There is no change to the risk budget this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. The Fed spent the last month forward guiding the market to the rate hike they implemented today. Interest rates, real and nominal, moved up in anticipation of a more aggressive Fed rate hiking cycle. [...]
If there is still no current or present indication of rising economic fortunes, and there isn’t, then the “reflation” idea turns instead to what might be different this time as compared to the others. In 2013 and 2014, it was QE3 and particularly the intended effects (open ended and faster paced, a bigger commitment by the Fed to purportedly do [...]
There hasn't been a lot of change in our indicators since the last update and therefore, despite my discomfort with the altitude of this stock market, there are no changes to the Global Asset Allocation this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. Bond markets moved around some during the [...]
Market based expectations for growth and inflation have moderated slightly since the last update. Since mid-December, interest rates - nominal and real - have fallen back, the yield curve has flattened, the dollar index has pulled back from its highs and gold has moved off its lows. In short, the Trump trade is being partially reversed as it dawns on investors [...]
Economic Reports Scorecard The incoming economic data has improved since the last update with a plethora of reports coming in better than expected. This is the longest run of better than expected data we've had in some time and encompasses a wide variety of indicators. Most surprising I think is that we are seeing a bit of an upturn in [...]
Rumors persisted in China of new foreign currency restrictions from state authorities now trying to crack down on corporate activity. The story was picked up in many news outlets all over the world, but will remain unconfirmed as it is based on reports from the South China Morning Post and others inside the country that have only claimed to have [...]
Economic Reports Scorecard The reported economic data of the last few weeks (it's been 3 weeks since my last update so I guess technically this isn't the Bi-Weekly Review) provides about as much direction and insight as the polls conducted prior to the election. To my eye, the trend here is trendless with a decidedly mixed set of data, each [...]
Economic Reports Scorecard There was little improvement in the economic data the last couple of weeks, the Citigroup Economic Surprise index still well below zero (-8.1). And frankly, where there was improvement such as the GDP report, it doesn't look sustainable...unless the US is about to become a soybean exporting powerhouse. Anything is possible I suppose but counting on Brazil [...]
For many, it was just too good. In early 2013, gold prices were slammed – twice. Just after QE3 was announced, gold had moved back up to almost $1,800 per ounce as it “should” have, reflecting all that future “money printing.” Rather than keep going, however, gold started to drop and then drop some more so that by the time [...]
As with last month, I delayed this update a few days to see if we might gain some clarity that would warrant some change in our allocation. Alas, no such clarity has emerged and so, as it has been since August, the risk budget remains unchanged this month. Indeed, as last month, the entire portfolio is unchanged. For the moderate [...]
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