Five Hundred Words 12/20/2018

Thursday, December 20, 2018

Daily Writing

 

Housekeeping

As I mentioned in a previous post I will be in China from December 25th to January 15th.  My intent is to continue updating the blog while I am there, but I cannot guarantee that I will be able to post every day.  One factor I cannot control is the quality of the internet connection.  I don’t plan on using a VPN, so if WordPress doesn’t function well in China, I’m going to be forced to deal with the consequences of that.  Even if I can’t post while I’m away I will continue writing and I’m sure I will have many stories to share by January 15th when I return.

 

 

Things I am thinking about today

  • Find software I can use to analyze my writing empirically (e.g., word usage rates, typing speed, etc.)
  • How can I keep track of major announcements made by the Chinese communist party?
  • What is the best way to map historical events into a framework?
  • For example, when Xi Jinping gives a new speech, how can I readily incorporate that information into my central China framework?

 

 

Things I was thinking about yesterday

  • What key economic metrics am I overlooking?  Especially regarding China?
  • Chinese internal crisis of confidence.  Are Chinese elites losing faith in Xi?
  • The empty promises of Xi Jinping.  What promises specifically?  “Reform”?
  • The Federal reserve is scheduled to raise interest rates 0.25% today.  How will the market respond?
  • Where can we find opportunities in this environment?
  • What is ‘open interest’?
  • Why is it significant if LIBOR moves higher (or lower)?
  • How to improve my technical analysis?
  • How can I improve the structure of my days?

 

Trading Log

9:48 AM

Today I spent most of the day casually observing the market and listening to an audiobook by George Magnus titled Red Flags: Why Xi’s China is in Jeopardy.  It is an interesting book focused on understanding China’s current problems in 2018 while also examining the historical context behind China’s interests as a modern superpower.

Market Observations

I find it quite interesting how briefly the yield on the US 10-year stayed above 3.00%.  The idea that the Chinese were actively selling US treasuries in October and November doesn’t really seem that ridiculous.  I don’t understand bonds quite as well as I would like, but I’m having trouble understanding most asset classes in this market environment.

I’m also drawn to the rapidly declining yields of the Brazilian Government Bond.  What is the reason behind this?  In October the yield on the BGB was almost 11.00%, now it sits at 9.41% as accelerating downward.

Market Data

Resource Commodities

 

December 20, 2018

December 19, 2018

December 18, 2018

December 17, 2018

Gold Spot

NA

1249.00

1245.20

1238.10

Silver

NA

14.600

14.65

14.535

Platinum

NA

789.00

792.00

785.00

Copper

NA

2.6825

2.7040

2.7200

Crude (WTI)

NA

47.00

48.64

50.53

Global Government Bond Yields

 

December 20, 2018

December 19, 2018

December 18, 2018

December 17, 2018

US 10 year

2.79%

2.82%

2.85%

2.86%

US 30 Year

3.02%

3.06%

3.10%

3.12%

UK

1.26%

1.28%

1.28%

1.27%

Germany

0.23%

0.25%

0.24%

0.26%

Brazil

9.41%

9.56%

9.67%

9.67%

Italy

2.73%

2.78%

2.93%

2.95%

Japan

0.02%

0.02%

0.01%

0.02%

Major U.S. Indices

 

December 20, 2018

December 19, 2018

December 18, 2018

December 17, 2018

VIX

NA

25.15

24.68

22.36

DOW

NA

236.93

237.70

239.86

S&P 500

NA

255.18

257.19

259.39

NASDAQ

NA

6741.80

6812.51

6864.23

Currency Cross Rates

 

December 20, 2018

December 19, 2018

December 18, 2018

December 17, 2018

USD/JPY

NA

112.450

112.500

112.9200

EUR/USD

NA

1.1392

1.1369

1.1344

GBP/USD

NA

1.2628

1.2650

NA

AUD/USD

NA

0.7141

0.7175

0.7181

USD/MXN

NA

20.068

20.066

20.223

USD/CNY

NA

6.894

6.896

6.905

USD Index

NA

97.03

97.02

97.15

Five Hundred Words 12/19/2018

Wednesday, December 19, 2018

Daily Writing

 

Things I’m thinking about

  • What key economic metrics am I overlooking?  Especially regarding China?
  • Chinese internal crisis of confidence.  Are Chinese elites losing faith in Xi?
  • The empty promises of Xi Jinping.  What promises specifically?  “Reform”?
  • The Federal reserve is scheduled to raise interest rates 0.25% today.  How will the market respond?
  • Where can we find opportunities in this environment?
  • What is ‘open interest’?
  • Why is it significant if LIBOR moves higher?
  • How to improve my technical analysis?
  • How can I improve the structure of my days?

