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. There are no changes to the portfolio this month. Growth and inflation expectations rose somewhat since last month's update. The change is minor though and within the range of what we've seen in recent [...]
The majority of the economic reports over the last two weeks have been disappointing, less than the consensus expectations. The minor rebound in activity we've been tracking since last summer appears to have stalled. Retail sales continue to disappoint and inventory/sales ratios are once again rising - from already elevated levels. Even the positive reports were clouded by negative undertones. [...]
In my last update two weeks ago I commented on the continued weakness in the economic data. The economic surprises were overwhelmingly negative and our market based indicators confirmed that weakness. This week the surprises are not in the economic data but in the indicators. And surprising as well is the source of the outbreak of optimism in the bond [...]
In the strict cohort of central bankers, at least the Fed isn’t yet the Bank of Japan. The BoJ is run by straight clowns, a sort of weird performance art maybe due to almost thirty years of accomplishing nothing. Federal Reserve officials can at least manage to sound legitimate if still acting without success. In the grand scheme of things, [...]
After the Fed “raised rates” a little over a week ago, the US treasury market responded with another collective shrug. Long-term rates fell rather than rose, having already responded that way to the prior two hikes. The word “conundrum” has sadly been revived. It is unfortunate because treasury market behavior in the middle of the last decade was never a [...]
There are four basic categories to the PBOC’s balance sheet, two each on the asset and liability sides of the ledger. The latter is the money side, composed mainly of actual, physical currency and the ledger balances of bank reserves. Opposing them is forex assets in possession of the central bank and everything else denominated in RMB. Because liabilities need [...]
Earlier this month, the BEA estimated that Disposable Personal Income in the US was $14.4 trillion (SAAR) for April 2017. If the unemployment rate were truly 4.3% as the BLS says, there is no way DPI would be anywhere near to that low level. It would instead total closer to the pre-crisis baseline which in April would have been $19.0 [...]
I am a long-term optimist by nature. Stop laughing. I am well aware I have attained a reputation as something of a permabear, but that is merely the consequence of the time period in which we inhabit. Read some of the things I wrote in 2009 (and even in early 2010) and you might think them authored by an entirely [...]
Suddenly central banks are mesmerized by yield curves. One of the jokes around this place is that economists just don’t get the bond market. If it was only a joke. Alan Greenspan’s “conundrum” more than a decade ago wasn’t the end of the matter but merely the beginning. After spending almost the entire time in between then and now on [...]
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. There are no changes to the portfolio this month. The growth and inflation outlook continued to weaken somewhat since last month's update. Certainly nothing very dramatic though, just a general, gentle trend of weaker [...]
Stay In Touch