- The Minimalist Portfolio
- Posts
- Weekend Reading
Weekend Reading 14th of July
It’s been another exciting week in the markets, with the broad stock market making yet another all-time high. Did you know only 5% of stocks in the SP500 reached an all-time high?
As discussed this quarter, the US is set to slow economic growth. When this happens, there is a large divergence in what performs well and what doesn’t.
Consumer Price Index
The talk of the week was clearly the CPI rapport:
The headline CPI was +3.0% Y/Y, compared to +3.3% in the prior month. It was also down -0.1% M/M, the lowest M/M increase since May 2020.
Core CPI came in at +3.3% versus +3.4% Y/Y previously.
While it looks like a positive sign that inflation is cooling, Core Services Ex-Shelter remained high and sticky at +4.9% Y/Y.
On the surface, inflation seems to be cooling. This suggests an almost 93% probability of some form of interest rate cut in September. Ironically enough, this likely easing of policy will come at a time when CPI comparisons, combined with the flow through from higher shipping costs, are likely to lead to inflation data re-accelerating into Q4 of 2024.
We expect and position ourselves for higher prices down the road through our commodity positions discussed below.
I’m looking to get into Oil and Energy related play through XLE, but I’ll keep you updated on that!
Another interesting plays are Japan, as its economy has re-entered a favorable macro environment. Japanese Machine Tool Orders accelerated for the second straight month (post a 16-month slowdown) to +9.7% y/y—Nikkei went moon +2% partially on that; Taiwan’s Exports went moon, too, at +23.5% y/y in June!
Portfolio
The further we go into the second half of the year, the more clear the macro environment we are positioned for will become for the consensus investor. We plan on catching all the inflow of capital into our positions so we are keeping the portfolio as is.
Utilities Sector (XLU) +1,8% Since Entry 14th of June
Great sector to be long now that growth is slowing. Very stable and defensive.
Insurance (IAK) 2,7% Since Entry Fri 30th of June
Insurance is a tremendous defensive sector for slowing growth.
Healthcare (PINK) 1,6% Since Entry Fri 30th of June
Healthcare is another amazing defensive position what is sure to pay off in these times of slowing growth.
Technology Sector (XLK) +3,4% Since Entry Fri 30th of June
As slowing growth remains the theme, we need to increase the quality of the portfolio. The Tech giants continue to deliver what makes them deserve a place in the portfolio.
Copper -4,2% Since Entry Fri 24th of May.
Copper builds perfectly on our theme of rising inflation and the rise in chip production.
SILVER (SLV) +13,2% Since Entry Fri 26th of April
Silver is an inflation hedge and a store of value what makes it perfect for the current macro dynamic.
Gold +16,9% YTD
Gold has been solid historically in the given macro environment, especially relative to the S&P500. It’s a true classic for holding up as a haven asset in higher-volatility environments.
Germany (DAX) +5,7% Since Entry Fri 19th of April
As we are bullish on Europe, it’s great to have exposure to Germany, which is considered the continent's engine
Netherlands (EWN) 4,6% Since Entry 14th of June
As the European Recession ended in Q4 of 2023, The Netherlands is a great place to allocate capital.
India (INDA) +17,7% YTD
The signal remains bullish on India as its world-leading economic growth is set to hold at these levels. Probabilities point towards shallow accelerations in 2H24 on buoyant domestic demand and government spending as well as strong credit growth.
I hope you enjoyed this week’s edition of Weekend Reading by The Minimalist Portfolio.
Best of luck in the markets!
Philippe