Confluence Podcasts: Recent Episodes
Confluence Investment Management
Podcasts from Confluence Investment Management LLC, featuring the periodic Confluence of Ideas series, as well as two bi-weekly series: the Asset Allocation Bi-Weekly and the Bi-Weekly Geopolitical Report (new episodes posted on alternating Mondays).
Confluence Market Strategist Patrick Fearon-Hernandez sits down with Phil Adler to discuss Great Power competition and the economics of national defense. In the absence of Great Power competition, defense spending is usually concentrated on defense companies. However, under conditions of Great Power competition, a “whole-of-economy” approach to national defense tends to evolve. Civilian companies become more involved in the defense effort, and societies need to make the “guns and butter” tradeoffs. Patrick and Phil discuss how the current iteration of national defense spending will likely be different than what was seen during the Cold War.
In Confluence's Mid-Year Geopolitical Outlook, they recognize China's youth unemployment and China's debt problem as two major issues for investors to keep tabs on in the months ahead. But there's one significant negative trend in China which may be an underlying cause of many other problems the country faces and could be beyond its ability to solve. In this episode, Confluence Market Strategist Patrick Fearon-Hernandez discusses the causes and impact of China's collapsing population.
Are higher interest rates bearish for risk assets? This may seem to be an easy question, but perhaps the answer is not so simple. Confluence Chief Market Strategist Bill O'Grady joins the podcast to broaden our perspective.
Confluence Chief Market Strategist Bill O’Grady, Market Strategist Patrick Fearon-Hernandez, and Staff Economist Thomas Wash sit down with Phil Adler to discuss the firm’s mid-year geopolitical update. This edition’s theme is “Welcome to the Polycrisis.” Confluence’s macro team lays out the large number of geopolitical concerns that could affect markets for the rest of 2023. This podcast accompanies the in-depth Bi-Weekly Geopolitical Report also published on July 10, 2023.
We may be getting a glimpse of what artificial intelligence (AI) can do and the tasks it can perform...but we may be slower to understand exactly HOW it does it. Becoming familiar, at least on a basic level, of the HOW might help us understand AI's potential and limitations and might even guide us toward proper investment decisions.
The S&P 500 has performed very well in 2023, but market internals paint a less healthy picture. Confluence Staff Economist Thomas Wash joins us to discuss the stock market's uneven performance so far this year and what this may portend.
For many years now, the need for oil has been a primary driver of foreign policy, not just for the U.S. but for nations around the world. For the U.S., a dominant dollar has been a key tool in the past to assure an adequate supply of oil, but today the energy landscape is changing. To accompany the Bi-Weekly Geopolitical Report published on June 12, 2023, Chief Market Strategist Bill O'Grady joins the podcast to discuss how the U.S. dollar policy seems to be changing as well and possible investment implications.
The latest Communist Party Congress in China provides fresh evidence that investors can no longer rely on the Chinese marketplace to boost the profits of American companies and bolster the U.S. stock market. Confluence Chief Market Strategist Bill O'Grady joins the podcast to analyze just what happened at this recent event and what it might mean for investors.
The Social Security cost of living adjustment for next year is the biggest increase in 40 years, at +8.7%. Confluence Market Strategist Patrick Fearon-Hernandez joins the podcast to discuss how this announcement affects the economy and investments.
Where are bond yields headed? And what does this mean for bond investors? The yield on the benchmark 10-year Treasury has been rising as the Fed increases rates, but it is not in line with Confluence's current estimates. Confluence Chief Market Strategist Bill O'Grady joins the podcast this week to help us make sense of the current bond market.
Recent dramatic and surprising gains by Ukraine in its war with Russia have brought political and investment implications. Confluence Chief Market Strategist Bill O'Grady and Market Strategist Patrick Fearon-Hernandez join this week's episode to discuss updates on how the war has progressed along with its impact on the ongoing conflict between Armenia and Azerbaijan in light of Russia's weakened position.
The Federal Reserve has made no secret of its intent to curb inflation by means of interest rate hikes, even if economic pain is the result. The Fed's hope, of course, is that any slowdown or recession will be mild. Confluence Market Strategist Patrick Fearon-Hernandez joins today to discuss why present Fed policy is more likely to lead to a deeper recession than the stock market currently anticipates.
