August 13, 2021 - Financial Occultist

German Dax new record high. France’s CAD works closer to the 2000 high

The Euro Stoxx index is holding onto a small gain, making it 10 straight higher closes for that index. The German Dax moved higher and closed at another record. The France’s CAC moved higher and got closer to the September 2000 all time high.

The provisional closes are showing:

German DAX, +0.3%.
France’s CAC, +0.2%
UK FTSE 100, +0.4%
Spain’s Ibex, +0.2%
Italy’s FTSE MIB, +0.3%

For the week, the major indices are all up on the week:

German DAX, +1.4%
France’s CAC, +1.1%
UK’s FTSE 100 +1.3%
Spain’s Ibex +1.3%
Italy’s FTSE MIB, +2.5%

As mentioned the Euro Stoxx index has moved higher for 10 consecutive days. That is a record streak. The gain has been around 3.3% over that two week period. It trades at a all time high.

German Dax new record high. France's CAD works closer to the 2000 high

Cortisol and testosterone increase financial risk taking and may destabilize markets -#AnirudhSethi

13-Aug-21 07:47 am

Anirudh Sethi

Why is cortisol known as the stress hormone? Financial risk-taking is a term that is thrown around quite often in the world of finance. But what does it really mean? Cortisol and testosterone are two hormones that have been shown to increase financial risk-taking, according to recent studies. Cortisol may increase financial risk by making people more sensitive to rewards and less sensitive to losses or punishments. Testosterone, on the other hand, has been found to make people more confident about their decisions when they take risks – essentially giving them an irrational sense of invincibility after they’ve taken a calculated gamble with potential long-term consequences. As these hormones are released into our body for various reasons (e.g., stress), they can lead us down the path towards increased volatility in markets which can have significant consequences for the rest of us. Testosterone — What It Does And Doesn't Do - Harvard Health

##Cortisol, testosterone increase financial risk-taking:

Cortisol and testosterone levels affect the way we take risks. Cortisol increases financial risk-taking while testosterone tends to decrease it. When cortisol is in excess, people are more likely to make risky decisions that may lead them into debt or bankruptcy. Men with high levels of both hormones were more apt to engage in reckless behavior than those who had low amounts of either hormone

When cortisol is high people make risky decisions that may lead them into debt or bankruptcy. Men with high levels of both chemicals increased their investment by 40%. Cortisone (cortisol) relative to his level of testosterone, the greater chance he will take big chances with money. Cortizone (cortisol) is released in response to any type of physical or emotional disturbance, while testosterone is secreted after intense moments such as winning a sports game.

Testosterone decreases financial risk-taking. Cortizone (cortisol) relative to his level of testosterone, the greater chance he will take big chances with money. Cortizone (cortisol) is released in response to any type of physical or emotional distress, whereas testosterone is secreted after intense moments like winning a sport’s game.

##The more stress we feel in our daily lives, the higher our level of cortisol and testosterone will be as well: (more…)

Is Trading All About Luck? – #AnirudhSethi

13-Aug-21 07:37 am

Anirudh Sethi

Luck of the Draw? There's a Lot More to Trading and I... - Ticker Tape One of the biggest misconceptions about trading is that it is all just luck. Is trading really just a game of chance? Is there any way to improve your odds? The answer is no, and yes. Trading isn’t all about luck because you can make intelligent decisions on what trades to take, but at the same time not every trade will be successful. You have to accept failure in order to succeed.

##The idea of luck is a misconception:

The idea of luck is a misconception. It’s not about who has the most money, or even who knows what they are doing…it’s all about how your brain handles risk and reward in our complex world.

Do you know that research shows we make more impulsive decisions when stressed out? Stress may be one cause for some people to have an increased vulnerability to gambling addiction. This doesn’t sound like much fun! Some other factors which can increase susceptibility to gambling addiction include poverty, social isolation, prior mental illness, access to addictive substances such as alcohol or drugs, and family history of addictions (including “dipsomania”).

