Ocean Park Capital Management

2503 Main Street

Santa Monica, CA 90405

Main: 310.392.7300

Daily Performance Line:  310.281.8577

January 2023
Market Update
(all values as of 03.29.2024)

Stock Indices:

Dow Jones 39,807
S&P 500 5,254
Nasdaq 16,379

Bond Sector Yields:

2 Yr Treasury 4.59%
10 Yr Treasury 4.20%
10 Yr Municipal 2.52%
High Yield 7.44%

YTD Market Returns:

Dow Jones 5.62%
S&P 500 10.16%
Nasdaq 9.11%
MSCI-EAFE 5.06%
MSCI-Europe 4.60%
MSCI-Pacific 5.82%
MSCI-Emg Mkt 1.90%
 
US Agg Bond -0.78%
US Corp Bond -0.40%
US Gov’t Bond -0.72%

Commodity Prices:

Gold 2,254
Silver 25.10
Oil (WTI) 83.12

Currencies:

Dollar / Euro 1.08
Dollar / Pound 1.26
Yen / Dollar 151.35
Canadian /Dollar 0.73

Portfolio Overview

Ocean Park Investors Fund rose 5.76%* in January as stocks rebounded from their December doldrums.  The S&P 500 rose 6.18% and the NASDAQ Composite rose 10.68%.  Technology stocks accounted for more than half of the portfolio gains. Chip stocks were particularly strong, led by Nvidia which gained 33%.

During January, we increased positions in the technology sector and the consumer discretionary and service sector and reduced exposure to the financial services sector and the autos and transportation sector.  We finished the month at about 95% net long, up from about 93% in December.

 

 

 

 

Daily updates on our activity are available on our Results Line, at 310-281-8577, and current information is also maintained on our website at www.oceanparkcapital.com. To gain access to the site enter password opcap.

*These results are pro forma. Actual results for most investors will vary. See additional disclosures on page 4. Past performance does not guarantee future results.

 
Equity Overview

Equity Overview

Eight of eleven sectors in the S&P 500 rose in October, with consumer discretionary stocks the best gainers and utilities the worst losers.  Growth stocks outperformed value.  Volatility was noteworthy, as the S&P 500 moved more than 1% on 9 of 20 trading days. The forward price/earnings ratio for the S&P 500 near month end was 17.8, elevated from December but well below the 5-year average of 18.5.

Fourth quarter earnings reported in January were expected to show weakness, and did so.  With 29% of S&P 500 companies reporting, 69% beat consensus earnings expectations and 60% beat consensus revenue expectations.  While these numbers may seem positive, both the earnings beats and the revenue beats were lower than the one-year and five-year average beat rates.  And the magnitude of earnings beats was also weak, at 1.5% above consensus versus the one-year average of 4.5% and the five-year average of 8.6%.

 

 

 
Macro Overview

Macro Overview

Economic headlines in January were the usual mixed bag.  Job creation was better than expected and unemployment ticked down to 3.5%–but it remains to be seen whether that trend can continue in the face of numerous layoff announcements by, among others, Amazon, Alphabet (Google), Microsoft, and Goldman Sachs.  Inflation news was good as the CPI declined by 0.1% month over month and stood at +6.5% year over year (down from +9.1% in June 2002).  The Commerce Department estimated fourth quarter GDP growth at 2.9%, better than the consensus estimate of 2.6%.  However, retail sales were lower, manufacturing contracted, factory orders decreased, consumer confidence fell, and housing was mixed.

The elephant in the room continues to be the threat of recession.  As we pointed out last month, Goldman Sachs believes that a recession is unlikely.  And it did seem clear that the Fed was on the path to moderating its interest rate increases, which would suggest less pressure on the economy and less likelihood of a recession.  But recent comments from Fed governors have cast some doubt on that path.  Now the “bond king” Jeff Gundlach — who has proven prescient in his economic forecasts — believes that a recession is inevitable and the only issue is whether it will be mild or harsh.  So there is no consensus.  Time will tell.

 

 

 
Additional Disclosures

Additional Disclosures

Performance data for OPI reflect the reinvestment of dividends and other earnings on the fund’s assets.  Performance data for the major indices reflect only changes in the value of those indices, and would be higher if dividends were included. However, the index data do not reflect fees that would be paid to index fund managers and transaction costs that would be incurred when their component stocks are bought or sold, while OPI’s data do reflect quarterly fees and expenses incurred by the fund.  The information provided is believed to be reliable, but its accuracy or completeness is not warranted. This material is not intended as an offer or solicitation for the purchase or sale of any stock, bond, mutual fund, or any other financial instrument. The views and strategies discussed herein may not be appropriate and/or suitable for all investors. This material is meant solely for informational purposes, and is not intended to suffice as any type of accounting, legal, tax, or estate planning advice. Any and all forecasts mentioned are for illustrative purposes only and should not be interpreted as investment recommendations.