Ocean Park Capital Management

2503 Main Street

Santa Monica, CA 90405

Main: 310.392.7300

Daily Performance Line:  310.281.8577

July 2018
Market Update
(all values as of 07.31.2020)

Stock Indices:

Dow Jones 26,428
S&P 500 3,271
Nasdaq 10,745

Bond Sector Yields:

2 Yr Treasury 0.11%
10 Yr Treasury 0.55%
10 Yr Municipal 0.64%
High Yield 5.44%

YTD Market Returns:

Dow Jones -7.39%
S&P 500 1.25%
Nasdaq 19.76%
MSCI-EAFE -10.64%
MSCI-Europe -10.86%
MSCI-Pacific -10.53%
MSCI-Emg Mkt -3.21%
 
US Agg Bond 7.72%
US Corp Bond 8.44%
US Gov’t Bond 9.35%

Commodity Prices:

Gold 1,992
Silver 24.54
Oil (WTI) 40.43

Currencies:

Dollar / Euro 1.17
Dollar / Pound 1.30
Yen / Dollar 105.01
Dollar / Canadian 0.74

Fund Overview

Equities posted solid gains in July.  The Ocean Park funds also rose, but underperformed the major indices as our consumer-oriented stocks, particularly Facebook and Netflix, were weak. Nonetheless, we continue to outperform most of the major indices for the year to date, as well as the HFRI Equity Hedge Total Index which is up 1.94% for the year.

During July, we added to positions in the technology and the health care sectors and reduced positions in the producer durables and the consumer discretionary and service sectors. We finished the month at about 87% net long, down from about 89% at the end of June.

A schedule showing the performance of the Investors Fund is included below, along with our Asset Allocation Chart. 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 - July 2018

Equity Overview

Large cap stocks outperformed small cap stocks in July (reversing a three-month trend), and value stocks continued to outperform growth stocks for the second month in a row.

2nd quarter earnings reported in July were impressive.  With 81% of S&P 500 companies reporting, the blended growth rate for earnings was 24.0%, which was even higher than the remarkable 1st quarter growth rate of 23.2% at this point in the earnings season.  In addition, 80% of companies beat consensus earnings estimates and 74% beat consensus revenue estimates, both numbers higher than the 1-year and 5-year averages.

 

 

 

 
Macro Overview - July 2018

Macro Overview

Tariffs and trade wars continued to dominate economic news in July, but without significant impact on the stock market.  However, the Fed expressed concern.  It released the minutes of its previous meeting which noted that “uncertainty and risks associated with trade policy intensified” and stated that most members “were concerned that such uncertainty and risks eventually could have a negative effects on business sentiment and investment spending,”

Economic data reported in July were generally positive.  Manufacturing and retail sales were strong and unemployment remained low.  The Commerce Department reported that GDP rose in the second quarter at an annual rate of 4.1%, the highest rate in four years.

In commenting about the extraordinary level of stock buybacks this year (on track to set a new record of $800-billion) we have pointed out that this phenomenon was inconsistent with the stated justification for the tax cut, which was supposed to encourage companies to raise the wages of their employees.  Now it appears that the buybacks are not benefiting companies as much as was hoped.    According to the Wall Street Journal, 350 companies of the S&P 500 have bought back stock this year but 57% of those companies have gained less than the S&P as a whole—the highest percentage of S&P 500 companies to fall short of the index performance since the onset of the financial crisis in 2008.

 

 

 
Additional Disclosures - July 2018

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.