Flash Update – January 31, 2020

Published on: January 31st, 2020

Julian has been an underwhelmed, FOMO bull but now has the catalyst to turn bearish as the technicals roll over. He initiates short positions in NDX and Apple, and addresses tactics on USDMXN.


  • MG
    Miguel G.
    2 February 2020 @ 17:45
    Julian, with China announcing stimulus measures what kind of implications would this have on the US dollar? Shouldn't this keep the dollar big and possibly open the door to that napalm move in the dollar we've been waiting so long for?
    • HM
      Harry M.
      11 February 2020 @ 13:33
      Miguel, you are right. We have been caught out by what now looks like a bear capitulation in equities. We tried to pick the stock market top given what looked like favorable risk-reward and technicals and got stopped out in the indices. The institutional consensus view was that US equities are expensive, and so is the US dollar. That view is getting hammered right now. No idea when this capitulation move ends. One explanation might be that the market is starting to discount a Trump win in the elections. Or at least an election between Trump and Bloomberg, which might be viewed as a "win-win". Whatever the reason, the dollar is very strong
    • MG
      Miguel G.
      12 February 2020 @ 17:23
      And Harry with the dollar now breaking out to 2 year highs isnt this a problem for further easing out of China? Until the fed capitulates in the US and tops the dollar doesnt this tie Chinas hands behind their back to continue to try and stimulate their economy without risk of losing their currency?
    • MG
      Miguel G.
      12 February 2020 @ 17:28
      Im just trying to talk this process through step by step and its becoming more clear to me that in order for the reflation bulls to get what they want they need to have the fed admit that their still to tight. The only logical way I see that happening is with equity pressure. Just all seems to point to some kind of selling coming in to this market in the near future. Am I thinking about this correctly?
  • df
    diamantino f.
    31 January 2020 @ 22:20
    Thanks Julian, although shorting Apple feels like getting drunk on beer without alcohol :)
    • HM
      Harry M.
      11 February 2020 @ 13:40
      Lol. I know exactly what you mean. Stops are our friends.
  • DB
    Daniel B.
    4 February 2020 @ 02:49
    Julian, concise and detailed update as always. AAPL was mentioned as a beneficiary of the repo injections in your last Insider Talks with Raoul, what about TSLA right now? Low short interest and potential to slow the balance sheet expansion by the Fed could see this drop faster than AAPL? Understand if AAPL is just the safer bet. Cheers
    • HM
      Harry M.
      11 February 2020 @ 13:39
      "Safer bet". Absolutely right Daniel. Tesla is a very scary short. I personally had a short in it and covered with quite a black eye. Some very smart short sellers hate the stock. Its extensive short base and committed following has made it a gamblers play. Very tempting to take a swing at it for all sorts of reasons, but its just so volatile that its very hard to recommend shorting it as a thematic trade. Still, I cant help but think of it as a "Northern Oil and Gas". But that's a personal observation - not a recommendation!
  • JA
    Joseph A.
    1 February 2020 @ 05:42
    Some technical and risk observations. Assuming entries are possible Sunday futures/Monday at the levels stated. Risk Reward Ratio (RRR) for SPX 0.67:1, NDX 2:1, Apple 2.28:1 with NDX and Apple correlated somewhat so double the risk if two full positions entered. Otherwise half each to manage correlated risk? (Somewhat rhetorical question to highlight what having both positions on could entail risk-wise). IWV/IVE ratio entry was at 1.48 now 1.56 against (hit 1.58 at one point). Suggesting to double down on the losing position? Although I do accept the thinking behind the IWV/IVE thesis and that it should play out eventually possibly quite soon with the latest moves. NDX stop is interesting compared to SPX stop. 9450 on the NDX a fair bit higher stop above the high than the SPX stop above the high both in % terms and comparative volatility measurement terms (using daily ATR (14) for example). Can you explain a bit more behind why you chose those stops relatively speaking? SPX target doesn't seem to be a good RRR with a target of 3150 that appears a bit arbitrary compared to the NDX target of 8250 which is both more aggressive and more of a likely support area. I am guessing that is possibly