May I have my $ back please? May 5th 2023

Another 25bp rate hike and a sour taste is what Fed chair Jerome Powell left markets with this week. Their statement was direct and left little to read into, “…data dependent from here on out, getting to 2% target is going to take a while”. With that, markets continued to purge out of risk assets throughout the week and yields moved lower across the curve as other regional banks admitted to liquidity draws and markdowns (PacWest and First Horizon this time). Although we approach the end of the hiking cycle, positioning in this market seems to be setting up for a sideways summer that is unlikely to change course in the absence of economic data that doesn’t reflect a significant and sustained improvement in inflation. In the meantime, fearful depositors and higher for longer rates are proving to be the regional undertakers.

** Thoughts on RCG Portfolio Positioning
————————————————————

** Dynamic Macro Strategy
————————————————————

This strategy relies on historical data and quantitative techniques to detect statistical disparities and make predictions in global markets using liquid ETF’s.

“The recent de-risking of the book and allocation to fixed income instruments proved timely and partially helped offset the recent fallout in financial markets. We remain vigilant to changes in capital re-allocations and have stayed the course this week running leaner risk given the heightened volatility and market pressures created by the Fed” – Nick Diaz

** Inflection Strategy
————————————————————

The strategy takes positions in highly out of favor US equities which we believe are inflecting due to changing fundamentals/events.

“In spite of a continued under-supplied oil market we witnessed a drop of 10% in crude oil prices this week as recession fears persist. Given our current overweight in Energy names the volatility in the portfolio has recently been exacerbated. However, currently reported earnings by our companies have all come above or in line with our expectations.” – Stefan Lingmerth

** Safe Haven Strategy
————————————————————

This strategy protects capital during inflationary environments and seeks to maximize yield using fixed income instruments and defensive assets. PM – Nick Diaz

“Defense continues to be the best offense during this turbulent period. Dollar weakness is favoring precious metals that continue to show their resiliency. Current positioning should provide the tailwind for this strategies performance over the next few months as inflation and volatility persist.“- Nick Diaz