5 May 2017: Commodities

The price of oil is attracting attention these days. On 30 November 2016, members of the Organization of the Petroleum Exporting Countries (OPEC) agreed on a deal to curb production in an effort to balance the market. Investors are getting more and more skeptical about this deal. Shale oil production appears to be on the rise in the US and conflicting parties in Libya are close to an agreement on increasing the crude oil production in the country. Libya is not part of the output cut pact. Oil has been off the radar of investors for quite some time. But now that prices are reaching critically low levels, they might influence other parts of the stock market. Asian markets were down at the beginning of the day, because of a slump in Chinese metals prices. Will commodities be capable of cooling down the current bull market?

white-chapel-logo-smallMajor US indices were basically unchanged Thursday: the S&P 500 (+0.06%) and the NASDAQ (+0.05%) rose slightly, the Dow slipped just (-0.03%). Weak energy shares exercised their pressure on stock prices, while the passage of a Donald Trump’s revised health care bill gave some relief. Volatility eased somewhat: the VIX is back below 10.50 points. UVXY ETFs recorded another loss: -4.9%. On the other hand, XIV ETNs had another positive day, adding more than 2.5%.
Danny Daredevil had to take a step back. His RSS is at 277%. Adventurous Anny is still not in possession of XIV ETNs and her RSS remained at 22%. Her AAR of 232% is currently the highest among all four models. Solid Suzy and Lazy Larry had a good day: their RSS rose to 17.1%.
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

277.46%

-6.36%

-19.48%

169%

Adventurous Anny Cash 6 March 2017

21.78%

21.78%

0.0%

232%

Solid Suzy XIV 6 March 2017

17.14%

17.14%

6.96%

162%

Lazy Larry
XIV 6 March 2017

17.14%

17.14%

6.96%

162%

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

 

 

Meanwhile in Japan
René’s Reflections @ Friday: The story of Hiroshima’s streetcar No. 651

Today, May 5th, Bevrijdingsdag (Liberation Day) is celebrated in the Netherlands, to mark the end of the occupation by Nazi Germany during World War II. Every year again, the Dutch are reminded of the fact that living in their free world came at a price and that lessons, once learned, should never be forgotten.
In Hiroshima, I read the following text on a memorial plaque which is attached to the driver’s cabin of Hiroshima’s streetcar number 651:

At 8:15 on the morning of August 6, 1945, a United States Air Force B-29 aircraft called the “Enola Gay”, dropped the “Little Boy” atomic bomb on Hiroshima, Japan. It was the first atomic bomb ever used in war. The bomb leveled the whole city to the ground in an instant.
The motor man and about 89 passengers except one survivor in this streetcar were killed by the heat of the blast around two thousand degrees Fahrenheit (about one thousand degrees Celcius).
Surviving employees at Hiroshima Electric Railway Co. Ltd. made desperate efforts to restore this streetcar and put it back into service in March next year.
After some sixty years, this streetcar is still running strong, as some hibakushas (those who were exposed to nuclear radiation) die every year.
Hiroshima Electric Railway Co. Ltd.

A lesson will repeat itself until learned. If we were to ever stop reflecting on this and other stories, as well as on the geopolitical developments that led to one of the blackest pages in human history, we may as well be facing dark times once again.