16 March 2017: No surprises

Yesterday, the Fed did exactly what investors were expecting. It raised interest rates for the third time since the financial crisis, taking its benchmark Fed Funds rate to a target range of 0.75%-1% from 0.50%-0.75%. Moreover, the Fed indicated that there will be two more rate hikes this year. Stocks (and bonds) rallied as a result. This is what investors like: no surprises. Now that it has become clear what one can expect from the Fed this year, the focus will once again be on the Trump administration: will it be able, together with the Republican majorities in the Senate and the House of Representatives, to fulfill its promises of lower taxes and higher government spending?

white-chapel-logo-small

Stocks were considerably higher yesterday: all major indices added between 0.5 and 0.9%. Volatility eased considerably: the VIX is once again firmly below 12 points at 11.63. XIV ETNs took the barrier of 70 points and closed well above 71 points. All our models gained substantially: Danny Daredevil‘s return since the start improved to 225% and Adventurous Anny, Solid Suzy and Lazy Larry are all up more than 5% since their start.
None of our models gave a trading signal. Danny and Anny are very close to such a signal, however.

Model Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil XIV 1 January 2016

+225.33%

-19.30%

-19.30%

+166%

Adventurous Anny XIV 6 March 2017

5.24%

5.24%

5.24%

Later

Solid Suzy XIV 6 March 2017

6.85%

6.85%

6.85%

Later

Lazy Larry
XIV 6 March 2017

6.85%

6.85%

6.85%

Later

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

 

RS_v05-smallAt the age of seventeen, René read the book “The Golden Lure: Stories of Famous Lost Treasures” by Edmund Burke while on a holiday in Spain. He remembers it as a collection of tantalizing short stories about the search for lost or hidden gold treasures. Most of them do not have a happy ending. According to some stories though, there are also the ‘lucky few’ who managed to retrieve (parts of) a treasure. René remembers that he was most impressed by the latter. All the stories appealed to his imagination, in particular because they are said to be based on real events.
He had almost forgotten about the book, when he stumbled across a copy of it, albeit a Dutch translation, on the weekly book market in his hometown. He bought it and started re-reading it as soon as his schedule allowed. Like he expected, the stories evoked exactly the same tantalizing feeling as they did so many years before. Could it be that his fascination for the human emotions fear and greed started when he was seventeen, while reading this book?