Buy Bonds. Buy Dollars. Wear Diamonds

Published on: May 20th, 2019

Raoul pulls the trigger on the long dollar trade and adds to his conviction in his bond positions.

Comments

  • DB
    Daniel B.
    4 June 2019 @ 04:22
    USD/DXY getting bit of a timeout at the moment - what's people's thoughts on sitting out of dollar bets until after the June meeting?
  • LV
    Lewis V.
    4 June 2019 @ 04:08
    This trade knocked it out of the park. Mice setup
  • FO
    Frederic O.
    3 June 2019 @ 12:08
    I've just got an account to trade eurodollar futures and will be able to make trades within a week. It feels like I've missed the train. Do you still recommend this actual setup or do you think another trade like March 2020 is better?
  • DY
    Dmytro Y.
    26 May 2019 @ 13:36
    Raoul, would you still suggest adding to GE calls 2020, 2021? i have a small position in the money now. Wonder if you would still recommend add up some more Eurodollars now after the rates had fallen from Nov 2018 and are much lower already. Thanks for your view
    • DY
      Dmytro Y.
      26 May 2019 @ 13:41
      or if the current options prices (premiums) have already priced in the lower interest going forward thus making GE calls for 2020-2021 not viable? Thank you
    • RP
      Raoul P. | Founder
      28 May 2019 @ 20:05
      Keep buying...
    • DY
      Dmytro Y.
      2 June 2019 @ 09:05
      Thanks, Raoul. How to express the trade USD vs HKD? i have IB and Saxo accounts. neither seem to have any FX options for this pair, nor options or futures for Gold denominated in HKD or even in RMB. it's only spot gold in RMB and HKD but not leverage which future or options would allow. Thank you for your advise
  • DB
    Daniel B.
    23 May 2019 @ 06:13
    Hi Raoul, Are you recommending 2s/10's steepener trade for your GMI clients? Will there be a time to back up the truck on 10 year treasuries again?
    • RP
      Raoul P. | Founder
      28 May 2019 @ 20:06
      Yes, for GMI I’ve dipped my toe in on the steepener
  • Yc
    Ying c.
    23 May 2019 @ 16:48
    Raoul, Thanks a lot for your reply previously. On the other hand, is Yen a better option over dollar? And What is your view on Gold?
    • RP
      Raoul P. | Founder
      28 May 2019 @ 20:05
      I prefer dollars
  • RH
    Rob H.
    25 May 2019 @ 23:11
    Why is JPY considered a safe haven currency when global market sell off? thanks far all replies in advance. I don’t get it since they have negative rates.
    • DB
      Daniel B.
      26 May 2019 @ 11:15
      Julian gave a good answer in a prior month’s comments (so he or Raoul can correct me if I cock it up). In short, Japan are net exporters of capital, so in risk-off situations capital comes home; hence the bid for JPY. Cheers
  • RP
    Roberto P.
    22 May 2019 @ 20:56
    Hi Raoul About HKD, Kyle Bass has commented many time how reserve has going down and you mention in this report again. But from what I see from Bloomberg, FX's reserves are near all time high at 1x GDP and with a positive current account seems unlike to break down. Can you comment on that ?
    • BD
      Bryan D.
      24 May 2019 @ 06:20
      Roberto you are correct. FX reserves are at an all time high and and I agree they have more than enough to defend the peg. What has materially decreased is Aggregate Balances which is in HKD and is the excess HKD cash in the interbank system once all the banks in HK have settled up for the day. These should be decreasing in order to get HIBOR to catch up to LIBOR (demand vs decreased supply effect is used to move HIBOR higher to reflect the importing of Fed policy via the currency peg). These seem to be getting confused in a number of reports but as Aggregate Balances are in HKD by definition they can not be use to sell to buy HKD to defend the peg. This is what the foreign reserves are and are predominately in USD. While i do agree with the long USD and long bonds view this distinction between the foreign reserves and aggregate balances is being misunderstood in quite a few places.
  • FO
    Frederic O.
    23 May 2019 @ 04:47
