Give the bull its daily portion of positive sentiment and it will keep on running. Positive sentiment in the stock markets comes from optimism. Optimism comes from expectations. Expectations come from what we believe, or are made to believe. (Okay, we may cut some corners here, but we have to boil it down just a bit in order to keep this post easily digestible.) What do investors believe right now? That the so called America first policy will work. No more unfair trade policies, companies from across the globe will invest in the US, and US companies will bring back money and jobs to the US. How this all will work out remains to be seen, but investors give it the benefit of the doubt — at least for the time being. Also, they believe that the tax reform program will benefit the US economy — or even the global economy for that matter — to a large extent, under the silent assumption that trickle-down economics will work this time.
So, will these tax reforms indeed ‘benefit society at large’? If the answer to this question turns out to be ‘yes’, then this bull may run a little longer. But in case these tax cuts fail to benefit the working families in time (or at all), then this belief system is likely to crumble, and the sentiment will swiftly follow.
All US indices posted solid gains on Friday. Again, they were in full-throttle rally mode, closing at new record highs as quarterly earnings from industrial conglomerate Honeywell, semiconductor giant Intel and others topped expectations. The good news outweighed the bad: investors shrugged off a report released by the Commerce Department showing a slower than expected GDP growth in the fourth quarter. The Dow gained 0.85% (+2.1% for the week), the S&P 500 1.18% (+2.2% for the week) and the NASDAQ 1.28% (+2.3% for the week). Very strong data, showing that this old bull apparently still has legs to run. Volatility was on the rise last week. During the first half of the week, the VIX averaged around the level of 11. Starting Wednesday, it averaged around 11.50 with occasional spikes just above or below 12 on both Wednesday and Thursday. On Friday, volatility eased again. The VIX settled at the level of 11 again, closing at 11.08 (-4.3% for the day, -1.7% for the week). For the second week in a row, the VIX hasn’t dipped into the single digits. UVXY ETFs closed 1.4% lower on Friday. XIV ETNs lost 0.6%.
Danny Daredevil saw his RSS fall back to almost -1%. Adventurous Anny´s RSS remained unchanged at 23%, as she is still holding a cash position. Solid Suzy and Lazy Larry ended the week with an RSS of 105%, just over a percentage point lower than the day before.
None of our models gave a trading signal at the end of Friday’s session.
RSS = Return Since Start | YTD = Year-To-Date | QTD = Quarter-To-Date | AAR = Average Annual Return
Until today, René didn’t know an annual event by the name of Warming Huts: An Art + Architecture Competition even existed. This open competition, which started in 2009 in Winnipeg, ‘has been melding world-class design and art with Winnipeg’s famous winters [..] and caught the attention of international architecture publications and awards, as well as admiration from newspapers such as the New York Times.’ One of the installations, the ‘Temple of Lost Things’, is located under the spans of the Norwood Bridge and was submitted by Guy Maddin, a Canadian filmmaker & visiting lecturer at Harvard University. (These Dutch Guys know his name since the BUT film festival of 2016 — see the blog post of 6 September that year). “This Temple of Lost Things is about the ephemerality of the world in which we all live — our own ephemerality,” according to Maddin. If René could teleport, he’d probably pop up in Winnipeg to take a look and shake Guy’s hand.
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