Past weeks my time has been very limited due to business travel and family activities. It’s time for another update of our own portfolio and a quick look at the markets while sharing my opinion. This update is written in New Orleans, USA.
The past weeks have been dominated by the central banks. Mario Draghi opened another bazooka to the markets. In a press conference, ECB President Mario Draghi urged governments to take fiscal measures to supplement the central bank’s monetary stimulus and reinvigorate the euro zone economy.
“In view of the weakening economic outlook and the continued prominence of downside risk, governments with fiscal space should act in an effective and timely manner,” Draghi said.
“In countries where public debt is high (such as Belgium) , governments need to pursue prudent policies that will create the conditions for automatic stabilizers to operate freely. All countries should reinforce their efforts to achieve a more growth-friendly composition of public finances,” he added. Additionally, the ECB changed its TLTRO (targeted long-term refinancing operations) rate to provide more favorable bank lending conditions and match that of its refinancing rate, erasing a previous 10 basis point spread. A new system will see borrowers receive preferential rates if their eligible net lending exceeds a benchmark, providing an incentive for banks to use that money.
The euro fell sharply against the dollar after the European Central Bank (ECB) cut its key interest rate and reintroduced a a major stimulus program. The economic data from Germany and France shows clear sign of a shrinking economy.
Also the Fed did execute another rate as precaution to support the US economy.
What does this mean for YOU as an investor ?
First this means that you will be able to borrow money cheaper which should help the economy to grow. More debt in other words. For your savings account this decision is bad news. Savings interest rates will either decrease for banks that offer more than the legal 0,11% minimum.
The ECB want people to continue to consume and spend money and have more debt. They also want to increase inflation.
Market Analysis
When we analyse the performance of the SPY (screenshot 23 September), we are now testing all time highs.
Currency manipulation is what Central banks do to help the economy. It is too early to say whether we will fall in a bearish market or break the All Time Highs ? We now have the FOMC out of the way so the main focus will be on the trade talks with China going forward. Over the weekend we have heard the trade talks are indeed back on and the reason why China cut their trip short is because they did not want to appear to be influencing the American political environment by taking smaller trips to individual states. With that being said, we can expect news like this to constantly move the market especially since we are near all time highs; anything negative can and will cause larger pull backs. From a technical standpoint we look bullish and ready for a breakout but for this to happen most likely news associate with trade relations must line up.
The long term trend is still intact at this moment.
Below you can find a YTD year chart of the SPY.
Let’s dive in the numbers of my August Passive Income Income Report.
My Passive Income in August 2019
In August 2019 we received a total of 446, $ passive income, only dividend income. With all this holiday travel and our honeymoon, our mind was at another place. Nevertheless it is always nice to earn money while travelling.
Below you see the monthly summary overview of the cash flow coming into my bank account.
My Options Trades
No option trades during the vacation time.
The Euro/Dollar trend
We keep on following the EURO/USD valuation. The euro zone had some negative news and the euro keeps getting weaker in comparison with the USD. The euro dropped big against the dollar.
Take a look at the 1 year chart.
Going forward
We are close to the end of september which gives us three remaining months to hit our objective. We keep on building our skills in options and forex trading. Last week I heard about a 100K options trade with only 1K investment. The options trade was with the company ROKU who got bad news and the stock got hit by a downgrade. The result was a 15 point drop.
Knowledge is power and the goal is to improve day by day, month by month, year over year. Let’s get back to work and you can read here our progress. I hope you’ll do the same…
This is the end of this blog post.
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