Research & News
Asset Allocation Weekly (October 19, 2018)
by Asset Allocation Committee The accompanying notes to the release of the FOMC minutes on October 17th indicated expectations from a majority of members to eventually push fed fund rates above the level that they would otherwise view as neutral. In the most recent projections, the average of members’ estimates for the neutral level by 2021… Read More »
Keller Quarterly (October 2018)
Letter to Investors Here we are just a little more than three-quarters of the way through 2018. While many might regard this as a rather unusual year for the stock market, it really hasn’t been all that unusual. This is true even though the market is now experiencing its second downturn of greater than 5%… Read More »
Asset Allocation Quarterly (Fourth Quarter 2018)
The U.S. economy is stable and growing, with sentiment indicators remaining high. A recession is not included in our cyclical forecast. The Fed’s tightening policy has thus far had modest effects. We expect a continuation of increases in the fed funds rate in tandem with a reduction of the Fed’s balance sheet. Though unemployment is… Read More »
Asset Allocation Weekly (October 12, 2018)
by Asset Allocation Committee Politics is usually an uncomfortable topic for financial market analysts. The subject is fraught with high emotion, and being overly concerned about a specific political outcome can sometimes cloud judgement. At the same time, political trends offer insight into future policy changes that can affect financial market performance. For example, we have… Read More »
Weekly Geopolitical Report – The Dollar Problem: Part II (October 8, 2018)
by Bill O’Grady Last week, we introduced the characteristics of a reserve currency, including a discussion of the costs and benefits of providing the reserve currency. This week, we will conclude the report with a short explanation of the S.W.I.F.T. network and its importance to international finance. From there, we will discuss the potential competitors to… Read More »
Asset Allocation Weekly (October 5, 2018)
by Asset Allocation Committee As the unemployment rate declines, there is a worry that wage growth may accelerate and lead to a wage-price spiral, forcing the FOMC to raise rates rapidly. Although possible, the key issue is slack in the labor market. Based on the unemployment rate, there would appear to be little; based on the… Read More »
Weekly Geopolitical Report – The Dollar Problem: Part I (October 1, 2018)
by Bill O’Grady In May, the Trump administration exited the Joint Comprehensive Plan of Action (JCPOA), otherwise known as the Iran nuclear deal.[1] In conjunction with its exit, the U.S. implemented new sanctions and the goal of U.S. policy is to reduce Iran’s oil exports to zero barrels by November. The other parties in the agreement,… Read More »
Asset Allocation Weekly (September 28, 2018)
by Asset Allocation Committee Since late August, interest rates have been steadily rising. The 10-year T-note yield made its recent low at 2.82%[1] on August 4th. Since then, yields have moved above 3.00%. Our 10-year T-note model suggests rates are a bit elevated. This model includes fed funds and the 15-year moving average of inflation (a… Read More »
Weekly Geopolitical Report – The Venezuelan Migration Crisis: Part II (September 24, 2018)
by Bill O’Grady Last week, we discussed Venezuela’s economic and political situations. Part II begins with a discussion on migration with a focus on emigrant flows. We include an analysis of the problems caused by migration followed by an examination of the possible end to this crisis and the broader geopolitical issues. As always, we will… Read More »
Asset Allocation Weekly (September 21, 2018)
by Asset Allocation Committee In this week’s report, we will focus on the U.S. economy. Since the 1987 crash every major equity market decline has coincided with a recession. Thus, we pay close attention to the economy with the goal of projecting the next recession. This expansion, which began in June 2009, is now the second… Read More »