Flash Update – February 28, 2020

Published on: February 28th, 2020

Julian updates strategy within a disorderly fall in the market and suggests a framework for implementing next steps.


  • JA
    Joseph A.
    11 March 2020 @ 00:02
    Selling HYG is already not possible at some brokers. Fiscal stimulus started in Hong Kong where I will be given 10000 HKD cash helicopter money and also there is a raft of other small business related benefits such as registration fee rebates introduced to help residents through difficult economic times. Heck my internet provider even emailed me to offer a months rebated subscription for the same reason!
  • KG
    Kos G.
    1 March 2020 @ 12:40
    I remember Raoul suggested shorting HYG in his Doom Loop paper. Julian, would you give any suggestion about the price target and time frame of the trade?
    • HM
      Harry M. | Real Vision
      1 March 2020 @ 19:45
      Time frame? Not really, although I would keep a very close eye on BIZD US because these types of business development corporations should be even more sensitive than HVG to shifts in credit conditions. However when I talked to JB, he noted that the current COVID19 episode, had the potential to do as much short term damage as the mini-recession in 2016, and its at least as bad as the Fed induced equity sell-off at end 2018. Right now HYG is at 86.04. The end 2018 sell-off in equities saw HYG down to a low of 80. The 2016 mini-recession saw HYG bottom at 75. Will ask the question and see if he has specific levels in mind.
    • KG
      Kos G.
      6 March 2020 @ 10:30
      Harry, thank you for your reply! Are there any updates to the positioning from Raoul/Julian? Specially regarding "I may just send a one-liner over the next few days." and contingency sell advice.
    • KG
      Kos G.
      6 March 2020 @ 10:31
      but I guess no one will ever read these messages anyway. sad.
  • KG
    Kos G.
    6 March 2020 @ 10:28
    "I may just send a one-liner over the next few days." Julian, do you have any updates?
  • KG
    Kos G.
    3 March 2020 @ 17:48
    "For those of you who are looking for a trade, I suggest using any policy-driven bounce to sell HYG short. Action:Contingent sell of HYG into a modest bounce above 86.50." So did it happen today? Policy-driven bounce - check above 86.50 - check modest - relatively Yes/no/maybe?
  • MG
    Miguel G.
    2 March 2020 @ 16:35
    Julian on the trade sheet it shows you've been stopped out of long value/short growth pair trade. Should we get out of this trade as well as or do you still believe that value will outperform growth in 2020? A little confused by the trade sheet and your flash update that makes it sound like you're still in the trade. Clarification please and thank you.
  • RH
    Robert H.
    2 March 2020 @ 03:21
    Re: Reading and Studying Flash Update I'm using a computer that allows the text or typed words to be spoken and be copied and pasted into notes and reminders And it can also be printed. This last change to the site will not work for these functions. I'm thinking it is a minor adjustment. BTW It Worked in the Past.
  • JK
    James K.
    28 February 2020 @ 22:56
    Thanks Julian... Continue to hold TLT ...? Just missed that short on the markets, horse shoes and hand grenades, as they say.... Hahaha... next time .... Thx
    • HM
      Harry M. | Real Vision
      1 March 2020 @ 21:01
      Its not cheap. Top slice if you have plenty, and if you dont then maybe continue to hold. At these levels its not an efficient hedge for equities.
  • JQ
    JACK Q.
    29 February 2020 @ 01:29
    Julian thanks for update - a few questions 1. is now the time to add into steepener? Take some outright longs profit and start building steepener. 2. You mentioned HY. How about an IG portfolio? This past week outright long US IG had performed relatively ok against the duration effect. FRNs were the pain. If you had portfolio in US IG space how would you position yourself next?
    • TB
      Thibault B.
      29 February 2020 @ 07:27
      Short dated ED options have moved far, so I also consider steepeners as a better way to play hard and fast rate cuts at this point (the chart not having broken out yet). Overall japanification of the yield curve means the potential profits won’t be the same as in previous cycles but there should still be shook money to be made - I hope.
    • TB
      Thibault B.
      29 February 2020 @ 07:28
      *good money*
    • HM
      Harry M. | Real Vision
      1 March 2020 @ 20:59