Recession fears can greatly impact investments, so it makes sense that financial markets are focused today on when, and if, a recession might occur. Confluence Chief Market Strategist Bill O'Grady joins today's podcast to offer his thoughts.
Might food be weaponized in a deglobalized world with at least two sharply divided political and economic groupings, one dominated by the U.S. and the other by China? Confluence Market Strategist Patrick Fearon-Hernandez discusses the latest in his series of reports on how deglobalization could impact investors.
When the July Consumer Price Index was released earlier this month, the stock market rallied on hopes that inflation has peaked and the Fed might be less inclined to raise interest rates. Was it a case of over-optimism? Confluence Chief Market Strategist Bill O'Grady reviews the numbers that were so well-received by financial markets and the arguments on both sides of the theory that inflation has peaked.
We return to a theme familiar to anyone who has been listening to us for a while--the decline of globalization and the implications for investors. The vehicle for our discussion today is a book that appeared for a while this year on the New York Times non-fiction bestseller list, titled "The End of the World is Just the Beginning: Mapping the Collapse of Globalization" by Peter Zeihan. Confluence Chief Market Strategist Bill O'Grady discusses why this particular book strikes a chord at Confluence Investment Management.
Bill O’Grady, Chief Market Strategist, joins host Phil Adler in looking at the second update of Confluence Investment Management’s “2022 Outlook: The Year of Fat Tails.” The focus of the discussion is on the impact of the Ukraine war and the financial markets’ discounting of a potential recession next year.
What do current levels of household debt portend for the economy and for investors? Confluence Chief Market Strategist Bill O'Grady joins us to discuss the path consumer debt followed to arrive at the level where it is today and where it fits in the investment equation.
The investment world seems more unstable these days, with COVID and the Ukraine war causing seismic shifts in economies and contributing to political crises for some top U.S. allies. Confluence Market Strategist Patrick Fearon-Hernandez examines the recent political events in Japan, the U.K., and Italy and discusses their common features and implications for investors.
If one keeps up with the news, they will hear reports of widening income and wealth inequality in the U.S. According to the Census Bureau, in 2020, the top 20% of the U.S. population earned over half of all U.S. income, and the top 5% earned nearly a quarter of all income. This week's geopolitical report looks at how the pandemic has affected inequality in America. Confluence Market Strategy Intern Natalia Fields discusses how one measures income and wealth inequality and how current trends might influence investment strategy.
Following the Fed's decision to raise interest rates, Federal Reserve Chair Powell stated that the Fed's goal is to bring about 2% inflation while keeping unemployment down. But, achieving the first goal will almost certainly mean a weakening labor market. How do you sell the necessity of a weakening labor market to the public? The Fed appears to have a strategy. Confluence Chief Market Strategist Bill O'Grady joins the podcast to discuss.
It's time for the Confluence Mid-Year Geopolitical Outlook: a look at world events likely to drive markets for the rest of the year and how investments might be aligned to accommodate the dominant trends. Confluence's market strategists identify seven major events and list the short-, medium-, and long-term impacts of each.
In Confluence's geopolitical report from May 9, 2022, we projected a world devolving into two major economic and political blocs: U.S.-led and China-led. In many ways, this process has already begun and the Ukraine war is serving as an accelerant. Countries within the China-led bloc are likely to be poor and more populous but they do include many major commodity producers, which is our focus today. Confluence Market Strategist Patrick Fearon-Hernandez joins the podcast to look at various resources and identify potentially significant problem areas for the U.S.-led bloc and some action steps for investors.
As we read various comments from Federal Reserve officials, it appears the Fed is making no bones about it: the drive to bring down inflation by raising interest rates will result in some financial pain. We can't help but wonder how much financial pain for consumers will the Fed tolerate? And if the pain becomes too bad, will the Fed be able to manage it? Confluence Chief Market Strategist Bill O'Grady discusses these questions and the challenge for investors.
Because of the Ukraine war, North Korea may have attracted less geopolitical scrutiny lately but its nuclear ambitions remain strong. Confluence Staff Economist Thomas Wash joins the podcast to discuss why North Korea continues to deserve the attention of investors. What is Kim Jong-un trying to accomplish with his periodic nuclear saber-rattling?
The Federal Reserve's decision to raise interest rates earlier this month may have been widely expected but the financial markets' reaction up to this point has still been highly volatile. Confluence Chief Market Strategist Bill O'Grady joins the podcast to talk about the longer-term implications for investors.
