Five Hundred Words 11/06/2018

Tuesday, November 6, 2018

Daily Writing

9:21 AM

The U.S. mid-term elections take place today.  The outcome is uncertain but there is a strong possibility that the Democrats retake the house of representatives.  This opens the door for Trump impeachment in 2018.  The markets have not fully priced in a democratic agenda for 2019.

Bond yields reflect the health of a state’s balance sheet.  Is this a fair way to approach government bond yields?  Brazil’s 10-year government bond currently yields more than 10.00%.  Will we see lower yields as newly elected right-wing candidate Jair Bolsonaro’s policies begin to take root in Brazil?  Bolsonaro is widely viewed as a right-wing fascist who will be willing to sacrifice capitalism in favor of dictatorship and “rule of law”[1].  At 0.42% Germany’s balance sheet looks quite “healthy”.

Most Asian bond yields are ridiculously low.  Japanese Government Bonds (JGB’s) currently yield 0.12%.  Isn’t this effectively a negative yield?  Why would anyone buy Japanese bonds?  (No one does apparently).[2]

The price of WTI crude has dropped considerably since the start of October.  What could be the cause of this?  Is Saudi Arabia facing heightened pressure to increase demand after the Khashoggi incident?  What is the impact of newly enacted U.S. sanctions against Iran on global oil prices?

Volatility continues to tick downward, with the CBOE Volatility Index falling below 20.00 for the first time since September 2018.  However, things can change drastically tomorrow following the results of the mid-term election.  Our thinking is that the market does not like surprises, if the market is surprised by the election outcome (i.e. Republican victory in the house race), then we could see a considerable spike higher in volatility.

Yesterday European Union Ministers called on Italy’s populist government on Monday to engage in talks with Brussels on a revised draft budget for 2019, backing the European Commission’s view that the plans violate previous commitments by Rome to shrink the deficit next year.  The populist Italian government does not view the EU’s terms favorably.  What does Italy want to include in its budget that the EU is opposed to?  Italy wants to include three things in its budget that fall outside of EU rules: flat tax, reduced retirement age, and citizens’ income.  In its current form, Italy’s 2019 budget deficit will balloon to 2.4% of GDP, well outside the 0.8% cap mandated by EU authorities.  Things could get ugly here if the issue is not resolved.  We are following the deeper impact on the Euro.

[1] https://www.commondreams.org/news/2018/10/29/after-win-brazilian-fascist-jair-bolsonaro-worlds-capitalists-salivate-over-new

[2] https://www.cnbc.com/2018/04/09/something-strange-is-happening-with-japans-bond-market-hardly-anyone-is-trading-it.html

 

Market Data

Resource Commodities

 

November 6, 2018

November 5, 2018

November 2, 2018

November 1, 2018

October 31, 2018

Gold Spot

1230.60

1232.20

1232.55

1218.30

1215.20

Silver

14.610

14.715

14.77

14.38

14.33

Platinum

864.00

NA

NA

NA

NA

Crude(WTI)

63.23

63.49

63.34

65.16

66.35

 

Global Government Bond Yields (10 year)

 

November 6, 2018

November 5, 2018

November 2, 2018

November 1, 2018

October 31, 2018

U.S. 10 Year

3.20%

3.19%

3.18%

3.16%

3.15%

Germany

0.42%

NA

NA

NA

NA

Brazil

10.19%

NA

NA

NA

NA

Italy

3.40%

NA

NA

NA

NA

Japan

0.12%

NA

NA

NA

NA

 

 

Major U.S. Indexes

 

November 6, 2018

November 5, 2018

November 2, 2018

November 1, 2018

October 30, 2018

VIX

19.84

20.18

19.24

20.96

22.72

DOW

254.52

254.44

254.84

252.42

248.75

S&P 500

273.36

271.89

274.75

271.64

267.77

NASDAQ

7378.25

7356.99

7407.46

7332.72

7161.65

 

Currency Cross Rates

 

November 6, 2018

November 5, 2018

November 2, 2018

November 1, 2018

October 31, 2018

USD/JPY

113.2900

113.1600

113.28

112.750

113.240

EUR/USD

1.1407

1.387

1.1385

1.1405

1.1318

AUD/USD

0.7229

0.7204

0.7193

0.7192

0.7086

CHF/USD

0.9964

1.0044

0.9955

0.992

0.993

USD/CNY

6.9166

6.9273

6.8893

6.9346

6.9737

USD Index

96.29

96.45

96.53

96.41

97.13

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Five Hundred Words 11/05/2018

Monday, November 5, 2018

Daily Writing

10:24 AM

The most palpable tension is stemming from the uncertainty over the outcome of tomorrow’s mid-term elections.  The outcome is uncertain.

The price of U.S. West Texas Intermediate (WTI) crude fell by more than 6.6% for the week.  Oil prices posted their fourth consecutive weekly loss.  It is still not entirely clear to me what determines the price of oil.  My intuition tells me that oil trading is susceptible to numerous exogenous factors that cannot be predicted by oil traders.

The price of gold continues to hover around the $1200.00/oz level, silver remains bound between $14.00 and $15.00/oz.

On Saturday (11/03/2018), Berkshire Hathaway Inc reported that its operating profit nearly doubled from the year prior due to stronger insurance results and lower taxes.  It is reported that Berkshire Hathaway repurchased $1 billion of its own stock in the third quarter of 2018.  Net income jumped to $18.5 billion from $4.1 billion just a year ago.