due to your bias with reference to rotation out of growth/tech into value reflected partly in a more aggressive stance on the NDX vs SPX? Silver and gold looking bullish after their pullbacks post Iran. I note you haven't mentioned silver or adding to silver here. Any particular reason or that you feel it is still chart challenged after the Iran strikes pull back (likewise for gold)? Fundamentally it appears supported by a weaker dollar but challenged by a currently dead reflation thesis for now? Although I note the USD/MXN risk/reflation issue in this piece which I would like some embellishment on why it is no longer a suitable trade because like Raoul I never had an opinion on this trade idea having never followed USD/MXN myself before you mentioned it so I don't have as good a grasp on what is driving it's recent rise back towards the entry price. I appreciate that you might be addressing some/all of the above in the upcoming presumably 1st February trade recommendations publication hopefully also before the weekend is out. By the way the email notification of this flash update only came through for me half an hour before the close of US markets. Thanks.
    • HM
      Harry M.
      1 February 2020 @ 14:47
      All good questions. Its true that the trade involves doubling from a losing position. Some people explicitly reject doing this in their trading style. Others only double losers, because entry position is more important than reinforcing performing trades and cutting losers. In the case of the growth value, JB argues that the trade has suffered from what has been a momentum driven market. Value is very cheap, growth arguably reflecting a bubble. The breaking of this sentiment is critical to the performance of the trade, so the weakness in Nasdaq despite the strong results announced by Apple, Tesla, Amazon etc is very telling. Using a Bayesian inference type approach, the additional information is much more supportive of the trade now, so because conviction is higher the risk taken by the trade is higher. Adding to that is the series of strong technical indicators of Momentum exhaustion. The number of TD13 counts. The very clear ABC pattern in the equity indices (Nasdaq and S&P). Re:targets and risk rewards, the S&P stop selected was the old high. A tighter stop could have been used such as interim highs. Because the old high was used the risk reward on the trade is very close to 50:50. The target is arrived at by technical analysis. However even analysts suffer from "slippage". This note was written a day earlier but because of delays in updating charts etc was released as the market broke (unfortunate). We would recommend traders apply judgement either to the stop (tighter) or the target, which may easily turn out to be overly conservative. We remain bullish silver and gold. On MXN, a risk-off trade in US equity indices (global leaders in risk) is no time for long EM fx risk. The situation in BRL and MXN looks concerning in the circumstances. Long MXN is definitely a crowded trade, and crowded EM trades are unsafe places to hang around in during a global risk off. I apologize for the delay in this reaching you. It was my fault. My email suggested it came out at 1.30pm EST, but that is still too late.
    • JA
      Joseph A.
      1 February 2020 @ 18:02
      Thank you Harry. “No further questions your honour” :)
    • JL
      J L.
      1 February 2020 @ 20:03
      I never got the email for some reason
    • HM
      Harry M.
      2 February 2020 @ 01:42
      JL, Thats very worrisome. Can we look into why not? Its possibly your email address is incorrectly listed in the system.
    • JL
      J L.
      2 February 2020 @ 12:49
      my email is correct but no alerts to be found in spam or anywhere, i opted out of all your publicity at some point maybe that made some difference
    • M.
      Milton ..
      3 February 2020 @ 07:40
      JL, just sent you a message.
  • MK
    1 February 2020 @ 08:42
    Hello Julian. I would appreciate just a small piece or comment on how Eurodollar futures are working. I've noticed during the Virus situation , eurodollar futures of Dec 2020 have doubled and more while FED rates stayed the same and even got +0.20 since FED announced stable rate last week. I struggle to find a way how those contract work. thank you
    • HM
      Harry M.
      1 February 2020 @ 14:30
