15 December 2017: Living off the wind

Is it possible to build a billion dollar wind farm in the North Sea without a penny of subsidy? We will know the answer to that question in the upcoming months. The Dutch government has opened the tender for this wind farm today. Only parties who are willing and able to submit a bid that does not include government subsidies are allowed to take part. The costs of generating wind energy at sea have been declining steadily over the last couple of years, but it is unclear if any of the interested parties is able to come up with a financially sound business case. There is a risk that one of the parties will come up with a bid that will turn out to be unfeasible in the end. And then the Dutch government will be confronted with another problem: it will not be able to achieve the climate objectives agreed upon during the 2015 Climate Summit in Paris. The Dutch are famous for their entrepreneurial spirit, but this subsidy-free tender might be one step ahead of developments.

white-chapel-logo-smallMarkets took a breather yesterday: all major US indices suffered (small) losses. The Dow (-0.31%) saw a five-day winning streak snapped. The S&P closed 0.41% lower and the NASDAQ lost 0.28%. As a result, volatility was on the rise. The VIX closed 3% higher. UVXY ETFs did not follow suit and suffered a loss of just over 1%. XIV ETNs gained 0.7%.
Danny Daredevil could not profit from the rising volatility. His RSS dropped to 11%. Adventurous Anny is holding cash. Her RSS remained at 22%. Solid Suzy and Lazy Larry continued their march toward the 100%, as far as their RSS. They closed at an RSS close to 94%.
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

11.08%

-72.44%

-20.27%

6%

Adventurous Anny Cash 6 March 2017

22.91%

22.91%

13.28%

30%

Solid Suzy XIV 6 March 2017

93.69%

93.69%

32.41%

134%

Lazy Larry
XIV 6 March 2017XIV

93.69%

93.69%

32.41%

134%

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

 

RS_v05-smallRené’s Reflections @ Friday: Money for nothing (II)

About a year ago, I wrote about the value of money throughout time. And how we got to the point where we are now, with our modern day implementation of this centuries-old concept called ‘fiat money‘. That intrinsically valueless money, not backed by any commodity, which is used as money simply because a government decree defines it as such. Fiat money is printed whenever the state of the economy requires it (read: quantitative easing in times of economic crises). Or because it just comes in handy (read: not knowing when to start reversing it by quantitative tightening). The concept of fiat money left me puzzled back then, and it still does. Ex nihilo nihil fit.

Yesterday, CNN’s Zain Asher interviewed Overstock.com CEO Patrick Byrne about what bitcoin could mean in times of a dollar crisis. She asked him why he thinks that bitcoin can be trusted over the US dollar. Even though it lacks regulation, and is feared by many to be a bubble about to burst. In his answer I found a piece of the puzzle:

“I trust it over all fiat currencies. All fiat currencies in time go to zero through history. The value of the US dollar has declined 96 percent versus gold over the last century. It’s what everybody does in late stages to enjoy a better standard of living. They can’t produce themselves, they borrow the difference and eventually pay for it by [..] printing money. Which is what we’ve been doing to keep ourselves in this sort of pseudo-recovery for so many years. And that always comes to an ugly end. We need a sound currency [..] whether it would be a return to the Gold Standard — which isn’t gonna happen — or bitcoin, or some other similar currency. [..] If we ever come to a dollar crisis in this country, if all of this money that the Fed has been printing up for eight years, ever start swishing around and we have inflation return, that’s when people will start stampede into bitcoin.”

What a delight. Someone with a vision. They still do exist!