15 June 2017: Sustainable choices

“In view of realized and expected labor market conditions and inflation, the Committee decided to raise [..] the federal funds rate,” the Federal Reserve wrote in a statement issued yesterday after its two-day policy meeting. The Federal Open Market Committee voted to raise the range of the federal funds rate to 1.00% and 1.25%. Markets barely reacted yesterday. This is exactly what investors and analysts expected. The US economy and its prospects look good. By raising interest rates, the Fed is buying opportunities to lower interest rates if this would be necessary some time in the future. It is very likely that we will see another one or two rate hikes this year. Both the economy and stock markets are robust enough to endure such measures. These rate hikes will not harm economic growth and will enhance its durability. Companies and investors should applaud such sustainable choices.

The Dow closed yesterday at a record for a second straight session. Other major indices finished lower after the Fed announced a rate hike. The Dow closed up 0.22%, while the NASDAQ (-0.41%) and the S&P 500 (-0.10%) recorded losses. Volatility was on the rise for most of the day, but was off from its intraday highs at the end of the session. The VIX gained more than 2%. UVXY ETFs could not profit and closed almost 1% lower. XIV ETNs gained 0.44%.
Danny Daredevil‘s RSS dropped to 355%. Adventurous Anny is still holding cash. Her RSS remained at 39%. Solid Suzy and Lazy Larry added a small gain to an already impressive return. Their RSS closed at almost 24% yesterday.
None of our models gave a trading signal at the end of yesterday’s session. Danny and Adventurous Anny are close to a signal. If the pressure on US indices remains, we can expect a signal from these models in two or three trading days.

Model Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil UVXY 1 January 2016

354.82%

12.83%

-2.98%

183%

Adventurous Anny Cash 6 March 2017

39.23%

39.23%

14.33%

231%

Solid Suzy XIV 6 March 2017

23.89%

23.89%

13.12%

117%

Lazy Larry
XIV 6 March 2017

23.89%

23.89%

13.12%

117%

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

 

Wednesday was a beautiful day in the South of the Netherlands. Temperatures reached as high as 26 degrees Celsius and there was not a single cloud in the sky. About 15 kilometers from Tim’s home, there is a sand pit that has been turned into a recreational lake. It is called ‘t Zand (the Sand). This lake is very popular with people from neighboring campsites and the wider area. Since most schools in the Netherlands are closed on Wednesday afternoon, Tim expected hundreds and hundreds of youth to be present on the sandy beaches surrounding the lake and in the water that had an enjoyable temperature. Much to his surprise, he could count the number of people at ‘t Zand on the fingers of two hands…