● Global Asset Allocation: A Survey of the World’s Top Asset Allocation Strategies
By Meb Faber
Summary via Amazon
With all of our focus on assets – and how much and when to allocate them – are we missing the bigger picture? Our book begins by reviewing the historical performance record of popular assets like stocks, bonds, and cash. We look at the impact inflation has on our money. We then start to examine how diversification through combining assets, in this case a simple stock and bond mix, works to mitigate the extreme drawdowns of risky asset classes. But we go beyond a limited stock/bond portfolio to consider a more global allocation that also takes into account real assets. We track 13 assets and their returns since 1973, with particular attention to a number of well-known portfolios, like Ray Dalio’s All Weather portfolio, the Endowment portfolio, Warren Buffett’s suggestion, and others. And what we find is that, with a few notable exceptions, many of the allocations have similar exposures.
Continue reading →

Asset allocation is second to none in the hierarchy of critical investment decisions, but benchmarking and general analysis in this space can be a slippery affair. That’s no surprise, since portfolio design and management deserves to be customized for each investor. But while asset allocation is largely an insular project, keeping an eye on how these strategies are faring generally is a useful exercise in the cause of developing perspective. With that in mind, I’ll be checking in on a set of asset allocation funds from here on out as an excercise for monitoring and evaluating this critical corner of the money game. As such, it’s really an excuse to kick the tires on a mix of techniques for evaluating portfolios generally.
Continue reading →

● U.S. Durable Goods Orders Rebound 2.8% In January | RTT
● Jobless Claims in U.S. Jump by Most Since December 2013 | Bloomberg
● Consumer Prices Drop, Primarily Because of Falling Gas Prices | NY Times
● Dollar on track for eighth month of gains on U.S. data, Fed outlook | Reuters
● Eurozone macro index rises for 3rd month in February | RTT
● Japan economic data signal slow recovery despite lower oil prices | USN&WR

Deflation risk seems to be making a comeback… again. Germany yesterday sold five-year government notes at a negative yield for the first time in its history. Meanwhile, China’s central bank this week warned that the threat of deflation is rising for the world’s second-largest economy. Europe and Japan, of course, continue to struggle with lowflation/deflation. The US is doing better, thanks largely to stronger growth, but inflation is low and may get lower still. “The problem is that aggregate prices are dipping in so many places at once,” The Economist reminds.
Continue reading →

● Yellen: Economic Future Doesn’t Pivot on Full Employment | MNI
● U.S. new home sales steady near multi-year highs | Reuters
● German consumer confidence at 13-year high despite crises | WaPo
● German Unemployment Rate Remains At Record Low | RTT
● US Mortgage Apps Continue Falling Despite Low Interest Rates | HousingWire
● Germany Sells Five-Year Debt at Negative Yield | NY Times

Fed Chairwoman Janet Yellen’s Senate testimony yesterday suggested that the central bank is still on track to hike rates later this year, courtesy of the stronger economic trend. But the big day may arrive later than previously assumed. It’s all about the data. “Provided that labor market conditions continue to improve,” the Fed will raise rates when it’s “reasonably confident that inflation will move back over the medium term toward our 2% objective,” she advised. But while the official line tells us to prepare for policy tightening at some point, there’s more talk in some corners that the business cycle is looking shaky again. Huh?
Continue reading →

● Yellen Puts Fed on Path to Lift Rates | WSJ
● Consumer confidence slides after big Jan. gain | USA Today
● U.S. services sector activity jumps in February: Markit | Reuters
● Case-Shiller: “The housing recovery is faltering” | HousingWire
● PMI: China mfg output at 4-mo high in Feb but export orders contract | Reuters
● Richmond Fed: Manufacturing Shows Growth Slowed | Bond Buyer

Fed Chairwoman Janet Yellen is scheduled for another chatfest in the Senate later today (starting at 10am EST), and it’s a safe bet that interest rates will be the main event. The big question on everyone’s mind, and the one the head of the central bank is sure to leave unanswered: When? Higher rates are coming, but no one knows the timing. Perhaps Janet is clueless as well. After all, there’s that incoming data issue to contend with and even the head of the world’s most influential central bank isn’t clairvoyant.
Continue reading →

● US existing home sales at nine-month low, supply limited | Reuters
● Greek Reform Proposals ‘Sufficient,’ EU Official Says | WSJ
● Dollar Strengthens as Fed’s Yellen Seen Signaling Higher Rates | Bloomberg
● Obama proposes tougher rules for retirement fund advice | LA Times
● Dallas Fed: Manufacturers feel effects of falling crude | San Antonio Express
● France Business Confidence fell marginally in February | RTT
● South Africa GDP Growth Accelerates to 4.1% in Q4 | Bloomberg

The US economy continued to grow at a strong “above-trend” pace through January, according to this morning’s update of the Chicago Fed National Activity Index. The three-month moving average of this business cycle benchmark (CFNAI-MA3) decelerated slightly to +0.33 last month vs. +0.34 in December, but the latest reading marks the third straight month of accelerated growth. In fact, the data for the November-through-January period mark the strongest three-month expansion for the US since 2006, based on CFNAI-MA3 data.
Continue reading →