A world with at least two sharply divided political and economic groupings seems more and more likely as globalization retreats in the face of new trade, immigration, and political barriers, and the Ukraine war appears to be accelerating the process. Confluence Market Strategist Patrick Fearon-Hernandez discusses what this new world might look like and what investors should watch for, including findings of a study conducted by Confluence that tries to determine the countries that may end up in each group -- either the group dominated by the U.S. or the one dominated by China.
It makes sense that as consumers our expectations for the economy influence our current spending decisions, that's why investment strategists pay so much attention to measures of consumer sentiment. Lately, two major readings of sentiment have started to diverge. Confluence Staff Economist Thomas Wash joins the podcast this week to help us make sense of these results.
Financial sanctions levied against Russia because of the Ukraine war included freezing Russia's holdings of dollars in foreign banks. This action may have a long-term impact on the dollar's status as the world's reserve currency. Confluence Chief Market Strategist Bill O'Grady discusses the investment implications of the ripple effects from these sanctions.
While the U.S. Federal Reserve appears to be in the early stages of raising interest rates and shrinking its balance sheet with the goal of reining in inflation, something quite different is happening in Japan. Confluence Market Strategist Patrick Fearon-Hernandez discusses the implications of the Bank of Japan's policy and why U.S. investors should take notice.
While the Ukraine war gets the headlines, the next hotspot for confrontation between the West and Russia may be forming relatively unnoticed, at least by many of us. Confluence's analysts have been closely watching recent events in Bosnia-Herzegovina, and Staff Economist Thomas Wash joins the podcast to discuss why he thinks this country might become Russia's next target.
Investors looking for suitable investments in emerging markets might want to consider Latin America. Confluence Market Strategist Patrick Fearon-Hernandez joins this episode to discuss the LatAm underperformance over the past decade and the investment prospects going forward given the current boost in commodity prices.
The announcement by various countries that they'll bulk up defense spending in the wake of the Ukraine war has investment implications as well as geopolitical ones. Confluence Market Strategist Patrick Fearon-Hernandez joins today to discuss the ramifications.
Bill O’Grady, Chief Market Strategist, joins host Phil Adler in looking at the first update of Confluence Investment Management’s “2022 Outlook: The Year of Fat Tails.” The focus of the discussion will be on the hawkish adjustment to monetary policy and four scenarios for the path of policy.
Today, we discuss commodity prices. How does the recent price surge rate in historical terms, and is this time ominously different for consumers because of the Ukraine war? Chief Market Strategist Bill O'Grady gives some perspective by comparing the recent surge in prices to what we've experienced in the past.
How has the Ukraine war changed the investment environment and are these changes likely to be long-lasting or short-lived? Bill O'Grady, Chief Market Strategist, joins the podcast to tackle these questions.
The attention we pay to inflation these days may lead us to overlook other important economic information that builds the framework for successful investment decisions. Patrick Fearon Hernandez, Market Strategist at Confluence, joins this week's episode to discuss what we're missing by devoting so much attention to inflation.
Confluence's geopolitical report this week looks at what appears to be an unusual economic experiment going on in Turkey: President Erdogan is refusing to allow the central bank to raise interest rates to contain rapidly rising inflation, meanwhile the Turkish currency, the lira, has been plummeting in value. Chief Market Strategist Bill O'Grady joins the podcast to give his analysis of Turkey's unorthodox response to inflation.
The shape of the U.S. economy is dominated these days by what appear to be pandemic-related distortions. Chief Market Strategist Bill O'Grady discusses how we got to where we are, what can be done about it, and where we might find the most bang right now for our investment dollars.
The latest geopolitical report from Confluence addressed some of the key questions regarding Ukraine, including the possible impact on investments. Chief Market Strategist Bill O'Grady and Market Strategist Patrick Fearon-Hernandez join today's episode to explore possible long-term ramifications stemming from the crisis (understanding that current events are fast-moving and headlines may have changed since the recording of this episode).
Recent volatility in financial markets and persistent geopolitical risks create an opportunity for a fresh look at gold prices. Confluence Chief Market Strategist Bill O'Grady discusses gold prices and whether our short-term outlook has changed.
While the West has been focused on the Russian threat to invade Ukraine and expand its sphere of influence there, recent developments in another former Soviet republic, Kazakhstan, have also appeared to increase Russian influence and have important implications for world energy prices. Confluence Market Strategist Patrick Fearon-Hernandez joins today with some analysis on the situation.
