Weekly summary in a paragraph
A mildly positive inflation data point on Wednesday was all it took to send the global stock markets higher and induce weakness in the US dollar. I don’t want to be the Cassandra of the situation here, but one month on month data point does not seem enough to justify a reversal of the general trend though technical analysis would suggest further strength ahead at least in the short term.
It was an even stronger week for the European stock market which was further amplified by strength in the Euro.
Asset classes weekly performance
This week the Dow gained +4.1% (-7.2% YTD) while the S&P500 went +5.6% higher (-16.2% YTD, we are 1x short), the Nasdaq skyrocketed +8.0% (-29.0% YTD, we have a 3x inverse position) and the Russell 2000 gained +4.6% (-16.7% YTD, we are 1x short). $Gold rose +5.2% (-4.4% YTD) while silver finished +3.6% higher (-7.2% YTD). $Oil gave up -4.0% (+18.3% YTD). The 20-y recovered +3.9% this week (-33.7% YTD). The European stock market outperformed the US market indices and finished +9.6% higher (-19.2% YTD). The Euro recovered as much as +4.0% relative to the USD (-11.5% YTD).
As most of the S&P500 companies have reported Q3 earnings, there is now sufficient data to update earnings forecasts. This week Goldman Sachs revised their S&P500 earnings forecast to the downside ($224 USD) to conclude that they now expect zero earnings growth for 2023. Because stocks follow earnings and earnings expectations, investors will now have to look to 2024 (current estimate is $237 hence +6% compared to ’22 and ‘23) to justify staying invested on the long side.
Weekly Portfolio Update
We initiated three new positions on $NEM, $KSS, and $USB which are already profitable trades. We have also increased our position in gold: if dollar continues its weakness this will send its price higher. Cash, precious metals and hedges were reduced to 37% in our portfolio which rose +2.77% this week.
Top 5 Weekly Portfolio Performers
$META +24.49% (Technology-Social Media)
$FTNT +19.17% (Technology-Software-Security)
$THO +17.38% (Building-Mobile Manufacturing/RV)
$DUE.DE +15.52% (Industrial – Germany)
$KSS +15.24% (Consumer-Dept. Stores)
Portfolio Asset Allocation
– Long stock positions 63% (increased)
– Hedges 9%, though equal to 14% considering leveraged ETFs (unchanged)
– Silver + Gold 4% (increased)
– Cash 24% (decreased)
YTD Portfolio Performance
Our currency-adjusted YTD portfolio performance is -2.2% (excl. dividends) vs the European market loss of -7.7% (+5.5% market beat).