29 September 2017: No cuts, no glory

Donald Trump made several promises during his campaign, but none of them have been translated into new and accepted policies. A wall between the US and Mexico: an unfulfilled promise so far. Reform of Obama Care: three failed attempts in Congress up to now. Disengagement of the North American Free Trade Agreement: six weeks of talks have not delivered a result. Tax cuts: President Trump is aiming for the ‘largest tax cuts in the history of the United States’. He wants big reliefs of taxation across the board. In fact, everybody will be profiting. But it is unclear where the money comes from. More and more, the success of Donald Trump as a US President depends on these tax plans. We should not think about how history will judge such a presidency. (Donald Trump’s own judgment will not be hard to guess: ‘the greatest President in the history of the United States’. But that’s a different story.)

white-chapel-logo-smallUS stocks closed mostly higher on Thursday. Both the S&P 500 (+0.12%) and the Dow (+0.18%) recorded moderate gains. The NASDAQ closed unchanged (+0.00%), however. Volatility eased further: the VIX dropped to 9.55 points (-3.24%). XIV ETNs climbed almost 1.5%. UVXY ETFs dropped more than 2.5%.
All of our models gained, as all of them are holding XIV ETNs. Danny Daredevil’s RSS rose to almost 37%. Adventurous Anny saw her return since the start go up to 6.5%. Solid Suzy and Lazy Larry continued their steady climb: their RSS closed at 43.6%.
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 XIV 1 January 2016

36.79%

-66.07%

-68.57%

20%

Adventurous Anny XIV 6 March 2017

6.53%

6.53%

-23.17%

12%

Solid Suzy XIV 6 March 2017

43.63%

43.63%

14.75%

89%

Lazy Larry
XIV 6 March 2017

43.63%

43.63%

14.75%

89%

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

 

RS_v05-smallRené’s Reflections @ Friday: Human after all

The financial world is crowded with people that have a lot to say about nothing. One of the exceptions to the rule — as far as I’m concerned — is James ‘Jamie’ Dimon, chairman, president and CEO of JPMorgan Chase, the largest of the Big Four American banks. He is one of those financial guys I greatly respect. A successful, inspiring business leader who has the right combination of intelligence and temperament. Charismatic, smart, thoughtful and direct, an engaging speaker whose words often run into each other in their eagerness to get out. Whenever he talks, he has my attention because I always want to hear what he has to say.
Two weeks ago, Dimon expressed his view on Bitcoin. This is what he had to say about it: “It’s a fraud. It’s making stupid people, such as my daughter, feel like they’re geniuses. It’s going to get somebody killed. I’ll fire anyone who touches it.” He even went as far as to compare it with the tulip bubble in the Netherlands in the 17th century. You can say about Bitcoin whatever you want, but to call it a fraud? Quite a bold statement for someone of his stature, I gathered. And I wondered: is he totally missing the point here, or could it be that I am missing something?
In an article at Yahoo Finance published yesterday, Akin Oyedele from Business Insider reports that Dimon’s words have made ‘Wall Street […] divided and unsure about bitcoin’. In the article, Macquarie strategist Viktor Shvets is quoted: “If one describes Bitcoin as a fraud, how would one describe a ‘financial cloud’ that is at least 4x-5x larger than the underlying economies? It is unlikely that US$400 trillion+ of financial instruments circulating around the world would ever be repaid and most are now backed by assets that are already either worthless or are diminishing in value. How does one describe rates and the yield curve that are either directly determined by central banks (Bank of Japan or People’s Bank of China) or heavily influenced by them (Federal Reserve or European Central Bank)? People living in glass houses should not throw stones.”
Maybe history will eventually prove Jamie Dimon right, but I highly doubt it — I am totally with Shvets on this one. If I were to bet on it today, I would say that Dimon’s tongue worked faster than his mind this time, and that even someone like Dimon is sometimes hampered by human emotions and weaknesses. A sobering thought, but also a reassuring one. After all, it’s exactly these human emotions and weaknesses that fuel our trading strategies.