201505.17
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10 Year Expected Returns and the Taylor Rule

After 3 decades of disinflation and 15 years of very aggressive monetary policy, asset prices are high. Returns are expected to be below average for the next decade. Given the hyper-aggressive monetary policy of the last 6 years, the historically low yields on bonds means multi-asset class portfolios will be hampered by low returns on…

201501.30
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Research Charts: ECB and Commodities

From strategic research partner MRB…with Alhambra’s added commentary. QE is primarily a signaling device to demonstrate policymakers’ commitment to fostering the recovery and sustaining a cohesive monetary union. The policy is implicitly designed to reduce the equity risk premium. We expect a gradual re-rating of euro area equities. A cheaper euro, itself associated with QE,…

201407.24
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Pity Japan

I have little doubt that the most perverse aspect of orthodox economics is the idea of monetary neutrality. Taken as nothing more than an article of faith, monetary practitioners use the principle as cover to undertake drastic and blunt intrusions into markets and economies, with no guilt over having done so because they can simply…

201403.30
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Tactical Update

Sell EZU: Buy HEDJ We have added a currency hedge to our European exposure. Dollar funding costs are rising. Eurodollars for December 2016 fell 25 basis points in one day after the March Fed meeting. Europe relies on Russia for energy. Economic sanctions against Russia would hurt Europe. The price of North Sea oil rose 2%…

201311.24
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Tactical Update

In today’s environment, our focus is on finding good companies and unique investing opportunities. We added one such company to the portfolio this week. The company has enviable revenue growth, strong operating margins, great returns on capital, growing cash flows and a P/E 20% below the broader market. The company also happens to have a…

201309.02
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Tactical Update

The stock market continues to show weakness. There is plenty to be concerned with: Global conflicts — Syria US foreign policy–alliances or lack there of G20 Summit this week in St. Petersburg, Russia Earnings growth Broad market equity outflows Debt ceiling and the pending debate…”We’re going to have a whale of a fight.” – House…

201306.16
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Tactical Update

As reported last week, we added some companies from our watch list.  The expectation is that these buys will eventually be offset with sales of companies which we don’t feel offer the upside potential. The market did not start the week strong.  It headed south and tested the 50 day technical line again; support did…

201306.09
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Tactical Update

As we’ve been reporting, the economic data has been showing weak performance.  But, the market hasn’t seemed to mind.  QE is in high gear.  It is supporting asset prices as the over-leveraged sectors of the economy heal themselves.  The banking and household sector received bailouts and a slow healing process puts them in a better…