Insights

Our trend-following algorithms moved us back to a fully invested position in our High Yield Bond allocations.

We began moving our High Yield Bond Positions defensive on Wednesday of last week. On Friday we completed those trades and started the year fully defensive in High Yield Bonds.

We began moving our US Stock Positions defensive on Wednesday of last week. On Friday we completed those trades and start this week fully defensive in US Stocks. Developed International Stocks and High Yield Bonds remain fully invested.

We began moving into International Stock Positions on Tuesday and US Stocks Positions on Wednesday this week and completed our moves at the Friday close. On Monday, we’ll be fully invested for all equity asset classes!

The more extreme market declines become, the more extreme following market actions may be.

In this commentary I’ll discuss opportunities that are emerging as markets continue to fall. I’ll also examine the impact of bond losses on conventional 60/40 portfolios. Finally, I’ll look at some of the remaining challenges that face stock and bond markets as we enter the final quarter of the year.

We are stuck. We have spent hours debating the jargon from the Fed like “transitory”, “growth below potential”, “soft landing”, and the latest one they have dragged out, “growth recession.” Trying to wring market direction from these words is fruitless, yet endlessly compelling

One week ago today, our algos finished moving to an invested position for our High Yield Bonds allocations across our models. After this move, high yield bonds have continued to advance this week, delivering gains for these allocations.