Investing in hedged equity strategies is a bit like running with the bulls: investors love the adrenaline rush of the Read More
June 1, 2017 |
What happened in May?
U.S. stocks (measured by the S&P 500 Index) moved +1.3% in May even though the index experienced its largest one-day decline year-to-date on May 17. The S&P 500 Index is now +8.4% YTD while international equities (MSCI ACWI ex-U.S.) advanced +3.3% for the month and +13.7% YTD.
Q1 profits across corporate America increased at their highest rate since 2011 while the U.S. GDP growth estimate was revised up to 1.2%. The healthy macroeconomic data buoyed stocks while volatility remained near historic lows. The lack of stock price swings can be attributed to a number of factors, including desensitized investors when it comes to turbulent geo-political events or the absence of any substantial change in market-moving data.
Moving into June
As equities remained in a consistent uptrend, our data signals followed suit. Little changed over the month as macroeconomic, sentiment and technical indicators remained positive indicating potential for further growth in the near term. Valuation metrics, while still negative, got a positive lift thanks to the record profits across U.S. companies helping justify the high stock prices. In our U.S. tactical strategies, we increased exposure to take advantage of the mid-month dip, then locked in profits on a few positions at the end of the month as the rally continued.
We enter June with a bullish posture at 92% invested in our tactical U.S. strategies and 100% exposure outlook in our international strategies.
↓ Valuation | Stock price valuations remained in line from the prior month as the Q1 earnings boost validated the increased price moves.
↑ Macroeconomic | U.S. retail sales rose in April after a sluggish February and March. U.S. private businesses added 253,000 jobs in May, per ADP survey.
↑ Sentiment | UM Consumer Survey ticked up to 97.1, a third consecutive monthly increase. U.S. manufacturing survey indicates continued expansion as ISM reading edged up to 54.9.
↑ Technical | Short-term momentum increased as the S&P 500 traded 2% above its 50-day moving average and remained 6% above the 200-day.
Important Disclosure Information
As of 5/31/2017. Data provided by Bloomberg, NorthCoast Asset Management.
The information contained herein has been prepared by NorthCoast Asset Management LLC (“NorthCoast”) on the basis of publicly available information, internally developed data and other third party sources believed to be reliable. NorthCoast has not sought to independently verify information obtained from public and third party sources and makes no representations or warranties as to accuracy, completeness or reliability of such information. All opinions and views constitute judgments as of the date of writing without regard to the date on which the reader may receive or access the information, and are subject to change at any time without notice and with no obligation to update. This material is for informational and illustrative purposes only and is intended solely for the information of those to whom it is distributed by NorthCoast. No part of this material may be reproduced or retransmitted in any manner without the prior written permission of NorthCoast. NorthCoast does not represent, warrant or guarantee that this information is suitable for any investment purpose and it should not be used as a basis for investment decisions.
PAST PERFORMANCE DOES NOT GUARANTEE OR INDICATE FUTURE RESULTS.
This material should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or investment products or to adopt any investment strategy. The reader should not assume that any investments in companies, securities, sectors, strategies and/or markets identified or described herein were or will be profitable and no representation is made that any investor will or is likely to achieve results comparable to those shown or will make any profit or will be able to avoid incurring substantial losses. Performance differences for certain investors may occur due to various factors, including timing of investment. Investment return will fluctuate and may be volatile, especially over short time horizons.
INVESTING ENTAILS RISKS, INCLUDING POSSIBLE LOSS OF SOME OR ALL OF THE INVESTOR’S PRINCIPAL.
The investment views and market opinions/analyses expressed herein may not reflect those of NorthCoast as a whole and different views may be expressed based on different investment styles, objectives, views or philosophies. To the extent that these materials contain statements about the future, such statements are forward looking and subject to a number of risks and uncertainties.