Will consumers keep consuming enough to sustain economic growth if interest rates rise? The answer might begin to emerge as we explore a separate question in today's discussion with Confluence Chief Market Strategist Bill O'Grady: what exactly drives consumption? Is it a rise in real income or is it an increase in the "wealth effect"?
Bill O’Grady, Chief Market Strategist, joins host Phil Adler in looking at the highlights from Confluence Investment Management’s “2022 Outlook: The Year of Fat Tails.” The focus of the discussion will be on policy expectations and potential risks for this year.
We’ve written extensively about the worsening geopolitical tensions between the United States and China, which have already affected investors. In our "2022 Geopolitical Outlook" published in December, we identified China as the #1 geopolitical issue to impact financial markets and investment policy for the foreseeable future. In the inaugural episode of Confluence's new Geopolitical Podcast series, Market Strategist Patrick Fearon-Hernandez discusses the challenges and potential outcomes created by the present confrontational relationship between the U.S. and China.
When will the Federal Reserve begin a much-anticipated series of rate hikes in order to tame inflation? Many, if not most, market analysts are predicting more than one rate hike and perhaps as many as four in 2022, but Confluence goes against the grain on this issue. Chief Market Strategist Bill O'Grady explains why the Fed may delay rate hikes until 2023.
What's causing it and should we be worried? Patrick Fearon-Hernandez, Market Strategist, takes a look at the flattening bond yield curve and explains how inflation and Fed rate hike expectations have affected it.
Bill O’Grady, Chief Market Strategist, Patrick Fearon-Hernandez, Market Strategist, and Thomas Wash, Staff Economist, discuss the geopolitical problems that could affect regional stability with the Taliban takeover of Afghanistan. Risks to Iran, India, China, Russia, and the “stans” are discussed, including the potential for a refugee crisis that might spread beyond the region.
The emergence of the COVID-19 variant, Omicron, appears to have changed inflation expectations at the Fed and gave financial markets quite a jolt as well when the news came out. Confluence Chief Market Strategist Bill O'Grady joins to discuss what may be the reasoning behind Chair Powell's change of heart and the possible impact on investors.
As inflation heats up, will gold prices do the same? Bill O'Grady, Chief Market Strategist, gives an update on the price of gold.
President Biden has some open positions to fill on the Federal Reserve Board, and the process bears close watching as the market anticipates future decisions on interest rates. Confluence Chief Market Strategist Bill O'Grady discusses how the policy tilt of the Fed could change based not only on who is chosen, but also the speed at which positions are filled.
Where are bond yields headed? An index that may be little-known among many investors, the Citigroup Economic Surprise Index, might provide some valuable clues. Patrick Fearon-Hernandez, Market Strategist, explains what this index measures and how it's proving to be a fairly accurate predictor of future bond yields.
Chief Market Strategist Bill O'Grady is here to discuss the market's influence on the Fed. Can we, with any confidence, look to the performance of financial markets for clues as to when the Federal Reserve will move on interest rates? Isn't the Fed supposed to prioritize inflation and employment as factors in its decision-making rather than rescuing the markets?
Raising the federal debt limit has reemerged this fall as a political issue with the potential to impact the financial markets. Chief Market Strategist Bill O'Grady discusses the current standoff over the debt limit and the investment implications.
Social security recipients will be getting a raise next year: cost of living adjustment (COLA) announced by the federal government is 5.9%. Patrick Fearon-Hernandez, Market Strategist, discusses how the social security COLA impacts the economy and how it compares to other years.
The pandemic has shown that globalization is ill-suited to deal with global supply shocks. In this week's episode, Thomas Wash, Staff Economist, elaborates on the supply chain breakdown and explores the impact on inflation and the dilemma it poses for the Federal Reserve.
Has Bitcoin become a substitute for gold, and is there a fit for Bitcoin within a risk-sensitive investment portfolio? Patrick Fearon-Hernandez, Market Strategist, addresses these questions by taking a statistical approach.
We return to the subject of inflation this week. Thomas Wash, Staff Economist, looks at a more positive recent inflationary trend, month-over-month inflation numbers, and what these figures can tell us about the strength and staying power of inflation that we don't get from the year-over-year numbers.
