Our weighted average return in July was +3.10%, bringing our year-to-date return to +11.86%.

During July we focused on analyzing corporate earnings releases. As a whole, the results were very impressive. As of the end of July 72% of S&P 500 companies beat their mean earnings per share (EPS) estimates and 70% beat their mean revenue estimates. These results were evidently very encouraging to equity investors. The S&P 500 ended the month up 1.95% and market volatility reached new lows.

Turning to the macro environment, the US central bank left rates on hold at the July meeting, citing lower than expected inflation levels. The European Central Bank also left interest rates unchanged and made no promises about upcoming stimulus tapering, despite increasingly positive Eurozone economic data. Positive Eurozone sentiment coupled with US political stalemates and chicanery (the failure of healthcare reform in Congress, the Trump investigation and a revolving door of senior White House staff…), pushed the US currency to new recent lows against the Euro, which gained 3.5% against the greenback during the past month. A lower US dollar should theoretically provide a boost to US exporters, and provide a headwind to international exporters to the US.

With the earnings season coming to an end, we see less catalysts in the foreseeable future, which could drive the already over-owned technology sector even higher. Keeping that in mind, we have sold the majority of our tech stocks and have been deploying capital to mining stocks. We have identified that the mining sector is incredibly under-owned and undervalued, especially when compared to the technology sector. This year’s P/E estimate for the global metals and mining sector is forecast at 13.39x vs. the 29.95x estimate for tech. It is also worth pointing out that the whole publicly traded metals & mining sector is valued at roughly $823 billion, whereas the market capitalization of Apple alone is now $827 billion.

Please feel free to contact us asset@blueorangebank.com if you would like to hear more about our investment strategies.
On the behalf our portfolio management team, I thank you for your continued trust and support!
FULL DISCLOSURE: Please note that the opinions expressed in this blog should in no way be considered as investment advice or a solicitation to buy or sell securities.

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