School’s out, market drought! – June 9th 2023

School’s out, market drought! Top heavy mega-caps took a breather from their recent climb as risk assets favored some long awaited rotation into lagging sectors of the economy.

Cyclicals found a bid on what was another choppy and light volume week while Financials partially recovered their earlier year losses as the SEC turned the heat onto several larger players in the cryptocurrency space. The US dollar weakened vs majors upon the debt ceiling resolution and rates markets traded in a relatively tighter range versus prior weeks.

In spite of light economic data reported: Services PMI, ISM and Jobless claims all further support the case for the FED to deliver a June pause next week.

** 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.

“The EU contracted for the 2nd consecutive quarter officially falling in recession zone as global markets traded mixed ahead of next week’s US rate decision. We’ve now fully reduced ST tactical exposures in the portfolio and will be strategically increasing our core US sector positions as market liquidity improves and relative dislocations offer us better entry points.” – 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.

“This week witnessed a notable resurgence in the energy market, primarily driven by significant developments within OPEC. The organization convened over the weekend and showcased its commitment to stabilizing the oil market through strategic supply cuts. The positive impact of these efforts rippled through the market, leading to a resurgence in investor confidence. Notably, the Russell 2000, rebounded strongly, reflecting the overall positive sentiment..” – 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.

“Debt limits were punted to Jan 1 2025 and now we await next week’s slew of bill issuance which will continue financing the government, including a new weekly 6w CMB. All in, we expect to see a $131b increase of bill supply next week. We are patient with new purchases into this added supply as levels are once again pricing fairly vs overnight funding rates.“- Nick Diaz