"Is it transitory?" This is the question we're hearing everywhere about inflation. Bill O'Grady, Chief Market Strategist, discusses whether we should worry that the inflation we're experiencing today will last even when the pandemic diminishes.
The Federal Reserve is closely watching the labor force for clues on how quickly the economy is recovering as it considers its timetable for withdrawing stimulus and eventually raising rates. Thomas Wash, Staff Economist, discusses the size of the workforce and how quickly workers are reentering the jobs market now that enhanced unemployment benefits have expired.
It appears likely that Jerome Powell will be nominated by President Biden to serve another term as Fed Chair, but that doesn't mean there isn't significant opposition. The nature of this opposition calls into question the fundamental relationship between the Fed and Congress, which could eventually have a significant impact on investors. Bill O'Grady, Chief Market Strategist, discusses the likelihood of his renomination and how the opposition could affect Fed independence.
When will the Federal Reserve raise interest rates? The timing of Fed action will depend on how quickly America emerges from the pandemic-induced recession; how fast jobs recover is one way to measure that. To address this issue, we look at the composition of the FOMC and the history of monetary policy in past recoveries.
How is the pandemic affecting the labor market? Bill O'Grady, Chief Market Strategist, discusses which effects represent a continuation, or acceleration, of previous trends and which are brand new to the labor market as a result of the pandemic.
What are the implications of growing intellectual property investment? Patrick Fearon-Hernandez, Market Strategist, focuses on the growing importance of intellectual property investment by U.S. corporations and the implications for individual investors.
How does unified government affect long-duration bond yields? Bill O'Grady, Chief Market Strategist, examines the statistical evidence.
Where are bond yields likely headed? Patrick Fearon-Hernandez, Market Strategist, looks at bond yields, focusing on the 10-year Treasury note.
What are the implications for investors and for the world economy of high corporate debt in China? Patrick Fearon-Hernandez, Market Strategist, discusses this question.
How stable is the labor market? Thomas Wash, Staff Economist, looks at the current state of the labor market.
What do the Distributional Financial Accounts data tell us about the economy and financial system? As a follow-up to the Flow of Funds data, Bill O'Grady, Chief Market Strategist, discusses how this subsequent release offers a deeper dive into the previous numbers.
Bill O’Grady, Chief Market Strategist, and Patrick Fearon-Hernandez, Market Strategist, discuss the geopolitics of Taiwan and the risks to globalization presented by the concentration of the semiconductor industry on the island of Taiwan. Topics include the issue of strategic ambiguity, the potential chokepoint that Taiwan’s semiconductor’s industry represents, and the issue of Taiwan/China unification by diplomacy or force.
What does the Flow of Funds data tell us about the economy and financial system? Bill O'Grady, Chief Market Strategist, looks at this latest report from the Federal Reserve for insights on the economy and investment environment.
How are "base effects" affecting today's economic and financial data? Patrick Fearon-Hernandez, Market Strategist, reviews what we mean when we talk about "base effects" and how the year-over-year comparisons change our perceptions.
Should we be concerned with the rise in inflation expectations? Thomas Wash, Staff Economist, addresses the relationship between inflation expectations and actual inflation.
What is behind the recent rally in gold? Bill O'Grady, Chief Market Strategist, reviews the recent performance of gold prices and reasons for the price action.
Why aren't people returning to the labor force? Thomas Wash, Staff Economist, looks at the labor shortage we're seeing in workplaces as the threat of the pandemic wanes and the economy opens up.
Is the Canadian housing market a bubble ready to pop? Patrick Fearon-Hernandez, Market Strategist, looks at the housing market in Canada and whether a price bubble is forming there.
How does the Confluence Asset Allocation Committee forecast? Bill O'Grady, Chief Market Strategist, discusses the process the Confluence asset allocation investment team uses to arrive at its economic forecasts, which are the basis for the firm's asset allocation recommendations.
Patrick Fearon-Hernandez, Senior Market Strategist, authored a five-part series earlier this year on the balance of power between the U.S. and China (published January 11 - February 22). His reports offer a comprehensive view of the relative power of the U.S and China in various areas, including military, economic, and diplomatic. In Part I, Patrick and host Phil Adler examined China’s goals and aspirations and discussed China’s growing military power. Part II covers economic power, “soft” or diplomatic power, and overall relations.
Will rising rent and home prices impact CPI? Thomas Wash, Staff Economist, looks at how increasing housing costs will impact the Consumer Price Index.
