Flash Update – January 24, 2020

Published on: January 24th, 2020

Buy bonds, wear diamonds (again) …


  • RP
    Raoul P. | Founder
    27 January 2020 @ 13:10
    Just some more answers - Why Eurodollars? They are massively liquid, offer big leverage and frankly Im used to using them. Sure you can use Fed funds or an equity that gives short dated bond exposure. Why 10 years? They are massively liquid, offer big leverage and frankly Im used to using them. You can used 30 years TLT or whatever. As you can tell, Im not an exactist. Its whatever works for you. I just use what I know and am comfortable with. Eurodollar options - Yes, I still like them. In the fast moving markets I like my core position as futures. I tend to then layer in options for increased upside but more managed downside risk. How do you protect yourself using so much leverage? I use stops where I am prepared to lose % of NAV on the position. I add all of those up to get the uncorrelated risk that I am running at any one time. So if I have 5 positions all with 2% of NAV at risk and if the shit hits the fan, I should be able to only suffer a max drawdown of 10% (give or take gap risk - which you need to be prepared for). Yes, I like gold and bitcoin but those are bets on systemic issues and are based on a different premise of the End Game, not global slowdown. Different bets. Bonds work best. I don't like shorting equities for this kind of thing as they are still in a bubble and are ever inexact when it comes to trading economic cycles. There will be a time where I will take more equity risk but bonds offer much superior risk adjusted returns. I don't like trading the VIX. It is too volatile, mean reverting and expensive. I'll leave that to the option arb professionals but that is just me. And yes, I love the dollar and will add at some point but I have plenty yon but have been small underwater for a bit in that trade so lets get some profits so we can add on the front foot.
    • IB
      Ivan B.
      27 January 2020 @ 14:53
      Raoul, thank you for the update and answering some of the questions. Is it possible to provide a bit more information in your trade recommendations e.g. with your ED call option trade you provided in the comments below price ranges where this trade would make more sense. Would be also good to know the levels you're looking at for ED futures entry/exit points? Same with 10 Year Bonds futures. I'm not sure if it's possible, but it would be helpful for less experienced subscribers to get as much info as possible to implement and manage these trades. Thank you, Ivan
    • RP
      Raoul P. | Founder
      27 January 2020 @ 15:12
      Ivan - thanks for this but we really can't give all the stops, profits, etc for each person. Its not what the service does really and it should spur you to search for your own answers to your specific needs. If not, we run the risk of running your positions for you, with all the fiduciary risk and legal risk that entails...
    • IB
      Ivan B.
      30 January 2020 @ 10:02
      Raoul, I appreciate your time answering my questions. I should have made it more clear, I am not asking or expecting you to provide personalised stops or profit targets. I understand this is not what MI is about, it's not a trading service. However, I do think giving some price ranges in case of EDs or ZN/TLT for example would be very useful. Futures market can move very fast and there could be a time lag between publishing an update and reading it so knowing at what levels a trade make sense to you is handy. I found your comment to Tim H. question below on how much to pay for the EDZ21 call is what was missing. Just a price range and your logic behind it - priceless :) Anyway, this is just my feedback and I appreciate all you and Julian do.
  • FK
    Firoze K.
    27 January 2020 @ 12:15
    Would IBTL be an alternative to TLT for Brits investing in ISAs?
    • RP
      Raoul P. | Founder
      27 January 2020 @ 12:54
      Yup. Perfectly find. Uk gilts are good too. Just gov bonds in general. But prefer the US.
    • JL
      J L.
      27 January 2020 @ 16:04
      those GBP denominated treasury ETFs are a gem in the expensive ISA brokers
    • FK
      Firoze K.
      27 January 2020 @ 16:55
      Thanks for the prompt response Raoul, very much appreciated!
  • MZ
    Matthew Z.
    27 January 2020 @ 02:24
    If the fed takes rates to zero - every dollar in US money market accounts leaves within 90 days. Does the fed just write the check?
    • RP
      Raoul P. | Founder
      27 January 2020 @ 12:53
      That is not the experience in UK, EU, Switzerland etc.
    • MZ
      Matthew Z.
      27 January 2020 @ 14:23
      Thanks for the reply. I didn't know that but it's interesting - I'm an advisor in the US, 60 mil in aum (so I'm no one). Among my clients, I know of at least 10 mil that flowed to MM's to acquire that 2% yield once it showed up (not all money i have under management - clients w cash). I can tell you advisors sought these funds that were actually paying interest because it had been so long since they did. This is going to be interesting.....
  • CP
    CRAIG P.
    27 January 2020 @ 01:24
