7 November 2017: Impeachment

Tom Steyer, a billionaire hedge fund operator, is paying for a television ad that promotes the impeachment of US President Donald Trump. According to Steyer there are reasons enough: Donald Trump has taken money from foreign governments, obstructed justice at the FBI, and  brought the world to the brink of nuclear war. Of course, Donald Trump himself is totally unimpressed by this action. But, what if… What would be the reaction of stock markets if the Donald were to be impeached? Naturally, first of all, there would be a shock reaction. Just like what happened shortly after it became clear that Donald Trump would be the new US President November last year. During the night after Trump’s election, volatility rose more than 50%. It is very likely that we will see an effect of the same magnitude or maybe even bigger. But after that? The most probable scenario is that investors will start realizing that the current economic situation is more dependent on the determination of American companies and the decisions made by the Fed than on the fickleness of Donald Trump.

white-chapel-logo-smallUS stocks closed higher on Monday, with all three major indices ending at records. This is the 26th time thus far this year, a new record. The Dow rose 0.04%, the NASDAQ gained 0.33% and the S&P closed 0.13% higher. Volatility rose slightly, because it was hard to get any lower than its historically low close of last Friday. The VIX gained almost 3%. UVXY ETFs had not reached their low, however. They closed almost 2% lower. XIV ETNs gained 1%.
Danny Daredevil was the main casualty: his RSS closed at 21%. Adventurous Anny is holding cash. Solid Suzy and Lazy Larry reached an all-time high. Their RSS climbed above 70% for the first time.
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

21.23%

-69.93%

-12.99%

11%

Adventurous Anny Cash 6 March 2017

15.37%

15.37%

6.34%

24%

Solid Suzy XIV 6 March 2017

70.40%

70.40%

16.49%

121%

Lazy Larry
XIV 6 March 2017

70.40%

70.40%

16.49%

121%

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

 

Meanwhile in Japan

While reviewing the pictures he took of one of the seven waterfalls at the Miyamakyo site, René’s first association when he saw the picture below, was that of a dollar sign. At the time of publishing this blog post, he is still trying to figure out whether or not this is something to worry about.