      Depends which steepener you mean. I pulled up EDH0 vs EDH1. That's at -.56 which is its flattest for the laws 10 years. If you mean the bond curve, I understand your point. If you mean the ED curve we may have to go some way out the curve to play lower for longer. It seems like we have either really scared bond investors this time, or the market positioning was such they couldn't resist the buying. Do I like lower for longer? Yes I do. Do I think its not in the price relative to the absolute level of rates? Not sure. They both seem to be discounting a lot to me. I cant see an obvious free lunch.If anything looks funny its bond gamma. 1m 10y is now at roughly the same level as Aug last year. Up from about 55bps per year to 90 per year. But thats just me. Re IG, well its very easy to see how you could get rather paradoxical effects. Credit deterioration in the BBB or BB- space can actually increase demand for IG, as segmented credit funds try to avoid problems in more vulnerable credit spaces. I will ask JB, but if I was running a credit portfolio I would up head to higher quality and definitely stay away from things like BIZD or CLOs. Don't go into a trade or theatre where you don't know where the exit is. Best of luck
  • JR
    John R.
    29 February 2020 @ 02:35
    As to timing, what are your thoughts/likelihood on market bounce into Fed meeting on expectation of major cut/easing announcement, only to be disappointed and roll over into Q2? I know we need the bounce first, but just brainstorming.
    • HM
      Harry M. | Real Vision
      1 March 2020 @ 20:28
      Will reflect to JB but its a very tough question. So many variables its probably better to be responsive to pre-thought out scenarios. So consider the following policy responses. Simultaneous 1) Trump removing all China tariffs. 2) Fed cuts 50bps. The market could well rally 100 S&P points. Will it stay there? Well that would depend on how bad a Covid19 epidemic is in the US, and how much damage it does to S&P earnings. I can easily imagine the worst of all possible worlds. An extended period of infection and a dramatic reduction in social contact associated with the infection. No one going to restaurants, bars, sports games etc. How exactly would you get credit to SMEs that need it? A government guarantee? Maybe? But implementation would be slow. There was some comment from Rajan (ex BoI governor) that comes to mind. Central banks always need to pretend to have a bazooka up their sleeves. Im not sure they really have one this time. Imagine how the market trades the minute they realize the Fed is out of ammo?
  • AS
    Amit S.
    29 February 2020 @ 06:13
    Julian - your take on SLV, given stop was hit at 17.10, are we looking to re-enter the trade at some point?
    • HM
      Harry M. | Real Vision
      1 March 2020 @ 20:10
      Yes we are Amit. The "reports" suggest precious metal selling was caused by margin calls on equities. The likely policy response is only going to to be bullish for precious metals. That said, a stop is a stop. Discipline is the second most important thing in trading - after capital preservation! So we have to honor our stop. But JB is still longer term bullish.
  • JW
    J W.
    29 February 2020 @ 06:15
    Thanks Julian - this is a useful framework to ponder next steps. Here are some of my initial thoughts on current positions - I would be interested to read any comments: 1) since the probability of continued uncertainty is high there is no reason to sell Bonds (should we add right now ?); 2) Raoul made a strong case for a continued dollar exposure, at least for the medium term; 3) my comment on (1) also leads me to stick to Gold (Andreas mentioned a yr end target of 1900 and the gold community remains extremely bullish over the medium/long term); 4) I am fading into the silver sell-off because this is now a contrarian trade with a potentially great asymmetric risk/reward set up (but you have to take some pain in the short term); 5) Eurodollar futures (both Dec 2020 and 2021 contracts) continue to deliver and in Julian's piece the rate cut consensus means we should probably add; 6) I reduced my equity exposure significantly in the past few months so this correction has not impacted my portfolio in a major way. Andreas and others mentioned another two weeks of selling at least - the market fundamentals are still not reflected in the stock prices. I am currently resisting temptation to buy even quality stocks that have sold off. There is probably another 10-15 to go; 7) I am adding to BTC, buying the dips and looking for swing trades in Alts plus perhaps add to ET. Trading these markets is very risky but there are certainly trades to be done on the shorter timeframe. I have a long term outlook and can sit through some pain if the medium to long term reward is there.
    • JW
      J W.
      29 February 2020 @ 06:18
