Research & News
Weekly Geopolitical Report – North Korea: An Update (September 18, 2017)
by Bill O’Grady The Kim regime has become increasingly belligerent, launching a number of ballistic missiles and testing what appears to be a hydrogen device. It is also claiming it has miniaturized a warhead, meaning, if true, North Korea is a nuclear power. The U.S. has indicated this development is unacceptable. Although the Trump administration still… Read More »
Asset Allocation Weekly (September 15, 2017)
by Asset Allocation Committee In our most recent asset allocation rebalancing, we added foreign allocations to our portfolios. Over the past few years, we had generally avoided allocations to non-U.S. markets in asset allocation portfolios due to two primary concerns. First, the dollar had been appreciating as a result of an improving U.S. economy and policy… Read More »
Weekly Geopolitical Report – Reflections on Nationalism: Part III (September 11, 2017)
by Bill O’Grady Three weeks ago, we began our series on nationalism. In Part I, we discussed social contract theory before and after the Enlightenment. We examined three social contract theorists, Thomas Hobbes, John Locke and Jean-Jacques Rousseau. In Part II, we recounted Western history from the American and French Revolutions into WWII. From there, we… Read More »
Asset Allocation Weekly (September 8, 2017)
by Asset Allocation Committee As the FOMC prepares to reduce its balance sheet, it’s a good time to update our views on long-term interest rates. The chart below shows our current estimate of fair value for the 10-year Treasury. The model uses fed funds, the 15-year moving average of CPI (an inflation expectations proxy), the yen/dollar… Read More »
Asset Allocation Weekly (September 1, 2017)
by Asset Allocation Committee We have previously documented the difference between S&P 500 operating earnings reported by Thomson/Reuters and Standard and Poor’s. Although both series purport to measure the same thing, there can be rather wide divergences. These exist due to differences in how unusual events are accounted for; we do often see long periods where… Read More »
Weekly Geopolitical Report – Reflections on Nationalism: Part II (August 28, 2017)
by Bill O’Grady (Due to the Labor Day holiday, the next report will be published on September 11.) Last week, we began our series on nationalism. In Part I of this report, we discussed social contract theory before and after the Enlightenment. We examined three social contract theorists, Thomas Hobbes, John Locke and Jean-Jacques Rousseau. This… Read More »
Asset Allocation Weekly (August 25, 2017)
by Asset Allocation Committee When President Trump was elected, there were expectations that fiscal policy would become more stimulative, which would lead to faster growth, tighter monetary policy and dollar strength. There were also promises of regulatory relief. In November, soon after the election, financial markets, exercising their usual pattern of discounting the future, immediately began… Read More »
Weekly Geopolitical Report – Reflections on Nationalism: Part I (August 21, 2017)
by Bill O’Grady Over the last decade, the West has seen a series of tumultuous events. Of course, ten years ago the world was trying to cope with the Great Financial Crisis which raised fears of a repeat of the Great Depression. Although that outcome was avoided, deep underlying problems remain. Southern Europe faced a series… Read More »
Asset Allocation Weekly (August 18, 2017)
by Asset Allocation Committee A number of market commentators have suggested current conditions are similar to 1987. Complacency, shown by the low level of volatility and an elevated P/E, is rampant. On the other hand, there is no evidence a recession is looming and, although monetary policy is tightening, the Federal Reserve has been raising rates… Read More »
Weekly Geopolitical Report – The Qatar Situation: Part II (August 14, 2017)
by Bill O’Grady Last week, we discussed a short history of Qatar and its geopolitical imperatives. This week, we will analyze the events precipitating the blockade, the blockade itself, the GCC’s demands and the impact thus far on Qatar. We will examine how the situation has reached a stalemate and, as always, we will conclude with… Read More »