Hold The Line

Published on: January 21st, 2019

Raoul observes that many of the key markets and asset prices around the world are now at crucial junctures; the next few days might well give us the direction for the rest of the year…


  • AS
    Armando S.
    21 January 2019 @ 19:37
    I'm curious if you are still short s&p or similar as you recommended on Dec 20 before the subsequent ~8% rally. No stop was specified, but it was a hope for a 3-18mo short. This would mean a pretty wide stop and small position sizing to wait out these rallies: "I hope that I will be in these trades for at least three months, and potentially eighteen months if my economic weakness thesis is confirmed. Set stops where you are comfortable with the pain levels. If I feel I am wrong and something has changed, I’ll let you know". It seems like you are saying no only to "hold the line" on the short, but double down and sell even more on these rallies! It seems position sizing is paramount here. Thanks!
    • RP
      Raoul P. | Founder
      21 January 2019 @ 23:21
      Correct. Long term views need small positions and then you add when the risk reward improves. Im suggesting that we might be at an add juncture or a stop juncture, depending how it trades.
  • AG
    Adam G.
    21 January 2019 @ 21:32
    I think that the bad eco data has been priced into the market. I think the rebound has more to do with Central banks around the globe getting dovish. I think that the Smart Money knows all about decelerations in Eco data. So... at this juncture, no edge to found in clasical biz cycle analysis. Time will tell, what do you all think ?
  • se
    scott e.
    21 January 2019 @ 22:37
    Raoul. Is this not a question of when growth stalls but what will the effect and extent of Central Bank intervention be on assets prices this time around. We are witnessing the beginning of that already in Fedspeak
    • RM
      R M.
      22 January 2019 @ 02:50
      Exactly. Plus China. Lots of news stories on the flooding of the market with liquidity. Am hoping Raoul and Julian address this.
  • MS
    Mark S.
    22 January 2019 @ 01:02
    Hi Raoul, What kinds of things can be the trigger down besides the dollar?
    • FM
      Fraser M.
      23 January 2019 @ 07:56
      Suggestion - watch the Eurodollar interest rate futures curve say, Dec ‘19, Dec ‘20, Dec ‘21 (contract code on Interactive Brokers ‘GE’) tells you how the big money is discounting future Fed moves. If the Fed isn’t going to raise rates or even drop rates then it’s because the economy is going into recession. We know what to do if that happens.
  • JQ
    JACK Q.
    22 January 2019 @ 15:55
    Hey Raoul - can you flash update us when you feel the conviction the top is in and full gas on the short side?
  • TK
    Torbjorn K.
    22 January 2019 @ 17:16
    Following the ISM New orders from Desember, there are no expectation that the one for January will be any better, and preliminary UMCSI numbers dropped dramatically also. TSLA has 30th of jan as release date for Q4 numbers. In Q3 they release numbers beating expectations and still the share fell quite a bit. What about a short TSLA for missing their estimates and then just 2 days later the ISM PMI will be out for January. Only thing I dont like about the tsla stock is its unpredicability. Hoping to start a factual discussion about the trade idea here. Raoul and Julian feel free to add some good or bad arguments against the trade.
    • JW
      James W.
      2 February 2019 @ 07:57
      I guess I'm not as confident as Fraser that TSLA will be TSLAQ within a year, so I've done put spreads at 280/200 and 300/150 in Jan 2020. YMMV.
    • FM
      Fraser M.
      23 January 2019 @ 07:48
      I think puts are the best way to play a TSLA short - otherwise timing is just too tough. $240 Puts to 21 June ‘19 and $100 Puts to Jan 2020 (my positioning) capture both a shorter term re-rating (yes it’s a car company) and a longer term bankruptcy prospect. Interesting to note that current TSLA short interest (float) is at a recent low - so not nearly as crowded as it was.
    • TK
      Torbjorn K.
      22 January 2019 @ 17:20
      Correction regarding Q3. Stock continued quite flat. Yahoo finance tricked me a bit on the date.
  • HO
    H2 O.
    24 January 2019 @ 00:59
    Financial conditions have eased temporarily and will some more based on some fiscal flow data for the US that everyone is ignoring. Macro outlook is well priced, these flows are not, and will help with a last gasp for risk assets until Trump thoroughly buggers the economy.
  • BR
    Brian R.
    24 January 2019 @ 04:18
    Dollar fate reduces to Global debt funding vs Twin deficits: if recession is deeper and faster than anticipated; Dollar moves up because of high yield spreads hold corporations hostage to higher costs, otherwise dollar moves down, since fed stays neutral yet twin deficits keep increasing. So crude and copper along usd/yen bottom and the trilogy starts trending higher. VS higher bond spreads in Mexico sovereign bonds and South Africa ( since China it's already priced) We know Raoul is not versed in math, but Julian cries out loud he is, perhaps he can pick one of his many models and show a chart of the REER of the dollar, if not you can ask one from me, ( it's in the top quartile overvalued) Even one chart of the big mac index can attest to that. I'm pretty sure they will both keep up with such charts in the next month.