22 March 2017: Waiting for hard data

Mohamed A. El-Erian, Chief Economic Adviser at Allianz, argues in an article at Project Syndicate that stock markets can only really rise substantially if hard data underpin economic growth. For this to happen, a chain of actions have to be taken, which include actions by the new President, Congress and businesses. But it is really the question if all these actions can and will be taken. Chances are that one or more actions will (partially) fail. The current exuberance in the markets will then have no solid ground. It might not be a coincidence that stock markets stepped back yesterday…

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The first cracks in the belief that Donald Trump’s plans will carry stock prices much higher were visible in the markets yesterday. All major US indices recorded substantial losses. The S&P 500 and the Dow almost lost more than 1% and the NASDAQ lost even more: 1.83%. Volatility shot up: the VIX catapulted back above 12 points and ended the day at 12.47 (+10%). UVXY ETFs had a good day and added 7.40%. XIV ETNs retreated to well below 71 points (-3.75%).
Danny Daredevil, the only one of our models currently holding UVXY ETFs, profited. His RSS rose to 257%. Adventurous Anny is holding cash, so for her nothing changed. Solid Suzy and Lazy Larry had to take a step back. Their return since the start is now at almost 6%.
None of our models gave a trading signal at the end of yesterday’s trading session.

Model Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil UVXY 1 January 2016

256.72%

-11.51%

-11.51%

183%

Adventurous Anny Cash 6 March 2017

8.17%

8.17%

8.17%

Later

Solid Suzy XIV 6 March 2017

5.95%

5.95%

5.95%

Later

Lazy Larry
XIV 6 March 2017

5.95%

5.95%

5.95%

Later

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

 

RS_v05-smallGraffiti is generally considered a contribution to the deterioration of public spaces, whereas street art is meant to do just the opposite. While walking through his hometown early this morning, René wondered how to distinguish the two, as the distinction seems to be blurry in many cases. And yet, does it really matter whether it is one or the other? In some cases, like in the picture below, anything goes to perk up a public space that is otherwise slowly but surely deteriorating by itself.

Breda, Achter de Lange Stallen

 

Picture of Mohamed A. El-Erian © World Economic Forum