Entering March, the non-U.S. equity Core model overweighted Japan and Germany. China and Canada are neutral, and the U.K., France, Switzerland, and Australia are underweight. The Explore model favored Mexico, Turkey, Brazil, Spain, and the Philippines.

The allocation of International Investment-Grade bonds remained underweight. Rising inflation expectations are bearish for the sector but offset by rising stock market volatility. Price-based measures—rising relative strength and short-term trend—improved during the month to bullish levels.

The sector model remained with a cyclical bias during the month. Entering March, Information Technology and Financials are overweight. Industrials, Health Care, Consumer Discretionary, Consumer Staples, Energy, and Real Estate are neutral. Materials, Communication Services, and Utilities are underweight.

From seasonal and cycle perspectives, February is often one of the weakest months of the year for equity performance. However, that wasn’t the case this time around, with equity markets around the globe continuing higher as investors focused on better-than-expected global economic activity and hopes for easier central bank policies.

Entering February, the non-U.S. equity Core model overweighted Canada and Germany. Japan was neutral, while the U.K., China, France, Australia, and Switzerland were underweight. The Explore model favored Brazil, Peru, Spain, Poland, and the Philippines.

Entering February, the strategy continued to favor risk-on leadership but did rebalance. The model remained overweight (versus the AGG benchmark), U.S. Treasuries, High Yield, & Emerging Market Bonds. The portfolio is market weight TIPS & Mortgage-Backed Securities & underweight U.S. Floating Rate Notes, U.S. Investment Grade, International Investment Grade, & International Bonds.

The sector model remained with a cyclical bias during the month, but there were some changes. Entering February, Financials and Communication Services improved and joined Information Technology and Health Care at overweight. Consumer Discretionary, Consumer Staples, Energy, and Real Estate are Neutral. Materials, Industrials, and Utilities are underweight.

The DH Smart Value Portfolio continues to invest in companies producing excess returns through positive economic profitability, supported by solid balance sheets (quality), significant cash generation (profitability), and trading with considerable margins of safety (valuation). We believe these factors will continue to provide rational opportunities for the foreseeable future.

Entering January, the fixed income allocation strategy shifted to risk-on leadership. The model is relatively overweight: U.S. High-Yield, Long-Term Treasurys, Short-Term TIPS, U.S. Investment Grade Corporates, International Investment Grade, and Emerging Market Bonds. The model is relatively underweight in U.S. Mortgage-Backed Securities and U.S. Investment-Grade Corporations.

The Catastrophic Stop model improved from last month, as it recommends a fully invested allocation. Entering January, the non-U.S. equity Core model overweighted Canada, Australia, and Germany while underweighting the U.K., China, France, and Switzerland. The Explore model favored Mexico, the Netherlands, South Africa, Poland, and Turkey.

The sector model remained with a cyclical bias during the month, but there were sev¬eral changes. Entering January, the sector model is overweight Energy, Real Estate, Utilities, and Consumer Discretionary. Materials and Financials are underweight. Information Technology, Communication Services, Consumer Staples, and Health Care are market weight.

The DH Smart Value Portfolio continues to invest in companies producing excess returns through positive economic profitability, supported by solid balance sheets (quality), significant cash generation (profitability), & trading w/ considerable margins of safety (valuation).

Entering December, the fixed income allocation strategy shifted to risk-on leadership. The model is relatively overweight: U.S. High-Yield, Long-Term Treasurys, Short-Term TIPS, U.S. Investment Grade Corporates, International Investment Grade, and Emerging Market Bonds. The model is relatively underweight in U.S. Mortgage-Backed Securities and U.S. Investment-Grade Corporations.

Given the conflicting messaging of the Catastrophic Stop model increasing while the Daily Trading Sentiment Composite reflects near-term caution, we executed the November 20 signal by shifting 25% of the cash holding into equities. We are looking to redeploy the remaining 25% cash holding as sentiment eases or longer-term breadth thrust measures confirm the near-term signals.

The sector model moved to a more cyclical bias during the month. Entering December, the sector model is overweight: Materials, Communication Services, Energy, and Consumer Discretionary. The model is neutral on Consumer Staples, Information Technology, Real Estate, and Utilities.

The DH Smart Value Portfolio continues to invest in companies producing excess returns through positive economic profitability, supported by solid balance sheets (quality), significant cash generation (profitability), and trading with considerable margins of safety (valuation). Using our consistent and differentiated investment approach, the DH Smart Value Portfolio is focused on outperformance, seeking higher total returns with lower volatility.

The Catastrophic Stop model declined from last month and it now recommends raising cash. Entering November, the non-U.S. equity Core model overweighted Australia, Japan, and France, while underweighting the U.K., China, and Canada. The Explore model favored Brazil, India, Israel, Turkey, and Taiwan.

Entering November, the fixed income allocation strategy continued to favor mixed leadership. The model is overweight U.S. Long-Term Treasurys, International Investment Grade, and U.S. Treasury Inflation-Protected Securities. The model is underweight U.S. Floating Rate Notes, U.S. Investment Grade Corporate, and U.S. Mortgage-Backed Securities.

Entering November, the sector model remained with a mix of cyclical and defensive leadership. The sector model is overweight Communication Services, Utilities, Materials, and Industrials. Information Technology dropped to market weight, while Energy and Real Estate improved to market weight. Health Care and Financials joined Consumer Discretionary and Consumer Staples at underweight.

The DH Smart Value Portfolio continues to invest in companies producing excess returns through positive economic profitability, supported by solid balance sheets (quality), significant cash generation (profitability), and trading with considerable margins of safety (valuation). We believe these factors will continue to provide rational opportunities for the foreseeable future.