      ET _ I meant to type ETH, and this reminds me...RV team, pls allow us to edit these posts ! Thanks for considering this.
    • JW
      J W.
      1 March 2020 @ 07:02
      Well well - Raoul's latest flash update changes this perspective for sure - certainly on the short term ! Shows we have to stay flexible at all times.
    • HM
      Harry M. | Real Vision
      1 March 2020 @ 20:05
      Great questions. I will reflect but here's my two cents while I wait for JBs answer. 1) Add bonds? Well I can see why you might be even more bearish but the implied Fed Funds rate in Dec 2020 is now 68bps. The original recommendation was to buy EDs as a very cheap hedge for overvalued equities. Yes equities are still overvalued but the hedge is no longer cheap and the risk reward of the hedge is no longer asymmetric. Basically its not a good hedge anymore. That doesnt mean you might not like it as a trade. There are very good reasons to think economic activity will go to hell in a handbasket in the US. But I would suggest something like HVG as a more asymmetric risk reward compared with EDs now. On the dollar, there is a case, but I personally would be very interested to see what the market is telling me. Dollar has stopped rallying. It might continue, and especially vs EM. But I spoke to JB about this last night so I can tell you that he is very interested in the weekly TD13 count in EUR/USD. Its also sitting on a multiyear trendline. EUR and the DM before it has a tendency to hit its low or high for the year in Jan or Feb. JB is wondering whether it might be flagging a dollar turn. Two ways such a EUR turn could happen. The "good" way is we get Fed cuts and stocks stabilize - the dollar carry advantage is reduced and EUR gently rallies. The "bad" way is stocks keep dropping, Fed cuts but doesnt solve the problem and the "Dollar exceptionalism" trade unwinds, with the dollar selling off sharply against funding currencies like EUR and CHF but up against EM FX In Gold we hit our stops. I can understand continued bullishness. Im very bullish. The correlation with the number of negatively yielding assets is very strong and very intuitive. And if I were a Chinese investor I would definitely want more gold in my portfolio. But discipline is everything in trading and a stop is a stop. In the longer run I imagine we will look for an opportunity to go long, but the reports suggest that investors were receiving margin calls on their equities and needed to sell gold holdings to de-risk portfolios. Its certainly not the first time I have seen that kind of action. Same arguments pretty much for silver.
  • AP
    Alfonso P.
    1 March 2020 @ 03:18
    can’t see
  • M.
    Milton .. | Founder
    29 February 2020 @ 18:33
    Bringing the download link up top again for members who can't open it. https://drive.google.com/file/d/1SDUpX8ed-NIZVCXlIYXAFpWa6e0HsR6t/view
  • J
    Jim .
    29 February 2020 @ 17:46
    Unable to read as well on iPhone. Any suggestions? Thanks
  • JK
    James K.
    29 February 2020 @ 01:17
    Anyone know of an inverse etf for HYG ... ? Thanks ...
    • FN
      Fredrik N.
      29 February 2020 @ 16:30
      ProShares Short High Yield (SJB)
  • ml
    mark l.
    29 February 2020 @ 08:40
    Can’t read on iPad. Travelling so can’t access other option. Second report I can’t read. When will this be resolved.
    • DL
      Darryn L.
      29 February 2020 @ 09:21
      I am travelling also and have the same issue.
    • DL
      Darryn L.
      29 February 2020 @ 09:27
      i didn’t see the link below. That worked for me on my ipad through safari (copy and paste into address line)
  • DN
    David N.
    29 February 2020 @ 04:17
    Report not downloading
  • jS
    juan S.
    29 February 2020 @ 03:45
    Unable to download
  • GH
    Gabrielle H. | Real Vision
    28 February 2020 @ 23:31
    For those of you having technical difficulties accessing the PDF, here is a private link for members only: https://drive.google.com/file/d/1SDUpX8ed-NIZVCXlIYXAFpWa6e0HsR6t/view We're working on solving the issue.
  • CS
    Chuck S.
    28 February 2020 @ 23:21
    Can’t open.
  • WW
    William W.
    28 February 2020 @ 22:55
    Can’t open
  • KC
    KEVIN C.
    28 February 2020 @ 22:45
    Can’t see either!
    • MD
      Michael D.
      28 February 2020 @ 22:47
      Came up fine for me in private browsing mode, may be worth a try if not tried already.
  • MD
    Michael D.
    28 February 2020 @ 22:46
    When the macro picture becomes unusually complicated, it is worth every nickel of the RV membership fee to be able to turn to you and Raoul for context, analysis, and trade ideas. Thank you.
  • CS
    Christian S.
    28 February 2020 @ 22:42
    Can’t see

