The End of Easy Street
One great quarter down, only three to go to wash away the horror show of 2018. The portfolio did well, though it is still bogged down by a number of single names which are beginning to look a lot like value traps, of the nastiest kind. I am, as ever, optimistic about redemption in coming quarters, but I fear that the retired Macro Man, a.k.a. Bloomberg strategist Cameron Crise, is right when he says that; “the sobering reality for asset allocators is that the returns of balanced portfolios are going to struggle mightily to approach anything like 1Q performance.” It won’t be as easy for punters from here on in, but they’ll do their best. Bond markets have taken centre stage in recent weeks, aided and abetted by significant dovish shifts in the communication by both ECB and the Fed. The result has been a heart-warming rally in both front-end and long-end fixed income, or a pain trade if you’ve been short, and the U.S. yield curve showing further signs of inversion. The 2s5s went a while a ago and now the 3m/10s is gone too, which, apparently, is a big thing. As per usual, economists and strategists are squabbling on the significance of this price action, and I doubt that I’ll be able to settle anything here, so I will stick with the grand narratives, which are tricky enough.
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