In Focus Trade Portfolio – February 1, 2020

Published on: February 1st, 2020

This publication is your ‘go-to’ to view a summary of trade recommendations proposed by Julian and Raoul in their respective In Focus pieces. Each month, we will update the performance of these trade recommendations, adding and removing trades as per the advice is given in subsequent In Focus publications or any Flash Update.

Comments

  • TH
    Tim H.
    6 May 2020 @ 17:46
    Xme is not in the portfolio which should be there as should be eww.
  • JA
    Joseph A.
    24 March 2020 @ 05:02
    Adding the comment here that I made on the flash update. Please try to provide an updated centralised location for all the trades ideas, current, new, closed, conditional. At the moment this document is never updated for example when flash updates come out. Some of those updates are also not document driven but video driven with the recommendation buried somewhere in the video and needs to be searched for. This is causing trade ideas to be fragmented across different resources and with fast moving markets time is critical. Subscribers need to be able to quickly access one single go to document where all trade recommendations and any changes to them are stored. These trading portfolios need to be updated as soon as Raoul and Julian make changes to their recommendations or add new positions etc. Having it updated only once a month is inadequate I feel anyway and even more so in the current state of fast moving markets. Thanks!
  • VR
    Vince R.
    28 February 2020 @ 19:08
    Gents, any take on why Gold went up the first day or two of the "correction" we are witnessing and then has continued to head down each day (down almost 70 as I write)? Gold always seems to be viewed as a "safe haven asset". It doesn't seem to be acting that way right now. Thoughts?
    • CH
      Charlie H.
      29 February 2020 @ 02:42
      Liquidity. Folks selling their gold to meet the margin calls on stocks.
  • JP
    Joseph P.
    28 February 2020 @ 01:57
    Gentlemen, you don’t need me to tell you this, but: there are some really special calls that appear be to materializing in here. I bought this service for Rauol’s pulse on things and ability to connect disparate dots like few can. I knew little about Julian before subscribing to this service, but the gent seems to have a knack for identifying trends that have juice and then getting onboard (eg Apple and Nasdaq shorts). Both extremely beneficial and unique in purpose as I approach this market and position my young family for the future. Thank you both.
    • JP
      Joseph P.
      28 February 2020 @ 02:01
      *Raoul
  • JA
    Joseph A.
    11 February 2020 @ 04:52
    Adding this comment here as well as on the latest insider talks with Harry M. This comment refers to current positioning (and by now the NDX and SPX trades have stopped out with growth/value trade still against after the double down recommendation) but first I want to mention that I just watched Raoul's Skype repo-rama on RVTV. Ending the piece with Barton was the icing on the cake. A proper deep dive insight into repo even though not all questions answered and probably never will be because it seems nobody really knows! However, I think there were a few light bulb moments in there for anyone trying to wrap their heads around repo and liquidity mechanisms. Essential viewing at precisely the right time given the current state of both the equity and bond markets so thanks for creating that film as I know I asked for something like that in one of my earlier message on MI. "Ask and thou shalt receive" :) So it brings up some questions I have for current MI positioning (see further down this post). An outstanding question I had from the repo film was what's causing the shortage in cash? At the end Raoul tried to say it was likely because market participants such as hedge funds need more cash every day to fund their new positions and day to day business. If that is so and presumably those positions are mainly relative value positions made up of trades in bonds and equities of all flavours and varieties, is this finally confirmation that the Fed and Treasury General Account (TGA) pumping cash on a regular basis into the system is simply being siphoned off and traded because the users of that low interest rate cash are doing with it what most people do when they can borrow cheap money which is to leverage that money and use it to invest in products where they can get a much higher return and then they finesse their choice of positions based on the repayment timeline. So whether it is QE, long dated, not QE, short dated they trade accordingly and that all works fine with low volatility, low rates at the margin and equities and stocks only going in one direction. The problem comes as was given in the example on the film by one of the other commentators, when rates swing not only to the higher end of the band (due to less cash more securities and less liquidity available) but also spike well over (for example in September last year to nearly 10%) then relative value hedge funds are forced to close positions to manage total risk and position sizing on their books as they would be concerned about being able to repay the cash loan at much higher interest than expected and also not knowing how long those sudden higher rates might occur for, potentially exacerbating the problem. I am leaving regulatory minimum reserve requirements for banks and hedge funds out of this as presumably they are a fixed, assumed part of the liquidity puzzle and not really the ongoing driving factor behind the constant need for liquidity. Comes back to my original question how and why are liquidity shortages occurring