13 December 2017: Yellen’s legacy

It is very likely that the Fed will raise interest rates today. It will be Janet Yellen’s final announcement of a major decision in her position as chair of the Fed. How should we judge her performance over the last four years? In the end, only history will be able to make the right judgment. If we were to decide at this moment if Janet Yellen has done a good job as the Fed’s boss, our opinion is far from crystal clear. From a superficial viewpoint, everything seems to be peace and quiet. The US economy goes like a bomb, stock prices have seen major gains, the unemployment rate is at a very low level. But a surprising twist might be just around the corner. The economy might be close to overheating, stock markets might pop the bubbles that have built up and the unemployment rate could rise steeply as a result. Janet Yellen has always treaded very carefully. The upcoming years will make clear whether or not she has been too careful.

white-chapel-logo-smallThe S&P 500 (+0.15%) and the Dow (+0.49%) closed at records for a fourth session in a row Tuesday. The NASDAQ went the other way: -0.19%. The Federal Reserve is expected to announce its third and final interest rate hike of 2017 on Wednesday afternoon. Volatility was taking off from its low levels. The VIX gained more than 6%. UVXY ETFs profited only marginally: +0.36%. XIV ETNs recorded a small loss: -0.30%.
Danny Daredevil was our only winner yesterday. His RSS rose to just below 13%. Adventurous Anny is holding cash. Solid Suzy and Lazy Larry took a small step back. Their RSS is still well above 90%.
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

12.88%

-72.00%

-18.98%

6%

Adventurous Anny Cash 6 March 2017

22.91%

22.91%

13.28%

31%

Solid Suzy XIV 6 March 2017

91.53%

91.53%

30.93%

132%

Lazy Larry
XIV 6 March 2017

91.53%

91.53%

30.93%

132%

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

 

Most people associate the term ‘magnetic fields’, especially in music, with French synth virtuoso Jean-Michel Jarre. But The Magnetic Fields are also an American indie pop group. The band, founded and led by Stephin Merritt, recorded one of the more interesting albums of 2017, as far as Tim is concerned: 50 Song Memoir. The record chronicles the 50 years of songwriter Stephin Merritt’s life with one song per year. Lyrically and musically, each song is adapted to the year on which it focuses. Merritt plays more than one hundred instruments on 50 Song Memoir,  but each instrument is not used on more than seven different songs and there are no more than seven instruments involved in the recording of each song. The album is not only interesting from a conceptual viewpoint: Stephin Merritt turns out to be a very skillful lyricist, who is also blessed with the gift of composing beautiful melodies. Check out a selection of songs from the album on YouTube.