The New Black Swan?

The weekly Market Update is posted at Alpha Baskets and includes the following; Martin Kremenstein from Nuveen was quoted at the Inside ETFs Conference last week as saying “the black swan is a 4am tweet.” This of course refers specifically to President Trump’s proclivity for Tweeting and more broadly the volatility associated thus far with the new administration. Interestingly the political volatility has not been matched in the capital markets. Last week we noted the lack of volatility as exhibited by VIX at 12. Well if you liked VIX at 12, you’ll love it at 10 ½ which is where it closed on Friday. It seems that while social media is in a frenzy over political developments the market are quite calm. Please click through to read the entire update. Hiking on Saturday Car show in Prescott last...

The Elusive VIX Hedge

My latest post for Alpha Baskets looks at a fund that is having a difficult time implementing a potentially interesting strategy. Let me reemphasize, potentially interesting. From the post; The fund’s literature makes it clear that the weightings change frequently. The investment objective is somewhat opaque but a little deeper in the prospectus the manager offers that fund tries to “capture favorable volatility movements in the equity markets while maintaining equity exposure to preserve positive performance during extended periods of rising markets.” Please click through to read the entire post. Malibu, CA Los Padres National Forest Engine 46 housed at Santa Barbara Fire Department Station No. 7 La Playa Stadium Santa Barbara City College, it was foggy the day I was there but the road runs along the...

“This Indecision’s Bugging Me”

The weekly Market Update is posted at Alpha Baskets and includes the following; Currencies have been interesting of late. The dollar went up against the yen rather dramatically after the election getting as high as 118 in mid-December and has been rolling over very slowly ever since, closing at 114 on Friday. The euro went on a month-long slide after the election down to 1.04 but has been trending higher and is now at 1.07. The British pound actually rallied after the election up to 1.27, slid to 1.20 in mid January and now resides at 1.23. The fundamental argument against the three major currencies (lousy demographics, weak economic underpinnings) is simple and makes a lot of sense but the dollar index, commonly tracked as DXY has historically met resistance at 103 which is where it stalled out at its recent mid-December high. Please click through to read the entire update. Today is day four of what is supposed to be a five day snow storm. We have more than a foot on the ground as of early Monday with estimates of close to two feet by later tonight. The higher elevations (above 7000 feet) were well above two feet as of yesterday (we live at 6600 feet and the fire station is down at 6300 feet). We had two calls for the fire department on Friday before the really heavy stuff fell. From our house looking at the higher elevations. The view from our...

Wait, How Much In Commodities?

My latest post for Alpha Baskets looks at some interesting comments in the annual Barron’s Roundtable. From the post; He believes rates will head higher and that inflation is coming back after a long deflationary run. Before the financial crisis, commodities were a good hold for much of the 2000’s. Not so after the crisis until just a few months ago as industrial commodities have rallied hard. Commodities tend to not do well in deflationary environments but there is an argument for gold as a deflation hedge from the context of gold being a currency that goes up against deflating currencies. Gold of course did very well in the early days after the crisis into its peak in 2011 but has mostly struggled since. Arguably gold as a deflation hedge wasn’t put to the test as we did not have any sort of catastrophic, deflationary outcome, more like heavier deflationary pressure than we’d had in a long, long time. Please click through to read the entire post. Capitol Reef National Park Monument...

Tweets & Press Conferences

The weekly Market Update is posted at Alpha Baskets and includes the following; The financial sector garnered a lot of attention on Friday as several of the mega cap banks reported earnings that were generally favorable with the idea being that higher interest rates will help profitability. Financials are important in this regard as being the second largest sector in the S&P 500 and if the FOMC follows through with three rate hikes this year (a big if) then this could be a source of increasing earnings for the index. Ycharts currently reports an estimate of $122.60 for 2017 versus $105.83 in 2016. We mentioned last week the potential boost that the energy sector could get if oil stays close to $50. There are always bullish and bearish data points, the potential earnings boost would obviously be a potential positive. Please click through to read the entire update. 1938 Chevy Master Deluxe A sort of ratrod motorcycle 1960...