Weekly Asset Allocation Highlights

Risky assets recovered last week – it seems like every other week we flip around – maybe this week is going to be good for bonds?
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 a bit of ground last week
Foreign central banks are reading their way toward policy normalization
Within EM currencies the pattern was mixed – the Rand and Rubble recovered nicely but the Brazilian Real continued its downward slide
Among the major currencies, the euro outperformed
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
Coffee also keeps getting pounded by the depreciating Brazilian Real
Oil is also getting whipsawed by political tensions – up a little last week as curbs on Iranian oil take effect
Gold and Silver were stable last week for a change but barring a real crisis continue on a downtrend

Are political issues in Washington of any concern to markets? Is the Manafort plea deal the beginning of the end?
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 -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
Global Tech has performed well this year but short-term it is in a break Down phase. More bad news to come or buy the dip? We are holding steady, not buying more.
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?

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Eric J. Weigel

Global Focus Capital LLC

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