 

Trading Log

9:48 AM

From a trading standpoint, shorting S&P Futures has been an effective strategy since the beginning of the month of December.  Today’s FOMC meeting will shed light on the Federal Reserve’s stance on interest rates moving into 2019.  Will the Fed hold off on raising rates next year if they feel global slowdown is becoming increasingly imminent?  We currently sit on 100% cash headed into the FOMC meeting today.

In yesterday’s letter we noted that it would be an historical aberration for the Fed to raise rates when the probability of a rate hike falls below 75.00%.

The entire trading day is being dictated by the outcome of the FOMC meeting.  We will know the Fed’s guidance for 2019 by 2:00 PM today.  At that time, we will also learn whether the Fed has opted to raise its overnight rate by another 0.25%.

2:13 PM

After the fed announced its rate hike at precisely 2:00 PM the market started to drop considerably.  The adage “buy the rumor, sell the news” seems especially appropriate in this case.  The SPY fell more than 1.00% following the release of the fed announcement.  The Fed also outlined its plans for 2019, and the message I took away from it was that they are just going to observe the market on a quarterly basis and make their decisions from there.  I can’t reiterate this enough that the Fed absolutely needs to get rates back up to at least 4.00% or 5.00% to have baseline ammunition to counter ever a moderate economic slowdown.

Market Observations

Why is the price of copper falling so drastically?

US Treasury yields continue to move lower, which is surprising considering how many bond bears there are out there.  The yields on the 10-year and 30-year US Treasuries are 2.82% and 3.06%, respectively.  Overall treasuries were stuck in a holding pattern today.

The major news today is the Fed’s 0.25% rate hike that many pundits view as dovish.  I find it unusual that the market is paying so much attention to this bit of news.  That fact alone tells me that the market may not be healthy.  The market is desperately struggling to eke out whatever good news they can find.  Our view is that the Fed must find a way to bring rates back to a normal level that can sustain the next downturn.  If we are currently in the next downturn then we could be in big trouble.

Market Data

Resource Commodities

 

December 19, 2018

December 18, 2018

December 17, 2018

December 14, 2018

Gold Spot

1249.00

1245.20

1238.10

1241.70

Silver

14.600

14.65

14.535

14.715

Platinum

789.00

792.00

785.00

794.00

Copper

2.6825

2.7040

2.7200

2.7590

Crude (WTI)

47.00

48.64

50.53

51.10

Global Government Bond Yields

 

December 19, 2018

December 18, 2018

December 17, 2018

December 14, 2018

US 10 year

2.82%

2.85%

2.86%

2.89%

US 30 Year

3.06%

3.10%

3.12%

3.14%

UK

1.28%

1.28%

1.27%

1.24%

Germany

0.25%

0.24%

0.26%

0.25%

Brazil

9.56%

9.67%

9.67%

9.61%

Italy

2.78%

2.93%

2.95%

2.93%

Japan

0.02%

0.01%

0.02%

0.02%

Major U.S. Indices

 

December 19, 2018

December 18, 2018

December 17, 2018

December 14, 2018

VIX

25.15

24.68

22.36

21.57

DOW

236.93

237.70

239.86

244.08

S&P 500

255.18

257.19

259.39

262.92

NASDAQ

6741.80

6812.51

6864.23

6961.86

Currency Cross Rates

 

December 19, 2018

December 18, 2018

December 17, 2018

December 14, 2018

USD/JPY

112.450

112.500

112.9200

113.2900

EUR/USD

1.1392

1.1369

1.1344

1.1306

GBP/USD

1.2628

1.2650

NA

NA

AUD/USD

0.7141

0.7175

0.7181

0.7178

USD/MXN

20.068

20.066

20.223

20.2528

USD/CNY

6.894

6.896

6.905

6.9049

USD Index

97.03

97.02

97.15

97.42

Five Hundred Words 12/11/2018

Tuesday, December 11, 2018

Daily Writing

Things I’m thinking about

  • How do the best traders structure their days?
  • What are the routines of the top traders?
  • What factors determine bond prices and yields?
  • After the point where the yield curve inverts, how do markets typically behave until recession arrives?
  • What does full conviction feel like?
  • What is the current state of global liquidity?  What are the arguments for global liquidity drying up?
  • What would happen to the UK economy under a ‘hard Brexit’?

Market Overview

Global bond yields continue to tick steadily lower.

China to cut tariffs on imported US cars.

 

What are the causes of the current global slowdown?