Should we be concerned with rising inflation? This week, Thomas Wash, Staff Economist, continues our recent focus on inflation with a discussion of recent market volatility and whether the markets are overreacting.
Patrick Fearon-Hernandez, Market Strategist, focuses on the relationship between aging populations and future inflation.
Patrick Fearon-Hernandez, Senior Market Strategist, recently authored a five-part series on the balance of power between the U.S. and China. His reports offer a comprehensive view of the relative power of the U.S and China in various areas, including military, economic, and diplomatic. In this first podcast episode, host Phil Adler examines China’s goals and aspirations, and discusses China’s growing military power. Part II, which will be posted in the coming weeks, will cover the other key areas.
Why is gold weak, and do we still hold a favorable view? Bill O'Grady, Chief Market Strategist, focuses on the decline in gold prices over the past few months and the underlying fundamentals.
Why are 10-year Treasuries rising? Thomas Wash, Staff Economist, focuses on the recent increase in the 10-year Treasury yield, an event which the stock market is watching carefully.
What are the investment opportunities in Japanese stocks? Patrick Fearon-Hernandez, Market Strategist, discusses whether Japan is currently an attractive destination for U.S. investors.
Where are we in terms of our 2021 Outlook? The S&P 500 is already close to the forecast zone presented in our 2021 Outlook report. Bill O'Grady, Chief Market Strategist, discusses the stock market's performance so far this year and how asset prices might behave in the coming months.
What is the impact of higher bond yields? Bill O'Grady, Chief Market Strategist, looks at the latest inflation data.
How bad was the jobs report? Thomas Wash, Staff Economist, looks at the January jobs report from the U.S. Labor Department, which generated lots of worried comments in the media.
Is the Fed facing the Tinbergen problem? Bill O'Grady, Chief Market Strategist, looks at a challenge shaping up for the Federal Reserve known to economists as the Tinbergen problem--whether encouraging employment by keeping interest rates low might contribute to encouraging risky investment that could lead to a stock market bubble.
In mid-December, we published our geopolitical outlook for 2021. In this podcast episode, Phil Adler, our host, interviews Bill O’Grady and Patrick Fearon-Hernandez as they examine the five areas of concern discussed in the report. These issues are the return of the establishment, the anti-China alliance project, the Middle East, North Korea, and the return of inflation. In addition, we talk about the factors that failed to make the cut for the written report, such as Russia, the pandemic, and climate change.
What is the situation in housing? Bill O'Grady, Chief Market Strategist, looks at the housing sector & the current state of housing in the U.S.
What is the outlook for inflation? Bill O'Grady, Chief Market Strategist, discusses inflation expectations and what measures Confluence relies on when considering inflation.
What will be Joe Biden's focus in his first term? Thomas Wash, Staff Economist, examines what economic statistics suggest might, or should, be the focus of an economic recovery plan as the Biden administration takes office.
What is the impact of currency debasement? Bill O'Grady, Chief Market Strategist, looks at the rare policy event of currency debasement.
What is the relationship between retail money market levels and equities? Bill O'Grady, Chief Market Strategist, looks at the current level of assets held in retail money market funds and what that might mean for the stock market.
How far will long-term Treasury rates rise? Bill O'Grady, Chief Market Strategist, looks at interest rates through the prism of long-term Treasury rates.
Bill O'Grady, Chief Market Strategist, addresses the short-term impact of the election on equity markets.
Should we be concerned about inflation? Thomas Wash, Staff Economist, addresses the question.
What are the investment implications of the EU's political dynamics? Patrick Fearon-Hernandez, Market Strategist, focuses on potential opportunities in the foreign equity space in the EU and U.K.
With the election looming, there is the potential for changes in foreign policy. Phil Adler, our host, interviews Bill O’Grady and Patrick Fearon-Hernandez as they address the future of American foreign policy. Bill discusses how a President Biden will conduct foreign policy, while Patrick examines what could be different with a second Trump term. This podcast relates to Weekly Geopolitical Reports published in late August on these topics. For Biden, there is a degree of uncertainty since he would be a new president. And, although it is tempting to assume a Trump presidency would be more of the same, there would likely be some differences as well. One possible change is that in a second term the Treasury might rely more on dollar weakness and less on tariffs to conduct trade policy.
