6 April 2017: China Crisis

One and a half years ago, stock markets experienced a China Crisis. After a buildup of more than a year, Chinese stocks had become so expensive, that not much was needed to cause a huge turmoil at Chinese stock markets. 24 August 2015 went down into the books as a Chinese ‘Black Monday’. The Chinese stock market crash was of such a magnitude that it also exerted its influence on stock markets worldwide.
Today and the upcoming days, US President Donald Trump is meeting with his Chinese counterpart Xi Jinping in Florida. It is very likely that the US’s trade deficit with China will be on top of Trump’s list of topics to discuss. Being a self-proclaimed deal-maker, Donald Trump will require a change of the Chinese policy to repress interest rates in order to boost growth, that allows Chinese companies to keep prices low. If the meeting with Xi Jinping does not end to Trump’s liking, we are up for a tit-for-tat tariff war between the US and China. That might cause a real China Crisis at stock markets worldwide.

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Initially, stock prices jumped yesterday after the ADP National Employment report showed that 263,000 jobs were added in the U.S. private sector in March, far more than economists’ expectation of 187,000. But, eventually, major US indices nosedived during the last trading hour. Volatility soared in the final minutes: the XIV closed almost 10% higher at 12.89 points. UVXY ETFs profited and added more than 6%. XIV ETNs lost 3.33%.
Danny Daredevil is the only model that is holding UVXY ETFs. His RSS rose to 391%, reaching an all-time closing high. Adventurous Anny remained at an RSS of 22%. Solid Suzy and Lazy Larry saw their RSS lower to below 7%.
None of our models gave a trading signal at the end of yesterday’s session.

Model Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil UVXY 1 January 2016

391.10%

21.83%

4.76%

253%

Adventurous Anny Cash 6 March 2017

21.78%

21.78%

0.0%

Later

Solid Suzy XIV 6 March 2017

6.61%

6.61%

-2.66%

Later

Lazy Larry
XIV 6 March 2017

6.61%

6.61%

-2.66%

Later

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

 

RS_v05-smallRené experienced a serendipitous moment on his way to Amsterdam. As he took the exit on the highway to refuel his car at one of the OK gas stations, the information display on the dashboard of his car stated the obvious: “Low fuel level. Find a gas station? OK to continue. EXIT to cancel.”