Deep Dive – October 2019

Published on: October 28th, 2019

In this month’s Meeting of Minds, Raoul presents two pieces. The first, “Plumbing the Macro Depths” discusses the threat that tightening dollar liquidity poses to global markets. The second, “A New Monetary Future” is a discussion of the future of currency itself, prompted by Mark Carney’s comments about the need for a digital alternative to the US Dollar. The common element is the centrality of the global reserve currency to global markets. Since the first piece was released, the Fed acted to supply liquidity to avoid precisely the kind of repercussions Raoul feared.

Comments

  • YO
    Yoshitaka O.
    27 November 2019 @ 14:35
    Raoul - an update on your bitcoin and eurodollar future trading view would be very much appreciated!
  • RP
    Raoul P. | Founder
    30 October 2019 @ 11:06
    Hi all, There is some confusion I can see on the site in recent days which 'i'd like to address. The Meeting of Minds is an article from GMI/MI which is released to MI subscribers after it is released to the GMI/MI subscribers. So, while it many not be fully actionable it will give you significantly more input into our broader thinking and frameworks than MI alone does. So, yes the charts might be a few weeks out of date, price action may have changed a bit but the overall thoughts have validity. This maintains the integrity of GMI/MI for its subscribers yet gives MI subs more than they would ordinarily get for the price. Also, there is some confusion about twitter comments of me reducing fixed income trades etc. Again, GMI has a LOT more risk on in this area than MI. I trimmed 3 fixed income trades and still have another 4 on in GMI. The level of risk and complexity is much higher than MI. If I am reducing MI I will send an update. My twitter feed does allow you to see that I am unsure of near term direction but I do not feel the need to change anything for MI at this point. I hope all of that helps! Raoul
    • RM
      Richard M.
      30 October 2019 @ 12:40
      Thanks for the clarification Raoul! Although there are some really good points below in the discussion thread about ways to make this an even better service for us subscribers. And I totally agree that this is a great service and enjoy it immensely!
    • JM
      Jeroen M.
      30 October 2019 @ 14:13
      Thanks, I think I start to understand difference GMI and MI. As per earlier below what would be great is an up to date overview of MI positions in a simple format, eg I miss Julians rec on silver and plat trades and your ED 2019 call spread in portfolio overview. More nice to have would be an email alert if big things change. If stoploss passed like KBE it is easy, but what is really valuable is to have the recommendations / trade ideas consolidated and up to date, maybe not needed on daily basis but for trade idea / flash update coming out. The value here is that in evenings you can do reading, take the relevant positions, not worry on hourly basis during the day (great segway in "being tested" write-up, was really appreciate!) and have the comfort MI has latest big items in their rec / trade ideas included. What I worry about now is that I might miss big things in team's thinking and refreshing twitter / mi / other platforms and causes too much distraction. Maybe wishful thinking but trying to control this proces a little better. Answer may be to go passive after all (HF), but still want to give this a shot. Keep doing what you are doing and best of luck, Jeroen
    • GP
      Geoff P.
      30 October 2019 @ 18:09
      Thanks for the clarification Raoul. That makes a lot of sense. If I may make one more suggestion, perhaps you and Julian could briefly touch upon what you envision for sizing a MI position. Without knowing in advance how much risk you're planing to put forth, it's hard to properly size the position (i.e. if you think you're only going to suggest X positions for MI in fixed income, or Y positions in metals, currencies, stock, etc. then you'll have a much better idea than we will on suggested sizing). Ultimately we are responsible for the size we carry, of course, but if, for example, we allocate improperly we could have a lot more cash than intended because we might expect more trades than you ultimately suggest, or conversely, we might have a fully allocated account and you're still making recommendations. Naturally this is complicated on both ends as you likely don't know in advance how many positions are suitable beforehand and likewise we need to determine whether or not to jump in or scale in, use leverage or not, etc. This added complexity might be inappropriate for the portfolio construction reports and I understand that, but if you and Julian wouldn't mind having a small part of the next conversation devoted to your thoughts on sizing for MI positions, it would be most helpful. Many thanks, Geoff
    • YO
      Yoshitaka O.
      31 October 2019 @ 06:32
      Raoul, thanks for the update! May I just check with your what % of your portfolio have you allocated to bitcoin? Keen to get a reference point for my own sizing
    • MG
      Miguel G.
      1 November 2019 @ 11:49
      I think whats being missed here is Raoul and Julian are big picture macro thinkers. When they are building a thesis it isn't one that has a shelf life of 2 days, rather multi month outlook. Problem with today's zero commission traders is they are far to impatient and dont realize that macro takes time to play out. The calls both Julian and Raoul are trying to nail today have market implications for the next 6 months plus, probably longer. The release of the note is of little importance. Im much more interested in the big theme calls they're trying to share. Ive been doing this since 2008 and there's a reason why I signed up for 2 years last year on that discount. There work is very well thought out and worth every penny. Thanks for your hard work guys, both Julian and Raoul.