Mark Yusko

Morgan Creek Capital Management, Co- Founder, CEO, & CIO

Mark Yusko is the Founder, CEO and Chief Investment Officer of Morgan Creek Capital Management. He is also the Managing Partner of Morgan Creek Digital Assets.

Morgan Creek Capital Management was founded in 2004 and currently manages close to $2 billion in discretionary and non-discretionary assets. Prior to founding Morgan Creek, Mr. Yusko was CIO and Founder of UNC Management Company (UNCMC), the Endowment investment office for the University of North Carolina at Chapel Hill. Before that, he was Senior Investment Director for the University of Notre Dame Investment Office. Mr. Yusko has been at the forefront of institutional investing throughout his career. An early investor in alternative asset classes at Notre Dame, he brought the Endowment Model of investing to UNC, which contributed to significant performance gains for the Endowment. The Endowment Model is the cornerstone philosophy of Morgan Creek, as is the mandate to Invest in Innovation.

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MicroStrategy, Co-Founder

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Mr. Saylor attended the Massachusetts Institute of Technology, receiving an S.B. in Aeronautics and Astronautics and an S.B. in Science, Technology, and Society.

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Nugget's News, Founder & CEO

Alex Saunders is the founder and CEO of Nugget’s News, a digital media company focused on all things crypto. Alex has been captivated by cryptocurrency since 2012 and in 2017 he began educating globally on the benefits of cryptocurrency and how to safely acquireit. Nugget’s News has been listed as a top-20 podcast by Business Insider, ShapeShift and Lifehacker and has over 120k YouTube subscribers with 9 million total views.Alex is also heavily focused on his cryptocurrency education platform Collective Shift which currently serves over 4,500 members. provides his unique perspectives by utilising his expertise in fundamental analysis, technical analysis and market sentiment. He is working towards his mission of making it easier for everyone to understand the financial world.

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TradeStation Crypto, Inc., Sr. Director of Product Strategy

James helped launch TradeStation Crypto’s offering which utilizes a true online brokerage model that self-directed investors and traders have come to expect for equities, futures, and foreign currency markets. He is a reputed crypto asset specialist and blockchain thought leader focused on helping people find innovative ways to participate in this space. He is active in the blockchain community with speaking engagements, TV appearances and mentoring. James has over 15 years of experience in the Fintech industry.

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Real Vision, Co-Founder & CEO

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Other stop-off points on the way were NatWest Markets and HSBC, although he began his career by training traders in technical analysis.

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What Bitcoin Did, Journalist

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Avanti Financial Group, Founder & CEO

22-year Wall Street veteran who has been active in bitcoin and blockchain since 2012. In 2018-20 she led the charge to make her native state of Wyoming an oasis for blockchain companies in the US, where she helped Wyoming enact 20 blockchain-enabling laws. From 2016-18 she jointly spearheaded a blockchain project for delivering market index data to Vanguard as chairman and president of Symbiont, an enterprise blockchain start-up. Caitlin ran Morgan Stanley’s pension solutions business (2007-2016), heldsenior roles at Credit Suisse (1997-2007) and began her career at Salomon Brothers (1994-1997). She is a graduate of Harvard Law School (JD, 1994), the Kennedy School of Government (MPP, 1994) and the University of Wyoming (BA, 1990).

Hunter Horsley

Bitwise Asset Management, CEO

Hunter Horsley is Chief Executive Officer of Bitwise Asset Management. Prior to Bitwise, he was a product manager at Facebook, working on advertiser products including the multibillion-dollar sponsored content ecosystem and ad breaks in videos. Before Facebook, Horlsey was a product manager at Instagram, responsible for multiple advertising products generating several hundred million dollars of revenue. He is a graduate of the Wharton School at the University of Pennsylvania, with a B.S. in economics. Recently, Horsley was named a member of Forbes’ 2019 “30 Under 30” list.

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FFTT caters to institutions and sophisticated individuals by aggregating a wide variety of macroeconomic, thematic and sector trends in an unconventional manner to identify investable developing economic bottlenecks for his clients. Prior to founding FFTT, Luke was a founding partner of Cleveland Research Company, where he worked from 2006-14. At CRC, Luke worked in sales and edited CRC’s flagship weekly thematic research summary piece (“Straight from the Source”) for the firm’s clients. Prior to that, Luke was a partner at Midwest Research, where he worked in equity research and sales from 1996-2006. While in sales, Luke was a founding editor of Midwest’s widely-read weekly thematic summary (“Heard in the Midwest”) for the firm’s clients, in which he aggregated and combined proprietary research from Midwest with inputs from other sources.

Luke Gromen holds a BBA in Finance and Accounting from the University of Cincinnati and received his MBA from Case Western Reserve University. He earned the CFA designation in 2003.

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CoinShares, Chief Strategy Officer

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Previously, she was part of the founding team of Digital Currency Group. As a veteran investor in the digital currency space, she has invested in over 250 companies in the ecosystem.

Meltem is passionate about education and advocacy, and teaches the Oxford Blockchain Strategy Programme and co-chairs the WEF Cryptocurrency Council.