Flash Update – August 10 2018

Published on: August 10th, 2018

Raoul’s framework has triggered a few opportunities that require urgent attention… Published August 10, 2018.

Comments

  • SD
    S D.
    19 April 2019 @ 02:59
    Hi Raoul I've been listening again to Bass's interviews on China during some long drives I've had to do and I think they're really significant. I'm referring to his interview with you on the currency, and also with Bannon - and it's shocking that Bannon's world view is so poorly or little understood because it's compelling, logical, and convincing. But I have two questions: 1. How do projections for the gold price play into Bass's view that an impending dollar shortage is going to cripple China. Surely they will have anticipated precisely what Bass is expecting, and they will have a mitigation strategy designed to exploit the situation, above and beyond what you two refer to - opening up their financial sector to shove a bunch of bad debt on to America's balance sheet. We don't know how much gold they have, but we do know they have masses and continue to acquire more. Why then, are countries like Canada and the UK failing to shore up their own reserves? Would a gold buying program by either of these countries be seen as somehow disloyal to the US, and the US dollar? What is the rationale for a refusal to insure a nation against currency disruption by at least having some sort of commitment to bullion of various types? This all strikes me as profoundly political, because it's so essential. 2. You seem to imply that the impending dollar shortage you've been talking about now for nearly two years may be politically motivated a la Russia. Is this correct? If so, can we please hear more about this. And about anything at all to do with expectations of how China anticipates any type of movement towards convertibility, which you guys believe is inevitable, for sound reasons, seems like. This all just strikes me as stupendously important but it's never discussed, and I wonder if that's because the mainstream media remains so adamantly allergic to anything Trump they cannot stand to contemplate the basis or rationale for his world view, and thus, the world is being deprived of necessary information to allow for preparation for what sound like a fairly seismic shift. I realise there are other factors here, but restricting the frame to yuan convertibility makes sense given the daily drip feed of news on China credit at the moment, especially in the context of trade. You have provided really essential context on these issues. Please continue to pursue this issue, it would be appreciated greatly.
  • DY
    Dmytro Y.
    29 September 2018 @ 14:04
    1.5 month later all these ideas did not work out. EEM is not down. USD is down. I have a growing frustration for MI and RV advise and ideas in general....track record seems poor. Sorry but saying as it feels
  • SD
    S D.
    17 August 2018 @ 03:06
    I was uncertain about resubscribing but your recent offerings are strong proof of value and I'm glad I did. Thank you both.
  • TR
    Todd R.
    15 August 2018 @ 17:45
    this is excellent thanks!
  • DY
    Dmytro Y.
    13 August 2018 @ 13:28
    Raoul, thanks for your last flash update. however i think this needs to be more specific. 1) Where do you see Gold going here given your USD view? 2)what liquid instruments to make your suggested trades in USD and TLT you can advise where trade can be done via liquid options, including selling options. 3rd part of this question is abt instruments with liquidity & availability of longer dated options such as 6-12 mths forward, not just very short term dated futures-options as basically is the case for TLT & UUP (short dated & also very wide bid-ask spreads). Thank you
    • DY
      Dmytro Y.
      13 August 2018 @ 13:30
      Gents (Raoul and Julian). Excuse me but a) there needs to be a forum or a way to ask the questions and to get answers. This membership is not cheap and we should be able to obtain the replies. B) targets have to be more specific. What levels in EEM you expect, what levels in USD vs EUR or etc. What vehicles to trade. Given the cost of this product the contents and advise need to be really improved.
    • TS
      Tyler S.
      14 August 2018 @ 16:39
      I agree with Dmytro y. there has to be some kind of basic interaction.
    • RP
      Raoul P. | Founder
      15 August 2018 @ 14:31
      We have been quite clear from the outset that our role is not to run anyones positions or give some tip sheet of trades. Our job is to show you the themes and the ideas that can help you make your own investment decisions. We charge $40,000 a year for open access to us via GMI and MI2, our full research service, and even there we don't necessarily chose a specific instrument for people, they follow our themes and recommendations and choose their own risk profile. MI has many subscribers of different skills and knowledge and its impossible to take those into account. Many people have differtent brokerage accounts too - some like Saxo and IB allow for more complex trades and others dont. We are as specific as we can be considering all of this. We are going to be creating a larger forum for discussion but again, Julian and I arent there to answer every question that thousands of people have, as its just not feasible nor desirable. I hope that explains things a bit.
    • TB
      Tim B.
      15 August 2018 @ 17:17
      Hi Raoul, That EEM trade is off to a brisk start! Thanks MI. I'm glad to hear you're looking to create a larger forum for discussion. As great and as revolutionary as the RV world is, I for one certainly feel that a richer environment for cross-pollination among subscribers would help in enabling smaller subsets of the RV subscriber base to collaborate and share ideas. Cheers
  • TA
    T A.
    13 August 2018 @ 18:45
