Ocean Park Capital Management

2503 Main Street

Santa Monica, CA 90405

Main: 310.392.7300

Daily Performance Line:  310.281.8577

July 2022
Market Update
(all values as of 07.29.2022)

Stock Indices:

Dow Jones 32,845
S&P 500 4,130
Nasdaq 12,390

Bond Sector Yields:

2 Yr Treasury 2.89%
10 Yr Treasury 2.67%
10 Yr Municipal 2.27%
High Yield 7.50%

YTD Market Returns:

Dow Jones -9.61%
S&P 500 -13.34%
Nasdaq -20.80%
MSCI-EAFE -17.07%
MSCI-Europe -18.52%
MSCI-Pacific -14.20%
MSCI-Emg Mkt -19.34%
 
US Agg Bond -8.16%
US Corp Bond -11.61%
US Gov’t Bond -9.13%

Commodity Prices:

Gold 1,782
Silver 20.32
Oil (WTI) 98.35

Currencies:

Dollar / Euro 1.01
Dollar / Pound 1.21
Yen / Dollar 135.01
Canadian /Dollar 0.77

Portfolio Overview

Ocean Park Investors Fund rose 7.75% in July, largely reversing the loss in June.  The S&P 500 rose 9.11% and the NASDAQ Composite rose 12.35%.  The consumer discretionary sector and the technology sector showed outsized gains, as reported consumer spending was strong and semiconductor stocks rebounded.

During July, we reduced positions in the financial services sector and the consumer discretionary and service sector and increased exposure to the SPY ETF.  We finished the month at about 93% net long, up slightly from about 92% in June.

 

 

 

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

Every sector in the S&P 500 rose in July.  Growth stocks dramatically outperformed value stocks.  Volatility continued unabated, as the S&P 500 moved more than 1% on 10 of 20 trading days—but unlike in previous months, 8 of the 10 moves were to the upside.

Second quarter earnings reported in July were healthy but showed deceleration.  With 56% of S&P 500 companies reporting, 73% beat consensus earnings expectations and 66% beat consensus revenue expectations—but in both cases the beat rates were lower than the one-year and five-year averages.  And the magnitude of earnings beats was less than stellar, averaging 3.1% above consensus expectations versus the one-year average of 9.8% and the five-year average of 8.8%.

 

 

 
Macro Overview

Macro Overview

Economic data reported in July were mixed.  Payrolls advanced, retail sales rose, and unemployment was low at 3.6%.  But housing was weak and manufacturing expanded at the slowest pace in two years.

More significantly, inflation remained elevated at 9.1% year-over-year.  In response, the Fed raised short-term interest rates by 0.75%, its second increase of that amount this year.  Chairman Powell reiterated that the Fed will take whatever measures are necessary to bring inflation back to the Fed’s 2% target.

The Commerce Department reported that GDP fell at an annualized rate of 0.9% in the second quarter, on the heels of a 1.6% drop in the first quarter.  This raises concern in the markets because the traditional definition of a recession is two consecutive quarters of declining GDP.  However, consensus among economists is that, when considering other factors which show signs of strength, including measures of income, spending, and employment, the GDP decline alone does not mean that recession is imminent.  Nonetheless, we expect the issue to predominate in financial news in the months ahead.

 

 

 
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.