What are the causes of the current global slowdown?[1]

A) Much tighter dollar liquidity

  1. US dollar has served as the world’s reserve currency since World War II
  2. All major international transactions are settled in US dollars
  3. Because central banks main reserves are held in US dollars rather than local currency
  4. The Fed is the world’s de facto central bank
  5. When the Fed floods domestic banks with reserves (QE) it increases the domestic monetary base
  6. Increasing US monetary base causes US demand to start growing faster than the rest of the world
  7. This causes the US current account to swell
  8. The result is that the Fed doesn’t only increase the monetary base domestically, but it also increases the monetary base abroad and generally the global monetary base increases
  9. The Fed’s quantitative tightening (QT) policy means global dollar liquidity stopped accelerating earlier this year

B) China

  1. China’s shift began following the 19th party congress is October 2017 when the central government signaled its intent to shift from an economic model heavily reliant on exports to one driven by the services sector and domestic consumption.

Book recommendation

Beyond Blockchain: The Death of the Dollar and the Rise of Digital Currency

By Erik Townsend

 

Market Data

Resource Commodities

 

  December 11, 2018 December 10, 2018 December 7, 2018 December 6, 2018

Gold Spot

1243.10
1245.00
1237.20
NA

Silver

14.495
14.545
14.440
NA

Platinum

783.00
782.00
788.00
NA

Copper

2.7575
2.80
2.7530
NA

Crude(WTI)

51.52
51.58
53.73
NA

 

Global Government Bond Yields

 

  December 11, 2018 December 10, 2018 December 7, 2018 December 6, 2018

US 10 year

2.85%
2.85%
2.89%
2.87%

US 30 Year

3.13%
3.13%
3.17%
3.13

UK

1.21%
1.21%
1.26%
1.24%

Germany

0.23%
0.25%
0.26%
0.23%

Brazil

10.12%
10.12%
9.99%
10.00%

Italy

3.09%
3.09%
3.14%
3.20%

Japan

0.03%
0.03%
0.05%
0.05%

 

 

 

Major U.S. Indices

 

  December 11, 2018 December 10, 2018 December 7, 2018 December 6, 2018

VIX

21.91
23.95
22.42
23.53

DOW

245.09
243.61
24918.82
247.27

S&P 500

267.45
263.37
269.45
265.97

NASDAQ

7041.83
7041.83
6994.39
7114.10

EM USD

NA
1062.41
1059.54
1060.39

 

Currency Cross Rates

 

  December 11, 2018 December 10, 2018 December 7, 2018 December 6, 2018

USD/JPY

NA
113.1800
112.6900
112.4800

EUR/USD

NA
1.1358
1.1384
1.1389

AUD/USD

NA
0.7188
0.7227
0.7224

USD/MXN

NA
6.8730
20.338
20.494

USD/CNY

NA
6.9127
6.882
6.8815

USD Index

NA
97.18
96.80
97.00

[1] Juliette DeClercq, JDI Research, as featured in Macrovoices

Five Hundred Words 12/10/2018

Monday, December 10, 2018

Daily Writing

9:25 AM

Things I’m thinking about

  • Do option holders receive dividends?
  • How do the best traders structure their days?
  • What are the routines of the top traders?
  • What factors determine bond prices and yields?
  • After the point where the yield curve inverts, how do markets typically behave until recession arrives?
  • What does full conviction feel like?
  • What is the current state of global liquidity?  What are the arguments for global liquidity drying up?
  • What would happen to the UK economy under a ‘hard Brexit’?

Market Overview

Brexit

The major news today revolves around Theresa May’s aborted Brexit vote upon the realization that her Brexit proposal would fail miserably.

 

How are markets reacting?

The GBP/USD currency pair dropped 67 basis points and is sitting on 0.90280 at time of writing.  The EUR/GBP currency pair is trading 92 basis points higher at 0.90261.

Our view is Theresa May is merely delaying the inevitable.

 

The Chinese Yuan has started weakening again

 

USDCNY_12_10_2018

 

Trading Log

Moving forward I will include a trading log as part of my writing.  The purpose of this activity is to gain a better sense of the price action of the market as it relates to my emotions in the market.  My to gain a better understanding of the impact of markets on my emotions.

Why do I have such strong impulses to sell when the correct decision would be to buy and vice versa?  It’s quite easy to lose track of your emotions while trading.

A lesson I learned recently is that I don’t always need to be trading.  I’ve found that 90% of my time is better spent observing the market, researching, and doing pretty much nothing.  I’ve discovered that I make my biggest mistakes when entering trades at the wrong time, mostly early.  For example,  after I conduct my research and open a position, I find I have difficulty maintaining my original reason for entering the trade initially, so when the trade starts to go in the wrong direction I begin to allow new ideas to pop into my head that eventually convinces me I’m wrong, even if I’m still right.  It’s quite confusing.

