Research & News
Asset Allocation Weekly (May 3, 2019)
by Asset Allocation Committee Covered interest rate parity is a basic concept that, at its heart, says all interest rates are equal after hedging exchange rate risk. It is one of the theories in finance that is beyond dispute—it works as long as capital markets are open (free of capital controls) and short-term money markets are… Read More »
Daily Comment (May 3, 2019)
by Bill O’Grady and Thomas Wash [Posted: 9:30 AM EDT] It’s employment Friday! We cover the data in detail below, but the quick take is that it was a blowout report. Payrolls were well above forecast and the unemployment rate fell to its lowest level since December 1969. Here is what we are watching: Moore… Read More »
Daily Comment (May 2, 2019)
by Bill O’Grady and Thomas Wash [Posted: 9:30 AM EDT] Some markets, notably China and Japan, remain closed for May Day. Here is what we are watching: The Fed: As expected, the FOMC left rates unchanged. The statement acknowledged the pickup in economic growth but tempered that positive comment by indicating that household spending and… Read More »
Daily Comment (May 1, 2019)
by Bill O’Grady and Thomas Wash [Posted: 9:30 AM EDT] Happy May Day, the international Labor Day! It’s also Fed day. Here is what we are watching: The Fed: The president continues to press the FOMC to cut rates.[1] So far, his demands have not had much effect, although we can make a cogent case… Read More »
Daily Comment (April 30, 2019)
by Bill O’Grady and Thomas Wash [Posted: 9:30 AM EDT] As we bid goodbye to April, there’s a new emperor in Japan and the IS leader re-emerges. China’s PMI data (see below) came in a bit light.[1] On the other hand, Europe’s GDP came in better than expected.[2] Here is what we are watching: Spanish… Read More »
Weekly Geopolitical Report – Reflections on Domestic Policy and American Hegemony: Part II (April 29, 2019)
by Bill O’Grady Two weeks ago, we introduced this report with a review of the basics of the reserve currency and the savings identity. This week, we will examine two important historical analogs, the Nixon and Reagan administrations. #1: The Nixon Analog As President Nixon prepared for the 1972 presidential campaign, he faced a number of… Read More »
Daily Comment (April 29, 2019)
by Bill O’Grady and Thomas Wash [Posted: 9:30 AM EDT] Happy Monday! It was a cold weekend in the Midwest, with a late April snow for the upper parts of the nation’s midsection. It’s going to be a busy week, with the FOMC meeting and Japan’s Emperor Akihito taking the rare step of abdication tomorrow.[1] … Read More »
Asset Allocation Weekly (April 26, 2019)
by Asset Allocation Committee One of the age-old problems of analysis is the problem of correlation versus causality. Correlations simply show the degree of relation; the range runs from -1 (perfectly negative) to +1 (perfectly positive). In any introductory statistics class, the instructor will discuss the difference between relation and causality. Here is an example: Although… Read More »
Daily Comment (April 26, 2019)
by Bill O’Grady and Thomas Wash [Posted: 9:30 AM EDT] It’s GDP day! We cover the numbers in detail below, but our quick take is that the data was much stronger than expected, coming in at 3.2%, well above the +2.3% forecast. Here is what we are watching: Disappointing Japan: Although inflation was modestly higher… Read More »
Daily Comment (April 25, 2019)
by Bill O’Grady and Thomas Wash [Posted: 9:30 AM EDT] It’s another mostly quiet morning as a plethora of earnings are released. Here is what we are watching: South Korea goes negative: Real GDP slipped into negative territory in Q1. Weak investment spending led to the unexpected slowdown. Although exports were weak, on a net… Read More »