How has the pandemic affected consumption patterns? Bill O'Grady, Chief Market Strategist, focuses on the unusual nature of the current economic recovery, in particular, consumption patterns, and what this portends for U.S. economic policy and your investments.
What do inventory levels portend for the post-pandemic economy? Patrick Fearon-Hernandez, Market Strategist, focuses on current U.S. business inventory/sales ratio data in an attempt to anticipate future economic activity.
Who will be the biggest beneficiaries from the European recovery program? Thomas Wash, Staff Economist, focuses on who might benefit the most from the current program.
What impact could the death of Ruth Bader Ginsburg have on markets? Bill O'Grady, Chief Market Strategist, focuses on the impact of the death of the Supreme Court justice on financial markets.
How have U.S. and non-U.S. stock market sectors performed in different periods of dollar strength? Patrick Fearon-Hernandez, Market Strategist, focuses on how U.S. dollar strength affects U.S. stocks compared with foreign market stocks.
Is the dollar on the cusp of a bear market? Bill O'Grady, Chief Market Strategist, looks at the possibility that we may be on the verge of a dollar bear market and what that might mean for foreign equities.
What is the impact of household debt service on discretionary income? Patrick Fearon-Hernandez, Market Strategist, looks at how debt levels are impacting consumers' ability to spend and keep the economy afloat.
Is the additional unemployment insurance reducing employment? Thomas Wash, Staff Economist, explores how the federal government's additional weekly benefit has affected unemployment.
Although the dollar remains the global reserve currency, there is widespread dissatisfaction with the role. On the domestic front, the dollar’s role has been positive for financial services and retailers, but it has been a persistent negative factor for import-competing industries and their workers. Foreign nations are increasingly uncomfortable with the U.S. weaponization of the dollar through financial sanctions. The decision by the EU to create a mutualized bond, a debt instrument backed by the full faith and credit of all the member states of the EU, creates a competing instrument for the U.S. Treasury. If debt mutualization continues to expand, the euro will become an attractive reserve currency to foreign reserve managers.
How are money market funds acting? Bill O'Grady, Chief Market Strategist, addresses the level of cash in retail money market funds.
What is behind the historic strength in gold prices? Bill O'Grady, Chief Market Strategist, addresses the issue of strong gold prices.
Join Greg Ellston, Confluence Investment Management’s CIO of Asset Allocation, for a discussion of this quarter’s outlook and changes to the Asset Allocation portfolios. Greg begins with the macro backdrop, discussing the economy and policy. From there, he shows how this macro information leads to concrete adjustments in portfolios. Even in cases where no changes are made, the analysis that holds a portfolio steady is itself “active.”
What is the risk if state and local governments have to cut spending? Patrick Fearon-Hernandez, Market Strategist, discusses how the coronavirus crisis may affect state and local spending.
How is the pandemic affecting the labor market? Bill O'Grady, Chief Market Strategist, discusses the pandemic's impact on the labor market, focusing primarily on older workers.
Is the Federal Reserve tightening policy? Bill O'Grady, Chief Market Strategist, addresses this question and discusses whether there is evidence to indicate that the Fed is now tightening policy.
In our “2020 Geopolitical Outlook,” we named the 2020 U.S. election as a key event. Our recent five-part Weekly Geopolitical Report series examined this issue in more detail. This is the final episode looking at the 2020 election. In this episode, we handicap the election based on the tools of prediction, polling and decision markets. We examine the geopolitics of the election, focusing on what countries are likely to intervene in our election, their capabilities and their goals. We also touch on what we expect to see in terms of policy if we get a new president or if the incumbent wins, and likely market reaction in either scenario.
Where does the extra liquidity flow? Bill O'Grady, Chief Market Strategist, addresses this key inflation question, especially in light of the Fed's recent policy actions.
In our “2020 Geopolitical Outlook,” we named the 2020 U.S. election as a key event. Our recent five-part Weekly Geopolitical Report series examined this issue in more detail. This is the second of three podcast episodes that will look at the 2020 election. In this episode, we discuss the issue of inequality and the rise of populism, the impact of social media, and the current problems of extreme partisanship and political legitimacy.
What is the impact of inequality on monetary policy? Bill O'Grady, Chief Market Strategist, addresses this question, primarily regarding racial inequality, in this week's episode.
Will the Fed implement negative interest rates? Bill O'Grady, Chief Market Strategist, examines whether this event may occur.