    • MG
      Miguel G.
      1 November 2019 @ 11:50
      Pardon my crappy grammar lol
    • TF
      Thomas F.
      1 November 2019 @ 15:32
      Could you just do an overview page of what service offers what? Maybe with an example report as you do on the GMI Page. Just the way startups do describing their pricing tiers / service offerings. Should help avoid confusion and therefore improve customer satisfaction... I think got it now, but it took a while to figure out... Real Vision - Videos and Interviews regarding trading ideas and the big picture with experts Think Tank - Reports on big structural shifts / big picture MI - Reports and Video on the Macro Environment and some Trading ideas, updated every couple of weeks GMI - Detailed Macro Reports and Trades, updated frequently (daily?)
  • JM
    Jeroen M.
    29 October 2019 @ 13:02
    Difficult to be tough here, as I think RVTV is a great product and happy follower. But.. I have to say MI has some improvement potential, also highlighted this with the team last month. I am not paying a 20% (carried) profit share, so not whining about performance. But there is a point to make as per below that the report is 1m old (uncertain if less relevant / outdated?) and twitter arguably got the scoop. This way I need to spend too much time on twitter tracking as gives most up-to-date views (GMI => Twitter => MI). Exactly the reason I wanted MI in an attempt to manage my own portfolio and be able to focus on my day job. Suggestions: Maybe too much products to keep focus and provide access to GMI for non-pro investors at price MI? Also as per below a more up to date / simple overview of MI positions (the in focus is outdated and structure not very intuitive)? + email alert if anything changed in MI positions (so do not have to refresh 3x per day ; )... and keep eye on twitter)? Hope feedback helps improve the products. Best of luck!
    • AA
      Alberto A.
      29 October 2019 @ 13:13
      Spot on. I feel the same way. I really like RV and at the beginning MI with Raoul and Julian great insights. I completely agree that they may have too many products going on at the same time and promoting them to get a bigger consumer base. If this is the case, another suggestion is to have a biweekly discussion on what is going on in the markets and their thoughts. Much better than waiting for their reports and it could be more actionable. Even though this is macro and medium to long term investments, what I really dont like is that it seems we are getting the insights a bit late or like you said you see it in twitter first.....not complaining but it is a great opportunity for Julian and Raoul to provide a better service here...
    • LH
      Luis H.
      29 October 2019 @ 13:50
      Completely Agee ! Julian and Raoul are brilliant minds but do not have the time to maintain MI updated. On the other hand I do not have the time to follow them in Twitter. There is a lot of room for improvement in communication with subscribers.This is especially noticeable at times like this.
    • MR
      Michael R.
      29 October 2019 @ 13:56
      fully agree. i would also like to know what happend to euribor-position?
    • mp
      mike p.
      29 October 2019 @ 19:00
      Unfortunately, it seems this product is not at all what it's portrayed to be. And that also goes for Real Vision in general. I stopped subscribing to ThinkTank because the reports were old and outdated. Now I'm getting the same thing except paying 10x more money?!
    • HK
      Hendrik K.
      29 October 2019 @ 20:53
      Thanks for saying - quite disappointed as I was hoping for three months for some trade ideas but basically only references to old ideas.
    • GP
      Geoff P.
      29 October 2019 @ 21:58
      Very much agree. I'd like to see the flash update better utilized. It doesn't have to be a full report. A simple twitter style update is fine. If you have a thought, a comment, a suggested position to look at, scale in/out of, or just check in when things get lively. It is disappointing to see twitter users get priority over paying subs. This platform has value, but could have tremendous value, so I hope to see some further effort put into it. If twitter is an easier platform to perform quick updates on, might I suggest a private twitter feed that could be published here as well. I feel there are many ways to attack this if there is a desire. I very much enjoy the content and I do understand you've been busy of late. I hope the feedback is helpful. All the best.
    • SS
      Shanthi S.
      30 October 2019 @ 09:45
      Very much agree. It took me a few months to realise I was missing out on loads of good info on Twitter, whilst constantly checking MI for non-existent flash updates. Twitter is a time hog, that I can’t always indulge in. Hoping for MI to provide succinct actionable ideas and information as it happens.
  • AM
    Artur M.
    29 October 2019 @ 18:00
    A lot of pain in bond trade around fin tweeter. Forward spreads are now suggesting 30% of hike next year. Two interesting post from Jeff Snider. One suggesting that we can have a pause in 10Y uptrend for quite some time. From the graphs up to 6 months. ED should act differently then 10Y but it's probably what many stir traders are positioning for and it's why ED suffers. Apparently pauses always happens during ED events. Well what a heck, read for your self: https://www.alhambrapartners.com/2019/10/28/the-midpoint/ and here he expects to take less time this time around: https://www.alhambrapartners.com/2019/10/28/more-points-for-and-pointing-to-the-midpoint/ I cross checked with front ED contract and it's not behaving exactly the same. If fed hicks or cuts rates, ED follows FED. But for extended cutting we need the markets to tank to force FED to capitulate and it's not happening. Buyback don't care about earnings or macro. The only thing that I see it play out soon is if we get macro data getting worse. Just thinking loud. Good Luck Artur @Ar2go2
    • AA
      Alberto A.
