Deep Dive – February 2020

Published on: February 28th, 2020

USD strength is a double-edged sword. As the US has become the destination of choice for asset managers, it squeezes those with unfunded USD liabilities. The current set-up is unsustainable. Given how strong USD has been recently, the bull case for the USD needs to be re-examined. Below I do just that and conclude that the bull case remains as strong as ever. Strong that is, until the realisation dawns that the days of a USD based system are numbered. Triffin’s Dilemma is exacerbating the instability of our global financial architecture.


  • JK
    James K.
    28 February 2020 @ 13:35
    Julian, looks like we’re getting stopped out of GDX this AM ...? Time to let it go .. ?
    • HM
      Harry M. | Real Vision
      28 February 2020 @ 19:17
      Yes. We hit the stop. Get out as per discipline and reappraise. Truth be told, the set up is even more bullish for gold than before in many respects. But there are reports of margins being increased in Gold causing a cascading stop out. Worth noting that margins are likely going up in everything. Volatility is massively higher everywhere.
    • JK
      James K.
      28 February 2020 @ 13:36
      Raoul... you still holding GDX ... ? Thx
  • CE
    Carol E.
    28 February 2020 @ 17:10
    When I click to read the report, nothing shows up. Not fun.
    • HM
      Harry M. | Real Vision
      28 February 2020 @ 19:35
      Sorry Carol. Working to fix it. Please bear with us.
  • wj
    wiktor j.
    28 February 2020 @ 17:12
    good call Guys last time. I am up 150%. Although S&P short i did a short and a long call to start with as it was going through the roof.
    • HM
      Harry M. | Real Vision
      28 February 2020 @ 19:14
      Thanks Wiktor. Our diagnosis was right on the technicals but several of our expressions of the idea got stopped, APPLE survived and is a long way onside. These things are always tricky to nail - it was a bit of a champagne trade in that respect. But I think still very important to warn clients of the degree of risk and deteriorating technicals in equity markets
  • dm
    daryl m.
    28 February 2020 @ 17:53
    How to download this report ???
  • KC
    KEVIN C.
    28 February 2020 @ 17:59
    I am having trouble accessing the pdf.
  • WW
    William W.
    28 February 2020 @ 17:59
    Can’t open report
  • CS
    Christian S.
    28 February 2020 @ 18:38
    Can’t open
  • dm
    daryl m.
    28 February 2020 @ 18:40
    All other reports had a download button ????
    • IB
      Ivan B.
      1 March 2020 @ 02:48
      Yes, but it works only when I use my browser.
  • KA
    Kelly A.
    28 February 2020 @ 19:03
    Hi, I realize you're still figuring out the new format, but I can't see the scroll bar on the side of the "window" of the report. And, the window is only laptop size. I'm seldom actively trading on my laptop. I use desktop w multiple screens, so it's kind of annoying not be be able to get a bigger "window." let me know if there is a simple fix I can make on my desk top. Thanks.
    • HM
      Harry M. | Real Vision
      28 February 2020 @ 19:11
      Hi Kelly, I can see the scroll bar so I guess the way its set up doesnt default to your window size. If you adjust the size of your browser window it might solve the problem. I say might. Let me know if that does not work.
  • GP
    Geoff P.
    28 February 2020 @ 19:32
    Can we make this full window like before? The small window is just too small. We can download which fixes that, but just my 2c. Thanks
  • SH
    Stu H.
    28 February 2020 @ 19:34
    Any update on our ED trades? Now ITM on the Dec 20 90 calls and rapidly closing in on the Dec 21 99.325 and 99.5 calls. Time to trim back or double down?
    • HM
      Harry M. | Real Vision
      28 February 2020 @ 19:36
      Great question. We are about to put out a flash update. But its hard to think this is the level to increase the position. Its moved a long way.
  • LH
    Luis H.
    28 February 2020 @ 20:04
    I can’t read or download the report in my iPad. Hope it’s not important, I have no computer until end of the day
  • MR
    Michel R. | Real Vision
    28 February 2020 @ 20:19
    Hi All, we have identified an issue that is affecting mobile usage and are currently in the process of fixing it. In the meantime, it can be viewed on the desktop.
    • GS
      George S. | Real Vision
      28 February 2020 @ 23:29
      For those that are having issue viewing it, here is a private link only for members - We are working on fixing the issue.
  • CS
    Chuck S.
    28 February 2020 @ 20:44
    I can't view it on my desktop which runs on an Ubuntu operating system. It says a special plug-in is required.
  • FB
    Floyd B.
    29 February 2020 @ 00:09
    While very convincing but I wonder why currently with a failing oil price the dollar is falling.
    • CH
      Charlie H.
      29 February 2020 @ 03:04
      The US has relatively high rates compared to other sovereigns. Now that the market is pricing in 3 cuts by June from the US Fed the dollar has corrected a bit.
  • JQ
    JACK Q.
    29 February 2020 @ 02:07
    An update on curve trade pls =] mega steepening to come? First comes bear steepening next week?
  • ml
    mark l.
    29 February 2020 @ 08:30
    Still can’t open properly
  • JM
    Jennifer M.
    29 February 2020 @ 14:42
    Not able to open either report on my cell
    • CH
      Charlie H.
      29 February 2020 @ 14:44
      Same. Tried both safari and Chrome on iOS to no avail.
  • BS
    Bevyn S.
    29 February 2020 @ 16:55
    So cogent. Love it. Raoul-at some point, could you discuss your approach to dealing with risk / hedging as you step into this? I believe it will be very tempting to lever up as this starts to play out. How do you hedge for tail risks / volatility for this roller coaster, assuming you're taking on leverage? Do you avoid holding significant leverage in FX over the weekend or other closed periods? What leverage ratio are you comfortable with? I think answering some of these questions will help the MI community significantly. Thanks!
  • MS
    Mark S.
    29 February 2020 @ 16:58
    Hi Raoul, you posted this on Twitter Friday’I dunno, but Im thinking that central bank coordinated cuts might be coming. 1998 was all about that (different circumstances). If it happens, fixed income will sell off sharp, then explode... forewarned is forearmed. Make sure your risk is manageable and you have ammo to add.’ If true wouldn’t this send ZT calls ED calls higher?
    • HM
      Harry M. | Real Vision
      1 March 2020 @ 21:05
      Wasnt much of a sell off in fixed income so far. The market is priced for some kind of aggressive Fed easing. Its how this is followed up, and how much lasting damage Covid19 causes. And it might dampen Bond and rates vol from the levels they have reached. Not so high in the big picture, but if all the rate cuts which are priced happen it will bring us to 68bps in Fed funds. How much action could we expect from that level?
  • J
    Jim .
    29 February 2020 @ 17:53
    Unable to open on my iPhone. Any suggestions?
    • JV
      Jaco V.
      3 March 2020 @ 01:42
      open on computer. It works. it seems to me that it's an issue with mobile.
  • AP
    Alfonso P.
    1 March 2020 @ 03:27
    Milton, cannot watch the report
  • JK
    James K.
    1 March 2020 @ 18:23
    There is just one point that I am getting stuck on here. At 2mm bpd crude imports at $45 works out to 33B per year flowing out of the US. This is an order of magnitude less than it was at the time of peak oil prices. So, in my mind, a fall in oil prices from here would be rather inconsequential to FX. What am I missing here?
    • BS
      Bevyn S.
      2 March 2020 @ 03:08
      I think his point was that it's an additive factor for USD strength from a reduced flow of dollars out of the US. Probably a small factor though. More of a concern is reduced demand and prices for oil means less income to service USD denominated debt in EM (and thus dollar shortage).