Barometer Capital

David Burrows Market Update | May 27, 2019

Volatility has Remained Muted Throughout May

Our view is that we continue to be in a secular bull market which began in 2013. After experiencing a large correction in late 2018, the recovery experienced in 2019 has been strong. After making new all time highs we have traded back into support levels.

Fundamentals remain strong and investors still remain underweight U.S. equities. As market breadth is in the process of correcting, we have taken a more defensive stance and hedged out some exposure.

Throughout May volatility has remained muted and credit spreads have ticked up only marginally, which is constructive. At these levels, exposure to cyclically sensitive sectors is not expensive, while the utilities sector is trading at relative P/E ratio highs to the market. We have now seen most companies in the S&P 500 report Q1 earnings and they have reported as expected. We have also seen the economic surprise index tick higher which is indicative of economic data improving.


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