9 March 2017: Prepare for a rate hike

It has become very unlikely that the Fed will not raise interest rates next week, now that we have a very good jobs growth estimate by ADP. It is a clear sign that the US economy is growing at a healthy pace. There is really nothing that can stop the Fed next week and it is also very likely that we will see more rate hikes this year. Investors will not be shocked by these decisions and might even hope for some speedy decision making by the Fed now that inflation is on the rise. To the rest of the world, it may not only be good news. A rise of interest rates will mean that the dollar will also become more expensive. To countries that hold dollar loans, this will result in higher costs. An era of low borrowing costs will come to an end.

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US indices closed mixed yesterday: the Dow (-0.33%) and the S&P 500 (0.23%) recorded losses, the NASDAQ squeezed out a small gain (+0.06%). UVXY ETFs were in the red for most of the session, but were able to lift itself into green territory: +1.34%. XIV ETNs lost 0.74%.
Danny Daredevil‘s return since the start improved to 212%. Adventurous Anny was still holding cash during yesterday’s session. Solid Suzy and Lazy Larry lost half of the profit they made at their opening day and their result since the start is now at 0.8%.

Model Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil UVXY 1 January 2016

+212.30%

-22.53%

-22.53%

+161%

Adventurous Anny Cash 6 March 2017

0.0%

0.0%

0.0%

0.0%

Solid Suzy XIV 6 March 2017

0.79%

0.79%

0.79%

Later

Lazy Larry
XIV 6 March 2017

0.79%

0.79%

0.79%

Later

RSS = Return Since Start | YTD = Year-To-Date | QTD = Quarter-To-Date | AAR = Average Annual Return

 

Two of our models gave a trading signal at the end of yesterday’s session: Danny Daredevil and Adventurous Anny. Danny switched from UVXY ETFs to XIV ETNs and Anny used her cash to buy XIV ETNs at the opening of today’s session. Solid Suzy and Lazy Larry keep XIV ETNs in their portfolio.

 

The Chapel Family – Episode 1

Larry is sitting on the couch. We are not sure if the word ‘sitting’ is an accurate characterization of Larry’s state of being. Larry is located on the couch.
Anny enters the room. She displays a somewhat restless mood. Not that Larry is taking notice of it in any way whatsoever. Although, it must be said, he is in fact showing some movement. His left hand is grabbing a handful of chips from an over-sized bag of cheese chips. His right hand is searching for the remote control.
Anny orbits around the couch and stops right in front of Larry. “Larry, I can’t wait.”