2 August 2017: Debt again?

The previous major recession was caused by debt. To be more specific: debt related to housing, the so-called sub-prime crisis. There may be another recession in the making that has its roots in debt. In less than ten years, the total debt in China (corporate, government, and household debt) has risen from around 150% of GDP to almost 300%. It is now more than a year that credit facilities to the private sector in China have been growing faster than the country’s national income. Debt is currently at a level that caused bubbles to burst in the past: the property and stock market bubble in Japan of the nineties and the Spanish housing bubble at the end of the previous decade. Is China’s debt on a road to nowhere?

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All US indices posted gains yesterday. The S&P 500 ended 0.24% higher, the Dow closed up 0.33% while the NASDAQ almost recovered from Monday’s losses with a gain of 0.23%. Volatility eased steadily during the trading day. The VIX closed 1.66% lower and landed at 10.09 points, just north of single-digit territory. XIV ETNs profited from the lower volatility: +1.29%. UVXY ETFs lost ground for the second day in a row: -2.75%.
Danny Daredevil‘s patience keeps being tested as long as there is no clear trigger for volatility to pick up substantially. As a result, his RSS dropped to 186%. Adventurous Anny is still holding cash. Her RSS stayed at 33%. Solid Suzy and Lazy Larry‘s RSS rose to 43%.
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

186.16%

-29.01%

-34.26%

94%

Adventurous Anny Cash 6 March 2017

32.57%

32.57%

-4.39%

100%

Solid Suzy XIV 6 March 2017

43.36%

43.36%

14.53%

142%

Lazy Larry
XIV 6 March 2017

43.36%

43.36%

14.53%

142%

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

 

The Chapel Family – Episode 8