ILCB - Weekly Market Pulse: Happy Anniversary!

• The volatility of the dollar does present some problems for the world but, for better or worse, it is the world’s reserve currency and I see no real threat to that status on the horizon.
• I positioned our portfolios for a weak dollar period early last summer and maintained those positions until early this year, when the dollar stopped falling. It has traded in an even narrower range since then, and our portfolios have become increasingly more conservative.
• The dollar isn’t the only factor in our asset allocation process. Economic growth is also important, and based on the recent volatility of interest rates, there is no more consensus about that than the direction of the dollar. The two variables are related and feedback on each other.
• With the economic outlook so uncertain, my instinct is to shrink the portfolio to a more neutral position - and that is what we’ve done.

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