Flash Update – August 1, 2019

Published on: August 1st, 2019

The last In Focus, I made the case that we needed to sit on our hands and wait for some clarity. Time for action.

Comments

  • J
    JP .
    20 August 2019 @ 21:31
    1 yr treasury = 1.75% 2 yr = 1.53% Eurodollar Dec 2020 = 1.28% (1 yr and 4 months) Not better trade to buy the 2 yr bonds instead of the Eurodollar futures (already priced) at these levels if we us for lower rates?
    • J
      JP .
      29 August 2019 @ 14:01
      I joined macro to get feedback on questions raised. Up to now, i have received more value from Realvision TV and twitter comments....
    • M.
      Milton .. | Founder
      11 September 2019 @ 06:44
      JP, Raoul and Julian are active in the comments section a couple of days after the report is posted. Given the high number of questions it’s likely they will only cover some of them.
  • BS
    Bevyn S.
    6 August 2019 @ 19:55
    Any thoughts on recent equity high volatility bouts being positively correlated with the dollar? Haven't done a historical analysis but it feels lately like rapid risk off movements equates to stocks and dollar down, bonds up... Not what I would've anticipated...
    • BS
      Bevyn S.
      7 August 2019 @ 16:41
      Super rare to have such a large move dollar & spx down (only like 4-5 times since 2009).... Still need to get more data back to 2000.... Last time was August 2015 (China deval)... What's the significance here?
    • BS
      Bevyn S.
      7 August 2019 @ 16:46
      Maybe just a short squeeze due to a common trade (long dollar and us stocks?)
    • BS
      Bevyn S.
      7 August 2019 @ 16:47
      Looking at EUR/USD here...
  • BH
    Boris H.
    2 August 2019 @ 09:54
    Raoul, does it still make sense to by the calls at 0.16? Market moved very quickly here - does this trade still seem contrarian and with good risk/reward? Thanks!
    • RP
      Raoul P. | Founder
      2 August 2019 @ 10:54
      Keep buying.
    • PM
      Philip M.
      7 August 2019 @ 16:24
      Trade management question... Great trade so far. Still worth adding at 0.24? Moved well above 1SD today so assume still a buy on any pullback?
  • TS
    Tyler S.
    7 August 2019 @ 13:50
    what about a new flash update, I see there is a 20 page twitter story but nothing for paid clients.
  • CS
    C S.
    3 August 2019 @ 07:23
    Does this change thoughts on expected USD projection? https://www.baldwin.senate.gov/imo/media/doc/Competitive%20Dollar%20for%20Jobs%20and%20Prosperity%20Act%20FINAL.pdf
  • DB
    Daniel B.
    3 August 2019 @ 03:37
    Raoul, any thoughts on the long end of the curve? We’ve rallied pretty hard again, assuming equity weakness continues and Fed is forced to cut 50-75 bps to try and knock this on the head, will that steepen and possibly back up the long end of the curve? In other words, wait for September because we might be getting stretched at these levels for 10+ years on the curve?
  • AM
    Artur M.
    2 August 2019 @ 20:02
    Raoul, from your experience time to take the steepner is after first rate cut? I don't have Bloomberg terminal and it's hard for me to validate the time, but I think I heard you saying that that should be after the first cut, meaning now. Also a tip for MI as getting on a steepner in UST is complicated. You can use Blue pack - Gold pack in eurodollars to put on on 2/10 steepner as it's equivalent but much easier as you don't need to think about multipliers. So the most simplest would be to buy EDZ20 and sell EDZ23 if you don't want to complicate too much but the current configuration for blue pack/ gold pack is (GEU2020-GEU2023+GEZ2020-GEZ2023+GEH2021-GEH2024+GEM2021-GEM2024) (trading view formula) if you want to be strict. The shape of this configuration is at the moment the same as EDZ20 - EDZ23. Thanks in advance Artur @Ar2go2 (twitter)
    • MC
      Mathieu C.
      2 August 2019 @ 20:18
      Hi Artur What makes you think the curve will steepen?
    • AM
      Artur M.
      2 August 2019 @ 20:34
      You get bull steepner when front end falls faster than back end which you get if FED cuts. So if you think that rates going to 0 that should imo be the case
    • AM
      Artur M.
      2 August 2019 @ 20:36
      But would love to get some confirmation by Raoul experience
    • MC
      Mathieu C.
      2 August 2019 @ 23:16
      Have a look at ETF STPP that might help you. The yield curve has inverted massively this week, 10Y shorts have been destroyed, I don't think the risk/reward is that good on a bull steepner unless you think they are going to cut massively in a short period of time which they said they will not. With your strategy based on ED though it seems really hybrid I am not a specialist but I don't even think you are going to capture any sorts of steepening or so few as the rates are low already and the story of negative rate if any is that we don't get out of them that quickly so they all going to zero.. The theme could also be 10Y going up though. But Powell just killed your scenario and his buddy Trump just killed the 10Y shorts. What a team! So if I understand it correctly now all Wall Street is long rates... except China.. interesting...
  • TB
    Tim B.
    2 August 2019 @ 16:56
