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
- 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
This Coming Week:
- 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
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