14 November 2016: Dollar on the rise

dollarAlthough there is not a clear-cut effect of Donald Trump’s election as the 45th President of the US on stock markets, the value of the US dollar is showing a different picture. The US dollar is getting rapidly more expensive against the yen and the euro. Investors are anxious about Trump’s economic proposals and are expecting inflation to rise strongly under the upcoming Trump’s presidency. Investments in infrastructure, deficit spending, protectionism, immigration reform will all make prices rise in the US. It also explains why stock traders are somewhat more reluctant: there seem to be no excuses anymore for the Fed not to raise interest rates. This will have a short-term dampening effect on stock prices. The mid-term might look more promising, however.

white-chapel-logo-smallSince the US Presidential elections, our model White Chapel has demonstrated what a perfect zigzag pattern looks like. The return for the year started at 288% on election day, then turned to 268%, went back up to 285% and then back down again to 268%. The main reason is that investors are not sure what to make of the election result. Not only within this 4-day period, but also within each and every trading day within that period, the VIX is basically directionless. It can go up steeply one moment and go down even more steeply the other moment. Return for the quarter is, once again, just above 20%.

White Chapel gave a trading signal at the end of Friday’s session. This is due to the (very surprising) euphoric nature of trading following the election result. Our model gave an “I” (inverse) signal. As a result of that, we sold our volatile positions (UVXY ETFs @ $13.70) this morning and bought inverse ETNs (XIV ETNs @ $38.67).

Accumulated capital at close of previous trading day

Return since start

Return this year

Return this quarter

$36,796

+267.96%

+267.96%

+20.1%

Our initial capital was $10,000 at 1 January 2016. Our average Annual Return is 359%.

RS_v05-smallLast Friday, René drove to the coastal town of Den Helder for a one day visit. Located in the upper North West corner of the country, Den Helder is a 2.5 hour drive from his hometown. Despite the distance, René visits the place several times a year. This time he met some old time friends who live there, and whom he hadn’t seen in years. Much catching up was done while enjoying a long walk along the beach. But sunset comes early at this time of the year: just before 5 PM. So shortly after the obligatory Kodak moment they rushed back to the car before darkness set in. A couple of hours later, while enjoying his coffee in the Italian restaurant where he took them for dinner, he realized once more how important it is to meet your friends in real life, instead of only online.

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