Option Queen Letter By the Option Royals Jeanette Young , CFP ® , CMT, M.S. and Jordan Young, CMT 4305 Pointe Gate Drive Livingston, New Jersey 07039 www.OptnQueen.com [email protected]February 7, 2016 The good news regarding last week’s action in the market is it felt a lot worse than it actually looks on a chart. Now, we aren’t saying that it was a pleasant decline, but this was a decline inside a trading range. With that said, we must alert you to the fact that the Bollinger Bands have become narrow and that typically warns us to fasten our seat-belts for a jolt. Speaking of jolts, yesterday we enjoyed a lecture hosted by Dartmouth on Location given by Charlie Weelan, a senior lecturer in public policy for the Rockefeller Center. This was an eye- opening talk regarding that absolute mess the US budget, sporting record-high levels of deficits, is in. The projections clearly illustrate an unsustainable path. These numbers and facts painted a picture of Armageddon. Clearly nobody knows when the piper will have to be paid but we all know, or should know, that a time will come when this will have to be faced. Politics plays a role in “we will handle it another day,” with no politician willing to made the difficult decisions to fix this mess. With today's sound bite media, mob rule has come to pass. Our politicians do not talk about real issues. They do not speak of work place displacement resulting from technological advances or the role having the world's highest per patient costs has on an already broken healthcare system. Rather, sound bites rule the day. We speak of walls and speeches to Goldman Sachs. Perhaps Adams and the Federalists were right to have so much fear over uneducated decision making. Today's rule of thumb in the legislature is to pass the buck onto the next guy and ignore it….. Our comment is Ugg, these are our leaders……we are a debtor nation and getting deeper in debt every day. Isn’t it time to start fixing this mess? The one piece of good news for the economy was that last week, the US Dollar retreated. While a week, does not make a trend, it does help a little bit. We still have the ability, here in the US, to attract cash onto our shores insomuch as we are a “safe” high interest paying country. This condition helps stimulate the carry trade. Is it good for our economy…..no, not really but it is good for those borrowing a zero and getting paid. Isn’t that what the banks are doing anyway? Borrowing from the Fed and lending out at a much higher level? Well we know it is different but the same. These sorts of spread trades, employed by the banks, have almost no risk currency or sovereign risk.
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Option Queen Letter By the Option Royals
Jeanette Young, CFP®, CMT, M.S. and Jordan Young, CMT