Five Hundred Words 12/17/2018

Monday, December 17, 2018

Daily Writing

 

Housekeeping

Over the next few days, we are gearing up for a long-scheduled, much-anticipated trip to China on December 25, 2018.  Throughout this week we will focus on some of our main goals for the China trip.  I am genuinely worried about the state of China, its economy, and its political climate.

 

Things I’m thinking about

  • What does the economic environment currently look like in China?
  • How is the political climate changing?
    • E.g., political propaganda more prevalent, increased patriotic sentiment?
  • How does the average Chinese citizen view the economy vis-à-vis the “average” Chinese political and/or business elite?
  • How have views of the United States changed since this time last year?
  • What are Chinese companies doing to prepare for a global economic slowdown?
  • What is the overall market sentiment China?
  • If folks in China aren’t worried about the economy, then what are they worried about?

 

 

Market Observations

The S&P started the day with a 1.00% spike downward.  US Treasury yields continue their push lower, with the yield on the 10-year Treasury now 2.86% and the yield on the 30-year Treasury now 3.13%.  Keep in mind that just a few weeks prior the yield on the 10-year Treasury Note was higher than 3.25%.  At the time many experts felt that US Treasuries could online continue to move higher, with some speculating that the 10-year yield was more likely to reach 4.00% than 3.25%.

The CBOE put/call ratio also remains elevated, at time of writing sits at 1.16 after opening the day at 1.24.  The average ratio is 0.76, and a rate over 1.00 is elevated.  The CBOE put/call ratio is a measure of overall fear in the market.

At the time of writing, WTI crude has dropped more than 3.50% where it currently sits at $49.40/barrel.  I find it interesting that amid the current market turmoil gold has hardly budged.  For the past few months, gold has traded within a tight range between $1200 – $1250/oz.

 

 

Personal thoughts

I’m not sure if this belongs in my daily writing, but I feel it is essential to grant this sliver of insight into my own thinking.

When I wake up each morning, I tell myself three things that help propel me forward:

  • I will be proud of my actions
  • I will strive to help others
  • I will be kind

It can be quite tricky to balance these things, and the results are not immediate.  However, in general, I’ve found that by following these commands that I give myself I can enhance my own learning and growth.  The focus is not on me, but those around me.  Also, I do not ‘hope’ to accomplish these tasks each day, I give myself the command that I ‘will’ strive to accomplish these things each day.  This allows me to feel a greater sense of control and accountability for my actions.  I must be a pillar of support for others, but I also must be vulnerable at times.  Kindness is highly undervalued.

 

Developing a personal investing style

Last week I met with a trusted advisor for lunch.  We discussed the importance of identifying broad trends in market behavior and even human behavior.  Sometimes patterns cannot be quantified 100%, although that doesn’t deter many from trying.

My biggest takeaways were focusing on using Time to my advantage.  It seems obvious, but the more time you have, the more options and flexibility you must employ different strategies.  The second takeaway was the importance of discovering my own style and utilizing that style to my advantage.  I’ll never be able to obtain an edge if I blindly copy the path of others, even if I emulate Warren Buffett there will be times where I need to make decisions based on my own intuition, experiences, and processes.  I’ll never be the next Warren Buffett because I am focused on being the next Kevin Tellier.

General Notes

Types of Hedge Funds

  • CTA/Managed Futures
  • Equity Hedge
  • Event Driven
  • Fixed Income Directional
  • Fixed Income Relative Value
  • Macro
  • Multi-strategy

Market Data

 

Resource Commodities

 

December 17, 2018

December 14, 2018

December 13, 2018

December 12, 2018

Gold Spot

1238.10

1241.70

1245.00

1242.90

Silver

14.535

14.715

14.720

14.535

Platinum

785.00

794.00

802.00

783.00

Copper

2.7200

2.7590

2.780

2.7854

Crude(WTI)

50.53

51.10

51.41

51.83

 

Global Government Bond Yields

 

December 17, 2018

December 14, 2018

December 13, 2018

December 12, 2018

US 10 year

2.86%

2.89%

2.91%

2.90%

US 30 Year

3.12%

3.14%

3.16%

3.13%

UK

1.27%

1.24%

1.26%

1.24%

Germany

0.26%

0.25%

0.27%

0.26%

Brazil

9.67%

9.61%

9.86%

10.02%

Italy

2.95%

2.93%

2.93%

3.00%

Japan

0.02%

0.02%

0.05%

0.04%

Major U.S. Indices

 

December 17, 2018

December 14, 2018

December 13, 2018

December 12, 2018

VIX

22.36

21.57

21.00

21.91

DOW

239.86

244.08

245.76

245.09

S&P 500

259.39

262.92

266.45

267.45

NASDAQ

6864.23

6961.86

7096.00

7163.89

 

Currency Cross Rates

 

December 17, 2018

December 14, 2018

December 13, 2018

December 12, 2018

USD/JPY

112.9200

113.2900

113.6700

113.210

EUR/USD

1.1344

1.1306

1.1355

1.1366

AUD/USD

0.7181

0.7178

0.7223

0.7230

USD/MXN

20.223

20.2528

20.069

20.0358

USD/CNY

6.905

6.9049

6.878

6.8777

USD Index

97.15

97.42

97.15

97.46

Advertisements

Five Hundred Words 11/30/2018

Friday, November 30, 2018

Daily Writing

10:14 AM

Today is the final trading day of November.  Yesterday we exited our short US 10-year Treasury position as it is becoming clear that yields are struggling to keep their head over the 3.00% support level.  Although the historical volatility of the PST exchange-traded instrument was within a tolerable range of 7.00% to 9.00%, the underlying narrative was struggling to hold up after Jerome Powell’s announcement on Wednesday that interest rates are inching closer to a range considered to be “neutral”.

