Weekly Asset Allocation Highlights

Equities had again a big week last week as the market focused on growth again
US assets once again dominated non-US assets as the US dollar regained some lost ground
US REITS have continued their comeback after falling apart earlier in the year
Commodity index composition is playing a big role as divergences among commodities are accentuated
A 60/40 mix of purely US assets slightly out-performed a global version
Higher risk multi-asset strategies out-performed last week

Currencies:

The USD was flat last week
- Down against developed market currencies but up against em currencies
Within EM currencies the pattern was mixed
- The Rand depreciated over 2% while Rubble and Brazilian Real continued in a downtrend
Among the major currencies, the US dollar lost the most ground versus the Swiss Franc
The Yuan has stabilized after a period of depreciation but remains volatile within the “official” range

Grains are getting whipsawed by trade war on/off issues
- Corn and soybeans continue being most at risk
Oil is also getting whipsawed by political tensions but had an up week due to smaller inventories in the US, robust Chinese demand and output curbs in Iran
Gold and Silver lost more ground last week and the trend is down especially as ST interest rates keep climbing higher
The large fall in coffee prices last week was again blamed on the falling Brazilian real

Still watching the USD – crushing investors in international assets but should be losing some momentum
International equities keep losing ground to US stocks despite superior fundamentals
EM equities, in particular, are taking a huge hit both on the asset side as well as currency
- China has a lot to do with this given its weight in the MSCI index (30%)
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?
Macro Events: Manufacturing (JP, UK, Germany, US), Trade Balance (US, China), lots of Fed Governor Speeches

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Eric J. Weigel

Global Focus Capital LLC

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