Looking at the bond market: “not one point on the Treasury yield curve is priced to deliver a positive, after-tax, real return when adjusted for the consumer prices you actually pay but that the Bureau of Labor Statistics neglects to incorporate in its carefully curated inflation indices.”[1]

[1] Grant’s, Vol. 36, No. 21, “What Corrections Correct”

Market Data

Commodities & U.S. Treasuries

 

 

November 5, 2018

November 2, 2018

November 1, 2018

October 31, 2018

October 30, 2018

Gold SPOT

1232.20

1232.55

1218.30

1215.20

1222.90

Silver

14.715

14.77

14.38

14.33

14.49

Crude(WTI)

63.49

63.34

65.16

66.35

65.64

US 10yr

3.19%

3.18%

3.16%

3.15%

3.11%

Major U.S. Indexes

 

November 5, 2018

November 2, 2018

November 1, 2018

October 30, 2018

October 30, 2018

VIX

20.18

19.24

20.96

22.72

24.20

DOW

254.44

254.84

252.42

248.75

247.00

S&P 500

271.89

274.75

271.64

267.77

266.23

Nasdaq

7356.99

7407.46

7332.72

7161.65

7124.74

Currency Cross Rates

 

November 5, 2018

November 2, 2018

November 1, 2018

October 31, 2018

October 30, 2018

USD/JPY

113.1600

113.28

112.750

113.240

112.861

EUR/USD

1.387

1.1385

1.1405

1.1318

1.14105

AUD/USD

0.7204

0.7193

0.7192

0.7086

0.7114

CHF/USD

1.0044

0.9955

0.992

0.993

0.997

USD/CNY

6.9273

6.8893

6.9346

6.9737

6.928

USD INdeX

96.45

96.53

96.41

97.13

96.79

 

Patience For The Better

The following essay is a work from an author who wishes to remain anonymous:

I applied to two more jobs this afternoon but it seems like such a lazy way to do it. Does it meet the global criteria for “good enough”?  A few months ago, I probably would have judged myself too harshly and said it wasn’t good enough.  I didn’t even submit and cover letter with either application.

If I cared enough about actually getting a job that sort of thing would have been important to me.  Submitting the perfect cover letter with the perfect resume – if I cared enough I probably would have found the hiring manager online, added him on LinkedIn and included a nice note.

The most important thing to me is meeting my personal goals – am I following through on all the things I say I’ll do in each day?  If not, I should ask myself why I’m not following through with those goals?  What is the root cause of my laziness?  As I sit here writing this diary entry I believe my laziness stems from a lack of desire to work for another shitty organization.  My gut instincts do offer me some insight into whether an organization will be shitty or not.  I send out my half-hearted resumes to soothe myself.  Where is my desire?  Where did it go?  Why don’t I have it anymore?

“I’m not a loser, I’m just unmotivated.”  Why am I not motivated?  Because I don’t feel a sense of fear or stress – I’m too comfortable with my life.  I don’t have the burning fear inside me that I could lose everything immediately.  I don’t have the continual racing thoughts inside of me re-enforcing backup plan upon back up plan.

From my perspective, what I’m already doing is good enough.  I’m already doing what I need to support my wife and make her happy.  The standards seem to be impossibly low and for me that’s ok.  I meet the minimum impossibly low standard day in and day out – how could I be so lucky?   How could I be so misfortunate?

Would my life be better if I were sleeping on a couch in my office in the middle of fucking China?  Would my life be better if I were sleeping in a kitchen of a dilapidated brownstone next to the 41st street port authority?  I did those things.  And in so many ways I was much happier then.  I felt in touch with humanity in some way.  I could empathize with the struggle more than most.

Why is there no middle ground?  Why is it that once we obtain what we were seeking all along we no longer feel content?  How does life change so quickly?  I’m not asking why I’m asking how!  I already know there is no answer to the why question – and that’s comforting because that represents an answer.  And that’s a good thing because it’s always better to be answered than be ignored.  That’s what homeless people always say.  And I’m saying the same thing from a $4000 per month apartment in one of the glitziest neighborhoods of Manhattan.  There’s something underrated about a pure human connection that is devastatingly real and irreplaceable.

Human connection is devastatingly underrated and irreplaceable.

Magic in the West Village

“Every once in a while we find something that catches our eye in places we exist.  We don’t notice these details in our every day lives for some reason, and it really is a pity.  This installation hanging above me caught my eye — I couldn’t really see anything special at the time, but once I took the photo and saw the result I have to say I was pleasantly surprised — the west village reveals a surprise from time to time.”

jagged_patterns_kevin_tellier

 

Find us on Ello

designer piece top Parsons grad - kevin_t | ello

The designer of this piece is top Parsons graduate and rising star in the New York design scene Yiyun Guo

The piece featured above comes from her “Wind” collection

Please support the artist by checking out her work by following this link https://tinyurl.com/mgo3ou8

A medley of materials: linen, wool, cotton

The design featured on the lining of the coat and shirt is completely original — if you look closely the ‘marble’ pattern is in fact a collage of line drawings consisting of portrait and profiles

Nothing too complicated

Kevin Tellier on Ello