Weekly Asset Allocation Highlights

The out-performance of domestic assets continued last week
A 60/40 mix of purely US assets vastly out-performed a global version
REITS had been slowly recuperating but last week they really took off
- Their behavior has recently become more aligned/correlated with equity markets
International stocks continue under-performing despite cheaper valuations
- EAFE in local currency is outperforming by 3.33% YTD
- EM in local currency is outperforming by 5.13% YTD

Currencies:

The USD keeps chugging along notching weekly wins
EM currencies continue their pattern of depreciation
The biggest loser was the SA Rand – concerns over slower economic growth was a driver as well as contagion from the Turkish Lira
The rubble has stabilized but for how long?
The YEN was up slightly last week as monetary policy is likely to normalize soon in Japan

Grains are getting whipsawed by trade war on/off issues
Oil is also getting whipsawed by political tensions between the US and Iran – technicals are deteriorating
Gold and Silver continue a down-trend with little sign of relief especially as ST interest rates keep climbing higher
Lumber prices have become incredibly volatile and subject to trade issues between CA and the US

Watching the USD – crushing investors in international assets
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
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?

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Eric J. Weigel

Global Focus Capital LLC

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