Weekly summary in a paragraph
Fifth straight week of upside for the Nasdaq despite most of the Q4 earnings reports from the major tech stocks disappointed, the exception being Meta (which we own). Ford, Qualcomm and Starbucks also missed. The Fed confirmed the expected quarter point rate hike on Wednesday and Powell came across as relatively dovish during the press conference. The most notable data point of the week was the January nonfarm employment which was up 517k vs 190k consensus – a clear underestimation, which would suggest continued strength in the job market and brings the unemployment down to 3.4% (vs 3.6% expected). More than half of the S&P500 companies are yet to report: the next two weeks will be key to assess the extent of the year on year earnings decline for Q4.
Asset classes weekly performance
This week the Dow finished -0.1% lower (+2.4% year to date) while the S&P500 did better with a +1.6% increase (+7.7% year to date, we are 1 time short), the Nasdaq gapped +3.3% higher (+14.7% year to date, we have a 3 times inverse position) and the Russell 2000 gained +3.9% (+12.7% year to date). Gold finished lower -3.2% (+4.0% year to date, we are long) while Silver was -5.1% weaker (-6.7% year to date, we are long). Oil tanked -7.8% (-4.6% year to date). The 10-y US treasury retraced -0.3% this week (-6.9% year to date). The European stock market gained +0.9% (+13.3% year to date). The Euro finished +0.7% higher against the US Dollar (+0.82% year to date).
Weekly pitch
Investors have finally been able to catch a breath after a very positive January. Given the steep climb of these first 5 weeks of 2023, particularly for long-duration tech stocks, one wonders whether the Nasdaq has gone up too quickly. Despite finishing up again this week, the fact that all the four biggest tech companies have disappointed is weakening the bullish sentiment in the Nasdaq, at least in the short term.
It is tempting to go all in when markets outperform but it is prudent to either keep profitable positions on a tight leash (do you use sell stops and take profits like we do?) or have cash and hedges in one’s portfolio (see our portfolio asset allocation below).
Weekly Portfolio Update
Here are this week’s movements: we took profits on Newmont Mining (+13%) and Amazon (+8%); partial sell stops were triggered on our Intel, Mattel, Oak Street Health and Williams-Sonoma short positions. Cash, precious metals and hedges amount to 37% in our portfolio (reduced compared to last week).
Top 5 Weekly Portfolio Performers
Meta +24.4% (Social media/Tech)
Gap +12.12% (Retail trade)
Thor +11.04% (Recreational products)
Orsted +8.18% (Utilities, Green Power)
NXPI +8.05% (Semiconductors)
Portfolio Asset Allocation
US Long stock positions 47% (unchanged)
EU Long stock positions 10% (unchanged)
Short stock position 6.5% (increased)
Hedges 7% (reduced)
Silver & Gold 4% (unchanged)
Cash 26% (reduced)
Year to date Portfolio Performance
Our currency-adjusted year to date portfolio performance in Euro is +4.51% (excl. dividends) vs the European market gain of +12.51% and +5.6% in US Dollars vs the S&P500 gain of 7.7%.
…in case you missed it…
Check out our first 2023 weekly newsletter to read the 5 things I got right in 2022…and the 5 I got wrong.
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Invest responsibly!!!
Responsible Investor 