Market Data

 

Resource Commodities

 

December 10, 2018

December 7, 2018

December 6, 2018

December 5, 2018

Gold Spot

1245.00

1237.20

NA

1238.00

Silver

14.545

14.440

NA

14.505

Platinum

782.00

788.00

NA

802.00

Copper

2.80

2.7530

NA

2.7555

Crude(WTI)

51.58

53.73

NA

52.12

 

Global Government Bond Yields

 

December 10, 2018

December 7, 2018

December 6, 2018

December 5, 2018

US 10 year

2.85%

2.89%

2.87%

2.91%

US 30 Year

3.13%

3.17%

3.13

3.17%

UK

1.21%

1.26%

1.24%

1.31%

Germany

0.25%

0.26%

0.23%

0.27%

Brazil

10.12%

9.99%

10.00%

10.09%

Italy

3.09%

3.14%

3.20%

3.05%

Japan

0.03%

0.05%

0.05%

0.06%

 

 

Major U.S. Indices

 

December 10, 2018

December 7, 2018

December 6, 2018

December 5, 2018

VIX

23.95

22.42

23.53

CLOSED

DOW

243.61

24918.82

247.27

CLOSED

S&P 500

263.37

269.45

265.97

CLOSED

NASDAQ

7041.83

6994.39

7114.10

CLOSED

EM USD

1062.41

1059.54

1060.39

CLOSED

 

Currency Cross Rates

 

December 10, 2018

December 7, 2018

December 6, 2018

December 5, 2018

USD/JPY

113.1800

112.6900

112.4800

113.2100

EUR/USD

1.1358

1.1384

1.1389

1.1344

AUD/USD

0.7188

0.7227

0.7224

0.7268

USD/MXN

6.8730

20.338

20.494

20.5130

USD/CNY

6.9127

6.882

6.8815

6.8545

USD Index

97.18

96.80

97.00

97.08

Five Hundred Words 11/26/2018

Monday, November 26, 2018

Daily Writing

8:37 AM

We are placing greater emphasis on risk management and portfolio construction.  Personally, I perform portfolio evaluations each day to address weaknesses.  I intend to use this blog as a means of keeping track of my work.  Additionally, I can use the blog to publicize my work, progress, and development strategy.

There are many things to learn each day.  I am working to geographically regionalize my framework because I learn best when I can visualize the system I am analyzing.  The world is a complex system which I am hoping to investigate.

This blog is intended to be daily, but I do take time off for holidays and travel days.  I spend my days reading and monitoring data.

I learn by asking questions and seeking the answer.  Sometimes I do not find the solution immediately or at all, but sometimes the question in itself or the process of seeking can be more critical.  This blog contains many questions that remain unanswered.

What is the importance of the gold/silver ratio?  What does it mean when the gold/silver ratio moves higher or lower?

The price of oil continues to fall considerably.  WTI Crude (Jan ’19) has dropped more than 30.00% since its high on October 3, 2018.  What is the cause of falling oil prices?  Despite the decline in price in recent weeks, WTI Crude is up close to 2.82% on the day at the time of writing.

Brazilian 10-year government bond yields have dipped below 10.00% for the first time since May 2018.

We’ve introduced the Mexican 10-year bond yield to our global government bond yield watchlist because we would like to keep a closer eye on the political developments of incoming Mexican President Andrés Manuel López Obrador (AMLO).  We have also introduced the USD/MXN currency cross pair to serve the same function.  AMLO is a socialist who heads the National Regeneration Movement (MORENA). [1]

We continue to emphasize the importance of building out a framework for understanding the flow of capital in the world.

At the end of the week, President Trump and Chinese President Xi Jinping will meet in Buenos Aires as part of the Group of 20 meetings and look for ways to ease tensions.[2]

A scientist in China claims to have created the world’s first genetically edited babies, in a potentially ground-breaking and controversial medical first.[3]  In what other scientific areas is China equally or as advanced?yield_curve_11_26_2018

What are the effects of a flattening yield curve vis-à-vis a steepening yield curve?  Which result is most desirable for the Federal Reserve?

The CBOE volatility index dropped considerably today, finishing at 18.90 after opening at 20.78, a 12.17% decline.

