Interest rates – Starting to Move

Published on: January 14th, 2018

Inflation expectations are marching higher again and global rates are moving as a result. Europe is the most mispriced and the ECB now has a lot of responsibility on its shoulders.


  • CL
    Chris L.
    15 January 2018 @ 15:48
    Hi Julian, What effect do you see rising european rates having on US tech stocks and the broader Nasdaq? Is the weak dollar all out bullish for this space?
    • JB
      Julian B. | Contributor
      30 January 2018 @ 19:28
      I think rising European rates are a key driver of US Treasuries (its been European/Japanese flows into the US market that have supressed US yields). As US yields rise I expect rate sensitive sectors like the Nasdaq to get hurt badly. These are "Growth" stocks i.e. they do well when there is no growth . Higher yields implies higher growth. As for $ ...yes in theory a weak $ is good for tech...BUT I'm not playing a weak $. I think we have a risk-off $ bounce coming ie stocks lower and $ up
  • JJ
    Josh J.
    15 January 2018 @ 18:22
    Hi Julian and RV team, What time horizon do you see for the Short TLT or Long TBT setup? For 1 month or 1Q 2018 (3 months) or for 1H 2018 (6 months)? Thanks.
    • JB
      Julian B. | Contributor
      30 January 2018 @ 19:25
      The game is on now...If you are looking at options I wouldn't bother just look at the levels we've given and trade vs those. If you want to buy options Dec 2018 50 strike puts on EEM look cheap
  • SR
    Steve R.
    16 January 2018 @ 03:15
    The risk here with US bonds is when we get a sizeable market correction, which feels like its imminent to me (IMHO). In such a case wouldn't there be a huge 'flight to safety' to US bonds? The market is very fickle and I could image a sudden rush to bonds in the event of an equity retreat - at just about the same time as everyone is loading up (shorting US bonds) due to the discussed inflation theme? So what would be the best way to hedge out this risk?
    • JB
      Julian B. | Contributor
      30 January 2018 @ 19:23
      Steve as you know I'm a bear and I share your concern. BUT its an issue of timing. At least initially both bonds and stocks can both fall (this is the positive correlation between stock and bond PRICES not yields we've discussed). Indeed, in the Taper Tantrum in 2013, the Bund collapse on Q2 2015 and the bond sell off in 2016 correlations went positive i.e. bonds and stocks both fell in value. Yes at some point when equities have fallen enough that policy makers panic and ease then yes bonds bounce. But at least initially that isn't a risk. Frankly, the hedge initially is selling both.
  • TH
    Thomas H.
    16 January 2018 @ 13:06
    The question is how unwinding QE will affect asset prices. I do not see how this is bullish for the economy. Failure to raise rates or stop QE is inflationary. The real macroeconomics question is whether debt will be inflated or defaulted.
    • JB
      Julian B. | Contributor
      30 January 2018 @ 19:18
      Thomas I addressed this in a RV interview but I think that section was cut. Some debt will be inflated, especially government obligations. It's that simple and we have no choice. However, outside the official sector the outcome will depend on whether the entity with the debt has pricing power or not. Imagine 2 firms; Firm A and B both junk with loads of debt but very different abilities to pass on price increases. As rates rise in nominal terms (not necessarily real terms) Firm A can hike prices, thus service it's debt despite the higher cost and as the value of that debt is eroded the stock explodes higher. Firm B on the other hand, has no pricing power and as its debt servicing costs increase it defaults over.
  • AC
    Andrew C.
    18 January 2018 @ 06:13
    What happens to European banks if rates in Europe increase? One would think they become more profitable and thus long UBS/DBK/CSG/ING might be a good way to play this. What do you think, Julian?
    • JB
      Julian B. | Contributor
      30 January 2018 @ 19:11
      Hi Andrew yes I like European banks with a slight BUT. If rates rise too quickly as was the case in Q2 2015 and is once again a risk you have to be careful how you structure the trade. Yes banks will rise on a relative basis and outperform the broad market. BUT they could still fall overall as the overall index is hit by rising yields.
  • DB
    David B.
    20 January 2018 @ 08:46
    Raoul and Julian- Please provide an update in chart format for the trade ideas you've made. I recall Raoul being long the US dollar and short crude oil. The US dollar has fallen and crude oil has risen. Perhaps there are other recommendations, but I do not recall except possible gold and EEM. The TLT trade idea is interesting. Have you considered the COT futures data for both T Bonds and 10 Year T Notes? Commercial traders are net short T Bonds yet net long 10 Year T Notes. Thank you, David
  • AC
    Andrew C.
    18 January 2018 @ 06:18
    Also, rates have been rising in the US for several years. Your chart shows the 10yr bottomed in 2016. So for the past 18-24months, the market has been "on a tear" even though rates are rising. Why might this change now?
  • MG
    Miguel G.
    17 January 2018 @ 17:07
    I couldn't agree with you more Julian only concern I have is how long this move is taking to take shape. I look at US macro and the data is pointing to the economy slowing down in Q3 in rate of change terms. If im correct on this then this yield spike needs to happen no later than summer or Im afraid that a tipping point in US growth will once again put a lid on yields. IMHO I think time is of the essence and if this is in fact going to happen it needs to start happening soon. FWIW I am long TBT around 34 with hopes of it becoming a nice size swing trade by summer.
  • JJ
    Josh J.
    17 January 2018 @ 04:41
    Hey RV guys, Can you take some q's from folks? Cuz by the time we get your response, its usually too late.

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.