May 19, 2019

What happened this past week – The global stock markets expended an enormous amount of energy and experienced a lot of volatility but wound up barely moving (remember, the S&P 500 slumped ~70 points or 2.41% on Monday before recouping essentially that entire loss Tuesday-Thursday). For the week, the U.S. equity indices lost either side of 1% (although the Russell 2000 slumped 2.4%), mainland China tumbled 2% but the rest of Asia Pacific was mixed, and the European bourses gained ~1.5% to 2%. In aggregate, news out Monday-Friday was net negative with the Huawei action (placing the company on the Commerce Department export black list) overshadowing the trade positives (auto tariff deferral and lifting Mexican/Canadian metals tariffs), some solid April-end earnings (AMAT, CSCO, NVDA, and WMT), and mixed economic data (the IP, retail sales, and FAI figures out of China were dreadful, while decent U.S. April housing starts/building permits and solid May Empire/Philadelphia indices along with a better May NAHB survey offset poor U.S. April retail sales, industrial production and manufacturing data).

Your BSD Global Tech Hedge Fund’s strategic and tactical plan is working – Our discipline to bank some profits when price targets are achieved, has currently resulted in a 45% cash position, while the remaining long positions across numerous tech sectors are protected on the downside by our short derivatives overlay. The BSD Global Tech Hedge Fund’s P&L was flat this past week.

For the coming week, the big macro events will be the FOMC minutes (Wednesday, May 22) and the May flash PMIs (Thursday, May 23). If the minutes suggest any doubt behind Powell’s “transitory” thesis that would obviously have dovish implications and cause expectations for an “insurance” cut to rise while the PMIs give investors the first major look at economic activity for the month of May. Powell speaks Monday night, May 20 although it doesn’t sound like this will be a major policy address. The Eurozone parliamentary elections run May 23-26 and Trump leaves for a trip to Japan on May 26. The other area of focus will be the April-end earnings reports, including HD, KSS, and TJX (Tuesday morning), JWN, TOL, and URBN (Tuesday night), ADI, LOW, and TGT (Wednesday morning), LB and NTAP (Wednesday night), BBY and MDT (Thursday morning), and ADSK, HPE, HPQ, INTU, ROST, and SPLK (Thursday night).