Ocean Park Capital Management

2503 Main Street

Santa Monica, CA 90405

Main: 310.392.7300

Daily Performance Line:  310.281.8577

May 2017
Market Update
(all values as of 09.30.2020)

Stock Indices:

Dow Jones 27,781
S&P 500 3,363
Nasdaq 11,167

Bond Sector Yields:

2 Yr Treasury 0.13%
10 Yr Treasury 0.69%
10 Yr Municipal 0.84%
High Yield 5.77%

YTD Market Returns:

Dow Jones -2.65%
S&P 500 4.09%
Nasdaq 24.46%
MSCI-EAFE -8.92%
MSCI-Europe -10.53%
MSCI-Pacific -6.19%
MSCI-Emg Mkt -2.93%
 
US Agg Bond 6.79%
US Corp Bond 6.64%
US Gov’t Bond 8.04%

Commodity Prices:

Gold 1,892
Silver 23.37
Oil (WTI) 39.88

Currencies:

Dollar / Euro 1.17
Dollar / Pound 1.28
Yen / Dollar 105.60
Dollar / Canadian 0.74

Fund Performance

Equities gained ground in May, as did the Ocean Park funds.  We outperformed all of the major indices for the month, paced by our holdings in technology and producer durables.  Reversing the downtrend in April, the semiconductor industry was particularly strong and a number of our positions generated outsized returns, including equipment makers such as Applied Materials and chipmakers such as Broadcom, Nvidia, and Micron.

During the month of May, we increased positions in the producer durables sector and reduced positions in the financial services, health care, and technology sectors.  We finished the month at about 87% net long, down from about 93% at the end of April.

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 - May 2017

Equity Overview 

The S&P 500 and the NASDAQ composite both reached new highs in May.  Mid-cap and small-cap indices lagged.

Market volatility reached a two-decade low at the beginning of the month, but spiked on May 10 when the firing of FBI Director James Comey caused prices to drop sharply.  However prices recovered within days, and markets were calm for the balance of the month.

Consistent with the recent trend, growth stocks outpaced value stocks, and earnings surprises continued to drive superior stock performance.  As was the case in April, energy stocks were weak along with the price of oil.

First quarter earnings reported in May continued the uptrend from April.  With 83% of S&P 500 companies reporting, the blended growth rate for Q1 earnings is now 13.5%, even better than the 12.5% rate at the end of April and the best result in six years.  In addition, 75% of companies reporting beat consensus earnings estimates, compared with the 70% one-year average, and 66% of companies reporting beat consensus revenue estimates, compared with the 53% one-year average.

 

 
Macro Overview - May 2017

Macro Overview

Economic data reported in May continued mixed.  Employment statistics were positive, as payroll growth rebounded and consumers stayed confident about job prospects.  And the Commerce Department raised its estimate of first quarter grow from 0.7% to 1.2%.  On the other hand, manufacturing growth slowed and housing was weak.

Domestic economic news focused on health care, as the House managed to pass its “repeal and replace” of Obamacare on a vote of 217-213.  The Congressional Budget Office estimated that the bill would cause 24-million Americans to lose their health care, which led to widespread criticism even among Republicans.  The bill’s future in the Senate remains uncertain.  In addition, the administration released its budget proposal, which projects a balanced budget in 10 years based on $3.6-trillion in spending cuts (including $1.7-trillion in entitlement cuts) and an increase in GDP to 3% per year.  The plan included a number of arithmetic errors and was widely dismissed as unrealistic.  Analysts described its prospects in Congress as dead on arrival.    The administration also released its long-awaited infrastructure plan which, as predicted, calls for minimal federal spending and relies primarily on private sector financing.  There was no meaningful progress on tax reform, except that the Treasury Secretary criticized House Speaker Ryan’s Border Adjustment Tax, leading Ryan to acknowledge that it was not likely to be enacted.

In international news, Emmanuel Macron won the French presidential election in a landslide with 65% of the vote, defeating the right-wing ultranationalist Marine Le Pen and striking a blow for European unity.  This theme was reinforced in Germany, where Angela Merkel’s party performed strongly in regional elections including in areas controlled by her opposition.  Analysts suggest that this bodes well for her reelection in September.  North Korea fired more missile tests and remains a conundrum, continuing to defy international norms with apparent impunity.

 

 

 

 
Additional Disclosures - May 2017

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.