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July 2019

Market Update

(all values as of 06.28.2024)

Stock Indices:

Dow Jones	39,118
S&P 500	5,460
Nasdaq	17,732

Bond Sector Yields:

2 Yr Treasury	4.71%
10 Yr Treasury	4.36%
10 Yr Municipal	2.86%
High Yield	7.58%

YTD Market Returns:

Dow Jones	3.79%
S&P 500	14.48%
Nasdaq	18.13%
MSCI-EAFE	3.51%
MSCI-Europe	3.72%
MSCI-Pacific	3.05%
MSCI-Emg Mkt	6.11%

US Agg Bond	-0.71%
US Corp Bond	-0.49%
US Gov’t Bond	-0.68%

Commodity Prices:

Gold	2,336
Silver	29.43
Oil (WTI)	81.46

Currencies:

Dollar / Euro	1.06
Dollar / Pound	1.26
Yen / Dollar	160.56
Canadian /Dollar	0.73

Fund Overview

Equities continued to rally in July, as did the Ocean Park funds. Technology, and particularly semiconductor stocks, led the way. Although we trail the major indices, we continue to outperform the HFRI Equity Hedge Index, which rose 0.25% for the month and is up 9.52% for the year to date through July.

During July, we reduced positions in the autos and transportation, consumer discretionary and service, and technology sectors. We ended the month at about 91% net long, down from about 98% in 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 2019

Equity Overview

Investors favored growth stocks over value stocks in July, and large cap over medium and small cap. Significantly for our results, positive earnings surprises were rewarded with lower price gains than usual (0.6% vs. the 5-year average of 1.0%) and negative earnings surprises were punished with greater losses than usual (-3.3% vs. the 5-year average of -2.6%). The forward 12-month price-earnings ratio for the S&P 500 rose to 16.8, modestly above the five-year average of 16.2.

Second quarter corporate earnings reported in July maintained the unimpressive tone set in the first quarter. With 77% of S&P 500 companies reporting, the blended growth rate was again negative at -1.0%, disappointing in light of the strong gains in 2018. While 77% of companies have beaten consensus earnings estimates (in line with the one-year average), only 59% have beaten consensus revenue estimates (below the one-year average of 63%).

Macro Overview - July 2019

Macro Overview

As expected, the Fed lowered interest rates at its July meeting. However the cut was only 0.25%, which was less than the 0.50% which many analysts had hoped for. And Chairman Powell made clear that this was not necessarily the beginning of a series of rate cuts, stating that it was simply a “mid-cycle correction.”

Fresh GDP numbers from the Department of Commerce were disappointing. The initial estimate for second quarter growth was 2.1%, a significant decline from the 3.1% growth in the first quarter. In addition, the growth rate for 2018 was revised downward, from 2.9% to 2.5%. This made administration promises of 3% or 4% growth look increasingly unrealistic. However, there was one bright spot: consumer spending (which accounts for two-thirds of the economy) rebounded strongly in the second quarter, offsetting declines in business spending.

On the international front, the trade war with China continues with no end in sight, as the president continues to set policy via Twitter. Meanwhile, Japan, Germany, and other European countries have initiated negative interest rates and may be in, or on the verge of recession.

Additional Disclosures - July 2019

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.