      30 October 2019 @ 01:50
      Thanks for sharing. Very interesting articles from Jeff. It seems in a different way Raoul was trying to get to this point in terms of timing for the ED play.
  • TC
    Terry C.
    29 October 2019 @ 21:52
    Julian and Raoul's $40k subscription UHNW clients would not be very happy to see their actionable research being readily shared with the Mass Affluent Macro Insiders.
    • AA
      Alberto A.
      29 October 2019 @ 22:09
      Eager to hear what are your expectations then for MI clients? Not sure this is for a mass audience. Mass is RV. Otherwise the target segmentation is completely wrong :)
    • GP
      Geoff P.
      29 October 2019 @ 22:38
      Are you suggesting that there is a conflict of interest across the two platforms? I doubt that. I think we get a more laymen overview of the much more thoroughly detailed 5 figure sub, but the actions should coincide although perhaps not across as many topics.
    • AA
      Alberto A.
      30 October 2019 @ 01:07
      That is what I thought Geoff. But I do think there is an issue with the timings. I know that in some cases Institutional investors get the info hours or maybe a few days prior is release to individual investors. Not sure here as Raoul and Julian both have the service for institutional investors.
  • dm
    daryl m.
    29 October 2019 @ 22:53
    I concur with Alberto A. No mention of Gold in this narrative with such conviction to Bitcoin. Thoughts would be much appreciated if it is still part of the end game you see ?
  • KA
    Kelly A.
    29 October 2019 @ 00:54
    Raoul, Sven says the Dec 2018 sell off was a rare event, not likely to be repeated. Yet, it seems from your analysis of boomer retirement effect, that it is likely to recur. Thoughts? Thank you. Per usual. found your thoughts useful. I wish there was a decent ETF for buying bitcoins. suggestions?
    • JM
      Jeroen M.
      29 October 2019 @ 08:33
      BITCOINXB works right. Drawbacks fees, illiquidity and spread but if long-term? See it as fee someone managing crypto exposure for which I do not have the time.
    • JM
      Jeroen M.
      29 October 2019 @ 11:53
      You made me read into this again: https://xbtprovider.com/assets/documents/factsheets/btce.pdf Maybe not as watertight as I expected.... darn ETFs
    • JM
      Jeroen M.
      29 October 2019 @ 11:55
      Correct doc: https://xbtprovider.com/assets/documents/xbt-prospectus-(english-approved)-v15---website.pdf
    • KA
      Kelly A.
      29 October 2019 @ 20:24
      Thank you Jeroen!
  • MR
    Michael R.
    29 October 2019 @ 12:20
    the charts in this report are more than a month old (end date 20th of sep 2019). can you comment on this?
  • LH
    Luis H.
    29 October 2019 @ 11:08
    This is strange, you kept for months a narrative of buy bonds wear diamonds. Suddenly you are tweeting about reducing your bond position but kept Macro insiders in the dark and fed the subscribers with a month old report. The report is interesting but the issue at the moment is other.
    • DV
      Didier V.
      29 October 2019 @ 12:07
      The jury is still out if we have to buy or sell diamonds.
  • AA
    Alberto A.
    29 October 2019 @ 12:06
    Hi Raoul. This seems to be an old report you wrote prior to October? (please correct me if I'm wrong). Not sure is timely as you mentioned a few things about the ED position which is not even happening. One suggestion is for you and Julian to put some timings behind your trades. Now you are talking about August 2020 when your previous messages, even though you never mentioned timing, was perceived to be an eminent jump in EU ....you never mentioned gold on this narrative....something change? remember the narrative buy bonds, buy dollars, buy gold...wear diamonds? thoughts?
  • JQ
    JACK Q.
    28 October 2019 @ 23:54
    Hey Raoul - appreciate the update. Saw on twitter you’ve mentioned Looking to start to reducing exposure to rates, have you cut some of you ED positions yet?
  • AM
    Artur M.
    28 October 2019 @ 19:09
    Thanks for update. I see one more potential risk to recession view that is not so small. Why is Tramp admin issuing Trillion in debt. Well maybe Tramp will spend most of it by himself into the election to boost GDP? Should not be a surprise. There was some that suggested earnings recession, that could make the stocks fall. I thought it could be quite probable, with buybacks black out. Well up to now we are only -1% Y/Y, against -5 to -10 predicted by these guys. Read on Twitter that Reporting Standards have been change to make it easier for companies, don't know if it¨s true. But this one went out of the window. Still have the CCP to roll ower the swaps in RMB on Oct 31. Maybe finally unemployment numbers will turn and force cutting cycle. Artur @Ar2Go2