Ocean Park Capital Management

2503 Main Street

Santa Monica, CA 90405

Main: 310.392.7300

Daily Performance Line:  310.281.8577

May 2022
Market Update
(all values as of 05.31.2022)

Stock Indices:

Dow Jones 32,990
S&P 500 4,132
Nasdaq 12,081

Bond Sector Yields:

2 Yr Treasury 2.53%
10 Yr Treasury 2.85%
10 Yr Municipal 2.50%
High Yield 7.00%

YTD Market Returns:

Dow Jones -9.21%
S&P 500 -13.30%
Nasdaq -22.78%
MSCI-EAFE -12.76%
MSCI-Europe -13.61%
MSCI-Pacific -11.01%
MSCI-Emg Mkt -12.53%
 
US Agg Bond -8.92%
US Corp Bond -11.92%
US Gov’t Bond -9.61%

Commodity Prices:

Gold 1,840
Silver 21.54
Oil (WTI) 115.27

Currencies:

Dollar / Euro 1.07
Dollar / Pound 1.26
Yen / Dollar 127.36
Dollar / Canadian 0.78

Portfolio Overview

Ocean Park Investors Fund lost 2.07%* in May.  The S&P 500 gained 0.01% and the NASDAQ Composite lost 2.05%.  Among portfolio holdings, energy stocks were strongest and consumer stocks were weakest.

During May, we added to positions in the financial services sector and reduced positions in the consumer sector.  We finished the month at about 93% net long, up slightly from about 92% in April.

 

 

 

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

Stock market performance was mixed in May.  Energy stocks were dramatically higher, followed by utilities and financials.  Consumer discretionary stocks lost the most ground.  Value stocks significantly outperformed growth stocks.

Market volatility continued, as the S&P 500 moved by 1% or more on 10 of 22 trading days, 7 of which were moves of 2% or more.

1st quarter 2022 earnings reported in May continued to exceed expectations.  With 95% of S&P 500 companies reporting, 77% have beaten consensus earnings estimates and 73% have beaten consensus revenue estimates.  These percentages are lower than the one-year averages but equal to or better than the five-year averages.  However, the market did not reward earnings beats as it has in the past.  Companies exceeding expectations sustained an average price decrease of 0.5% during the period from two days before to two days after the earnings release, well below the 5-year average of a 0.8% increase.

The S&P 500 forward price earnings ratio dipped to 16.4, below the five-year average of 18.6 and the 10-year average of 16.9.

 

 

 
Macro Overview

Macro Overview

Economic data reported in May was not impressive.  Retail sales were higher but key retailers such as Walmart and Target reported disappointing earnings and their stock prices sank.  Manufacturing and housing were weak.  Employment concerns have largely shifted away from unemployment—which remains historically low—to the scarcity of workers, as employers struggle to fill positions.  Sourcing materials continues to be problematic, as 73% of S&P 500 companies cited supply chain issues in their earnings calls.

Inflation continued unabated, as consumer prices reported in May rose 8.3% over the previous year. In response, the Fed raised short-term interest rates by 0.50%, its most aggressive increase since May 2000.  It also announced specifics for its “quantitative tightening” plan:  reductions in its $9-trillion balance sheet of $37.5-billion per month through August and $95-billion per month thereafter.  The Fed projects that by year’s end the inflation rate should be in the 4-5% range.

 

 

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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.