      Forgive me for answer on JB's behalf. So if we assume a stable spread between Libor and Fed Funds, EDZ0 contracts will reflect the markets best guess as to where Fed Funds will be in Dec 2020. The contract is actually 100- contract price, which itself is the 3m Libor rate at the expiration of the contract. The reason why you can see such sharp moves is that the market can swing from expecting rate hikes, to expecting rate cuts. Since the Fed announced last week we have had the evidence that the Corona Virus is more contagious and more dangerous than we had understood. This is a threat to global growth, so the ED market is anticipating that interest rates will be cut to reflect now weaker growth prospects. It is a forward looking contract, rather than a reflect of current Fed policy. Hope that helps.
    • MK
      MILTOS K.
      1 February 2020 @ 19:07
      Thank you Harry. Appreciated
  • JK
    James K.
    1 February 2020 @ 01:56
    The “Black Swan” has come to a market priced for perfection, .....
  • OT
    Omar T.
    31 January 2020 @ 21:13
    Thanks Julian, also, do you see this as the start of a 5-10% correction? or are you in the camp of Raoul that the virus could tip the global economy in the a recession this year?
    • JB
      Julian B.
      1 February 2020 @ 00:12
      My base case is a 10% . But I wouldn't be surprised to see 20% i.e. a 2018 type move because stocks are very stretched and people as SO complacent . I was amazed to hear on CNBC commentators talk about a policy response as soon as next week, which certainly in the US is WAY too soon. We are only a few % of the highs. The only place I'd watch is China and at this stage I'd even fade that! As for Raoul's call I don't have a recession in my models. Yes its possible and I would construct a scenario but that's not how I work. So that's not my call yet.
  • HM
    Harry M.
    31 January 2020 @ 21:30
    Since publication the equity market has sold off very sharply. The levels Julian set for trade entry in the S&P and Nasdaq were reached within an hour and half of publication. He noted that one of the most telling indicators was that the weakness occurred despite some very strong results from some of the market leaders. This is a clear indication of exhaustion, and suggests that even though the market is now below our suggested entry points, strength should be sold.
    • HH
      Hugh H.
      31 January 2020 @ 22:22
      thanks for the quick update!
  • OT
    Omar T.
    31 January 2020 @ 20:37
    Julian, what are your thoughts on EEM? As isn't that majority China? and the SPY could jump back easily with more fed action?
    • JB
      Julian B.
      31 January 2020 @ 20:59
      Hi Omar, yes the epicentre is China, which means EEM is vulnerable . However, when you look at equities holistically, the excesses are here in the US. Indeed, I believe the Fed has exacerbated inherent weakness in the US market. Stocks like AMD, Apple etc have gone parabolic since Not QE was launched at the start of Q4. Those moves look incredibly powerful but in fact they are incredibly fragile, because they are unstainable and once the momentum fades you need to run. Don't forget what we saw in Amazon, Netflix and Nvidia at the end of Q3 2018. PS. In Q4 2018, EEM actually outperformed the Nasdaq.
    • DR
      David R.
      31 January 2020 @ 21:23
      Re EEM, bear in mind that China has been closed 7 days for lunar new year. So when China re-opens next week, it will have a huge spike down to catch up and then EEM will gap down big.
  • RK
    Robert K.
    31 January 2020 @ 21:03
    Nice ideas. Thanks!
  • JI
    Janne I.
    31 January 2020 @ 18:36
    Thank you for the update!

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.

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 authored The Mobile Wave: How Mobile Intelligence Will Change Everything, which earned a spot on The New York Times Best 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 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.

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 channel watched 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 he began his career by training traders in technical analysis.

Peter McCormack

What Bitcoin Did, Journalist

Peter McCormack is a full time journalist/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 human interest recordings, documentaries and films Peter has recently launched the Defiance podcast and DefianceTV.

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 clients and 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 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.

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. Meltem oversees 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.