Quarter Two


We began the Second Qtr of 2019 in benign fashion. The Fed is back to being a tailwind and certainly going to continue to lend all the spport it can to spending, investment and risk assets.

THe bond bull market is entact with the 10yr. Treasury having a glass ceiling at 2.50%. Munis are being gobbled up in the US, the German Bund contiues to have a yield with a negative sign infront and the only place to be if you want to try for anything mroe exciting is in US stocks.

The US stocks market is in a bit of a quiet period during this time as we await April reporting season to begin with the lead-off from the financials. Many corporate buybacks take a pause around this time and that could be one reason volatility and volumnes have been subdued. I have long been convinved that one of the more prevalent strategies of the 'quants' or 'algo-driven' funds has been that of coding for momentum. That strategy seems to have suffered of late with less follow-thru on both UP and DOWN days.

There are some smaller-themes within the market - like Cable-TV 'cord-cutting' and the battle for dominance in the streaming space with the main implications for ROKU, DIS, NFLX, CMCSA and IQ, BILI for those playing China.

Today's tape seems a bit sloppy yet the likes of SNAP & TWTR remain strong. These are some examples of social-media co's that could be entering a renewed growth phase. Small-cap biotech is another area where one can play idiosyncratic names that will not get caught up in macro-driven gyrations.

Apart from that I sense a bit of fatigue amongst larger-beta swathes of the market. China aside, the US seems to be struggling with trade skirmishes everywhere from our own North American neighbors to continental Europe (which is already ensconced in broad economic malaise to boot). Global growth expectations have recently been trimmed by many research houses and thinktanks. Projections for oft-market-leading sectors likes semiconductors have likewise seen a rash of downgrades.

To me cash has the greatest appeal for the short/medium term. Aside from that, I would view PYPL and CVS as safe longs with CAT, IBM and WHR as short plays for a market re-pricing.

Be a turtle. Go Slowly.