    Hi. What does it mean to buy the call spreads for three ticks?
    • WY
      Weikun Y.
      23 May 2019 @ 18:10
      buy 98 call and sell 98.5 call. 3 ticks as the cost was 0.03 per spread. It's more expensive now.
    • FO
      Frederic O.
      23 May 2019 @ 19:16
      I’m new to these types of trades. I’ve found a 3-month Eurodollar dec-19 that I can sell at 9771 and buy at 9773. I don’t see an option of any other prices such as 98 or 98,5
    • JL
      J L.
      23 May 2019 @ 22:19
      you can read about options here https://www.investopedia.com/terms/b/bullcallspread.asp
    • FO
      Frederic O.
      24 May 2019 @ 05:01
      Thanks!
  • MG
    Miguel G.
    23 May 2019 @ 14:13
    Hi Raoul I shorted oil via uso/long sco around 63 bbl on your dollar strength idea. I know youve been an energy and oil bear for a while, do you have a target in mind that you see crude heading to?
    • WY
      Weikun Y.
      23 May 2019 @ 18:16
      oil now 57 handle. what a great trade
  • WY
    Weikun Y.
    23 May 2019 @ 18:08
    Thanks Raoul. Eurodollars made a huge move today. Got into GE calls yesterday. Good trade so far.
  • SS
    Steve S.
    23 May 2019 @ 03:11
    Thanks Raoul. This is well thought out. I appreciate your recommendations and comments to some people's questions.
  • LV
    Lewis V.
    21 May 2019 @ 18:12
    Raoul the Eurodollar Optix is at 100 and hedgers are net short for the first time since 10/2015. The endogenous market structure looks suboptimal. Are you waiting for a pullback to size up or just adding to existing position right here
  • GP
    George P.
    21 May 2019 @ 17:54
    Raoul Can you recommend a commodities broker that you use or may suggest to use. Thank you
  • MS
    Mark S.
    20 May 2019 @ 22:30
    Hi Raoul thanks for being very specific and giving lots of options for the less experienced. To be clear on the interest rate instruments you are referring to the spread of the GE Dec 16 '19 98/98.5 call? Not the GE0, GE2 etc that expire on Dec 13? thanks in advance
    • RP
      Raoul P. | Founder
      21 May 2019 @ 11:49
      Correct
  • TJ
    Tyler J.
    20 May 2019 @ 22:57
    i am in individual who is not familiar with call spreads. Would you kindly walk me through EXACTLY how I would execute a December 2019 call spread?
    • RP
      Raoul P. | Founder
      21 May 2019 @ 11:49
      Buy 1x 98 call and sell the 1x 98.5 call. These are usually quoted as a "package'. Limited risk and limited reward but still a very good risk reward.
  • BR
    Brian R.
    21 May 2019 @ 01:01
    Finally you had the balls to make a clear call on the USD... the best pair to steal like a bandit is long USD/MXN. Highest liquidity in em fx, proxy for volatility.
    • RP
      Raoul P. | Founder
      21 May 2019 @ 11:48
      It was the right call not to. FX was in a range. Now it is not.
  • Yc
    Ying c.
    21 May 2019 @ 02:46
    How about USDTRY, USDZAR? What's your view on these two Raoul?
    • DB
      Daniel B.
      21 May 2019 @ 04:18
      There's high cost of carry on USDZAR so no good unless you get access to futures (same goes for TRY)
    • RP
      Raoul P. | Founder
      21 May 2019 @ 11:48
      Too volatile for me... but they are telling us that EM FX overall should weaken and global growth is an issue and there is a shortage of dollars. That being said, both are going to new all time highs.
  • PW
    Phil W.
    21 May 2019 @ 11:47
    Hi Rauol, great piece. Being a "newbie Marco Investor" I need to keep things as simple as possible and my capital in play is small. In terms of the BOND play- is buying the TLT still a potential trade? (or is it too much at the long-end of the curve). And in terms of the $- is being long the DXY a possible trade? (I can buy the DXY via Spread-Betting- meaning that I have no currency risk- it basically tracks the rise or fall the DXY per se)
  • HO
    H2 O.
    21 May 2019 @ 03:57
