Little to Celebrate | Flow Traders Investment Competition | Week 29

Stocks erased most of the prior week’s gains after a string of disappointing economic releases and escalating tensions between the U.S. and China. The U.S. administration moved to block semiconductor shipments to Huawei, adding to investor caution. The declines were most pronounced among small-caps and slower-growing value stocks. Health care and consumer (both staples and discretionary) shares held up relatively well, while energy stocks lagged despite a rise in domestic oil prices, which peaked their highest level in over a month. Real estate shares were also weak, as worries grew that struggling retailers and other businesses would be unable to make lease payments. 

Equities in Europe fell on growing fears of a prolonged recession that could be made worse by a possible second wave of coronavirus infections. The pan-European STOXX Europe 600 Index ended the week 3.44% lower. The UK’s FTSE 100 Index lost 1.97%. Japanese stocks posted mixed returns for the week. The Nikkei 225 Stock Average declined 142 points (0.7%) and closed at 20.037.47, down 15.3% for the year-to-date period. 

The week’s economic data brought little to celebrate on multiple frontiers. On Friday, the Commerce Department reported that retail sales (excluding car sales) dropped 17.2% in April, the biggest fall on record and twice as large as the consensus expectation. Thursday’s weekly jobless report, which showed almost 3 million more Americans filing for benefits in the previous week, also negatively surprised. The price index fell 0.8% over the month, as decreases in energy, and transportation costs outweighed the sharpest increase in grocery food prices since 1974. Treasury yields decreased through most of the week on the dismal economic data, mostly solid demand for surging levels of new issuance, and continued purchases by the Federal Reserve of longer-term Treasuries. The broad municipal market produced positive returns, led by high-grade issues. 

Meanwhile in the Eurozone, the GDP contracted by a record of 3.8% in Q1, according to a flash estimate from Eurostat. France’s economy shrank 5.8%, followed by Slovakia (5.4%) and Spain (5.2%). The largest economy, Germany, shrank 2.2%. UK GDP dropped by 2.0% compared to the previous quarter. On the other hand in China, industrial production continues to recover with a rise of 3.9 year on year.

Moving onward to the competition, the first position is still entitled to Clear Water Group with a magnificent M2 of 48.43, followed up by Phoenix with a M2 of 12.26%. Our biggest riser, this week, is INVICTI, moving +9 into rank position 27. On the other hand, the biggest loser this week is Basura, moving from rank 10 to rank 20. 

Amar Soebhag