    Raoul, Observation: A year back, like Walther, I also asked about your seemingly synonymous use of the words 10 year treasuries and TLT. I noticed after you replied then that you seemed to stop interchanging the two. I’m glad you are clarifying here that there is a difference (10 years of maturity) between the two. Question: I always wondered that if one is expecting a significant decline in longer term interest rates, why use a 10 year treasury vehicle over TLT?
    • RP
      Raoul P. | Founder
      27 January 2020 @ 12:52
      Its just what I am used to 10 yr bond futures while others are used to TLT. I am not fussed about the different duration.
  • BS
    Bevyn S.
    25 January 2020 @ 02:15
    Been watching this TLT and EUR/USD breakout...! Interesting how this is happening even with the repo operations (QE4). Quite telling!
    • WM
      Will M.
      25 January 2020 @ 15:42
      The Repo operations are not QE. They are designed to keep short rates low, not purchase longer term bond assets to keep long rates low.
    • BS
      Bevyn S.
      27 January 2020 @ 02:38
      'Traditional' US QE and repo operations both expand the monetary base, and the path of liquidity certainly matters. If the dollar is breaking out, and it's a sign of more dollar funding issues, it may need to become QE4 (or something else) soon. It'll be interesting to see if the bond and dollar breakouts hold.
  • RP
    Raoul P. | Founder
    26 January 2020 @ 23:27
    Im going to be sending out an update tomorrow...ASAP. Im going to full risk in bonds immediately.
    • YO
      Yoshitaka O.
      27 January 2020 @ 02:10
      Looking forward Raoul!
  • TH
    Trina H.
    25 January 2020 @ 16:56
    Can you please explain the risk of loss on the Eurodollar trade. Is there potential to lose the entire investment? Or more than the entire investment? Some guidance is appreciated.
    • RP
      Raoul P. | Founder
      25 January 2020 @ 20:44
      These are high leverage futures contracts so yes, you have larger risks, best stick to TLT if you aren’t comfortable with futures. But to trade them, you can just out in a stop loss of,the a,limit you are prepared to lose.
    • IB
      Ivan B.
      26 January 2020 @ 07:04
      Raoul, isn’t the suggested Eurodollar call option trade has limited downside e.g. risk of losing only premium paid for the option?
  • WD
    Walther D.
    25 January 2020 @ 14:19
    Raul - Sorry for the potentially dumb question. You talk about 10 year bonds but TLT is 20 year maturity - how should we think about this? Or your recommendation simply long dated treasuries ?
    • JI
      Janne I.
      25 January 2020 @ 15:28
      I was thinking about this same question. I hope someone can clarify this.
    • CS
      Cameron S.
      25 January 2020 @ 18:30
      I think if you're trading futures, the go to is the 10 year. But if you're not trading futures, the best available ETF would be TLT. So it's kind of an either-or depending on what you are trading.
    • JL
      J L.
      25 January 2020 @ 19:47
      There's the IEF ETF 7-10 years but of course not very punchy if you can't leverage it, perhaps therefore a recommendation to use TLT
    • RP
      Raoul P. | Founder
      25 January 2020 @ 20:43
      I just use it as a proxy. It should still work.
  • ZW
    ZH W.
    25 January 2020 @ 04:39
    Raoul, what is your opinion on steepener trades ? 2s/10s and ED6/12. Thanks!
    • RP
      Raoul P. | Founder
      25 January 2020 @ 13:59
      I like them for the longer term. I am long for GMI, but curve might flatten a bit more until we see the next rate cut. Then this trade will pay off very well (but so will ED's and bonds!).
  • TH
    Tim H.
    24 January 2020 @ 22:18
    Hi raoul how much to pay at the maximum for the dec 2021 call you mentioned?
    • RP
      Raoul P. | Founder
      25 January 2020 @ 00:31
      I think we can get to 100, so wouldn't pay more than 15, I go to a shorter dated contract and lower the strike but I don't like options without at least a 3:1 upside and prefer to look for 5:1 +
  • JK
    John K.
    24 January 2020 @ 22:19
    @Raoul, if we had joined you in the Eurodollar positioning for the GE Dec 2020 calls at a 99 strike, should we (a) leave them alone and let them appreciate, or (b) roll them over to the furthest out in time contracts, which appear to be the GE Mar 2021 contracts in IB, or (c) wait to roll them over once the GE Dec 2021 calls are available to roll to, if time/contract terms permit them to roll that far out? Thank you, sir. Regards, John K.
    • RP
      Raoul P. | Founder
      25 January 2020 @ 00:29
      Leave them and add more in 2021... that is what I am suggesting.
  • JW
    John W.
    24 January 2020 @ 21:16
    I took a half position with a TLT Sept 20 Call @ $145. There is a Jan 2022 option offered. If I want to mirror Raoul's December 2021 Euro Dollar call with my othere half position how high should I set my TLT strike? Thanks.
    • RP
      Raoul P. | Founder
      24 January 2020 @ 22:05
      It’s tricky because the yield curve moves. Look for a strike just above the August highs. That should be fine. Look for 20 delta or 30 delta calls, depending on your view.
  • MS
    Mark S.
    24 January 2020 @ 21:50
    Raoul If there is rate cuts starting in the next 3 months, is there greater leaverage to going for the ED with a closer expiry? Say Jun 21 or Dec 20? Thanks in advance.
    • RP
      Raoul P. | Founder
      24 January 2020 @ 22:03
      Yes, I’m long Dec 2020 99 calls still too