    Super strong $ has never helped reduce deficits, quite the opposite. Make it twin deficits and history favors a weaker currency. That aside, if a real trade war breaks out, not just these silly tariffs, we are looking at a deflationary global recession. Sharply lower trade flows means sharply lower demand for dollars. The rally would have to come from financial flows. What I think is missed is that the US has sucked in trillions of dollars in investment, and the source of these funds are offshore dollar liabilities. That is to say the run up in US asset prices is substantially a function of offshore dollar liabilities looking for assets, and USD bonds and equities have been on the receiving end because the US is the least worst option. If we do get a global recession, the dollar would spike before it crashes as all of this unwinds. In most cases recessions have kicked off major downward corrections for the dollar. The current level for DXY anyway is around 15 year highs.
    • RP
      Raoul P. | Founder
      21 May 2019 @ 11:46
      Usually the dollar rallies until the rates go on pause at the lows and then it collapses. Im am strongly in the spike then collapse camp over 3 years.
  • PH
    Pedro H.
    21 May 2019 @ 05:57
    Hi Raoul, I'm mostly an options seller type of trader, playing short-term vol crush with delta neutral strategies. But I'm really tempted to try your recommendation with this long call vertical spread on /GEZ9 options expiring Dec 16, 2019. Questions: 1) In absolute terms IV is very low compared to other options I trade. But the trading platform I use shows that IV for /GE is in the upper half percentile range. So don't know if I'm missing something... 2) How do you predict this will play? What confirmation should we expect to keep this trade?
    • RP
      Raoul P. | Founder
      21 May 2019 @ 11:45
      I almost never sell naked options but I do sometimes lower a cost structure by selling something way out of the money. Fixed income vols are very low right now, and that gives opportunity for more leverage. Confirmation needed is an economy that stays sluggish or slows and the global economy remain very slow.
  • VG
    Vivek G.
    21 May 2019 @ 06:34
    Hi Raoul - is buying the Futures - Eurodollar Dec 2019 - Spot basis likely to be equally effective? - would you clearly advocate doing the same for Dec 2020 and 2021? - how does one ascertain the quantum of investment in a risk Adjusted basis for the Dec 2019 recommended Eurodollar Trade? - could you explain how you arrived at the 16X on the Dec 2019 Eurodollar Call Spread recommendation Regards
    • RP
      Raoul P. | Founder
      21 May 2019 @ 11:43
      I cant really help with how you structure your trades. the futures carry more risk but the market is liquid enough to manage stop losses. Ti assign risk in futures I look at % loss of portfolio if my stop is hit. That is what gives you the leverage. The 16x is the max profit divided by the cost.
  • AS
    Alan S.
    20 May 2019 @ 20:08
    Good afternoon Raoul, What is your thinking on January 2020 outs on FXY? Still looking for a jubilee? Thank you if you have time to respond.
  • RH
    Rob H.
    20 May 2019 @ 19:47
    No options market to speak of in SHY. TD doesn't off Eurodollar options. Time to move to IB I think!
  • TB
    Thibault B.
    20 May 2019 @ 17:54
    Following up on your twitter remark - low vol and high forwards allows you do do some really leveraged (10x1) long-dated option trades on certain USD pairs.
  • MG
    Miguel G.
    20 May 2019 @ 15:28
    Raoul, have you looked at the spec money positioning in the eurodollar hedger position? Spec money got aggressive at the cycle peak last year but now they have unwound that position and are net short. While I agree that a rate cute looks likely this year do you think this spec money is correct to be leaning on the side of a more hawkish fed? Spec money positioning went from 4.7M summer of 2018 to -136k net short as of last Tuesday. Curious what you make of their positioning in the eurodollar market and what spec money may be positioning for?
    • MG
      Miguel G.
      20 May 2019 @ 15:33
      Looking over last two cycle peaks in the Eurodollar market spec money was building a long trade 12-24 months too early then as well so maybe their timing this time around is a good 1-2 yrs early.

