Five Hundred Words 12/12/2018

Wednesday, December 12, 2018

Daily Writing

10:15 AM

Things I’m thinking about

  • How do the best traders structure their days?
  • What is the significance of the gold/silver ratio?
  • What are the most important Chinese economic data to follow?
  • What are the industrial uses for copper, palladium, and platinum?
  • What is ‘interest rate differential’?
  • What are credit spreads?  What do spreads measure?

Market Overview


Price of gold has been steadily rising since the beginning of the month.  The price of silver closed yesterday at 14.535, and at the time of writing the price of silver is up 1.20%.

platinum_price_12_12_2018

Trading Log

I am working to determine my precise tolerance for volatility.  On many trades I find myself exiting a position due to my emotions, then a few weeks later I will discover that the price of the security I sold had recovered or even soared higher.  How can I resolve this? Better risk management?

1:32 PM

There are times where I feel like it doesn’t make sense to follow the news as closely as I typically do.  To me it seems like it could be more productive to perhaps read the news in the morning, gain a grasp of the general undertone of the day, and move forward.  Not every day is going to be a “newsworthy” day. That doesn’t mean every day can’t be amazing from a personal standpoint, it’s just that there are so many headlines in the world that can attract attention.

 

Market Data

Resource Commodities

December 12, 2018

December 11, 2018

December 10, 2018

December 7, 2018

Gold Spot

1242.90

1243.10

1245.00

1237.20

Silver

14.535

14.495

14.545

14.440

Platinum

783.00

783.00

782.00

788.00

Copper

2.7854

2.7575

2.80

2.7530

Crude(WTI)

51.83

51.52

51.58

53.73

 

Global Government Bond Yields

December 12, 2018

December 11, 2018

December 10, 2018

December 7, 2018

US 10 year

2.90%

NA

2.85%

2.89%

US 30 Year

3.13%

NA

3.13%

3.17%

UK

1.24%

NA

1.21%

1.26%

Germany

0.26%

0.23%

0.25%

0.26%

Brazil

10.02%

NA

10.12%

9.99%

Italy

3.00%

NA

3.09%

3.14%

Japan

0.04%

NA

0.03%

0.05%

 

Major U.S. Indices

December 12, 2018

December 11, 2018

December 10, 2018

December 7, 2018

VIX

21.91

NA

23.95

22.42

DOW

245.09

NA

243.61

24918.82

S&P 500

267.45

NA

263.37

269.45

NASDAQ

7163.89

NA

7041.83

6994.39

EM USD

1061.96

NA

1062.41

1059.54

 

Currency Cross Rates

December 12, 2018

December 11, 2018

December 10, 2018

December 7, 2018

USD/JPY

113.210

NA

113.1800

112.6900

EUR/USD

1.1366

NA

1.1358

1.1384

AUD/USD

0.7230

NA

0.7188

0.7227

USD/MXN

20.0358

NA

6.8730

20.338

USD/CNY

6.8777

NA

6.9127

6.882

USD Index

97.46

NA

97.18

96.80

 

Five Hundred Words 11/27/2018

Tuesday, November 27, 2018

Daily Writing

8:58 AM

Gold remains rangebound hovering around the $1200 spot price.  The price of gold has not moved outside of $1200 to $1235 per ounce since the middle of August.

Oil has started to hold ground at $51.00/barrel.  We found an informative clip assessing the current oil pricing situation.  In the current environment, which countries have the most impact on the price of oil?  Which events or types of events have the most significant impact on the global price of oil?

German bunds move higher, as the yield on the 10-year bund continues to move lower.  How are German and other European equities performing?  What determines the price of German government bonds?  How much impact does the European Central Bank (ECB) policy have on the domestic monetary policy of sovereign European states?

What sorts of things keep the E.U. up at night?  We know for sure that climate change is one of those things.  We know the idea of adopting a common military is also one of those things.

The yield of the 10-year United States Treasury is hovering around the 3.05% mark. We currently hold a significant position in PST, a 2X leveraged bond ETF. What are the bull and bear cases for bonds?

