Weekly summary in a paragraph
After three weeks of decline the US stock markets finally changed direction despite it being a relatively uneventful week. The terminal rate is now seen at 5.50% and two Fed members effectively cancelled each other out by speaking in favour of and against a higher that 0.25% increase at the late March FOMC meeting. Notable companies reporting earnings last week included Macy’s and Broadcoam who beat estimates and Lowe’s which missed. The Tesla investor day underwhelmed despite sparking some interest in the sharp cost reduction programme for one if its models. Renewed optimism on China reopening pushed oil and copper higher. The European stock market finished also higher and continues to outperform the US stock market since last October.
Asset classes weekly performance
This week the Dow finished +1.75% higher (+0.7% year to date) and the S&P500 rose +1.9% (+5.4% year to date), the Nasdaq gained +2.6% (+11.7% year to date) and the Russell 2000 appreciated +2.0% (+9.5% year to date). Gold finished higher +2.08% (+0.04% year to date) as did Silver which rose +2.05% (-13.1% year to date). Oil was strong and gained +5.51% (+3.34% year to date). The 10-y US treasury yield finished +1.07% higher (+4.51% year to date). The European stock market gained +3.2% (+9.6% year to date). The Euro finished +0.76% higher against the US Dollar (-0.70% year to date).
Investors should always be cautious when markets trade higher on a “slow news” week as this may just be retail investors taking over while institutional investors wait for a reason to sell or buy. Next week is a lot more economic data heavy and sometimes the best strategy is to be passive, at least in the short term. That is why you will see later in the newsletter that this week’s portfolio movements are minor. In other words we remain reasonably cautious thanks to our cash and hedges and are not prepared to go all in. In fact, we would always retain some cash in our portfolio, in order to take advantage of buying opportunities that may present themselves, as well as hedges, which protect you in rainy days. Hedges are the reason we did not beat the market this past week but they are also the reason we have been beating the market over the past year, check out our portfolio allocation and performance further below.
Weekly Portfolio Update
Here are this week’s movements: we initiated new long positions on Range Resources and Sanofi; sell stops were triggered on our Dexcom short positions. Cash, precious metals and hedges amount to 41% in our portfolio (reduced compared to last week).
Top 5 Weekly Portfolio Performers
Callum Petroleum +10.37% (Oil)
Freeport McMoRan +9.63% (Copper)
Meta +8.72% (Internet and content information)
Denbury Resources +6.24% (Oil & Gas)
Google +5.23% (Internet and content information)
Portfolio Asset Allocation
US Long stock positions 49.5% (increased)
EU Long stock positions 7% (reduced)
Short stock position 2.5% (increased)
Hedges 6.5% (reduced)
Silver & Gold 4.5% (unchanged)
Cash 30% (reduced)
1-year Portfolio Performance
Our portfolio performance over the last year (12 months) is +0.4% (excl. dividends) vs the S&P500 loss of -7.3%, which corresponds to a +7.7% market beat.
…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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