Mark Yusko

Morgan Creek Capital Management, Co- Founder, CEO, & CIO

Mark Yusko is the Founder, CEO and Chief Investment Officer of Morgan Creek Capital Management. He is also the Managing Partner of Morgan Creek Digital Assets.

Morgan Creek Capital Management was founded in 2004 and currently manages close to $2 billion in discretionary and non-discretionary assets. Prior to founding Morgan Creek, Mr. Yusko was CIO and Founder of UNC Management Company (UNCMC), the Endowment investment office for the University of North Carolina at Chapel Hill. Before that, he was Senior Investment Director for the University of Notre Dame Investment Office. Mr. Yusko has been at the forefront of institutional investing throughout his career. An early investor in alternative asset classes at Notre Dame, he brought the Endowment Model of investing to UNC, which contributed to significant performance gains for the Endowment. The Endowment Model is the cornerstone philosophy of Morgan Creek, as is the mandate to Invest in Innovation.

Mr. Yusko is again at the forefront of investing through Morgan Creek Digital Assets, which was formed in 2018. Morgan Creek Digital is an early stage investor in blockchain technology, digital currency and digital assets through the firm’s Venture Capital and Digital Asset Index Fund.

Mr. Yusko received a BA with Honors from the University of Notre Dame and an MBA in Accounting and Finance from the University of Chicago.

Anthony Scaramucci

SkyBridge Capital, Founder & Co-Managing Partner

Prior to founding SkyBridge in 2005, Scaramucci co-founded investment partnership Oscar Capital Management, which was sold to Neuberger Berman, LLC in 2001. Earlier, he was a vice president in Private Wealth Management at Goldman Sachs & Co. In 2016, Scaramucci was ranked #85 in Worth Magazine’sPower 100: The 100 Most Powerful People in Global Finance. In 2011, he received Ernst & Young’s “Entrepreneur of the Year –New York” Award in the Financial Services category. Anthony is amember of the Council on Foreign Relations (CFR), vice chair of the Kennedy Center Corporate Fund Board, a board member of both The Brain Tumor Foundation and Business Executives for National Security (BENS), and a Trustee of the United States Olympic & Paralympic Foundation. He was a member of the New York City Financial Services Advisory Committee from 2007 to 2012. In November 2016, he was named to President-Elect Trump’s 16-person Presidential Transition Team Executive Committee. In June 2017, he wasnamed the Chief Strategy Officer of the EXIM Bank. He served as the White House Communications Director for a period in July 2017. Scaramucci, a native of Long Island, New York, holds a Bachelor of Arts degree in Economics from Tufts University and a Juris Doctor from Harvard Law School.

Michael Saylor

MicroStrategy, Co-Founder

Mr. Saylor is a technologist, entrepreneur, business executive, philanthropist, and best-selling author. He currently serves as Chairman of the Board of Directors and Chief Executive Office of MicroStrategy, Inc. (MSTR). Since co-founding the company at the age of 24, Mr. Saylor has built MicroStrategy into a global leader in business intelligence, mobile software, and cloud-based services. In 2012, he authored The Mobile Wave: How Mobile Intelligence Will Change Everything, which earned a spot on The New York Times Best Sellers list.

Mr. Saylor attended the Massachusetts Institute of Technology, receiving an S.B. in Aeronautics and Astronautics and an S.B. in Science, Technology, and Society.

Alex Saunders

Nugget's News, Founder & CEO

Alex Saunders is the founder and CEO of Nugget’s News, a digital media company focused on all things crypto. Alex has been captivated by cryptocurrency since 2012 and in 2017 he began educating globally on the benefits of cryptocurrency and how to safely acquireit. Nugget’s News has been listed as a top-20 podcast by Business Insider, ShapeShift and Lifehacker and has over 120k YouTube subscribers with 9 million total views.Alex is also heavily focused on his cryptocurrency education platform Collective Shift which currently serves over 4,500 members. provides his unique perspectives by utilising his expertise in fundamental analysis, technical analysis and market sentiment. He is working towards his mission of making it easier for everyone to understand the financial world.

James Putra

TradeStation Crypto, Inc., Sr. Director of Product Strategy

James helped launch TradeStation Crypto’s offering which utilizes a true online brokerage model that self-directed investors and traders have come to expect for equities, futures, and foreign currency markets. He is a reputed crypto asset specialist and blockchain thought leader focused on helping people find innovative ways to participate in this space. He is active in the blockchain community with speaking engagements, TV appearances and mentoring. James has over 15 years of experience in the Fintech industry.

Raoul Pal

Real Vision, Co-Founder & CEO

Raoul Pal is the Co-Founder and CEO of Real Vision, the world’s pre-eminent financial media platform, which helps members understand the complex world of finance, business, and the global economy.

Real Vision members also have access to Real Vision Crypto, a cryptocurrency and digital assets video channel watched by over 80,000 people. In addition, Raoul has been publishing Global Macro Investor since January 2005 to provide original, high quality, quantifiable and easily readable research for the global macro investment community hedge funds, family offices, pension funds and sovereign wealth funds. It draws on his considerable 31 years of experience in advising hedge funds and managing a global macro hedge fund. Global Macro Investor has one of the very best, proven track records of any newsletter in the industry, producing extremely positive returns in eight out of the last twelve years.

