3 November 2017: The balance of Powell

Breaking news: Donald Trump made a decision on the new Chair of the Board of Governors of the Federal Reserve System and he did not do something unexpected. Jerome H. Powell will be the successor to Janet Yellen and it is to be seen if investors will notice the difference after the change of power. The upcoming appointment of Powell as boss of the Fed can be regarded as a choice for continuity. Powell is a supporter of the Fed’s policy of slowly but steadily hiking interest rates and of winding down its huge balance. So far, nothing new. However, there are four more seats to be filled in the seven-piece Board of Governors. Maybe that will give us some waves and swells. We will monitor it in the upcoming months.

white-chapel-logo-smallThe Dow closed at another record on Thursday. But the other main US indices hardly moved. The Republicans in the House of Representatives revealed their much-anticipated tax plan. The Dow gained 0.35%, the S&P 500 closed slightly higher (+0.02%) and the NASDAQ ended slightly lower (-0.02%). Volatility eased with the VIX returning into single-digit territory (-2.7%). UVXY ETFs were positive for most of the trading session, but ended in the red nevertheless: -2.1%. XIV ETNs profited and gained 1.1%.
Danny Daredevil had to take a small step back. His RSS dropped to 24%. Adventurous Anny was unchanged, as she is holding cash. Solid Suzy and Lazy Larry almost reached another all-time high. Their RSS rose to 68%.
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

24.18%

-69.19%

-10.86%

12%

Adventurous Anny Cash 6 March 2017

15.37%

15.37%

6.34%

24%

Solid Suzy XIV 6 March 2017

68.42%

68.42%

15.13%

120%

Lazy Larry
XIV 6 March 2017

68.42%

68.42%

15.13%

120%

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

 


Meanwhile in Japan
René’s Reflections @ Friday: Chances are

O-mikuji are random fortunes written on strips of paper at Shinto shrines and Buddhist temples in Japan. Literally “sacred lot”, these are usually received by making a small offering (generally a five-yen coin as it is considered good luck) and randomly choosing one from a box, hoping for the resulting fortune to be good. […] The o-mikuji is scrolled up or folded, and unrolling the piece of paper reveals the fortune written on it. — Wikipedia

While visiting the Gokoku Shrine, a Japanese Shinto Shrine located near Hiroshima’s city center, I picked my O-mikuji. It was the second time I did this at this shrine. The first time was about four years ago. Out of the approximately one hundred different O-mikuji, I picked out one, which appeared to be number 36. It said: “Thanks to the breeze, young grass has begun to put forth its shoots. Your Fortune: Good.”
This time, I was hoping for another ‘good news’ text, as I picked my O-mikuji. I put my coin in the wooden coin box, took out a random O-mikuji and opened it. Much to my surprise, it was number 36 again. “Thanks to the breeze, young grass has begun to put forth its shoots. Your Fortune: Good.”
The probability of choosing the same number twice from one hundred different numbers, is one out of 10,000. I am already looking forward to the next time I pick my O-mikuji at this shrine. If it appears to be the same number for the third time in succession, I will eat my hat. There is a one in a million chance that this will occur.
Right?