29 November 2017: The rich

The rich get richer and the poor get poorer. We cannot make it any more fun. The Republicans in the US Senate are working on their tax plans and it is becoming clear that eventually everyone, except for the rich and companies, will pay the bill for these plans. In the first years, everyone will get a tax cut, but after 2024, the lower and middle class income groups will pay in fact more taxes than before the cut. Trickle-down economics are back. After Ronald Reagan tried it in the eighties, various studies have shown that trickle-down economics might look good on paper, but in reality do not have the desired effect. Multiple studies have found a correlation between trickle-down economics and reduced growth. So, after 2024, the lower and middle class income groups may seem themselves confronted with a double problem.

white-chapel-logo-smallInvestors at Wall Street took positive cues from a lot of sources: upbeat economic data, incoming Federal Reserve Chairman Jerome Powell’s comments that he wouldn’t make drastic changes to central bank policy and the news that the Republican tax bill moved forward in the Senate. Even another missile tested by North Korea could not scare them. All major indices closed at record highs. The S&P 500 gained 0.98%, the NASDAQ closed 0.49% higher and the Dow jumped 1.09%. Volatility hardly moved, since it is already at low levels. In fact, the VIX even gained 1.6%. UVXY ETFs lost another 2.8%, whereas XIV ETNs gained more than 1%.
Danny Daredevil saw his RSS drop and getting closer to a negative number. It closed at 5% yesterday.  Adventurous Anny is still holding cash. Her RSS remained at 15%. Solid Suzy and Lazy Larry took another hurdle and their RSS ended the day at 81%.
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

5.13%

-73.92%

-24.54%

3%

Adventurous Anny Cash 6 March 2017

15.37%

15.37%

6.34%

22%

Solid Suzy XIV 6 March 2017

81.13%

81.13%

23.83%

125%

Lazy Larry
XIV 6 March 2017

81.13%

81.13%

23.83%

125%

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

 

RS_v05-small

A well-used door needs no oil on its hinges.
A swift-flowing stream does not grow stagnant.
Neither sound nor thoughts can travel through a vacuum.
Software rots if not used.

These are great mysteries.

— The Tao of Programming, Book Five

One thought on “29 November 2017: The rich

  1. Yes the rich get richer, but somehow these guys messed up the corporate tax deductions by setting a corporate alternative minimum tax….bonkers.

    I am in the high earner bracket, but not high enough to get a benefit from this tax bill.

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