The key highlights for the month
The usual sentiment of "sell in May and go away" that the Media frequently likes to portray during this month of the year did not materialize. In fact, the US stock market staged a strong recovery following a bad sell-off in April.
It was not all that plain sailing though. With S&P 500 valuations now on the higher side and a lack of fresh leads, interest rates outlook again took centerstage this month. The market rose steadily in the first 3 weeks of the month on relief from weaker payrolls, GDP, and CPI data which heightens hope that rate cuts won’t be delayed too far into the future. But following the release of the FOMC minutes and a string of hard talks from Fed members which stresses the lack of progress on inflation and the likelihood of high rates being around longer, the rally fizzled and the market started selling down.
Fed’s insistence on seeing continued improvements in inflation can be unnerving to the markets. The longer interest rates stay higher, the greater the pressure on the economy and the US debt burden, and the higher the chance it can break something and tip the economy into a more severe downturn. Short of new injects, that is likely going to be the theme for some time.
Asset Class & Sector Performance Snapshot for the Month
But overall, May is a great month across all assets except commodities. While Gold was up, it gave back the bulk of the gains it made intra-month. Equities are the biggest winners with returns driven by utilities, technology, and the communications sector. The only sector that came in red was Energy this month.
Portfolio Updates
The AQ multi-strategy model portfolio was up 4.4% this month erasing all the losses from April and hitting a new high this year. All the underlying strategies made decent and comparable profits with each other this month. The model’s asset picks in equities picked up a good ride even though Gold’s rally stalled after a spate of Fed speeches reignited concerns about interest rates. The model’s sector picks, on the other hand, were a bit more varied. It picked both the top and worst-performing sector in May – the top being utilities and the worst being energy. But the gains far outweigh the small loss coming from the energy sector. There was some action in the volatility space as well. The model reduced the size of its short volatility position right about where the sell-off hits this month thereby preserving more of the profits it made.
Overall, the AQ multi-strategy model is up 4.4% for May 2024 and up 6.5% YTD.
Download our AQ Multi-Strategy Model Newsletter
* This is the model performance of portfolios constructed using more advanced strategies than those taught in our courses. Note that live performance may vary due to execution price slippages, the difference in sizing precisions, etc. All performances are measured in USD terms.
Disclaimer & Disclosure
The information published on this Site is provided for informational purposes only. It is not intended to be, nor shall it be construed as, financial advice, an offer, or a solicitation of an offer, to buy or sell an interest in any investment product. Nothing on this site constitutes accounting, regulatory, tax, or other advice.
Any performance shown on this Site is model performance and is not necessarily indicative nor a guarantee of future performance. You should assess the relevance, accuracy, and adequacy of the information on this Site and consult your independent advisers where necessary.
Comments