12 September 2017: New bubbles

Although the eurozone has seen economic growth for almost five years now, inflation remains at low levels, well below the desired two percent. According to Lukas Daalder, chief investment officer at Robeco, in an article in Het Financieele Dagblad, price increases can be observed in other fields than consumer goods and wages. Especially the prices of stocks and houses are inflated by the huge amount of money that has become available because of quantitative easing. The ECB and other central banks should ask themselves how long they can live with these undesired effects. Central banks will be among the first institutions which are asked to react if these bubbles in the stock and housing markets burst. Some wise decisions now, might prevent the worst from happening later.

white-chapel-logo-smallMajor US indices booked their biggest one-day gains in months. The devastating effects of Hurricane Irma were smaller than expected and North Korea did not carry out another nuclear missile test over the weekend. The S&P 500, which ended at a record high, advanced 1.1%, the same percentage as the NASDAQ did. The Dow added even 1.2%. Volatility eased strongly, with the VIX closing well below 11 points (-11%). UVXY ETFs also lost 11%, while XIV ETNs gained almost 6%.
Danny Daredevil was the biggest loser of the day. His RSS dropped to 67%. Adventurous Anny is still holding cash. Her RSS remained at 4%. The RSS of Solid Suzy and Lazy Larry is back above 25%. Their RSS closed at 26%.
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

66.55%

-58.68%

-61.74%

35%

Adventurous Anny Cash 6 March 2017

3.84%

3.84%

-25.11%

8%

Solid Suzy XIV 6 March 2017

26.44%

26.44%

1.02%

57%

Lazy Larry
XIV 6 March 2017

26.44%

26.44%

1.02%

57%

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

 

RS_v05-small

You may remember the story of the monkey Naruto who took some selfies with the camera of a British nature photographer, David J. Slater, a couple of years ago. After these monkey selfies were publicized by a news agency in 2011, they became widely popular, and the legal question arose: who owns the copyrights of these photos? Is it the British photographer, or the monkey? A lengthy lawsuit followed.
Stories like these fascinate René. More than any other news article he had read before on the subject, it was this news article about the settling of the case, published by The Los Angeles Times yesterday, that had a particularly high entertainment value for him. It was the following passage that triggered a belly laugh: “PETA¹ and David Slater agree that this case raises important, cutting-edge issues about expanding legal rights for non-human animals, a goal that they both support, and they will continue their respective work to achieve this goal”.

__________
1) People for the Ethical Treatment of Animals