201805.15
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Global Asset Allocation Update

The risk budget changes this month as I add back the 5% cash raised in late October. For the moderate risk investor, the allocation to bonds is still 50% while the risk side now rises to 50% as well. I raised the cash back in late October due to the extreme overbought nature of the…

201805.01
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Is It Over?

The world is full of anomalies. It may seem like a paradox, but financial markets are particularly eventful places. Something happens, some people notice, and most often it goes…nowhere. It’s all the time and a constant part of analysis, trying to identify and separate what is truly contained. The global eurodollar monetary system grew so…

201804.13
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Global Asset Allocation Update: The Certainty of Uncertainty

There is no change to the risk budget this month. For the moderate risk investor, the allocation to bonds is 50%, risk assets 45% and cash 5%. Stocks continued their erratic ways since the last update with another test of the February lows that are holding – for now. While we believe growth expectations are moderating…

201804.10
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Bi-Weekly Economic Review: Investing Is Not A Game of Perfect

The market volatility this year has been blamed on a lot of factors. The initial selloff was blamed on a hotter than expected wage number in the January employment report that supposedly sparked concerns about inflation – although a similar number this month wasn’t mentioned as a cause of last Friday’s selling. The unwinding of…

201804.09
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Deutsche Bank Replaces Another CEO; Or, Bubbles And Money

Another global bank CEO is given his walking papers. John Cryan’s tenure at Deutsche Bank was unsurprisingly brief. He began it by being realistic. Upon being hired for the top job, Cryan predicted his stay there would, “[depend] on how well we deliver on strategy, impress clients and reduce complexity.” It’s that last one nobody…

201804.03
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Curse of the Zombie Junk

If the road to Hell is paved with good intentions, in economic terms the paving is done by zombies. We’ve all heard of the convention regarding Japanification. In desperation trying to avoid a worse fate, many of Japan’s tortured financial institutions were left open and operating so as to not force losses too much at…

201803.28
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Stocks’ Price to Eventually Ratio

The Bureau of Economic Analysis (BEA) revised upward fourth quarter 2017 Real GDP. The second estimate had been revised lower to 2.50458% (continuously compounded annual rate of change) from the advanced estimate. The third and final calculation raises the quarterly increase to 2.84707%. None of the changes are substantial. Accompanying these revisions are the BEA’s…

201803.27
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Bi-Weekly Economic Review: Embrace The Uncertainty

There’s something happening here What it is ain’t exactly clear There’s a man with a gun over there Telling me I got to beware I think it’s time we stop, children, what’s that sound Everybody look what’s going down There’s battle lines being drawn Nobody’s right if everybody’s wrong Young people speaking their minds Getting…

201803.23
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Chart of the Week: JPY, not Payrolls

The biggest risk to the bond bear case, that expressed by Bill Gross, Jeffrey Gundlach, and Ray Dalio, is, ironically, stocks. Convention has it that rising interest rates are bad for them, but what are falling stock prices for UST’s? Historically speaking, the introduction of risk and even liquidations is bond positive. When the last…

201803.20
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The Blind Interviewing The Blind; Or, Bubble Time

At the end of last month, the Brookings Institute hosted a conversation where one of their most distinguished current scholars introduced and interviewed one of their newest. The former was former Federal Reserve Chairman Ben Bernanke welcoming the latter, former Federal Reserve Chairman Janet Yellen. Listening to them talk was a total delight (thanks T….