In our “2020 Geopolitical Outlook,” we named the 2020 U.S. election as a key event. Our recent five-part Weekly Geopolitical Report series, which concludes this week, examines this issue in more detail. This is the first of three podcast episodes that will look at the 2020 election. In this episode, we discuss the concept of public goods, who benefits from them and who pays, the concept of the identity/class nexus, the fluidity of political party affiliation and the risks to fixed investment that come from the inability to build a political consensus.
We continue to build on themes discussed in episode #11, “The Lessons of History,” in which we examined the effects of earlier pandemics. In this episode, we discuss how the COVID-19 pandemic will likely accelerate the reversal of the equality/efficiency cycle toward equality. Deglobalization is a key element of that shift. Although we believe the world has been steadily moving toward equality, this pandemic is moving the process forward. The eventual outcome is higher inflation, although it may take several years for higher price levels to become evident.
This episode examines the economic, market and social effects of earlier pandemics. Although the Black Death is mentioned, we focus on relatively recent events, including the Spanish influenza. One of our themes has been an impending reversal in the equality/efficiency cycle; in this podcast we discuss the potential that the pandemic could accelerate the shift to an equality phase.
This episode discusses the two updates to our 2020 Outlook, in which we have moved from “storm watch” to “storm warning.” In the podcast, we note the three factors that have put the U.S. into recession—the pandemic, rising financial stress and the oil crisis. Our current take is that the recession will be deep, the deepest since the Great Depression, but likely short, given the aggressive policy response.
This episode discusses Confluence’s asset allocation process. In earlier episodes, Bill O’Grady examined the importance of process when investors are making decisions under conditions of uncertainty, while Mark Keller talked about the process for managing the firm’s value-oriented equity strategies. In this podcast, Greg Ellston, Confluence’s CIO of Asset Allocation, discusses the investment team’s process for managing the asset allocation strategies.
This episode discusses Confluence’s 2020 Geopolitical Outlook. We examine the U.S. 2020 elections, the situation in Iran, China’s debt, the impact of demographics and North Korea. We also provide an update on emerging issues since we published the report in mid-December.
This seventh episode discusses Confluence’s 2020 Outlook, which is titled “Storm Watch.” We explain the key points of our outlook, including three factors where our forecast could go awry, and also provide an update on developments since the report was published in December.
This sixth episode takes our discussion of process from the previous episode and shows how it works at Confluence. Financial decisions exist in a milieu of uncertainty, and thus a sound process is critical to successful equity selection. In this episode, Mark Keller, the CEO and CIO of Confluence, details the firm’s process for selecting equities.
This fifth episode examines the issue of making decisions under conditions of uncertainty. There are some situations of pure luck, like lotteries. There are others, like chess, which are pure skill. For most everything else between, including investing, there is a mix of skill and luck in success. Under such conditions, investors are faced with the following problem: is an investment manager’s success due to skill or luck? In this podcast we discuss what an investor should focus on when trying to select an investment manager. A hint…it’s all about process.
In this episode we explain the equality/efficiency cycle, which is based on the seminal work of the economist Arthur Okun and the cycle work of Peter Turchin. The cycle explains how societies shift from focusing on equality, which usually includes policies favoring regulation, autarky and high marginal taxes, to efficiency, where policies of deregulation, globalization and low marginal tax rates dominate. The podcast discusses where the U.S. is in this cycle and the impact on American hegemony.
This third episode of The Confluence of Ideas series concludes the overview of Hegemonic Stability Theory and U.S. hegemony with an examination of the financial elements of hegemony. It discusses the evolution of the reserve currency role and the costs and benefits of financial hegemony.
Confluence’s Chief Market Strategist, Bill O’Grady, continues the discussion on Hegemonic Stability Theory and the unique aspects of American Hegemony.
Confluence’s Chief Market Strategist, Bill O’Grady, discusses the origins, the roles and the world affairs of Hegemonic Stability Theory.
Bill O'Grady and Kaisa Stucke discuss two of the five topics for our 2016 outlook. (Part 2)
Mark Keller, Bill O'Grady and Kaisa Stucke host Confluence's inaugural podcast. They discuss the state of the economy and whether there will be a return to trend or a continuation of slow growth.
Mark Keller, Bill O'Grady and Kaisa Stucke look at the divergence of opinions among the doves on the FOMC.