A study published in the Journal of Gambling Studies found that gamblers with a family history of addiction were more likely to have worsened gambling symptoms than those without such a history.

People who are addicted might not be able to control their behaviors and they may experience cravings for the activity – even if it’s harmful or dangerous. This is where trading all about luck comes in! If you can take your emotions out, then this will give you an edge over other traders on Wall Street. Is Trading All About Luck?

It’s possible some people just aren’t wired right when it comes to making decisions under duress which would explain why these people seem “luckier” at times – but luckily doesn’t mean there isn’t skill involved as well!

##Trading is about managing risk and being disciplined: (more…)

Poll shows majority of economists expect a Fed taper announcement in September

13-Aug-21 06:41 am

Analysis

Anirudh Sethi

Reuters conducted the polling, with the results (in summary):

28 of 43 said the Fed is likely to announce a taper of its asset purchases – currently set at $80 billion of Treasuries and $40 billion of MBS per month – at its September meeting

Comments from one analyst who is not amongst that majority:

“I know some Fed officials are pushing for it to happen at the September meeting, but that is very unlikely,” said Jim O’Sullivan, chief U.S. macro strategist at TD Securities.
“November is possible if the next two employment reports are strong enough, but the odds favor December as the time of the formal announcement.”

Link to the Reuters report for much more

Here are the dates of FOMC meetings still to come this year:

Reuters conducted the polling, with the results (in summary):

ICYMI – a worker infected at the world’s third-busiest container port, China

13-Aug-21 06:29 am

Analysis

Anirudh Sethi

All inbound and outbound container services at the Meishan terminal in the Ningbo-Zhousan port, third busiest in the world, were halted yesterday until further notice

The port is the second-busiest in China and, as already said, 3rd in the world.

A few folks might be incredulous that one case can shut down a section of such a globally critical facility … but yeah. Further supply-line disruptions ahead.

Speaking of one case, Australia’s capital city, Canberra, was placed in lockdown yesterday with just one new case reported. the first in a year. Canberra is home to Australia’s Federal parliament and if parliament meddling gets shuts down it threatens to perhaps trigger accelerated economic growth in the country. 😉

Australian PM and his lump of coal in parliament (real pic):

Asia next week – highlights include China ‘activity data’ for August and the RBNZ monetary policy decision

13-Aug-21 06:24 am

Analysis

Anirudh Sethi

Next week, on Monday 16 August 2021 at 0200 GMT we’ll get ‘activity data’ for the Chinese economy for July:

retail sales
factory output
investment

Signs of any or all of these slowing will further add to concerns that the economic recovery momentum in China is slowing.

On Wednesday 18 August its Reserve Bank of New Zealand monetary policy decision time, with widely held expectations of a 25bp rate hike from the Bank.

Coronavirus – Australia to remain closed for four to five years

13-Aug-21 06:23 am

Anirudh Sethi

This via an opinion piece in the Nikkei.

I think Australia will remain closed for four to five years.

The basis of the opinion is that

Australian Prime Minister Scott Morrison’s new four-stage plan to greater freedom from coronavirus restrictions, the ban on outbound travel for vaccinated Australians will not be lifted until 80% of the population is vaccinated.
Morrison believes 70% of Australians will be vaccinated by the end of the year. But reaching 80% ” is going to be a herculean task,” according to Dr. Rob Grenfell of Australia’s science agency, the CSIRO. “Yes, we could do it but it is a matter of how long it will take,” he said, meaning Australia will remain closed well into next year at a minimum.

Australia has been ‘closed’ since about the end of March last year … so three and a half years or so to go!

Link to the Nikkei piece is here if you’d like to check it out.

This from the local media here in Australia (Australian Financial Review) on the rollout progress so far:

This via an opinion piece in the Nikkei.

S&P/Dow closes at a record level. NASDAQ breaks two day slide

13-Aug-21 06:14 am

Anirudh Sethi

Russell 2000 moves lower

Dow and the S&P closed at record highs once again (3rd day in a row) after reaching new intraday record highs as well. The NASDAQ index broke a two day slide.

The final numbers are showing: