Volta de preto! Era o retorno para o mês 1.03%. Não é um ganho enorme, Eu desisto, Mas uma vitória é uma vitória.
Performance didn’t really go anywhere this month. We floated 2% above and 2% below zero most of the time.
QB Yen came in again at a minor loss -0.61%.
I’m a bit disappointed with the QB Yen performance so far. Nothing seems wrong other than bad timing turning it on on my part. It’s still hard to take it on the chin for 5 months running, embora.
I manually hedged the portfolio earlier this month by buying USDCNH in a pullback from of all the chaos. The portfolio took it hard when the yuan was loosened up. I figured that any further volatility would likely stem from USDCNH weakness.
The Chinese are actively intervening in their currency. As we all know from the GBP in the 1990s and the CHF this year, interventions work until they don’t. The main point of concern for me is the rollover cost. It is quite expensive to maintain the position.
The thing that makes me comfortable with that trade is that there is no chance of China miraculously healing. It’s in debt up to its eyeballs – everything from corporates all the way up to regional governments. And while China doesn’t want the yuan to devalue too quickly, the absolute last thing it would want is for the yuan to rise in value.
I cannot conceive of any plausible scenario where China manages to return to the 7-10% annual GDP growth that it experienced for 30 anos. Too hot, too fast. If you have a plausible scenario in mind, then write your ideas in the comments section.
Updates to the strategy
I’ve promised many updates to the strategy over the past 6 meses. Jingwei and I have evaluated them all. All of the proposed changes came up far short of my expectations and were thus not implemented in the live account.
The changes alluded to in the post are all different from QB Pro. I’ve flogged that strategy about as much as I can.
I feel good about QB Pro long term. Before anything potentially good happens in the account, contudo, I really need the Fed to get off the bench. Raising rates would be good for us because it should kick off a long term USD trend. Another round of QE would be the best thing for the strategy. I personally despise QE and think it’s a bad idea, but it would ignite a massive USD selloff. That’s the kind of market where QB Pro has done extraordinarily well in the past.
Here’s the US dollar index for the past year:
And for easy comparison, here’s the same QB Pro lifetime equity chart. Notice that performance peaked around mid-March and has been flat ever since.
Things should pick back up whenever the dollar picks a direction. I expect that to happen by year’s end. Nobody will believe the Fed if they punt one more time on a rate increase in December.
Entretanto, all of this research has given me the great epiphany that the strategy works best where pairs are trending. The portfolio is being rebalanced this month accordingly.