Research & News
Daily Comment (December 19, 2016)
by Bill O’Grady, Kaisa Stucke, and Thomas Wash [Posted: 9:30 AM EST] Markets are quiet as we head into the last two weeks of the year, although there is an old faithful tendency for the “Santa Claus Rally,” which usually runs the last five days of the old year and the first two days of the… Read More »
Asset Allocation Weekly (December 16, 2016)
by Asset Allocation Committee Equity markets are expensive by numerous measures and have become even more extended in the wake of the “Trump Rally.” As noted in our weekly P/E update (found in the last section of the Daily Comment), our four-quarter measure of the P/E is elevated. Another well-known derivation of the “Buffet Indicator” has… Read More »
Daily Comment (December 16, 2016)
by Bill O’Grady, Kaisa Stucke, and Thomas Wash [Posted: 9:30 AM EST] With the release of CPI data, we can update our versions of the Mankiw rule model, incorporating the recent rate changes by the FOMC (we assume December’s data will be close to November’s releases). This model attempts to determine the neutral rate for fed… Read More »
Daily Comment (December 15, 2016)
by Bill O’Grady, Kaisa Stucke, and Thomas Wash [Posted: 9:30 AM EST] The Fed gave us a modest hawkish surprise, calling for three rate hikes in 2017 rather than two. That was taken as bearish by the financial markets yesterday with Treasury yields rising, equities declining and the dollar rising. U.S. equities are mostly flat this… Read More »
Daily Comment (December 14, 2016)
by Bill O’Grady, Kaisa Stucke, and Thomas Wash [Posted: 9:30 AM EST] It’s FOMC day! The statement comes out at 2:00 EST with the press conference a half hour later. We will also get new forecasts and a refreshed “dots” plot. Market expectations call for a “dovish tightening,” where the FOMC raises rates by 25 bps… Read More »
Daily Comment (December 13, 2016)
by Bill O’Grady, Kaisa Stucke, and Thomas Wash [Posted: 9:30 AM EST] The FOMC begins its meeting today. Tomorrow we expect to see a 25 bps rate hike and little, if any, change to the structure of the dots plot. These expectations are based on the idea that, like all of us, the FOMC doesn’t know… Read More »
Weekly Geopolitical Report – The 2017 Geopolitical Outlook (December 12, 2016)
by Bill O’Grady (This will be the last WGR for 2016. The next report will be published on January 9, 2017.) As is our custom, we close out the current year with our outlook for the next one. This report is less a series of predictions as it is a list of potential geopolitical issues that… Read More »
Daily Comment (December 12, 2016)
by Bill O’Grady, Kaisa Stucke, and Thomas Wash [Posted: 9:30 AM EST] The two major news items this morning are OPEC and China. First, OPEC managed to procure pledged cuts of 558 kbpd from non-OPEC producers. This is the first time since 2001 that the cartel has managed to get production cut pledges from producers outside… Read More »
Asset Allocation Weekly (December 9, 2016)
by Asset Allocation Committee The rapid rise in longer duration Treasury yields since the presidential election has been surprising. As of December 8, the 10-year T-note yield was approximately 2.40%. Although President-elect Trump’s policies will probably be inflationary, it is still unclear how much of his arguably vague plans will get passed. It is possible the… Read More »
Daily Comment (December 9, 2016)
by Bill O’Grady, Kaisa Stucke, and Thomas Wash [Posted: 9:30 AM EST] BREAKING NEWS: The ECB has rejected a request by the troubled Italian bank Monte dei Paschi (BMDPY, $0.18) for an extension of the deadline for the bank to raise more capital. Italian banking authorities had requested more time to complete a €5 bn rescue… Read More »