We are focusing on outperforming the SPX benchmark.  Our primary goal into the next year is focusing on exceeding this benchmark.  Our methodology will focus on large-cap, high dividend U.S. equities. We expect portfolio allocation of U.S. equities to fall within 50 – 75%.  At least 60% of portfolio allocation will consist of low beta assets, aiming for below average correlation to the S&P 500 benchmark.

Market Data

 

Resource Commodities

November 30, 2018

November 29, 2018

November 28, 2018

November 27, 2018

Gold Spot

1223.90

1220.70

1214.60

1221.60

Silver

14.285

14.285

14.120

14.190

Gold/silver

85.76

85.39

86.13

85.81

Platinum

818.00

822.00

831.00

842.00

Copper

2.824

2.7955

2.75

2.73

Crude(WTI)

50.52

51.07

51.23

51.58

 

Global Government Bond Yields

November 30, 2018

November 29, 2018

November 28, 2018

November 27, 2018

US 10 year

3.02%

3.02%

3.06%

3.07%

US 30 Year

3.38%

3.33%

3.33%

3.32%

UK

1.36%

1.34%

1.37%

1.39%

Germany

0.31%

0.32%

0.35%

0.35%

Brazil

9.89%

10.05%

10.08%

10.10%

Italy

3.21%

3.22%

3.26%

3.25%

Japan

0.08%

0.08%

0.09%

0.08%

 

Major U.S. Indexes

November 30, 2018

November 29, 2018

November 28, 2018

November 27, 2018

VIX

19.18

NA

18.87

19.41

DOW

253.39

NA

248.33

246.40

S&P 500

273.98

NA

269.61

265.76

NASDAQ

7296.39

NA

7120.56

7081.85

EM USD

1053.73

NA

1048.40

NA

 

Currency Cross Rates

November 30, 2018

November 29, 2018

November 28, 2018

November 27, 2018

USD/JPY

113.5300

NA

113.6300

113.6300

EUR/USD

1.1316

NA

1.1367

1.1326

AUD/USD

0.7306

NA

0.7304

0.7242

USD/MXN

20.226

NA

20.2442

20.623

USD/CNY

6.95557

NA

6.9538

6.9486

USD Index

97.20

NA

96.84

97.15

Five Hundred Words 11/09/2018

Friday, November 9, 2018

Daily Writing

1:05 PM

Markets are down today overall.  The question is whether the past week was a false breakout to the upside or if will see continued momentum higher toward the end of the year.  The price of crude oil continues to drop as we are now retesting February lows.  If crude oil drops below $60/barrel it would have disastrous effects on the U.S. shale industry, as prices need to remain above $60/barrel for the industry to remain solvent.

Bond yields ticked higher throughout the week.  While yields on the 10-year U.S. Treasury note remain elevated, it is not clear if the yield will continue to move higher and eventually break through the 3.25 level for the long term.  Bond yields have been artificially suppressed for quite some time, and it seems reasonable to believe that we could see bond yields move into the 3.50% to 4.00% range, at least temporarily.  Side note: Brazilian U.S. Treasury yields ticked steadily higher throughout the past week.

Market Data

Resource Commodities

 

 

November 9, 2018

November 8, 2018

November 7, 2018

November 6, 2018

November 5, 2018

Gold SPOT

1223.50

1226.10

1226.50

1230.60

1232.20

Silver

14.420

14.540

14.495

14.610

14.715

Platinum

861.00

871.00

867.00

864.00

NA

Copper

2.78

2.72

2.81

2.8034

2.8099

Uranium

28.80

28.90

27.85

NA

NA

Crude(WTI)

60.19

61.60

62.61

63.23

63.49

 

Global government bond Yields (10 year)

 

 

November 9, 2018

November 8, 2018

November 7, 2018

November 6, 2018

November 5, 2018

U.S. 10 year

3.19%

3.22%

3.19%

3.20%

3.19%

Germany

0.40%

0.45%

0.45%

0.42%

NA

Brazil

10.37%

10.31%

10.26%

10.19%

NA

Italy

3.40%

3.41%

3.35%

3.40%

NA

Japan

0.11%

0.11%

0.11%

0.12%

NA

 

 

Major U.S. Indexes

 

 

November 9, 2018

November 8, 2018

November 7, 2018

November 6, 2018

November 5, 2018

VIX

16.87

16.18

18.03

19.84

20.18

DOW

261.49

261.80

257.85

254.52

254.44

S&P 500

277.76

281.01

277.55

273.36

271.89

NASDAQ

7406.90

7570.75

7442.00

7378.25

7356.99

 

Currency Cross Rates

 

 

November 9, 2018

November 8, 2018

November 7, 2018

November 6, 2018

November 5, 2018

USD/JPY

113.7800

113.6800

113.2900

113.2900

113.1600

EUR/USD

1.1315

1.1426

1.1476

1.1407

1.387

AUD/USD

0.7213

0.7292

0.7285

0.7229

0.7204

CHF/USD

1.00590

0.9971

1.0021

0.9964

1.0044

USD/CNY

6.9552

6.9366

6.9165

6.9166

6.9273

USD Index

96.90

96.23

95.87

96.29

96.45

 

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