Penn Wealth Publishing

2019.01.13 Penn Wealth Report Vol 7 Issue 01

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13 Jan 2019 penn wealth Report volume 7 issue 01 5 Penn Wealth Report Copyright 2019. All Rights Reserved. Charts tell the story. Here are some of our favorites from recent days. For the top business and economics stories of the week, visit Penn...After Hours at www.penneconomics.com. The Week in CharTs Not everything was down in '18 It feels a lot like 1987 e Fed's balance sheet It is a staggering amount. It grew from under $1 trillion in September of 2008 to $4.5 trillion six years later. Now, the Fed is unwinding its ridiculously-large federal balance sheet—all of its outstanding T-bills, notes, mortgage-backed securities, and the like—to the tune of $50 bil- lion per month, or $600 billion per year. But investors reacted angrily to Fed Chair Powell's comments that the unwinding would continue on "auto-pilot." Good for our fiscal health; bad in the short-term for the markets. Abject fear gripped the markets back in the lat- ter months of 1987. Out of the blue, the S&P plunged 23% in October, followed by a 9% drop in November. Investors wanted out. at would have been a mistake, as the S&P rose about 30% by the following summer. To us, today's markets feel a lot like 1987. It was an ugly year, but inverse funds weren't the only vehicle bucking the trend. Volatility returned with a vengeance in the fourth-quarter. Consider VXXB: it rose over 90% during the first-quarter downturn, only to fall 90% by the fourth. But, in the last three months of the year (and YTD over- all) it was up 90% once again as of the time of this writing. If you invest, strap on! (And put some pro- tection on the investment!)

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