May was a very strong month for A. Quality and A. Growth, up +4.25% and +3.33%, respectively. A. Momentum fared worse, down -1.18%, due to its greater exposure to sectors that lagged behind during the month. A. Tactical capitalized on the decline in volatility, with a +5.24% rise that lifted YTD returns into positive territory.

The Altex DIPS’ contribution this month was negative: between -0.61% and -1.37%, depending on the fund.

The USD appreciated by +0.68% against the EUR; hedging strategy detracted between -0.86% and -1.16% during the month.

Markets:

Rising stock indices amid earnings season, advances in AI, and tentative progress in Middle East peace talks.

Nasdaq 100: +10.5%, S&P 500: +5.15%, Eurostoxx 50: +2.87%, Dow Jones Industrial Average: +2.79%.

Nvidia smashed earnings expectations and announced a share buyback, Google released a new version of Gemini, and memory manufacturers continued their upward trend.

Markets are gaining momentum, but inflation shows no signs of easing in the middle of the Fed’s transition period. Kevin Warsh replaces Jerome Powell as chairman of the U.S. Federal Reserve.

Throughout May and early June, some of the largest companies (Google, Meta, OpenAI, Anthropic…) have been announcing capital increases or debt issuances to finance the trillion-dollar investments they will need to undertake in the coming years to maintain their leadership in a world marked by shortages in equipment, processors, and components that are necessary for technology and data centers. Heavy demand for liquidity draining stock markets, high demand for data center components, and low supply from supplier companies: a full-blown bottleneck.

Large-cap companies outperformed small-caps for the month, with the S&P Top 50 up +5.7% versus the S&P 600, which rose +1.15%.

The sectors with the largest gains were AI and Robotics (+26%), Technology (+19.8%), and Semiconductors (+18.2%). On the downside: Oil & Gas Exploration -8%, Energy -5.6%, and Utilities -5.2%.

Risk-on factors (Momentum, Growth, and Quality) performed best, between +7.1% and +8.2%, while defensive factors (Low Volatility and Dividend) were hurt the most, falling between -2.9% and -1%.

While Japan and Europe rose +4.3% and +3%, respectively, India, China, and Brazil fell -1.7%, -4.7%, and -9.6%, each.

Brent crude oil fell -17%. Natural gas, on the other hand, rose +20%. Other commodities posted mixed returns, ranging from +6% to -6%.

Outlook & Positioning:

Markets are travelling towards resistance and extension levels of $7,600 on the S&P 500 and $30,000 on the Nasdaq 100. SpaceX’s IPO is generating excitement and fear in equal parts, with a highly compelling narrative and fundamentals that hardly justify the IPO valuation.

This IPO is yet another sign of an overheated market, coupled with a lack of financial discipline: a stratospheric valuation and urgent rule change so that SpaceX can be included in the Nasdaq 100, barely 15 days after the IPO, with a limited weighting of three times its free float, which will increase as shares are released. Its initial weight could be around 0.7% of the index. This translates into a mandatory purchase for all ETFs and index funds, which will have to rebalance their portfolios by selling other positions to reduce their weight.

Overall, between 2026 and 2027, the announced IPOs could total $700 billion, that companies expect to raise from investors. A large number of the IPOs come from companies that are not yet profitable. The risk profile of indices is increasing.

This earnings season has revealed a sharp increase in profits and also a call for caution in the guidance provided by certain companies.

We have substantially reduced our exposure to gold and silver mining companies in the Quality and Growth strategies. In Momentum, our exposure is pretty much unchanged, but with a shift toward companies with stronger momentum. We are increasing our exposure to technology, particularly in A. Quality, where we remain positioned to benefit from the secular trend of critical data center equipment suppliers.

Although sector weightings are now more balanced, we continue to favor cyclical and hardware companies over financials and software, both of which have been hit hard this year.

We currently have no hedging on the USD, and Altex DIPS has been triggered intermittently during this month’s volatility episodes.