The U.S. capital markets have been undergoing rapid changes. Interest rates which had been low for so many years are rising: the fed funds rate is up by 150 basis points (bps) from its cycle trough and the 10-year treasury is up 140bps. Equities, after being in a seemingly unstoppable bull market for almost 9 years, have stalled since late January and volatility has surged with the CBOE Volatility Index (VIX) jumping from a low of 9 to 25 in just a few months. It is indeed possible that the great bull market will not be able to endure in the face of rising rates and growing uncertainty. Only time will tell.
In the meantime, professional investors would be well-served to focus on themes. It is the identification of change-driven themes that is our mission at MRP. So, in the face of the recent market turmoil, a review is in order. Since October we have added 3 new themes and also eliminated 3. Currently, we have a total of 19 themes that are active. A review of them follows . . .