    thanks Raoul what is your view on gold if this is the case ? I remember once you mentioned USD and gold MIGHT rise together ! however, this wasn't the case ! im wondering if there is anything to do to hedge gold position( bullion) as USD heading higher . dispite gold being as insurance policy ... losing that much % in just few months is quite awful
    • RP
      Raoul P. | Founder
      15 August 2018 @ 14:33
      Julian gave a great trade idea in a dollar hedged Gold trade, that might well be your answer. For GMI I have been long gold vs a basket of non-dollar currencies for a while. It hasnt really performed but hasnt lost money yet either
  • RK
    Robert K.
    12 August 2018 @ 18:50
    FYI: Betting on USD strength was something I've jumped on earlier. What worked for me so far is going long USDZAR. There are more factors which will make this pair fly further (I am still in it). Note: this pair is extremely volatile - but very tradeable.
    • RK
      Robert K.
      13 August 2018 @ 17:34
      I am proven correct often but not this fast ... (look at the USDZAR action).
  • PM
    Philip M.
    12 August 2018 @ 07:13
    How to size? on a typical fx trade, 8-10x leverage / 1% of portfolio stop? Or do you measure with ATR? And if trading outside majors? Would also appreciate more charting advice for trade management. Thanks for all the great content...
    • RK
      Robert K.
      12 August 2018 @ 18:52
      I would suggest that "being all in" with max 3x leverage. Risk only 2% of your NAV. 10x leverage is bananas.
  • MB
    Markus B.
    12 August 2018 @ 10:46
    Raoul, thanks - very helpful. Would you recommend a short position in gold and metals as well?
  • SR
    Steve R.
    12 August 2018 @ 08:03
    Having just read/analysed a whole shed load of data over the past couple of days, I now tend to think Raoul's view on US Bonds may be the right one. This is also supported by recent work from Peter Brandt (technicals) and Charles Gave (fundamentals). With the rest of the world slowly falling behind the US, when the US does finally crack, where else are investors going to park their money? I would argue, a large amount will head straight to US bonds in an instant.
  • RM
    R M.
    10 August 2018 @ 18:19
    Thanks for posting, Raoul! What about $Yen, you have mentioned this in past?
    • RP
      Raoul P. | Founder
      11 August 2018 @ 08:37
      Im still not clear on it so best leave it for now
  • RS
    Rajesh S.
    10 August 2018 @ 19:12
    Not Comfortable shorting EEM. Is there any other instrument that can express that view. Looking at option a put spread.
    • B
      Bob .
      11 August 2018 @ 07:26
      EUM is a -1X of EEM It is clean and easy, and liquid. It has an annual expense of .95%. Proshares also has a -2X and -3X version if you are so inclined.
  • LM
    Lawrence M.
    10 August 2018 @ 22:15
    Thanks Raul! I appreciate you including an ETF option (UUP), I know ETFs aren't always the best way to handle a trade but It's much easier for someone like me (never traded currencies, can't trade currencies with my broker, don't want to pay monthly fees to Interactive Brokers / some others). Just adding some more UUP is simple enough for anyone :)
    • AS
      Armando S.
      11 August 2018 @ 00:10
      ETFs are certainly easy to use. If you have views on the dollar and trade them from time to time, you might want to consider a cheaper option at some point down the line. UUP expense ratio is .79% on a low vol, unlevered exposure, so you need a lot of it at that fee to have any impact on your portfolio. (And at around 6% vol, the dollar might move a few percent--the fee will eat a lot of that.) You mention IB, where you can trade the same underlying USDX futures contract that UUP wraps, at something like $2 per contract (nearly $100k notional exposure per contract)--much cheaper. These are also tax efficient for short term trades (in Raoul's case, a 3 month horizon). There is no monthly fee at IB except for very small accounts that are also very inactive with trades.
  • YJ
    Yvonne J.
    10 August 2018 @ 17:59
    I am not comfortable shorting FX yet so what do you think UUP instead? Thanks much!
    • EF
      Eric F.
      10 August 2018 @ 19:50
      Well it’s not a short but is a recommendation. Raoul also says it could retrace so maybe look at the chart and set yourself an entry price with alert. I haven’t checked options but alternatively buy a call? You then limit downside but have open upside. Really wish there was a forum where we could take Raoul’s (and Julian’s) trade recommendations for further discussion.
    • AS
      Armando S.
      10 August 2018 @ 23:42
      Raoul mentions UUP as an option in the piece. All FX trades are pairs--long one currency vs short another. UUP is simply a wrapper around usdx futures, which is long the us dollar vs short a basket of currencies. If you make a dollar trade, you must be comfortable with shorting something :) Probably the most efficient way for a retail investor to implement long USD/short other currencies is with currency futures. Though I would not really recommend this to a retail investor who is not comfortable with leverage, position sizing, risk management, portfolio construction...
  • MH
    Marc H.
    10 August 2018 @ 17:25
    Why can’t Trump have his weak dollar? It would make US exports cheaper and foreign imports more expensive, which would likely decrease trade deficit. It might blow up the budget deficit since It may deter purchases of treasuries down the road but I don’t think he cares about that.
    • EF
      Eric F.
      10 August 2018 @ 19:52
      My take Marc is he can’t have it because his actions are inconsistent with achieving this. It’s maybe what he wants but talking it into existence is not enough.
  • SD
    S D.
    10 August 2018 @ 17:33
    Thank you Raoul.