Market Data

Resource Commodities

 

November 26, 2018

November 20, 2018

November 19, 2018

November 16, 2018

November 15, 2018

Gold Spot

1222.80

1224.55

1222.70

1214.50

1203.25

Silver

14.250

14.405

14.340

14.270

14.130

AU/AG Ratio

85.86

NA

NA

NA

NA

Platinum

841.00

847.00

841.00

840.00

833.00

Copper

2.72

2.80

2.80

2.75

2.78

Crude(WTI)

51.91

56.23

55.66

57.82

56.53

Global Government Bond Yields

 

November 26, 2018

November 19, 2018

November 16, 2018

November 15, 2018

November 14, 2018

US 10 year

3.07%

3.04%

3.08%

3.09%

3.15%

US 30 Year

3.38%

3.29%

NA

NA

NA

UK

1.41%

1.39%

1.42%

NA

NA

Germany

0.36%

0.35%

0.36%

0.36%

0.40%

Brazil

9.97%

10.10%

10.15%

10.39%

10.44%

Italy

3.25%

3.60%

3.49%

3.51%

3.48%

Japan

0.08%

0.09%

0.09%

0.10%

0.10%

Major U.S. Indexes

 

November 26, 2018

November 20, 2018

November 19, 2018

November 16, 2018

November 15, 2018

VIX

20.78

20.76

18.78

20.04

20.41

DOW

243.64

250.17

254.13

252.42

250.61

S&P 500

265.80

269.10

273.73

271.74

268.76

NASDAQ

7051.86

NA

7247.87

7247.87

7129.04

Currency Cross Rates

 

November 26, 2018

November 20, 2018

November 19, 2018

November 16, 2018

November 15, 2018

USD/JPY

113.5700

NA

112.8600

112.8300

113.2200

EUR/USD

1.1340

NA

1.1427

1.1415

1.1303

AUD/USD

0.7233

NA

0.7289

0.7332

0.7272

USD/MXN

20.399

NA

NA

NA

NA

CHF/USD

1.0012

NA

1.0033

0.9996

0.9949

USD/CNY

6.9396

NA

6.9427

6.936

6.938

USD Index

96.98

NA

96.39

96.43

97.22

[1] https://en.wikipedia.org/wiki/National_Regeneration_Movement

[2] https://www.wsj.com/articles/u-s-china-trade-fight-risks-fragmenting-global-market-says-beijings-ambassador-to-the-u-s-1543228321

[3] https://www.theguardian.com/science/2018/nov/26/worlds-first-gene-edited-babies-created-in-china-claims-scientist

Image: National Geographic

Five Hundred Words 11/16/2018

Friday, November 16, 2018

Daily Writing

9:44 AM

US 10-year treasury notes have steadily ticked down throughout the week as investors seek a haven.  Equities markets remain choppy on trade tensions between the US and China.  Uncertainty regarding the outcome of UK-EU Brexit negotiations is also feeding into the broader uncertainty.

Brazilian 10-year government bond yields dipped lower on news that president-elect Jair Bolsonaro selected Santander’s Campos Neto to chair the Central Bank of Brazil.[1]

We are looking into a play to short European corporate debt.  Some European corporate bonds currently yield less than US treasuries.[2]  One way to short European corporate debt would be through shorting international corporate debt through the exchange-traded fund PICB.  We will continue to look through this and provide updates in the future.

US Treasury yields continue to move lower coupled with weakness in the equities markets.  The dollar fell and Treasuries rallied on Friday after the Fed’s newly appointed vice-chairman issued cautious comments that further reinforced the market’s view the US central bank would be in no hurry to step up its pace of interest rate rises.[3]

 

[1] https://www.bloomberg.com/news/articles/2018-11-15/brazil-s-campos-neto-to-take-over-central-bank-guedes-says

[2] https://seekingalpha.com/article/4121474-look-back-cringe-part-1-european-junk-bonds-yield-less-u-s-treasuries

[3] https://www.ft.com/content/dfa2dbc4-e9a9-11e8-885c-e64da4c0f981

 

Market Data

Resource Commodities

 

November 16, 2018

November 15, 2018

November 14, 2018

November 13, 2018

November 12, 2018

Gold Spot

1214.50

1203.25

1201.90

1199.98

1209.40

Silver

14.270

14.130

13.985

13.990

14.040

Platinum

840.00

833.00

837.00

838.00

852.00

Copper

2.75

2.78

2.76

2.72

2.69

Crude (WTI)

57.82

56.53

56.43

57.13

60.74

 

Global 10-Year Government Bond Yields

 

November 16, 2018

November 15, 2018

November 14, 2018

November 13, 2018

November 12, 2018

USA

3.08%

3.09%

3.15%

3.15%

3.18%

UK

1.42%

NA

NA

NA

NA

Germany

0.36%

0.36%

0.40%

0.39%

0.38%

Brazil

10.15%

10.39%

10.44%

10.54%

10.49%

italy

3.49%

3.51%

3.48%

3.44%

3.43%

japan

0.09%

0.10%

0.10%

0.10%

0.11%

 

