30 November 2017: A different tone

Is there a contrarian among the European presidents of central banks? Klaas Knot, president of De Nederlandsche Bank (The Dutch Bank) spoke yesterday during a dinner of the Society of Business Economists in London. His proposal is to abolish quantitative easing completely after the current QE program of the European Central Bank (ECB) ends in September 2018. According to Knot, the program will have done its job to increase inflation. A renewed QE program will very likely disturb markets more than central banks would like.
The tone of Knot is very different from the words spoken by Mario Draghi after the latest meeting of central bankers, in which the president of the ECB sounded very dovish. According to Knot, a continuation of QE would lead to an even greater amount of ‘misallocated’ money. The bubble in the stock markets that is currently blowing up underlines the words of Knot. 

white-chapel-logo-smallUS benchmark stock indices showed a very diverse picture yesterday. Especially tech stocks were out of fashion. The Dow recorded a gain (+0.44%), the S&P 500 was more or less unchanged (-0.04%) and the NASDAQ closed substantially lower (-1.27%). As a result, volatility was on the rise. The VIX gained almost 7%. UVXY ETFs recorded a significant gain: +4.5%. XIV ETNs paid the price: their loss was 2.2%.
Danny Daredevil recovered partly from the losses he ran into during the previous sessions. His RSS rose to 10%. Adventurous Anny is still holding cash. Her RSS remained at 15%. Solid Suzy and Lazy Larry had to take a step back. Their RSS closed at 77% yesterday.
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

9.81%

-72.76%

-21.18%

5%

Adventurous Anny Cash 6 March 2017

15.37%

15.37%

6.34%

21%

Solid Suzy XIV 6 March 2017

77.11%

77.11%

21.08%

117%

Lazy Larry
XIV 6 March 2017

77.11%

77.11%

21.08%

117%

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

 

RS_v05-small

Pictured below are several ways to look at the NASDAQ.
There is the acronym — where do the letters ‘N A S D A Q’ stand for?
And then there is the way it manifests itself in our physical world. Since the NASDAQ is a purely electronic trading platform, it has no physical trading floor. But it has its headquarters, located at One Liberty Plaza, 165 Broadway, New York City.
We can look at the Year To Date (YTD) line chart of the Nasdaq Composite. Pictured is that of the year 2017.
We can also zoom in on its performance of the day. Like that of yesterday (minus 1.273 percent).
Or we can look at how the NASDAQ is perceived by those who don’t know anything about the financial world.
But passed through an artistic filter, like that of random-art.org, it suddenly looks a lot more interesting and appealing, and unlike any of the above. It is what art is great at: to extract us from our daily reality, and transform the ordinary into the extraordinary.

 

Picture of Klaas Knot: © De Nederlandsche Bank
Picture of One Liberty Plaza by Erik DrostFlickr: One Liberty Plaza, CC BY 2.0, Link
Picture of puzzled face by Christophe Dioux (Own work) [GFDL (http://www.gnu.org/copyleft/fdl.html), CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0/) or CC BY-SA 2.5-2.0-1.0 (https://creativecommons.org/licenses/by-sa/2.5-2.0-1.0)], via Wikimedia Commons