Ocean Park Capital Management

2503 Main Street

Santa Monica, CA 90405

Main: 310.392.7300

Daily Performance Line:  310.281.8577

August 2018
Market Update
(all values as of 08.31.2020)

Stock Indices:

Dow Jones 28,430
S&P 500 3,500
Nasdaq 11,775

Bond Sector Yields:

2 Yr Treasury 0.14%
10 Yr Treasury 0.72%
10 Yr Municipal 0.81%
High Yield 5.38%

YTD Market Returns:

Dow Jones -0.38%
S&P 500 8.34%
Nasdaq 31.24%
MSCI-EAFE -6.23%
MSCI-Europe -7.39%
MSCI-Pacific -4.42%
MSCI-Emg Mkt -1.18%
 
US Agg Bond 6.85%
US Corp Bond 6.94%
US Gov’t Bond 8.09%

Commodity Prices:

Gold 1,973
Silver 28.43
Oil (WTI) 42.82

Currencies:

Dollar / Euro 1.19
Dollar / Pound 1.33
Yen / Dollar 105.37
Dollar / Canadian 0.76
 

Fund Overview

Equities generated impressive gains in August as did the Ocean Park funds.  Our technology stocks were particularly strong.  We outperformed all the major indices and posted our best monthly performance of 2018.  In addition, for the year to date, the funds continue to outperform most of the major indices, as well as the HFRI Equity Hedge Total Index which is up 2.26%.

During August, we reduced positions in the consumer discretionary and service sector.  We finished the month at about 85% net long, down from about 87% at the end of July.

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 - August 2018

Equity Overview

Stocks continued their remarkable rally in August, buoyed by impressive corporate earnings and strong consumer confidence. The S&P 500 hit a milestone on August 22, when its current bull run became the longest in history, lasting 3,452 days (nine and a half years).  It produced a gain of 324% over that time.

Growth stocks outperformed value stocks, reversing a two-month trend.  Leading sectors included technology, consumer goods and services, and health care.

Second quarter earnings reported in August continued to reflect strong gains.  With 99% of S&P 500 companies reporting, the blended growth rate was 25%, even higher than the 24% reported in July.  In addition, 80% of companies beat consensus earnings expectations and 72% beat consensus revenue expectations, both numbers higher than their 5-year averages.

 

 

 

 

 

 
Macro Overview - August 2018

Macro Overview

As was the case in July, tariffs and trade wars were headline news in August, but again had little impact on the U.S. stock market.  However, European indices were weak, as were Asian indices (except for Japan).  Turkey had some short-term impact on international markets, as its currency continued to collapse.

Economic data reported in August were mixed.  Manufacturing moderated from previous levels and housing was weak.  However, retail sales continued strong.

The Fed kept its benchmark short-term interest rate unchanged at its August meeting.  But there are cautionary signs on the horizon.  As inflationary pressure grows, analysts project a steady pace of Fed increases for the next several quarters, with the rate reaching about 3.00% to 3.25% by the end of 2019.  Long-term rates are also projected to increase.  While the broader economy may absorb these increases, there is likely to be a more immediate effect on consumers as banks raise floating rates on credit cards and adjustable rate mortgages.  In addition, rising rates cause an increase in the debt obligations of the U.S. government, which is already running a deficit projected to exceed $1-trillion per year.  This dynamic will command our attention in the coming months.

 

 

 

 
Additional Disclosures - August 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.