 

Market Data

Resource Commodities

November 27, 2018

November 26, 2018

November 20, 2018

November 19, 2018

November 16, 2018

Gold Spot

1221.60

1222.80

1224.55

1222.70

1214.50

Silver

14.190

14.250

14.405

14.340

14.270

Gold/Silver

85.81

85.86

NA

NA

NA

Platinum

842.00

841.00

847.00

841.00

840.00

Copper

2.73

2.72

2.80

2.80

2.75

Crude(WTI)

51.58

51.91

56.23

55.66

57.82

 

Global Government Bond Yields

November 27, 2018

November 26, 2018

November 19, 2018

November 16, 2018

November 15, 2018

US 10 year

3.07%

3.07%

3.04%

3.08%

3.09%

US 30 Year

3.32%

3.38%

3.29%

NA

NA

UK

1.39%

1.41%

1.39%

1.42%

NA

Germany

0.35%

0.36%

0.35%

0.36%

0.36%

Brazil

10.10%

9.97%

10.10%

10.15%

10.39%

Italy

3.25%

3.25%

3.60%

3.49%

3.51%

Japan

0.08%

0.08%

0.09%

0.09%

0.10%

 

Major U.S. Indexes

November 27, 2018

November 26, 2018

November 20, 2018

November 19, 2018

November 16, 2018

VIX

19.41

20.78

20.76

18.78

20.04

DOW

246.40

243.64

250.17

254.13

252.42

S&P 500

265.76

265.80

269.10

273.73

271.74

NASDAQ

7081.85

7051.86

NA

7247.87

7247.87

 

Currency Cross Rates

November 27, 2018

November 26, 2018

November 20, 2018

November 19, 2018

November 16, 2018

USD/JPY

113.6300

113.5700

NA

112.8600

112.8300

EUR/USD

1.1326

1.1340

NA

1.1427

1.1415

AUD/USD

0.7242

0.7233

NA

0.7289

0.7332

USD/MXN

20.623

20.399

NA

NA

NA

CHF/USD

1.00187

1.0012

NA

1.0033

0.9996

USD/CNY

6.9486

6.9396

NA

6.9427

6.936

USD Index

97.15

96.98

NA

96.39

96.43

 

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 11/05/2018

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

 

Five Hundred Words 11/02/2018

Friday, November 2, 2018

Daily Writing

10:24 AM

U.S. average hourly earnings rose 3.1% in October.  Rising rates are central bank’s worst nightmare because it forces central banks to raise interest rates.  We think it is quite possible we see another rise in the federal funds rate in December.

Market Data

Commodities & U.S. Treasuries

November 2, 2018

November 1, 2018

October 31, 2018

October 30, 2018

October 29, 2018

Gold SPOT

1232.55

1218.30

1215.20

1222.90

NA

Silver

14.77

14.38

14.33

14.49

NA

Crude(WTI)

63.34

65.16

66.35

65.64

NA

US 10yr

3.18%

3.16%

3.15%

3.11%

NA

 

Major U.S. Indexes

 

November 2, 2018

November 1, 2018

October 30, 2018

October 30, 2018

October 29, 2018

VIX

19.24

20.96

22.72

24.20

NA

DOW

254.84

252.42

248.75

247.00

NA

S&P 500

274.75

271.64

267.77

266.23

NA

Nasdaq

7407.46

7332.72

7161.65

7124.74

NA

Currency Cross Rates

 

November 2, 2018 November 1, 2018 October 31, 2018 October 30, 2018 October 26, 2018

USD/JPY

113.28

112.750

113.240

112.861

112.368

EUR/USD

1.1385

1.1405

1.1318

1.14105

1.1407

AUD/USD

0.7193

0.7192

0.7086

0.7114

0.7046

CHF/USD

0.9955

0.992

0.993

0.997

0.99849

USD/CNY

6.8893

6.9346

6.9737

6.928

6.945

USD Index

96.53

96.41

97.13

96.79

96.73