Research & News
Asset Allocation Weekly (July 8, 2016)
by Asset Allocation Committee One of the great characteristics about working in financial services is that there are always surprises. Recently, we came across a situation in the S&P earnings data that we had not noticed before. It is well known that earnings have two variations—as reported and operating. As reported earnings include all costs. Thus,… Read More »
Asset Allocation Weekly (July 1, 2016)
by Asset Allocation Committee The Brexit situation is dominating the financial news, and rightly so—such events are unusual and their outcomes are usually uncertain. As part of our asset allocation process, we examine these types of issues and adjust our portfolios to account for them. Although our process is cyclical, meaning we pay particular attention to… Read More »
Weekly Geopolitical Report – The 2016 Mid-Year Geopolitical Outlook (June 27, 2016)
by Bill O’Grady As is our custom, we update our geopolitical outlook for the remainder of the year as the first half comes to a close. This report is less a series of predictions as it is a list of potential geopolitical issues that we believe will dominate the international landscape for the rest of the… Read More »
Asset Allocation Weekly (June 24, 2016)
by Asset Allocation Committee Last week, St. Louis FRB President Bullard issued a position paper that represents a significant departure from what has been standard policy at the Federal Reserve. Our first hint that something had changed was noticed in the dots chart. First, there were two dots that indicated no change in policy in 2017… Read More »
Weekly Geopolitical Report – The Real Risk of Brexit (June 20, 2016)
by Bill O’Grady In February, we presented an analysis of Brexit, which is shorthand for Britain’s potential departure from the European Union (EU). The referendum is slated for June 23.[1] In general, the points discussed in the aforementioned report on the economy, trade, regulatory policy, immigration and the U.K.’s geopolitical “footprint” all still hold. There… Read More »
Asset Allocation Weekly (June 17, 2016)
by Asset Allocation Committee Our asset allocation process has generally favored longer duration fixed income instruments. We have expected inflation to remain low due to continued globalization and deregulation. Over time, low inflation brings low long-term interest rates. In recent weeks, domestic long-term interest rates have declined significantly. Although this isn’t a huge surprise to us,… Read More »
Weekly Geopolitical Report – The Trade Facilitation and Trade Enforcement Act (June 13, 2016)
by Bill O’Grady In February, President Obama signed the Trade Facilitation and Trade Enforcement Act, a broad refresh of U.S. trade laws. Title VII of this law concerns exchange rate and economic policies. The earlier law, passed in 1988, required the Treasury Department to determine if a nation was “manipulating” its exchange rate. If a… Read More »
Asset Allocation Weekly (June 10, 2016)
by Asset Allocation Committee In our asset allocation process, we focus on cyclical trends—trends that tend to have three- to five-year time horizons. Two examples of these sorts of trends are the business cycle and the monetary policy cycle. Although both cycles can last longer or less than three to five years, in general, these types… Read More »
Weekly Geopolitical Report – The Tragedy of Venezuela (June 6, 2016)
by Bill O’Grady The decline in oil prices has been a major problem for oil-exporting nations. In general, the degree of disruption is mostly based on how well the country was run before oil prices plunged. Venezuela has arguably been the worst run of the major oil producers. The late President Hugo Chavez built an… Read More »
Asset Allocation Weekly (June 3, 2016)
by Asset Allocation Committee The prolonged weakness seen in capital spending is a concern for the economy and equity markets. This chart shows the yearly change in the three-month smoothed non-defense capital goods orders excluding aircraft. The Census Bureau changed how it calculates this series in 1992; we have overlapped the yearly change in the earlier… Read More »