Research & News
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 »
Weekly Geopolitical Report – Intergenerational Forgetfulness (April 11, 2016)
by Bill O’Grady As the political nominating season in the U.S. wears on, presidential candidates have been making statements about foreign policy that would signal a significant change in direction. What has been striking about these comments is a seeming ignorance about why current policies are in place and what could occur if these policies… Read More »
Asset Allocation Weekly (April 8, 2016)
by Asset Allocation Committee One of our key investment decisions in terms of asset allocation has been to avoid emerging markets. There are primarily two reasons for this call. First, as the U.S. pulls back from its superpower position, the emerging world, which tends to be more dependent on exports for economic development, faces two significant… Read More »
Weekly Geopolitical Report – The Archetypes of American Foreign Policy: A Reprise (April 4, 2016)
by Bill O’Grady We are currently experiencing one of the most contentious primary election seasons in at least 35 years. Candidates have made numerous incendiary statements about foreign policy that offer insights into their thinking. However, without a paradigm, it can be difficult for investors to determine what foreign policy decisions a candidate is likely… Read More »
Asset Allocation Weekly (April 1, 2016)
by Asset Allocation Committee In the most recent GDP report, corporate profits plunged. The overall decline in profits was $153 bn in Q4, although some of this drop was due to an $83 bn settlement that BP had with the government over the 2010 Gulf of Mexico oil spill. We have been noting for some time… Read More »
Quarterly Energy Comment (March 24, 2016)
by Bill O’Grady The Market Oil prices have fallen steadily over the past year, reaching a new low early in the first quarter just below $30 per barrel. Since mid-February, they have staged an impressive recovery. Oil Prices and Inventories This rally has occurred despite historic levels of U.S. commercial crude oil inventories. The chart… Read More »