Research & News
Asset Allocation Weekly (March 29, 2019)
by Asset Allocation Committee Long-dated Treasury bonds have enjoyed a strong rally in recent weeks. Fears about future U.S. economic growth, falling global economic growth and a reversal in monetary policy expectations have all conspired to lower yields. The question now is whether or not yields have fallen more than is justified by the fundamental factors.… Read More »
Weekly Geopolitical Report – Modern Monetary Theory: Part III (March 25, 2019)
by Bill O’Grady In Part II, we discussed the principles and consequences of Modern Monetary Theory (MMT). This week’s installment will be devoted to the importance of paradigms. Next week, we will conclude the series with a discussion on the potential flaws of MMT along with market ramifications. The Importance of Paradigms Every major shift in… Read More »
Asset Allocation Weekly (March 22, 2019)
by Asset Allocation Committee One factor we have been tracking is the recent behavior of retail money market funds. We have noted that households began building money market funds about the time that the equity market peaked and U.S. trade policy began to turn toward protectionism. In the coming months, money market funds continued to rise… Read More »
Quarterly Energy Comment (March 21, 2019)
by Bill O’Grady The Market Oil prices have been volatile over the past few months. In October, OPEC producers increased output in anticipation of U.S. sanctions on Iran. However, the Trump administration granted more waivers for Iranian exports than anticipated, leading to more oil supply. As the above chart shows, prices plunged, falling from $78… Read More »
Weekly Geopolitical Report – Modern Monetary Theory: Part II (March 18, 2019)
by Bill O’Grady In Part I of this four-part series, we introduced this report and discussed the origin narratives of Modern Monetary Theory (MMT). This week, we will examine the principles and consequences of the theory. Principles of MMT[1] MMT begins its analysis with a focus on macroeconomic identities and flows.[2] The theory states that the… Read More »
Asset Allocation Weekly (March 15, 2019)
by Asset Allocation Committee The Financial Accounts of the United States, formerly known as the Flow of Funds Report, was released last week. It is a plethora of information about the state of the economy. Below we discuss the charts we find most noteworthy. First, here is the saving balance by sector. The tax cut has… Read More »
Weekly Geopolitical Report – Modern Monetary Theory: Part I (March 11, 2019)
by Bill O’Grady In recent weeks, Modern Monetary Theory (MMT) has become a hot topic of discussion. Given the level of controversy, we want to provide our take on the theory. One could wonder if this topic is appropriate for a geopolitical report. We are using this report to examine MMT because, in our opinion, its… Read More »
Asset Allocation Weekly (March 8, 2019)
by Asset Allocation Committee The Federal Reserve is experiencing a crisis of sorts. For years, policymakers have used the Phillips Curve as a guide to policy. The Phillips Curve postulates that there is a tradeoff between inflation and unemployment. Essentially, to quell inflation policymakers need to raise rates to create unemployment. The basic idea is that… Read More »
Weekly Geopolitical Report – The Irish Question: Part II (March 4, 2019)
by Bill O’Grady Last week, we examined the geopolitics of Britain and offered an abbreviated history of Irish/British relations. This week, we will begin by analyzing the Good Friday Agreement, followed by an analysis of Brexit regarding the Irish question. As always, we will conclude with market ramifications. The Good Friday Agreement By the late 1990s,… Read More »
Asset Allocation Weekly (March 1, 2019)
by Asset Allocation Committee Our cyclical position on foreign investing remains with a zero allocation; although the committee has not been negative on foreign, our work suggested that the risk/reward compared to small and mid-cap stocks warranted putting more assets in those areas. However, we are continuing to pay close attention to foreign as an area… Read More »