Asset Allocation:
5.0% Cash | 51% Fixed Income | 44% Equity
Reduced exposure to Industrials and Financials and increased exposure to Technology and REITS
US Equities had mixed results last week:
Mixed week of results with the DOW (+1.57%) and S&P (+.61%) out-performing; NASDAQ (-1.05%) and RTY (Russell 2000) (-1.96%) under-performing
Started to see weakness in growth stocks as Facebook, Netflix and Twitter all had disappointing earnings
Amazon had solid earnings but stock had muted reaction given all the pressure on other FANG components
Value outperformed growth on the week by 154bp but still lags YTD by over 10%
Large Cap Financials (+2.07%), Energy (+2.32%), Materials (+1.73%) and Industrials (+2.11%) were outperforming sectors and we saw rotation into cyclicals
Technology and small cap financials were underperformers on the back of weaker than expected earnings.
Key Themes
Global growth numbers remain solid—despite trade war/tariff threats
China had better than expected growth numbers which halted the dollar rally and bolstered EEM (Emerging Markets) (+1.3%) and hit the small caps in the US
It has been a very strong earnings season—53% of companies in S&P have reported; 83% have reported earnings higher than estimates. But equity market reaction has been mixed. Companies that have missed have been penalized and many that beat had modest moves to upside.
Yield Curve slowly trying to steepen but remains extremely flat—2/10 closed at 28.07. The 10 year inching higher to close at 2.95%
Volatility picked up slightly but remains at historical lows—closed at 13.
Credit remains very stable
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