NAV: 365,976.29
Total Shares Outstanding: 363,418
NAV per share: 1.007
Performance since inception: -0.03%

What an amazing month for US equities in April, as they rebounded to positive territory YTD, erasing all losses with an astonishing ~13% gain in just a month, as markets priced in peace talks and potentially the end of the war. Unfortunately, we did not participate in the rally, as the previous signal prevented us from entering US markets (and many other markets), and we have since underperformed MSCI ACWI and SPY YTD. This was primarily due to the double stop-loss triggers over the past 2 months and our failure to capture the sharp rebound that followed. I have added a new mechanism to hopefully prevent this from occurring in the future, other changes to the portfolio includes the addition of a Vietnam ETF to our investable universe, which will represent a small portion of our portfolio.

As the ceasefire deadline passed and the US placed its own naval blockade around the Strait of Hormuz and the Gulf of Oman, I cannot help but wonder what the strategy is moving forward. It appears that the US does not have a clear strategy to negotiate with Iran, and peace talks have already been postponed without a firm date. It is possible that in a desperate attempt, the US might even begin targeting Iranian civilian infrastructure such as roads, power plants, and water desalination facilities — which would constitute a war crime. That said, both sides appear to have hard lines that they are unwilling to give up, so it’s difficult to tell. Without a resolution in sight, I believe energy prices should continue to rise due to the two layers of blockade. Additionally, the straits remain mined, which will take time to clear, and it could take weeks or months for ships to resume oil deliveries.

Speaking of oil, the UAE is finally leaving OPEC after years of frustration, mainly with the cartel’s restrictions which capped its oil output. In addtion to OPEC’s restriction, I’m guessing they saw the war as a good opportunity to leave, possibly because it views the US as unable to guarantee its protection, and therefore no longer sees the need to maintain that partnership and be part of the ‘petroldollar’ system. This would allow the UAE to produce and sell oil at its own pace and choose which currency to trade in.

In other news, Jerome Powell will be stepping down as Fed Chair but has indicated he will remain on the board. Inflation remains above the Fed’s target, and markets are now pricing in a rate hike instead of a cut by year-end, potentially driven by oil prices feeding into inflation.

Our signal has indicated a long position in the US market this time, driven by the sharp rebound. I’m skeptical about this rally as the war does not appear to be ending anytime soon, and the full effects of oil and food shortages are yet to be seen. However, we must remain discipline in our approach. Currently, we are on a 4-week rebalancing schedule on Fridays. However, this would mean that the next rebalancing will still fall in May. Therefore, moving forward, rebalancing will take place on the 1st of each month, or the next available trading day.

Factsheet for April can be downloaded here.