Research & News
Weekly Geopolitical Report – The Geopolitics of Helicopter Money: Part 2 (May 9, 2016)
by Bill O’Grady Last week, we described in some detail the process of “monetary funded fiscal spending” (MFFS). Part 1 of this series included a discussion of why MFFS might be implemented, how it would work and the potential problems that come with using it. In this week’s report, we will examine two historical examples where… Read More »
Asset Allocation Weekly (May 6, 2016)
by Asset Allocation Committee In our latest adjustment to the asset allocation portfolios, we added to the REIT positions in three of the four models. One of the reasons we remain friendly to this asset class has been the steady increase in rental income. This chart shows rental income from the National Income and Product… Read More »
Weekly Geopolitical Report – The Geopolitics of Helicopter Money: Part 1 (May 2, 2016)
by Bill O’Grady Since the 2008 Financial Crisis, developed economy central banks have been implementing a series of unconventional policy measures, including quantitative easing (QE), zero interest rate policy (ZIRP) and negative interest rate policy (NIRP). Although these measures likely prevented a deeper financial calamity, such as a repeat of the Great Depression, these actions by… Read More »
Asset Allocation Weekly (April 29, 2016)
by Asset Allocation Committee We recently completed our quarterly rebalancing process in our asset allocation models. One of our key assumptions is that the economy will avoid recession but growth will remain sluggish. Recently, two reliable recession indicators, one from the Philadelphia FRB and the other from the Chicago FRB, have confirmed our expectations. First, shown… Read More »
Weekly Geopolitical Report – The Impeachment Proceedings of Dilma Rousseff (April 25, 2016)
by Kaisa Stucke, CFA Brazil’s lower house voted on April 17th to impeach President Dilma Rousseff by a vote of 367 to 137. The process now moves to the Senate, where the country’s 81 senators are expected to vote sometime in the next few weeks, although a final date has not been set. For almost a… Read More »
Asset Allocation Weekly (April 22, 2016)
by Asset Allocation Committee Although it is a widely held assertion that lower gasoline prices will lead to stronger consumption, this correlation has been mostly absent following the most recent decline in fuel prices. We suspect that household deleveraging has tended to weaken the expected impact of lower gasoline prices. However, there does appear to be… Read More »
Keller Quarterly (April 2016)
Letter to Investors An avid baseball fan once invited a business associate to a game. The associate was not much interested in baseball, but he agreed to go. They travelled to the park separately. The true fan got to their seats first well before the game started…and what a game it was! Both pitchers were… Read More »
Weekly Geopolitical Report – Nagorno-Karabakh (April 18, 2016)
by Bill O’Grady In early April, fighting erupted in the region around Nagorno-Karabakh, a disputed area within Azerbaijan but controlled by Armenia. Reporters described the fighting as the worst since the 1994 ceasefire. This region is considered one of the world’s “frozen conflicts,” experiencing periodic unrest. In this report, we will discuss the history and… Read More »
Asset Allocation Quarterly (Second Quarter 2016)
Economic growth will likely remain slow, but stable. We expect the Fed to proceed gradually in raising rates. The labor market continues to strengthen, with more workers entering the labor force, but wage growth remains weak. We expect domestic growth to be higher and more stable than most foreign economies. Therefore, we maintain a significant… Read More »
Asset Allocation Weekly (April 15, 2016)
by Asset Allocation Committee It is becoming apparent that the FOMC is using something other than the Phillips Curve to manage monetary policy. The Phillips Curve postulates that there is a tradeoff between inflation and the labor markets. Economists have developed models based on the Phillips Curve to determine what interest rate target the FOMC “should”… Read More »