Research & News
Asset Allocation Weekly (June 30, 2017)
by Asset Allocation Committee For equity investors, there is always a concern about the major market declines; being able to reduce market exposure prior to crashes like the ones in 2000 or 2008 is always desirable. Although large declines have occurred outside of economic recessions, they have become increasingly rare. The last major market pullback absent… Read More »
Weekly Geopolitical Report – The Second Korean War: Part II (June 26, 2017)
by Bill O’Grady (N.B. Due to the Independence Day holiday, our next report will be published on July 10th. That edition will be our Mid-Year Geopolitical Update.) Last week, we offered background on the situation with North Korea. We presented a short history of the Korean War with a concentration on the lessons learned by the… Read More »
Asset Allocation Weekly (June 23, 2017)
by Asset Allocation Committee The FOMC did raise rates at the June meeting, which was fully expected. The dots chart suggested that we would see one more hike this year and three next year. In addition, the central bank gave some indication of how it would shrink its balance sheet. Although the statement didn’t signal when… Read More »
Weekly Geopolitical Report – The Second Korean War: Part I (June 19, 2017)
by Bill O’Grady Tensions with North Korea have been escalating in recent months. The regime has tested numerous missiles and claims to be capable of building nuclear warheads, which, combined with an intercontinental ballistic missile (ICBM), would make the Hermit Kingdom a direct threat to the U.S. Such a situation is intolerable to the U.S., and… Read More »
Asset Allocation Weekly (June 16, 2017)
by Asset Allocation Committee Last week, the Federal Reserve published its Financial Accounts of the United States report, more commonly called the “Flow of Funds” data. The report offers a plethora of insights into the economy. This week we want to examine the household debt situation. In Q1, household debt reached $15.1 trillion, up 3.4% from… Read More »
Weekly Geopolitical Report – South Korea’s Too Big to Fail (June 12, 2017)
by Thomas K. Wash On March 10, Park Geun-hye was removed from her position as president of South Korea. Her ouster came on the heels of a scandal involving her close confidant who is accused of seeking bribes from chaebols, a group of family-owned multinational conglomerates that dominate the South Korean economy, to curry favor with… Read More »
Asset Allocation Weekly (June 9, 2017)
by Asset Allocation Committee We have been monitoring the S&P 500 performance relative to new GOP administrations. Based on the historical pattern, the market has reached the average peak level a few weeks early. This chart shows the performance of the S&P 500 on a weekly close basis, indexed to the first Friday of the first… Read More »
Weekly Geopolitical Report – Are the Germans Bad? (June 5, 2017)
by Bill O’Grady At the NATO meetings late last month, the German media reported that President Trump had called the Germans “bad” for running trade surpluses with the U.S. The president threatened trade restrictions, focusing on German automobiles. Needless to say, this comment caused a minor international incident. Although such incidents come and go, it did… Read More »
Asset Allocation Weekly (June 2, 2017)
by Asset Allocation Committee In the last FOMC minutes, policymakers signaled another hike at the upcoming June 14th meeting. We continue to closely monitor financial conditions but, so far, financial markets are rather sanguine about the impact of policy tightening. The blue line on the chart shows the Chicago FRB Financial Conditions Index, which measures the… Read More »
Asset Allocation Weekly (May 26, 2017)
by Asset Allocation Committee The dollar is in its third major bull market since currencies began floating in 1971. This chart shows the JPM dollar index which adjusts for relative inflation and trade. The previous two bull markets exhibited greater strength than the current one. Because of the dollar’s reserve currency role, there will always be… Read More »