CONFLICTING NARRATIVES

Published on: January 20th, 2020

The general market narrative from participants is saying one thing while the underlying data is telling us another. What’s Up? Raoul tries to figure it all out…

Comments

  • WD
    Wim D.
    23 January 2020 @ 07:42
    Sorry to drop somewhat of a newbie question, but I'm a bit of a bond-noob, I do get the ED-trade etc (expected to go up as short term yields drop ), but still confused on the 10y / ZN watch-levels .. are 10y yields expected to drop, thus again a flattening of the 2-10 curve ? ( and are yields are inversely correlated to ZN futures contracts ? )..
    • JL
      J L.
      23 January 2020 @ 12:28
      you are correct, except if the shit really hits the fan rates might get cut another 100 basis points which can cause the curve to steepen (google bull steepener)
    • HM
      Harry M. | Real Vision
      29 January 2020 @ 17:29
      Exactly yes. And the curve flattens if the Fed is literally "behind the curve" in cutting. The long end of the curve can rally in anticipation of eventual fed action.
  • JW
    J W.
    24 January 2020 @ 08:58
    Compelling views. The facts speak clearly but they still get lost in the global market noise. Thanks again for sharing. The recession can is kicked down the road once more. Looks like we are dancing on a volcano. I'll stop with the metaphors now :-)
  • AA
    Alberto A.
    23 January 2020 @ 21:20
    Hi Raoul, Thanks for replying back to this group this time around. Question: I re-played EDZ0 99 calls and also EDZ1 after taking a profit around September (this was your call and many many thanks!!). Now I have bigger exposure in Z0 vs Z1 since my greedy emotions got in the way and I listened to the story of your friend doubling down (this was last year before repo operations). Now I'm struggling for the probabilities to play out or roll the Z0 99 calls but this will cost. Can you please elaborate on this in your next update? Many thanks for everything and help to the individual investors....exciting times as I switch my career from corporate to full time trading (best decision of my life! :))
  • AM
    Aengus M.
    23 January 2020 @ 16:35
    Hi, can anyone tell me what LEI is please? Thanks in advance.
    • AM
      Aengus M.
      23 January 2020 @ 16:55
      Leading Economic Indicators (LEI)
  • MG
    Miguel G.
    23 January 2020 @ 16:48
    Raoul your analysis is looking spot on in real time today. If were to assume this is a 2016 reflation or bust the market is speaking in volumes as we see commodity intensive companies along with physical commodities trading nothing like the impulse we saw in 2016. Although our fed is clearly pivoting in to a more easing stance, just maybe they arent doing enough on the margin to save this cycle this time around.
  • JB
    Jonathan B.
    21 January 2020 @ 16:57
    In your conclusion you say “Once the data firms show their hands...”. Not clear to me what you are referring to. Referencing FB, GOOG earnings?
    • AM
      Aengus M.
      23 January 2020 @ 16:32
      Agree, can you please clarify?
  • JM
    Jeroen M.
    21 January 2020 @ 18:35
    That EURODOLLAR Dec-21 is trading close... 98,495. Looking forward to a flash ; )
    • JM
      Jeroen M.
      21 January 2020 @ 20:04
      There we go, a very short 95,500 on the screen
    • JM
      Jeroen M.
      21 January 2020 @ 20:04
      98,500 that is
    • RP
      Raoul P. | Founder
      22 January 2020 @ 15:32
      Sorry, was travelling. I would like to see a clear break of 98.60 in EDZ1...looks good thus far..
    • JM
      Jeroen M.
      23 January 2020 @ 14:42
      Haha...Well the TLT briefly touched @ 141.18... exciting times
    • JM
      Jeroen M.
      23 January 2020 @ 16:27
      Exciting is a bad term here. Bond market here could the signal for big recession ahead. TLT @ 141,32
  • SH
    Stu H.
    22 January 2020 @ 20:01
    The grind lower from September to now on the ED charts look very bull flag like to me. TA theory suggests the resultant move will be around the same as the preceding flagpole which would put us at around 100. Maybe Trump will get his low interest rates running into the U.S elections?
  • JA
    Joseph A.
    21 January 2020 @ 02:31
    Could please explain why you choose to focus specifically on the Eurodollar December 2021 as opposed to a more near dated Eurodollar contract?
    • RP
      Raoul P. | Founder
      22 January 2020 @ 15:34
      Just time for it to play out...
    • JA
      Joseph A.
      22 January 2020 @ 19:19
      I see well I don’t have access to platforms with contracts that far dated at the moment. Rolling futures less ideal but ok?
  • CS
    C S.
    21 January 2020 @ 03:06
    Hi Raoul, Lets assume Hedgeye are correct on their US GDP Nowcast for Q4 2019 and the number comes in a lot weaker than consensus - what effect, if any, do you think that would have on the value of Eurodollars? What Eurodollar options contract would you be most interested in purchasing from here, assuming things fall the right way? June 2021? Dec 2021. I have some 99 Dec2020 calls that I think will have a hard time rallying against decay and am wondering if I should roll them over into a longer duration (and at what strike?). Also, would you be sending out an Alert if/when you take action on the levels you are watching? Thank you.
    • RP
      Raoul P. | Founder
      22 January 2020 @ 15:34
      I think EDZ1 makes the most sense so we have some time and a mix between calls and outright futures. We'll get to that if the trades are triggered.
  • TH
    Tim H.
    21 January 2020 @ 16:04
    Hello Raoul, I see the data on your chart often doesnt include Q4 of 2019. This would mean we dont know if there is an improvement of the data and driving a bit blind here. Your thoughts?
    • RP
      Raoul P. | Founder
      22 January 2020 @ 15:33
      There is no Q4 data yet for some things..