Weekly – Storm Warning (September 6, 2022)

by the Asset Allocation Committee | PDF Throughout this year, there has been much talk (and confusion) about recession.  Officially, the National Bureau of Economic Research is the formal arbiter of recession.  This private group of economists assesses when there is a broad-based decline in economic activity and when that activity recovers.  It then tells… Read More »

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