    Thanks for the update Raoul. A question for anyone. I'm not familiar with these types of trades and just looking to take a flyer, and potentially add if things take shape. On my screen I'm showing /GEZ20 Dec 2020 Eurodollar 99 calls for 0.25, not .10 as Raoul is suggesting. Would .25 still be a decent entry point? Cheers
    • AM
      Artur M.
      2 August 2019 @ 19:44
      No way, you are being ripped off. The highest was 0.165 lowest 0.135. Artur @Ar2go2 (twitter)
    • TB
      Tim B.
      2 August 2019 @ 19:58
      Thanks Artur! And I'll check out your Twitter feed. Cheers
  • MC
    Mathieu C.
    2 August 2019 @ 12:35
    Thanks Raoul for the update + the notification with email to stay updated on time. I have opened the copper on time and reversed my bonds position. I have been struggling for many years to become consistent and hopefully MI can help me to not be as scared as to trade the trend when it's hot instead of playing fake reversals! One thing I have been struggling with also is how to allocate properly a trade in your portfolio, I and possibly many other humans with fairly light balance will have a tendency to too much leveraged a portfolio as making 5% - 10% a year will not do much for them in terms of real value. But on long term at the end I am underperforming these numbers. I was wondering if you could by any chance make a short videos on that topic to share your experience as to how you're sizing your trades. Your balance might be quite different than the majority of the subscribers but I'd interested in listening to your experience/ Julian's on how to trade futures/ options efficiently with a fairly light balance of 20k - 50k USD when the margin is taking easily 10% of the account. We could also have the same discussion with balances between 50k - 200k USD. In my opinion this gets easier as the balance increases in terms of risk/reward. I'd be curious as to what you think about this and I am sure your insight and thought might be very valuable as always. Thanks!
    • MC
      Mathieu C.
      2 August 2019 @ 12:52
      As also a mean of making a small contribution on the macro front, the property market has become extremely hot in Thailand where I reside and the situation has been even degrading further this year. I understand that is the same or worse for the whole south east region. This cannot spell a bright future for now or later. Jan 19 https://www.thailand-business-news.com/real-estate/70844-ballooning-unsold-inventory-casts-shadow-on-thai-property-market.html
  • AA
    Alberto A.
    2 August 2019 @ 11:36
    Hi Raoul....any thoughts how far OTM the UUP calls....and month.....I have bought Dec 20 at 27/28 and very profitable so far....which strike price do you suggest to double down and month? Thanks
  • LM
    Lawrence M.
    1 August 2019 @ 20:17
    Thanks for the immediate update! Was hoping to see something following the Fed meeting/today's market activity. I opened accounts with Coinbase and Interactive Brokers two weeks ago, dipped into bitcoin, futures here I come. This service has really pushed me into educating myself on products/platforms I would have otherwise avoided. Very exciting (win or lose).
    • RP
      Raoul P. | Founder
      2 August 2019 @ 10:56
      Great!!
  • GP
    Greg P.
    1 August 2019 @ 23:22
    Hi Raoul - thanks for the flash update. A newish member to MI - and I find your passion intoxicating. Even my wife has noticed a change in my zest for the future. Just on your Eurodollar recommendation, I can only go out as far as Dec 2019 with my current broker. Do you have an alternative bond recommendation that addresses your current ED theme, or, is a position in ED19 sufficient? Thanks.
    • JQ
      JACK Q.
      2 August 2019 @ 01:08
      2yr fut expresses same view. ZT
    • RP
      Raoul P. | Founder
      2 August 2019 @ 10:55
      2 years futures
  • DB
    Daniel B.
    2 August 2019 @ 04:31
    Raoul, thanks for adding to my conviction on bonds; ED trading at anywhere 98 is a no-brainer Quick q on copper, is high-grade copper futures as good alternative to the copper futures you're quoting? I can see similarities in both charts, but wanted to check.
    • RP
      Raoul P. | Founder
      2 August 2019 @ 10:55
      Yes, one is US listed, the other is the London Metal Exchange but they are essentially the same
  • MD
    Michael D.
    2 August 2019 @ 07:34
    Not yet time to short EEM?
    • RP
      Raoul P. | Founder
      2 August 2019 @ 10:54
      Ha1 Was thinking of this this morning...its bloody close.
  • PM
    Philip M.
    2 August 2019 @ 05:50
    Hi Raoul, Thanks for your fantastic research. The last time I traded ED I got nearly 3x returns - only because I entered late. This time, given the VIX spike and the TrumpTwit intervention pushing it to 0.1550, would you wait for VIX to lower or eat the difference?
  • JQ
    JACK Q.
    2 August 2019 @ 02:43
    Ah! missed the cheap opportunity to add EDs...already moved again! looking forward to insider talk with julian this month!
  • MS
    Mark S.
    1 August 2019 @ 22:27
    Hi Raoul thanks for the update. When I do a search for Copper Miners etf i get only COPX but they don't have options. Were you thinking of anyone else?
  • DD
    Daljit D.
    1 August 2019 @ 21:07
    Thanks for the update. Guessing those ED calls have got pretty expensive after this tariff move. What are your views on ED's at these prices? Any one of those trades stand out to you more now?
  • KA
    Kelly A.
    1 August 2019 @ 21:03
    timely and helpful. thank you.