2 November 2017: UK rate hike

“Well, here’s another nice mess you’ve gotten me into!” That’s what, Mark Carney, Will Governor of the Bank of England (BoE), could say to his fellow Brits. The outcome of the Brexit vote has created a difficult situation for the BoE. The British pound has been plunging ever since the EU referendum. As the UK is for a substantial part dependent on imports, inflation has been on the rise. Within a period of eleven months, the yearly rise of consumer prices has gone up from 1% to 3%. To bring down inflation to the desired level of 2%, a hike of interest rates is inevitable. But the big question is: can the UK economy handle such a rise at this moment? And, by extension, what will be the effect on the world economy? Will 2 November 2017 turn out to be a turning point?

white-chapel-logo-smallUS stocks mostly closed higher Wednesday, with the Dow and the S&P 500 ending near record levels after the Federal Reserve stood pat on interest rates. The Fed spoke about the US economy in positive terms, which enhances the chances of higher interest rates in December. The Dow rose 0.25% and the S&P 500 climbed 0.16%. The NASDAQ was the odd one out and lost 0.17%. Volatility was more or less lacking direction yesterday. But the VIX closed with a small gain nevertheless: +1.7%. XIV ETNs recorded a small loss (-0.6%), whereas UVXY ETFs rose slightly (+0.8%).
Danny Daredevil was yesterday’s winner among our models. His RSS rose to 27%. Adventurous Anny is holding cash. Her RSS remains at 15%. Solid Suzy and Lazy Larry saw their RSS drop to just below 67%.
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

26.89%

-68.52%

-8.92%

14%

Adventurous Anny Cash 6 March 2017

15.37%

15.37%

6.34%

24%

Solid Suzy XIV 6 March 2017

66.63%

66.63%

13.91%

117%

Lazy Larry
XIV 6 March 2017

66.63%

66.63%

13.91%

117%

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

 


Meanwhile in Japan

Hiroshima by night. The location is Hatchobori, a station on the Hiroden Main Line and Hakushima Line.
Picture taken at 10PM (JST) last night.