Choose Your Tactical Asset Allocation Strategy Carefully

Morningstar last week advised that tactical asset allocation funds “failed—again.” That sounds ominous for this class of strategies, but a closer review suggests it’s misguided to pull the plug on the on idea that dynamically adjusting weights of asset classes has crashed and burned. As discussed below, the case for tactical asset allocation (TAA) is quite strong, assuming you’re an informed investor able and willing to separate the wheat from the chaff in this corner of portfolio management.

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Macro Briefing: 10 February 2025

US non-farm payrolls rose 143,000 in January, a sharp slowdown from December’s strong increase. Meanwhile, the unemployment rate fell to 4.0% last month — lowest since May. “The weaker January increase masks what may be a firming trend in hiring,” advises a note from TMC Research, a unit of The Milwaukee Co., a wealth manager. “Using a 3-month average of payrolls to reduce the short-term noise suggests the hiring trend appears to be picking up. Note, too, that the 6-month trend turned above the 1-year change in January for the first time since May.”

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Book Bits: 08 February 2025

The Humble Investor: How to find a winning edge in a surprising world
Daniel Rasmussen
Interview with author via Bloomberg
Financial forecasting is a mainstay of finance and economics. Banks use them to analyze how well a company should be doing a few years from now; governments use them to set their budgets. But how often are those prognostications—on which so much depends— actually accurate? Not very often, according to Daniel Rasmussen, founder of Verdad Advisers, author of The Humble Investor: How to Find a Winning Edge in a Surprising World and guest on this week’s episode of Merryn Talks Money.

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Macro Briefing: 07 February 2025

US jobless claims edged up last week, but remain low. The 11,000 increase in new applications for unemployment benefits for the week through Feb. 1 reflects a middling range relative to recent history and near a multi-decade low. The latest report suggests the labor market will continue to expand at a solid pace.

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Risk-On Sentiment Endures, Despite Trade Uncertainty

Years ago there was a TV commercial about a kids’ toy called Weebles, which “wobbled but they don’t fall down.” The line comes to mind in reviewing recent market activity. Since returning to the White House last month, President Trump has outlined a wave of policy changes, plans and comments that have roiled markets and shaken expectations about the economic outlook. But for the moment, the latest squalls of volatility have come and gone, leaving an upside trend that’s a bit battered but mostly intact.

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Macro Briefing: 06 February 2025

US companies accelerated hiring in January, according to the ADP Employment Report. Private payrolls increased 183,000, marking a faster pace for a second straight month. “Hiring momentum in the last quarter of 2024 carried into January with some exceptions, including manufacturing,” notes Nela Richardson, ADP’s chief economist. “We had a strong start to 2025 but it masked a dichotomy in the labor market. Consumer-facing industries drove hiring, while job growth was weaker in business services and production.”

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Macro Briefing: 05 February 2025

US job openings fell to a three-month low in December. The downshift highlights an ongoing slide in openings, which suggests that the labor market’s expansion will continue to slow. The job-openings data “is consistent with the Fed’s view that the labor market is healthy enough to tolerate a more cautious approach to lowering rates, particularly given the uncertainty surrounding tariff policy, says Nancy Vanden Houten, lead U.S. economist at Oxford Economics.

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