He retired from managing client money at the age of 36 in 2004 and now lives in the tiny Caribbean island of Little Cayman in the Cayman Islands. Previously he co-managed the GLG Global Macro Fund in London for GLG Partners, one of the largest hedge fund groups in the world. Raoul moved to GLG from Goldman Sachs where he co-managed the hedge fund sales business in Equities and Equity Derivatives in Europe. In this role, Raoul established strong relationships with many of the world’s pre-eminent hedge funds, learning from their styles and experiences.

Other stop-off points on the way were NatWest Markets and HSBC, although he began his career by training traders in technical analysis.

Peter McCormack

What Bitcoin Did, Journalist

Peter McCormack is a full time journalist/podcaster covering topics such as Freedom, Human Rights, Censorship and Bitcoin. Peter created and hosts the What Bitcoin Did Podcast, a twice-weekly Bitcoin podcast where he interviews experts in the world of Bitcoin development, privacy, investment and adoption. Launched in November of 2017, the podcast has grown to over 100 episodes with a guest list that is a testament to the diversity of knowledge and opinions that represent the broader Bitcoin community. Expanding his growing list of human interest recordings, documentaries and films Peter has recently launched the Defiance podcast and DefianceTV.

Caitlin Long

Avanti Financial Group, Founder & CEO

22-year Wall Street veteran who has been active in bitcoin and blockchain since 2012. In 2018-20 she led the charge to make her native state of Wyoming an oasis for blockchain companies in the US, where she helped Wyoming enact 20 blockchain-enabling laws. From 2016-18 she jointly spearheaded a blockchain project for delivering market index data to Vanguard as chairman and president of Symbiont, an enterprise blockchain start-up. Caitlin ran Morgan Stanley’s pension solutions business (2007-2016), heldsenior roles at Credit Suisse (1997-2007) and began her career at Salomon Brothers (1994-1997). She is a graduate of Harvard Law School (JD, 1994), the Kennedy School of Government (MPP, 1994) and the University of Wyoming (BA, 1990).

Hunter Horsley

Bitwise Asset Management, CEO

Hunter Horsley is Chief Executive Officer of Bitwise Asset Management. Prior to Bitwise, he was a product manager at Facebook, working on advertiser products including the multibillion-dollar sponsored content ecosystem and ad breaks in videos. Before Facebook, Horlsey was a product manager at Instagram, responsible for multiple advertising products generating several hundred million dollars of revenue. He is a graduate of the Wharton School at the University of Pennsylvania, with a B.S. in economics. Recently, Horsley was named a member of Forbes’ 2019 “30 Under 30” list.

Luke Gromen

Forest For The Trees, Founder & President

Luke Gromen has 25 years of experience in equity research, equity research sales, and as a macro/thematic analyst. He is the founder and president of macro/thematic research firm FFTT, LLC, which he founded in early 2014 to address and leverage the opportunity he saw created by applying what clients and former colleagues consistently described as a “unique ability to connect the dots” during a time when he saw an increasing “silo-ing” of perspectives occurring on Wall Street and in corporate America.

FFTT caters to institutions and sophisticated individuals by aggregating a wide variety of macroeconomic, thematic and sector trends in an unconventional manner to identify investable developing economic bottlenecks for his clients. Prior to founding FFTT, Luke was a founding partner of Cleveland Research Company, where he worked from 2006-14. At CRC, Luke worked in sales and edited CRC’s flagship weekly thematic research summary piece (“Straight from the Source”) for the firm’s clients. Prior to that, Luke was a partner at Midwest Research, where he worked in equity research and sales from 1996-2006. While in sales, Luke was a founding editor of Midwest’s widely-read weekly thematic summary (“Heard in the Midwest”) for the firm’s clients, in which he aggregated and combined proprietary research from Midwest with inputs from other sources.

Luke Gromen holds a BBA in Finance and Accounting from the University of Cincinnati and received his MBA from Case Western Reserve University. He earned the CFA designation in 2003.

Meltem Demirors

CoinShares, Chief Strategy Officer

Meltem Demirors is Chief Strategy Officer of CoinShares, an investment firm that manages billions in assets on behalf of a global investor base, and is a trusted partner to investors and entrepreneurs navigating the digital asset ecosystem. Meltem oversees the firm’s managed strategies group and its New York office and leads corporate development.

Previously, she was part of the founding team of Digital Currency Group. As a veteran investor in the digital currency space, she has invested in over 250 companies in the ecosystem.

Meltem is passionate about education and advocacy, and teaches the Oxford Blockchain Strategy Programme and co-chairs the WEF Cryptocurrency Council.