From the Desk of Willie Delwiche

From the desk of Willie Delwiche.

Dynamic Portfolio Update: Our asset allocation models are tilting away from commodities, so we sold GLD in our cyclical portfolio (and replaced it with mid-cap equity exposure). With tactical risks rising, we raised some cash in our tactical opportunity portfolio.

From the desk of Willie Delwiche.

As good as the market looked in January, it looked that bad in February. The month began with the technical conditions for the re-birth of a bull market being met, but by the end of the month there was still little evidence of bull market behavior. If the Q4 turn is going to prove resilient, it’s time for the bulls to step up and show that the path of least resistance is indeed higher. That means firmly embracing a rally that has faltered under the ongoing weight of macro concerns and is on the cusp of breaking down.

Our Weight of the Evidence Dashboard fills in the details and includes a few charts that have our attention heading into March. 

Even with the impressive bounce heading into the weekend, the S&P 500 last week didn’t even get back up to its December high. Meanwhile nearly 10% of the industry groups in the S&P 1500 and more than 10% of global markets closed at new 52-week highs. That’s the longest new high list by the rest of the world in nearly a year.

From the Desk of Willie Delwiche.

Stocks rallied heading into the weekend, with the S&P 500 finishing up 1.6% for the day. Friday’s 1%+ move ended four consecutive days of relative quiet, the longest stretch without a 1% swing (on a closing basis) since a seven day streak in mid-November. We still have had just one week over the past year that did not experience a single 1% swing in the S&P 500.

This is the video recording of the March 2nd, 2023, Weekly Town Hall w/ Willie Delwiche.

03/02/23 2:00 PM ET

From the Desk of Willie Delwiche

From the desk of Willie Delwiche.

Dynamic Portfolio Update: This year's rally has so far failed to turn long-term trends higher and is starting to look ragged. As we see how this period of digestion plays out, we are reducing the equity exposure in our Tactical Opportunity Portfolio.

From the desk of Willie Delwiche.

Moving into commodities when they are trending higher versus stocks increases return and lowers risk relative to otherwise static equity exposure. Commodities may not always earn a spot in our portfolios, but we do well to remember to include them in the asset allocation conversation. 

The conditions for the re-birth of a bull market were met earlier this month, but the confirmation of strength has been underwhelming. Of the six indicators on our bull market behavior checklist, only one is currently meeting the bull market criteria.

From the Desk of Willie Delwiche.

Annual data shows that the Federal government’s cost to service its debt (as a % of GDP) reached its highest level in two decades last year. 

Why It Matters: Debt servicing costs were at a generational low just a few years ago. Now persistent inflation is pushing bond yields higher and the latest CBO projections show federal debt levels continuing to soar (new highs that aren’t cause for celebration). Interest payments on the debt are moving from afterthought to fiscal burden. Without a rediscovery of fiscal discipline getting a handle on inflation is going to be a challenge and that is likely to keep yields higher for longer. A quick return to the market and fiscal conditions of the past decade does not appear to be in the cards.    

This is the video recording of the February 23rd, 2023, Weekly Town Hall w/ Willie Delwiche.

2/23/23 2:00 PM ET