TPW Investment Management

Weekly Musings

Friday Musings

Happy End of May

Happy End of May,

Well the old adage: Sell in May and Go Away clearly topped the Equity & Commodity charts this year with ACWI, ACWX, SPY and Europe all down roughly 5.5% for the month in USD while  EM was down 8%. Broad Comm were down 3% with Copper down 9%, oil 8%, base metals off 6% and gold flat.

A different story over in UST world, especially long duration, with TLT up 5%, AGG up 1% while HY fell over 1% and EM $ debt rose slightly during the month.

A look over 3 months adds perspective: ACWI is down less than 1%, ACWX down 2% and the US up slightly. Long duration UST up 8%, AGG up 3% and HY up 1%. Over the same period broad Comm rose less than 1%, oil rose over  2% while Copper fell 10% & base metals 7%.

The past week’s  US - China trade rhetoric was nasty yet EM equity rose over 1%, ACWX was up slightly while US equity fell over 1%. UST have continued to rally with long duration up 2%, AGG up .5% and HY down .3%. Broad comm are off slightly led by oil down close to 3% while Copper is up close to 1% and base metals are flat.

What does all this tell us? UST are massively overbought with RSIs in the high 70s, HY’s muted decline doesn’t support the idea of a shapely weakening US economy & global growth plays: China equity, base metals, miners are deeply oversold with RSIs in the 20s.

As I write, US threats to impose tariffs on Mexico (on the same day Mexico introduced legislation to pass the USMCA - classy) has been met with Latin American equities up on the day after being up 3% for the week. 

The price action suggests that the leading global growth stories have already been sold and are bottoming. US equity, underperforming over the past week, is at risk to the trade fights  being picked with all corners of the globe; its leading sector, tech, is most exposed, thus leading to the downside with a 9% May decline ( still up 16% ytd, room to decline further). Seems like December all over again.

As talk of Fed cuts fill the air, with rate and growth differentials between the US and Europe narrowing perhaps the USD ( up less than 1% for the month) is suggesting that the US is not free from risk in the current environment.

Given an increasingly unstable environment having a point of view, a thematic approach to things can be of great use to investors. In this regard we offer a recent Real Vision interview with CIO Jay Pelosky where he discusses in great depth our main theme: The Lower for Longer Global Growth World & Its Investment Implications. We hope you find it of use.

TGIF indeed!

 

Upcoming TPWIM events 

May

5/15                                    Joint webinar w GlobalX (Replay to come next week)

5/20                                     RealVision interview on TPWIM’s Lower for Longer Global Growth Theme (Recording)

5/23 (10:30am EST)           Joint Conf Call with Signum Global on EU Parliamentary Elections - Political & Risk Asset Implications (Recording of Call)

5/24 (9:00am EST)             Jay was on Bloomberg TV: The Open (Short Clip)

 

June

6/3 & 6/4                             Inside ETF Smart Beta Conference

6/4 (11:40am EST)             Jay speaking on the panel “Active 2020: Strategies to Generate Alpha”

6/18 (10:30am EST)           Joint Conf Call with Signum Global on US Political Situation and Outlook

6/27 (10:30am EST)           Joint Conference Webinar with HAN ETF - Europe’s Only White Label ETF Provider

Trade & Tariffs in a Tri-Polar World: Investment Strategies

James Gardiner