June 2023 Monthly Review

Jordi Visser

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June was a great month for risk assets with both the SPX and NDX finishing up around 6.5%.  Importantly, after a year of narrow breadth, we did see some broadening out in June with the Russell 2000 small cap index up close to 8% for the month.  It was also a great month for the economically sensitive sectors with consumer discretionary, industrials, materials, technology and financials all up more than 6.5%, and energy up slightly less. The laggards were the defensive sectors.  This was due to continued stronger than feared economic data which led to a sharp rise in rates.  2yr yields were up 49 bps and 10 yr yields were up 19 bps as the market built in a resumption to the Fed rate hikes post the recent pause.  Jobs continue to be created leading investors to push out expectations of a recession and increase risk taking.  Even commodities were able to post their first positive month of 2023, with the best monthly performance since July 2022.

It has been a long road since February 2021 for risk taking in the market by long-short hedge funds.  It began with the unwinds and short squeeze in January 2021 due to the meme GME issue, then rolling covid fears and finally the sharp Fed rate hikes.  With the Fed on a more certain path, rates vol and the VIX have both moved lower leading to more signs of increased normal, fundamentally driven risk taking.  This year has been about a narrow breadth environment for equities driven by the euphoria over AI.  During June, our PMs saw more signs that with the valuation dispersion gap between the average stock and the megacap tech names, is showing signs of abating allowing for valuations to be a positive catalyst for alpha in the 2nd half of 2023.  To highlight this shift, the S&P Equal Weight index (SPW) outperformed the S&P cap weighted index (SPX) in June for the first time since January after a sharp decline over the last four months.  We see the rest of 2023 as a good environment for our PMs.

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Important disclosures: Disclosures: This content (the "Insights Page") is provided by Weiss Multi-Strategy Advisers LLC ("Weiss"). The views expressed on the Insights Page are for informational purposes only and are subject to change without notice. Information on the Insights Page has been developed internally and is based on market conditions as of the date of the original post on the Insights Page from sources believed to be reliable. Nothing on the Insights Page should be construed as investment, legal, tax, or other advice and should not be viewed as a recommendation to buy or sell any security or adopt any investment strategy. Past performance is no guarantee of future results. Please consult your own advisers regarding business, legal, tax, or other matters concerning investments. Weiss has no control over information at any external site hyperlinked on the Insights Page. Weiss makes no representation concerning and is not responsible for the quality, content, nature, or reliability of any hyperlinked site and has included hyperlinks only as a convenience. The inclusion of any external hyperlink does not imply any endorsement or ongoing monitoring by Weiss of any hyperlinked site. Investing in securities is speculative and involves substantial risk of loss.

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Important disclosures: Disclosures: This content (the "Insights Page") is provided by Weiss Multi-Strategy Advisers LLC ("Weiss"). The views expressed on the Insights Page are for informational purposes only and are subject to change without notice. Information on the Insights Page has been developed internally and is based on market conditions as of the date of the original post on the Insights Page from sources believed to be reliable. Nothing on the Insights Page should be construed as investment, legal, tax, or other advice and should not be viewed as a recommendation to buy or sell any security or adopt any investment strategy. Past performance is no guarantee of future results. Please consult your own advisers regarding business, legal, tax, or other matters concerning investments. Weiss has no control over information at any external site hyperlinked on the Insights Page. Weiss makes no representation concerning and is not responsible for the quality, content, nature, or reliability of any hyperlinked site and has included hyperlinks only as a convenience. The inclusion of any external hyperlink does not imply any endorsement or ongoing monitoring by Weiss of any hyperlinked site. Investing in securities is speculative and involves substantial risk of loss.

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