Market insight and a highlight of Cabana’s year-to-date performance:
Cabana’s seven portfolios range from “Conservative” to “Aggressive” and include an income strategy and an “Accumulator” portfolio. Performance is as of market close on April 30, 2018 and is presented net of maximum advisory fees and commissions.
Cabana’s portfolios were all slightly down this week. The Alpha Income continues to lag, as a result of the precipitous pop in interest rates. The three-month jump from 2.30% to 3.00% in the ten-year yield is remarkable. This gives support to the US dollar, which is up nearly 5% over the same time. Dollar strength puts pressure on multinational companies, commodities, and countries exporting commodities. Some of this is intended by central bankers in their ongoing quest to fight inflation. It is a delicate balance, however, in that the same cause and effect relationship stifles growth across many sectors of the economy. A return to a more normal historical yield can be healthy and evidence of confidence by markets, unless the additional “costs” cannot be absorbed downstream. Up until now this normalization process has resulted in a very bumpy ride for equity and bond markets, but so far they have stayed on track. If we see yields cross 3.04% (which is the post-crisis high), I am concerned that we may see a more severe and lasting downturn. In my view, the Federal Reserve should tread cautiously and give investors time to work through the changes we have seen already in 2018. Some dovish comments and a pause in raising short term rates would be welcome news. We remain cautiously bullish.
Year-to-date net-of-fees performance:
ALPHA INCOME: -1.84%
Performance is presented net of the maximum advisory fees and commissions (2%). Numbers indicated with (+) for positive return and (-) for negative return.
-G. Chadd Mason, CEO
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