Weekly Asset Allocation Highlights

Risky assets continued recovering last week with International assets out-performing domestic assets
Developed market equities did best this week with EAFE out-performing the US
EM equity and bonds recovered from pretty poor momentum – currency helped last week for a change
A 60/40 mix of purely US assets under-performed a global version but remains vastly ahead YTD
In general, higher risk multi-asset strategies out-performed last week and remain ahead YTD

Currencies:

The USD gave up ground last week – the second week in a row
Foreign central banks are reading their way toward policy normalization
Within EM currencies the pattern was bullish with wide-ranging appreciation versus the USD
- The Rand and Real recovered nicely
Among the major currencies, resource-oriented currencies such as the AUD and CAD appreciated the most
The Yuan has stabilized after a period of depreciation – authorities have refrained so far from using a weaker currency to fight tariffs

Lumber suffered a disastrous week as conditions of over-valuation are being worked through
Grains are getting whipsawed by trade war on/off issues but in general, benefited from the belief that negotiations will take place between China and the US
Coffee recovered along with the Brazilian Real
Oil keeps marching higher as economic growth remains robust and sanctions against Iran take a bite out of supplies
Gold and Silver were stable last week for a change but barring a real crisis continue on a downtrend

Risky assets keep outperforming despite political headwinds
The strong USD keeps crushing investors in international assets but should be losing some momentum.
EM equities, in particular, are taking a huge hit both on the asset side as well as currency
Growth is outperforming Value YTD but things may be turning around especially if interest rates remain range bound
Gold and Silver are losing their luster – not providing downside hedge and very driven by trends in short-term rates
What will make investors price risk more in line with history?
- A growth scare in the US, maybe? A real inflation scare? Waiting for Impeachment?
Biggest issue for investors is lack of a reasonable hedge to equity risk

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Eric J. Weigel

Global Focus Capital LLC

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