Headline inflation rose sharply in March. The bond market yawned.
* Biden today will announce US military troops will leave Afghanistan by Sep. 11
* US and NATO signal strong support for Ukraine after Russian troop buildup
* China conducts military drills near Taiwan ahead U.S. officials visit in Taipei
* IRS chief: $1 trillion in taxes may go uncollected every year
* World dependency on fossil fuels expected to rise in years ahead
* US small business sentiment edged higher in March but remains middling
* Money managers focused on ‘make or break’ inflation outlook
* US headline 1-year consumer inflation accelerated sharply in March:
Every investment strategy has its own particular set of pros and cons. Do you know how your strategy’s profile stacks up? As a reference point, consider an unmanaged, market-weighted asset allocation strategy.
* Russia warns US warships to steer clear of Crimea
* Japan plans to release contaminated water from nuclear plant into sea
* Will Treasury auctions and inflation data end recent lull in the bond market?
* US inflation data for next few months will bounce but it could be misleading
* China int’l trade activity rebounds sharply as global economy recovers
* Banks on track for profit boost as economy rebounds
* UK economy rebounded in February
* New US Covid-19 cases continue to hint at possibility of fourth wave
* US federal deficit deepens to $660 billion in wake of stimulus checks:
* Iran blames Israel for sabotage incident at key nuclear power plant
* Iran vows to ‘take revenge’ for attack on nuclear site
* Sec. of State Blinken has ‘real concerns’ re: Russia’s actions on Ukraine border
* Frenzy of lobbying begins over Biden’s $2 trillion infrastructure and jobs plan
* Covid variant evades some of the protection of the Pfizer-BioNTech vaccine
* Fed’s Powell: US economy at ‘inflection point’ as growth expected to accelerate
* Does accelerating economic growth raise inflation risk?
* Bitcoin trades near record high as largest crypto set to go public
* US financial-system stress remains low in early April:
Keeping up with the benchmark remains challenging for our proprietary strategies this year. Beta, in other words, is still red hot at the start of the third quarter.
● You Are What You Risk: The New Art and Science of Navigating an Uncertain World
Summary via publisher (Simon & Schuster)
How you see risk and what you do about it depend on your personality and experiences. How you make these cost-benefit calculations depend on your culture, your values, the people in the room, and even unexpected things like what you’ve eaten recently, the temperature, the music playing, or the fragrance in the air. Being alert to these often-unconscious influences will help you to seize opportunity and avoid danger. You Are What You Risk is a clarion call for an entirely new conversation about our relationship with risk and uncertainty. In this ground-breaking, accessible and eminently timely book, Michele Wucker examines why it’s so important to understand your risk fingerprint and how to make your risk relationship work better in business, life, and the world.
In this issue:
- US stocks continue to top returns for global markets this week
- The bulls remain in control of our portfolio strategy benchmarks
How Much Bitcoin Should I Own? A Mathematical Answer
Adam Grealish (Betterment)
March 9, 2021
It goes without saying that this is a hard question to answer. But we can borrow a page from modern quantitative finance to help us arrive at a potential answer. For years, Wall Street “quants” have used a mathematical framework to manage their portfolios called the Black-Litterman model. Yes, the “Black” here is the same one from the famous Black-Scholes options pricing formula, Fischer Black. And “Litterman” is Robert Litterman, a longtime Goldman Sachs quant.
Without getting into too much detail, the model starts with a neutral, “equilibrium” portfolio and provides a mathematical formula for increasing your holdings based on your view of the world. What’s amazing is that it incorporates not just your estimate about how an investment might grow, but also your confidence in that estimate, and translates those inputs into a specific portfolio allocation.