After declining almost 6% to start February, the S&P 500 index has rallied over 7% since February 12 to finish the month nearly flat at -0.2% return. The index remains negative for the year at -5.2%.

Much of the fear and uncertainty that “strong-armed” equities in January has temporarily subsided.

 Major oil producers around the globe continue to seek agreements in limiting supply to increase prices

 Chinese equities remain in a correction but have stabilized over the last few weeks

 The Federal Reserve has indicated a possible delay in additional increases to lending rates

Throughout January and early February, we remained committed to a bullish outlook with our tactical investment strategies holding between 90%-100% exposure to equities. This proved fruitful as the recent rally lifted portfolio performance. As the rally continued, we reduced exposure as key indicators pointed towards a more conservative stance, particularly with sentiment.

 Consumer sentiment, producer sentiment, and economic surprise indices weakened in February

 Macroeconomic signals slightly decreased driven by weaker job market data

 Valuation indicators decreased as stock prices rose, diminishing the appetite for high-priced stocks

We ended the month with 65% equity exposure in our U.S. tactical strategies and 85% in our international portfolios. The 35% cash hedge in the U.S. is primarily attributable to valuation and sentiment metrics which weakened as the market pushed higher at month end.