You can forget about rate cuts – April 28th 2023

April showers, will Powell allow May flowers? An end to another range bound month in financial markets where softer economic data begins to trend and public companies prove to be navigating smoothly through the storm with Q1 earnings surprising to the upside. A flight to quality continued this week causing mega caps to soar high enough to keep the broader US indices afloat for the month, meanwhile support for the rest of the market has been non-existent, with null risk appetite, lack luster volumes and persistent downside momentum awaiting the May 3rd Fed rate decision. Additionally, we saw another wave of liquidations, banking contagion and recessionary pricing further pressuring an already weak market and maintaining a strong bid under short duration instruments.

** Thoughts on RCG Portfolio Positioning
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** Dynamic Macro Strategy
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This strategy relies on historical data and quantitative techniques to detect statistical disparities and make predictions in global markets using liquid ETF’s.

“Although European equities, both core and periphery continue to outperform US markets, we are approaching our short term targets and have began rotating out of our tactical UK and Italian longs. We have also balanced the book and reduced beta by adding exposure to the cheaper points in the long-end of the US Treasury curve as we anticipate the Fed to finally signal a pause to rate hikes.” – Nick Diaz

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

“The recent fallout in equities led us to risk reduce and raise cash in the strategy into this upcoming earnings season. As our companies report in-line/better than expected results we have been re-deploying capital at these more favorable price levels. We believe these stocks are priced deeply below their intrinsic values, have reduced debt and are now focused or about to focus on returning value to shareholders.” – Stefan Lingmerth

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

“As localized fires spread through the banking sector, the divergence between the FEDs communication and market pricing on the treasury curve is concerning. If recent history repeats itself, we should see higher rates in the 3m to 2yr part of the curve as traders unwind the recent risk off move and accept that there are no rate cuts on the near term horizon by Fed Officials. We look to roll and secure new short term bills post FED comments and take profits on select precious metal exposure.” – Nick Diaz