Real Interest Rates
The 1999 leadership parallels we discussed in the latest Green Book remain intact—U.S. over foreign, Growth over Value, and Large over Small. Small Caps have given up most of the “beta bounce” enjoyed in the first two months off the December low, with one Small Cap measure—the Russell Microcap Index (the bottom 1000 of the Russell 2000)—undercutting last year’s relative strength low and those of 2011 and 2016.
Gold broke sharply lower in April, possibly sounding the death knell for the 12-year bull market in gold (and silver). We sold one-third of our holdings in the Core and Global funds in late February at around $1595/oz., cutting each fund’s position to 4% of total assets from 6% previously. Following the big bounce in late April, we sold another chunk at $1470/oz., leaving both Core and Global funds each with a small position of 2.5% of total assets that we’ll likely continue to hold, simply in the interest of diversification.