5 August 2016: The H-word is topical

Is helicopter money a feasible option? We think that it is a shame if central banks would feel pressurized to take a measure like helicopter money. 

helicopter-rondSuddenly, the H-word has become topical. Helicopter money. In a letter to the Guardian, 35 economists argue that providing money directly to households would be the most effective policy to drive economic growth.
Why? Because all other measures have lost their powers.
Will it work? Will it persuade consumers to spend more money? Or will people think that it is the ultimate measure out of desperation? In most countries, helicopter money is not even allowed. Because central banks cannot (and should not!) get involved with the monetary financing of the public sector.
In our opinion, it is up to political leaders to make decisions that get the economy going. It is the lack of clear political choices that has brought us to where we stand now, not a lack of creativity and willingness on the part of central banks. It is a shame if central banks would feel pressurized to take a measure like helicopter money.

white-chapel-logo-smallAfter Tuesday’s hiccup, when volatility spiked, it now looks like we are back to normal. That is: abnormal. Volatility remains at very low levels or declines to even lower levels. Our UVXY ETNs took another hit and return for the year is now at 336%. For this moment, a return of 400% seems to disappear from the view. White Chapel did not give a signal at the end of yesterday’s session. A trading signal might not be that far away, though.

Accumulated capital at close of market yesterday

Return since start

Return this year

Return this quarter

$43,586

+335.86%

+335.86%

+26.%

Our initial capital was $10,000 at 1 January 2016. Our average Annual Return is 1146%.

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René’s Reflections @ Friday: Hollandse Luchten (Part II)

I remember that as a child I liked to lie down on a meadow on hot summer days, breathing the fresh air and looking at the immense white clouds that scuttled across the bright blue sky. Given optimal circumstances (enough time, ditto clouds), after a while I always started to recognize all kinds of surprising patterns in these clouds. They were there, unmistakably: the dogs, the cats, the rabbits, the angry faces, the sharks, the submarines, the monkeys jumping from one tree to another, and last but not least: the long nosed witches. They were so incredibly real, that for a moment I really believed they were there. Fast forward in time, after having studied the basics of psychology, I learned what it really was, what I had been seeing all the time: plain, simple, unequivocal clouds. In all their abstract forms and shapes. But clouds, nevertheless.
It then also appeared to me that it wasn’t that strange at all, what I saw in the clouds as a child. When I mention notions such as ‘the Face on Mars’ and ‘Rorschach test’, most of us will know what I’m talking about. The scientific name for this phenomenon is ‘pareidolia‘ (ˌ/pæraɪˈdəʊlɪə/): ‘the imagined perception of a pattern or meaning where it does not actually exist’.
Yesterday, on one of the leading financial news sites, my attention was drawn by an article with the title ‘Something just happened in the stock market that was a precursor to the 1987 crash’. It reported that ‘the Dow Jones Industrial Average has declined in eight of the past nine days, including the past seven days straight’ and that ‘this pattern has not been good historically’.
I closed my eyes and smelled the fresh air of summer meadows…

Dollarcloud-640Photo: © 2016 These Dutch Guys