Major U.S. Indexes

 

November 16, 2018

November 15, 2018

November 14, 2018

November 13, 2018

November 12, 2018

VIX

20.04

20.41

20.52

19.45

17.26

DOW

252.42

250.61

253.88

253.21

259.59

S&P 500

271.74

268.76

274.18

273.06

277.24

NASDAQ

7247.87

7129.04

7271.83

7259.66

7309.29

 

Currency Cross Rates

 

November 16, 2018

November 15, 2018

November 14, 2018

November 13, 2018

November 12, 2018

USD/JPY

112.8300

113.2200

113.9600

113.8200

113.800

EUR/USD

1.1415

1.1303

1.1303

1.1292

1.1268

AUD/USD

0.7332

0.7272

0.7224

0.7219

0.7209

CHF/USD

0.9996

0.9949

0.992

0.9929

0.996

USD/CNY

6.936

6.938

6.9509

6.9545

6.9631

USD Index

96.43

97.22

97.12

97.16

97.33

Five Hundred Words 11/15/2018

Thursday, November 15, 2018

Daily Writing

9:44 AM

GBP/USD is trading much lower today amid Brexit negotiations which seem to be getting nowhere.

US treasury yields are also ticking lower today as investors move into more secure assets.  Volatility is not moving too much, and aside from the elevated CBOE put/call index from the start of the day, volatility has moved steadily lower throughout the trading session.

 

Market Data

Resource Commodities

 

November 15, 2018

November 14, 2018

November 13, 2018

November 12, 2018

November 9, 2018

Gold spot

1203.25

1201.90

1199.98

1209.40

1223.50

Silver

14.130

13.985

13.990

14.040

14.420

Platinum

833.00

837.00

838.00

852.00

861.00

Copper

2.78

2.76

2.72

2.69

2.78

Crude (WTI)

56.53

56.43

57.13

60.74

60.19

 

Global government bond yields (10 year)

 

November 15, 2018

November 14, 2018

November 13, 2018

November 12, 2018

November 9, 2018

U.S. 10 year

3.09%

3.15%

3.15%

3.18%

3.19%

Germany

0.36%

0.40%

0.39%

0.38%

0.40%

Brazil

10.39%

10.44%

10.54%

10.49%

10.37%

Italy

3.51%

3.48%

3.44%

3.43%

3.40%

Japan

0.10%

0.10%

0.10%

0.11%

0.11%

 

Major U.S. Indexes

 

November 15, 2018

November 14, 2018

November 13, 2018

November 12, 2018

November 9, 2018

VIX

20.41

20.52

19.45

17.26

16.87

DOW

250.61

253.88

253.21

259.59

261.49

S&P 500

268.76

274.18

273.06

277.24

277.76

NASDAQ

7129.04

7271.83

7259.66

7309.29

7406.90

 

Currency Cross Rates

November 15, 2018

November 14, 2018

November 13, 2018

November 12, 2018

November 8, 2018

USD/JPY

113.2200

113.9600

113.8200

113.800

113.7800

EUR/USD

1.1303

1.1303

1.1292

1.1268

1.1315

AUD/USD

0.7272

0.7224

0.7219

0.7209

0.7213

CHF/USD

0.9949

0.992

0.9929

0.996

1.00590

USD/CNY

6.938

6.9509

6.9545

6.9631

6.9552

USD index

97.22

97.12

97.16

97.33

96.90

Five Hundred Words 11/13/2018

Tuesday, November 13, 2018

Daily Writing

9:44 AM

The yield on the 10-year Japanese government bond currently sits at 0.10%.  Who buys Japanese bonds?  How is it possible for yields to move lower or even be negative?

Oil is down more than 7.00% today.  What is the cause of this?

4:59 PM

There isn’t really anything in my trading that has left me frustrated the past few days, despite the markets continuing to move lower.  I am working on managing my psychology.  I feel scattered much of the time, like there are a million things to do but not enough time to do or even think about everything.  What can I do to continue moving forward?  It takes a lot for me to reveal what I’m thinking inside.  I’m not great at sharing.  Something I learned from reading the analects of Confucius is that no matter what your state of mind, the most basic thing you can share with the world is a positive mindset and attitude.  Smile more.

The markets were flat today overall.  News came out that the UK and EU reached an agreement on principal to move Brexit forward.  Now the UK must bring their proposal to UK parliament for approval.  The whole thing seems like a mess to me.

