Hit Pause:

Risk barometers are still pausing even during the rally:

• Stocks to Bonds

• High beta to low beta

• Consumer discretionary to Staples

• Copper to Gold

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• Important to note: As the Fed’s hiking cycle comes to a potential pause, we’ve seen a significant drop in correlation between risky assets and rates.

• Quality factor (QUAL) with continue to outperform SPY through the chop

• We mentioned Chinese Innovation (KSTR) 12% ago.

• Private equity is hurting and investors are stuck getting capital called with little to no distributions.

With a 5% cash rate, numerous fixed income assets fail to provide the necessary incremental returns to offset the increased volatility. Investment Grade Commercial Paper, yielding around 6% over 9-12 months, presents minimal duration and credit risk. Considering the 30-40 bps monthly risk-free return, it's difficult to ignore such uncorrelated assets. Consequently, cash and similar instruments should hold a more prominent position in portfolios today.

QQQ: Our high-water mark of $320 has been reached.

Mega-cap continues to outperform equal market weight

China.

Risk barometers are pausing in this rally (not good)

Private Equity is hurting hurting

Return always wants its risk payment. NOT INVESTMENT ADVICE.