FXE

Things Are Bad Out There

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“I don’t like this market one bit, but we have to endure. Markets will rise again, but there will be a lot more pain to come in the near term. We think the base case is that we get a very bad recession in 2023. We’ve yet to pull the trigger on put option ideas in the simulated newsletter portfolios, but we expect things to get worse before they get better. For readers seeking ongoing option ideas each month, please consider subscribing to our options commentary here.” – Brian Nelson, CFA By Brian Nelson, CFA Things are bad out there, and there’s probably no better way to say it. On September 28, Bloomberg reported that Apple Inc. (AAPL) is now … Read more

The US Dollar, GDP Expansion, and Earnings

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Investors wouldn’t think news flow is that robust given that stock market volatility in recent months has been practically nil, but news is coming in fast. Let’s check up on the performance of the US dollar, the rate of GDP growth as well as key companies reporting fourth-quarter earnings. Intel’s quarterly report was fantastic, for one!    By Kris Rosemann The US dollar (UUP, UDN, USDU) hit a three-year low against the euro, but US Treasury Secretary Steven Mnuchin suggests a weaker dollar may be good for the US, which is a change from traditional US policy, though he was sure to note that the government is not concerned about short-term fluctuations in the currency. Meanwhile, of course, the euro … Read more

2018 Starts Out with a Bang!

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Image Shown: An ETF that measures momentum (MTUM) has done considerably better than the S&P 500 since the beginning of 2017. Among its top 5 holdings are Microsoft (MSFT), Apple (AAPL), Boeing (BA)—newsletter holdings that have had excellent value characteristics along the way. Visa (V) is also included in its top 10 holdings.

Even some the most bullish and optimistic investors have been surprised by the resiliency of today’s market environment. Why does it seem appropriate to remind members that the stock market doesn’t always go straight up with almost no volatility?

Earnings Insight – Visa

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Image source: Visa Let’s cover some ground on Visa’s (V) calendar third-quarter report, its fiscal fourth-quarter release. What management said: “We continue to deliver healthy earnings growth in the face of continued, but abating headwinds. We have begun to see the benefits from our acquisition of Visa Europe and strong cost discipline helped our results. At the same time, we are unwavering in our commitment to invest in client partnership opportunities and the further build out of our digital payments capabilities,” said Charlie Scharf, Chief Executive Officer of Visa Inc. “As we enter fiscal 2017, we are positioned well as revenue headwinds will continue to ease, we will continue to see the benefits from Visa Europe in our results, and … Read more

Currency: Cases in Probabilistic Thinking

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The rally in the Mexican peso relative to the US dollar during the first Trump-Clinton debate of 2016 showcased the increased likelihood of a Clinton victory, in light of Trump’s current political agenda. Instances like this, where currency markets serve to act as a probability indicator of the likelihood of a future event, have occurred through the course of history, the most fasinating of which happened during the American Civil War and with Confederate scrip specifically. Image Source: Bloomberg, “Mexican Peso Gives Clearest Signal Trump Lost Debate“ By Brian Nelson, CFA At Valuentum, we talk a lot about how markets act as “discounting” mechanisms of the probability of future events, and more specifically as it relates to stocks, how a … Read more

When “Bad” News Is “Good” News…Take A Euro Trip?

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Pack the bags, kiss the grandkids, it’s time to do some traveling!!! Maybe to Europe? From a global perspective, for those whose wealth and income is generated in US dollars, you can arguably buy more with one US dollar today than at any other time in the past 12 years, according to a popular index that measures the value of the dollar versus a basket of other currencies. Expectations are being ratcheted up for impending interest rate hikes by the Fed, and this means that assets are flying into US greenbacks from all over the world. The dollar is strengthening against the euro, the pound, the loonie, the aussie, the rand, and the list goes on and on. This decade … Read more

Volatility Spikes, Oh Cisco, the Mighty US Dollar, and More

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Image Source: CBOE Let’s talk about recent market events May 17. There’s a lot going on. By Brian Nelson, CFA It looks like volatility is back in a big way, with “all 29 volatility indexes at the CBOE ris(ing) today,” one more-than-doubling, the CBOE Short-Term Volatility Index (VXST). The ridiculously-named “fear gauge” or “fear index” or the CBOE Volatility Index, the VIX (VIX) leapt nearly 50%. On May 17, we effectively bought volatility intraday by adding put options to the newsletter portfolios, both on the S&P 500 SPDR (SPY) and Netflix, a company whose valuation we think remains ridiculous. We may continue to add put options on entities whose equity prices we believe have become too stretched, positions that may … Read more