Market Data

Resource Commodities

 

November 13, 2018

November 12, 2018

November 9, 2018

November 8, 2018

November 7, 2018

Gold spot

1199.98

1209.40

1223.50

1226.10

1226.50

Silver

13.990

14.040

14.420

14.540

14.495

Platinum

838.00

852.00

861.00

871.00

867.00

Copper

2.72

2.69

2.78

2.72

2.81

Crude(WTI)

57.13

60.74

60.19

61.60

62.61

 

Global government bond yields (10 year)

 

November 13, 2018

November 12, 2018

November 9, 2018

November 8, 2018

November 7, 2018

U.S. 10 year

3.15%

3.18%

3.19%

3.22%

3.19%

Germany

0.39%

0.38%

0.40%

0.45%

0.45%

Brazil

10.54%

10.49%

10.37%

10.31%

10.26%

Italy

3.44%

3.43%

3.40%

3.41%

3.35%

Japan

0.10%

0.11%

0.11%

0.11%

0.11%

 

Major U.S. Indexes

 

November 13, 2018

November 12, 2018

November 9, 2018

November 8, 2018

November 7, 2018

VIX

19.45

17.26

16.87

16.18

18.03

DOW

253.21

259.59

261.49

261.80

257.85

S&P 500

273.06

277.24

277.76

281.01

277.55

NASDAQ

7259.66

7309.29

7406.90

7570.75

7442.00

 

Currency Cross Rates

 

November 13, 2018

November 12, 2018

November 8, 2018

November 8, 2018

November 7, 2018

USD/JPY

113.8200

113.800

113.7800

113.6800

113.2900

EUR/USD

1.1292

1.1268

1.1315

1.1426

1.1476

AUD/USD

0.7219

0.7209

0.7213

0.792

0.7285

CHF/USD

0.9929

0.996

1.00590

0.9971

1.0021

USD/CNY

6.9545

6.9631

6.9552

6.9366

6.9165

USD Index

97.16

97.33

96.90

96.23

95.87

 

Five Hundred Words 11/12/2018

Monday, November 12, 2018

Daily Writing

9:44 AM

According to my sources in China, the current economic situation is looking quite dire.  Unless the Chinese government enacts major policy changes by the beginning of next year, the economic situation could become far worse.

The US Dollar Index has started to move higher once again, now firmly planted above the 97.00 level where it currently sits at 97.33.

GBP/USD is down today on concerns that the timing of a Brexit deal had slipped; sterling fell as much as 1.2 percent against the dollar early on but then recovered to trade down 0.5 percent at $1.2910.[1]

CBOE put/call ratio elevated throughout the day.  Out of the gate p/c ratio of 1.42.  Fear gradually subsided in the market as the day wore on.

It doesn’t seem like a good sign when the entire market falls due to the performance of one stock (AAPL in this case).  What makes it worse is that the weak performance wasn’t necessarily due to any changes in the underlying fundamentals in Apple, but rather on news that Lumentum Holdings, a supplier of 3D sensors that power the facial recognition technology on Apple’s latest iPhones, unexpectedly cut its outlook for its fiscal second quarter.

[1] https://www.ft.com/content/19529d88-e67a-11e8-8a85-04b8afea6ea3

Market Data

Resource Commodities

 

 

November 12, 2018

November 9, 2018

November 8, 2018

November 7, 2018

November 6, 2018

Gold spot

1209.40

1223.50

1226.10

1226.50

1230.60

Silver

14.040

14.420

14.540

14.495

14.610

Platinum

852.00

861.00

871.00

867.00

864.00

Copper

2.69

2.78

2.72

2.81

2.8034

Crude(WTI)

60.74

60.19

61.60

62.61

63.23

 

Global government bond yields (10 year)

 

 

November 12, 2018

November 9, 2018

November 8, 2018

November 7, 2018

November 6, 2018

U.S. 10 year

3.18%

3.19%

3.22%

3.19%

3.20%

Germany

0.38%

0.40%

0.45%

0.45%

0.42%

Brazil

10.49%

10.37%

10.31%

10.26%

10.19%

Italy

3.43%

3.40%

3.41%

3.35%

3.40%

Japan

0.11%

0.11%

0.11%

0.11%

0.12%

 

 

Major U.S. Indexes

 

 

November 12, 2018

November 9, 2018

November 8, 2018

November 7, 2018

November 6, 2018

VIX

17.26

16.87

16.18

18.03

19.84

DOW

259.59

261.49

261.80

257.85

254.52

S&P 500

277.24

277.76

281.01

277.55

273.36

NASDAQ

7309.29

7406.90

7570.75

7442.00

7378.25

 

Currency Cross Rates

 

 