Mark Yusko

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

Mark Yuskois 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. Mr. Yusko is again at the forefront of investing through Morgan Creek Digital Assets, which was formed in 2018. Morgan Creek Digital is an early stage investor in blockchain technology, digital currency and digital assets through the firm’s Venture Capital and Digital Asset Index Fund.Mr. Yusko received a BA with Honors from the University of Notre Dame and an MBA in Accounting and Finance from the University of Chicago.

Anthony Scaramucci

SkyBridge Capital, Founder & Co-Managing Partner

Prior to founding SkyBridge in 2005, Scaramucci co-founded investment partnership Oscar Capital Management, which was sold to Neuberger Berman, LLC in 2001. Earlier, he was a vice president in Private Wealth Management at Goldman Sachs & Co. In 2016, Scaramucci was ranked #85 in Worth Magazine’sPower 100: The 100 Most Powerful People in Global Finance. In 2011, he received Ernst & Young’s “Entrepreneur of the Year –New York” Award in the Financial Services category. Anthony is amember of the Council on Foreign Relations (CFR), vice chair of the Kennedy Center Corporate Fund Board, a board member of both The Brain Tumor Foundation and Business Executives for National Security (BENS), and a Trustee of the United States Olympic & Paralympic Foundation. He was a member of the New York City Financial Services Advisory Committee from 2007 to 2012. In November 2016, he was named to President-Elect Trump’s 16-person Presidential Transition Team Executive Committee. In June 2017, he wasnamed the Chief Strategy Officer of the EXIM Bank. He served as the White House Communications Director for a period in July 2017. Scaramucci, a native of Long Island, New York, holds a Bachelor of Arts degree in Economics from Tufts University and a Juris Doctor from Harvard Law School.

Michael Saylor

MicroStrategy, Co-Founder

Mr. Saylor is a technologist, entrepreneur, business executive, philanthropist, and best-selling author. He currently serves as Chairman of the Board of Directors and Chief Executive Office of MicroStrategy, Inc. (MSTR). Since co-founding the company at the age of 24, Mr. Saylor has built MicroStrategy into a global leader in business intelligence, mobile software, and cloud-based services. In 2012, he authoredThe Mobile Wave: How Mobile Intelligence Will Change Everything, which earned a spot onThe NewYork TimesBest Sellers list. 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.

Alex Saunders

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.

James Putra

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

James helped launch TradeStation Crypto’s offeringwhichutilizesa 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 innovativeways 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.

Raoul Pal

Real Vision, Co-Founder & CEO

Raoul Pal is the Co-Founder and CEO of Real Vision, the world’s pre-eminent financial media platform, which helps members understand the complex world of finance, business, and the global economy. Real Vision members also have access to Real Vision Crypto, a cryptocurrency and digital assets video channelwatched by over 80,000 people.In addition, Raoul has been publishing Global Macro Investor since January 2005 to provide original, high quality, quantifiable and easily readable research for the global macro investment community hedge funds, family offices, pension funds and sovereign wealth funds. It draws on his considerable 31 years of experience in advising hedge funds and managing a global macro hedge fund. Global Macro Investor has one of the very best, proven track records of any newsletter in the industry, producing extremely positive returns in eight out of the last twelve years. He retired from managing client money at the age of 36 in 2004 and now lives in the tiny Caribbean island of Little Cayman in the Cayman Islands. Previously he co-managed the GLG Global Macro Fund in London for GLG Partners, one of the largest hedge fund groups in the world. Raoul moved to GLG from Goldman Sachs where he co-managed the hedge fund sales business in Equities and Equity Derivatives in Europe. In this role, Raoul established strong relationships with many of the world’s pre-eminent hedge funds, learning from their styles and experiences. Other stop-off points on the way were NatWest Markets and HSBC, although hebegan his career by training traders in technical analysis.

Peter McCormack

What Bitcoin Did, Journalist

Peter McCormack is a full timejournalist/podcaster covering topics such as Freedom, Human Rights, Censorship and Bitcoin. Peter created and hosts the What Bitcoin Did Podcast, a twice-weekly Bitcoin podcast where he interviews experts in the world of Bitcoin development, privacy, investment and adoption. Launched in November of 2017, the podcast has grown to over 100 episodes with a guest list that is a testament to the diversity of knowledge and opinions that represent the broader Bitcoin community. Expanding his growing list of humaninterest recordings, documentaries and films Peter has recently launched theDefiancepodcast andDefianceTV.

Caitlin Long

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.

Luke Gromen

Forest For The Trees, Founder & President

Luke Gromen has 25 years of experience in equity research, equity research sales, and as a macro/thematic analyst.He is the founder and president of macro/thematic research firm FFTT, LLC, which he founded in early 2014 to address and leverage the opportunity he saw created by applying what clientsand former colleagues consistently described as a “unique ability to connect the dots” during a time when he saw an increasing “silo-ing” of perspectives occurring on Wall Street and in corporate America.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 whichhe 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.

Meltem Demirors

CoinShares, Chief Strategy Officer

Meltem Demirors is Chief Strategy Officer of CoinShares, an investment firm that manages billions in assets on behalf of a global investor base, and is a trusted partner to investors and entrepreneurs navigating the digital asset ecosystem. Meltemoversees the firm’s managed strategies group and its New York office and leads corporate development. 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.