if everyone's supposedly making money hand over fist being long equities in a low volatility and low interest rate environment? Is greed for placing ever more new positions and new business what is driving the constant demand? When is enough enough? Is this in simple terms the mechanisms that are creating both the steady march up (sometimes explosive in growth stocks) of equities? Likewise if shortage of cash and sudden rate spikes cause sudden drops in equity markets and the market participants rely on more liquidity being pumped into the system whether from Fed repo, future QE or the TGA to restore order and marginal interest rates then surely this is the argument to explain why bonds and equities are rising basically at the same time and that it will go on for a considerable period of time especially when Barton suggested that it's the TGA that has all the ammo now really and that they can use it to add liquidity much quicker than the way the Fed does at the moment (notwithstanding any future official QE that takes place). If this is the case then I question the vanity equity trades on at the moment (short S&P, Short NDX both since stopped out at time of writing), short Apple) and the taking off of the short USD/MXN trade which acts as a hedge when the current MI portfolio (speaking from the point of view of when I joined MI only a few months ago) doesn't have one that deals with risk on/long equities going on for the foreseeable future (as growth value play that had double down recommendation also still close to stopping out as a kind of hedge). My next question is about the current bond positioning. At the moment we have long dated Eurodollar, ED calls, TLT or 10 year notes. Based on the repo film again where it talks about front dated and long dated changes with regard to trying to uninvert the yield curve, can someone explain what the relative implications are for price action across the tradable bonds set i.e. from treasury bills to 2 year to 10 year and longer. What are the risks to price action to all of them individually and relative to each other in both an inverted yield curve, a flat yield curve and a rising yield curve. Does the optimal treasury bill/note to be long of (in the case of inverted with rates going to zero) need to change? Are 10 year notes or TLT simply more likely to accelerate in price action to the upside in price with a steepening inversion on the curve relative to short dated treasury bills and are therefore the preferred ones?
  • JM
    Jeroen M.
    3 February 2020 @ 15:53
    Happy MI subscriber but sorry to say the Buy Dec 2021 Eurodollar Futures Jan24th'20 98.53 26 Ticks is not really correct. It was triggered through alerts when well past the 98.6 as revised level to justify a buy signal. If I am correct, it did not trade below the 98.6 since and saw steep rise since. Great call in any case from Raoul but think the 98.53 level for MI subscribers is not the correct reference point.
    • JM
      Jeroen M.
      3 February 2020 @ 16:23
      Same for TLT but it is fine. Not tracking performance here on YoY basis.
    • rt
      remi t. | Founder
      3 February 2020 @ 20:51
      Thank you Jeroen to point this out. The update was published at 15:23 on Jan 24th, The price of EDZ0 at 15:27 was 98.57. I will amend the entry price to reflect this in our next portfolion update.
    • JM
      Jeroen M.
      4 February 2020 @ 11:35
      No worries. If you want to replace that one you should consider to do TLT too, open was at 141.30 and was low of the day. Raoul's initial trigger level was also on that level. 140.9x was on close 23 jan. Level Raoul wanted to see in order to make trade rec (flash update) was 141.2. Think that should be the ref point then. Still very well timed call.
    • rt
      remi t. | Founder
      4 February 2020 @ 22:03
      I am changing it too. Thanks
  • AA
    Andrew A.
    3 February 2020 @ 15:41
    I use Saxo Markets (UK) to trade Futures and Options and I'm getting myself in a bit of a pickle trying to follow Raoul's Eurodollar recommendations. So far I've bought Eurodollar Call Options Dec 20 (Strike 99) and more recently Eurodollar Call Options Dec 21 (Strike 99.375). I was sure Raoul recommended the latter but this On Focus update says the recommendation is to Buy Dec 2021 Eurodollar Futures! There's no mention of a strike price. Please could Raoul clarify. Thanks. Andrew
    • JM
      Jeroen M.
      3 February 2020 @ 15:56
      Think he used that as an example and uses the price of the future contract as a reference which makes sense for technical analysis purposes etc.
    • rt
      remi t. | Founder
      3 February 2020 @ 20:42
      Hi Andrew Raoul's recomendation was as follow: Buy December 2021 Eurodollar Futures or call options(Dec 2021 99.375 as a suggestion) We simply decided to keep the futures position for the portfolio, but you were right to buy Dec 21 call 99.375.
    • AA
      Andrew A.
      4 February 2020 @ 11:45
      Thanks Remi. I thought I was going crazy for a moment there!
  • AT
    Andy T.
    3 February 2020 @ 19:02
    Really enjoy reading the RV publication. Did well with TLT. Otherwise not so sure.
  • wj
    wiktor j.
    3 February 2020 @ 15:47
    How well the gold/silver stocks do during this downturn? I have my own thoughts but I would like some comments. I am also thinking of shorting WTI due to the ugly virus. Dont think we are being told the entire truth about it. I heard that a dog had been diagnosed with corona. Dog never got sick but gave it to people. Has anyone tested the birds?
    • JI
      Janne I.
      3 February 2020 @ 16:34
      Should do very well. I think gold stocks as leveraged gold. Not a store of value but as a trade.