November 12, 2018

November 8, 2018

November 8, 2018

November 7, 2018

November 6, 2018

USD/JPY

113.800

113.7800

113.6800

113.2900

113.2900

EUR/USD

1.1268

1.1315

1.1426

1.1476

1.1407

AUD/USD

0.7209

0.7213

0.792

0.7285

0.7229

CHF/USD

0.996

1.00590

0.9971

1.0021

0.9964

USD/CNY

6.9631

6.9552

6.9366

6.9165

6.9166

USD index

97.33

96.90

96.23

95.87

96.29

Five Hundred Words 11/07/2018

Wednesday, November 7, 2018

Daily Writing

9:21 AM

Crude oil has undergone steep declines over the past few weeks.  What is the reasoning behind this?  The U.S. Dollar index has started to show weakness over the past several weeks as well.  According to experts, the weakness in the U.S. dollar index was expected after mid-term elections reflecting skepticism that the stimulus bonanza, including further tax cuts, that had fueled the dollar’s rally in the first half of the year, would continue under a split congress.[1]

We are eagerly awaiting two new developments from the UK and Europe in the coming days and weeks.  Theresa May has ordered a push for a Brexit deal this week, ordering her attorney-general Geoffrey Cox to prepare a legal solution that would unlock an agreement between the UK and Brussels.  We are keeping an eye on the impact of this week’s development on the GBP and EUR.

The second major development in Europe is also set to play out over the coming days.  The Italian government has until November 13 deadline to submit a re-drafted budget proposal to the Eurogroup.[2]  We don’t really see an easy resolution here, as “Rome’s populist government is standing firm ahead of a November 13 deadline to rewrite plans or escalate its stand-off with Brussels.”[3]

Something new to consider: the price of Uranium hit a 2.5 year high on November 5.  Uranium has been one of the best-performing commodities of 2018, rising more than 40% from its April lows.

According to data recently released by the People’s Bank of China (PBoC) in October, the central bank’s foreign exchange reserves dropped by roughly $32bn on account of China’s push to strengthen the renminbi in the face of potentially disastrous devaluation.  The PBoC is also intent on maintaining foreign currency reserves above $3tn, as these reserves serve as China’s means of suppressing the value of the renminbi.  Official foreign exchange reserves fell to $3.05tn by the end of October from $3.087tn a month earlier.  China’s forex reserves peaked at just under $4tn in mid-2014, but in the following two-and-a-half years the PBoC burnt through nearly $1tn to prop up the renminbi amid a capital outflow surge.

[1] https://www.marketwatch.com/story/dollar-slides-following-midterm-election-results-2018-11-07

[2] The Eurogroup is the recognized collective term for informal meetings of the finance ministers of the eurozone—those member states of the European Union (EU) which have adopted the euro as their official currency. The group has 19 members.

[3] https://www.ft.com/content/197f4ad2-e10b-11e8-8e70-5e22a430c1ad

 

Market Data

Resource Commodities

 

 

November 7, 2018

November 6, 2018

November 5, 2018

November 2, 2018

November 1, 2018

Gold Spot

1226.50

1230.60

1232.20

1232.55

1218.30

Silver

14.495

14.610

14.715

14.77

14.38

Platinum

867.00

864.00

NA

NA

NA

Copper

2.81

2.8034

2.8099

2.8012

2.7501

Uranium

27.85

NA

NA

NA

NA

Crude (WTI)

62.61

63.23

63.49

63.34

65.16

 

Global government bond yields (10 year)

 

November 7, 2018

November 6, 2018

November 5, 2018

November 2, 2018

November 1, 2018

US 10 Year

3.19%

3.20%

3.19%

3.18%

3.16%

Germany

0.45%

0.42%

NA

NA

NA

Brazil

10.26%

10.19%

NA

NA

NA

Italy

3.35%

3.40%

NA

NA

NA

Japan

0.11%

0.12%

NA

NA

NA

 

 

Major U.S. Indexes

 

 

November 7, 2018

November 6, 2018

November 5, 2018

November 2, 2018

November 1, 2018

VIX

18.03

19.84

20.18

19.24

20.96

DOW

257.85

254.52

254.44

254.84

252.42

S&P 500

277.55

273.36

271.89

274.75

271.64

NASDAQ

7442.00

7378.25

7356.99

7407.46

7332.72

 

Currency Cross Rates

 

November 7, 2018

November 6, 2018

November 5, 2018

November 2, 2018

November 1, 2018

USD/JPY

113.2900

113.2900

113.1600

113.28

112.750

EUR/USD

1.1476

1.1407

1.387

1.1385

1.1405

AUD/USD

0.7285

0.7229

0.7204

0.7193

0.7192

CHF/USD

1.0021

0.9964

1.0044

0.9955

0.992

USD/CNY

6.9165

6.9166

6.9273

6.8893

6.9346

USD Index

95.87

96.29

96.45

96.53

96.41