Less Doom & Gloom?

Published on: September 14th, 2019

Over the summer, markets were faced with an almost never-ending list of adverse developments. The result was a strong trend in anything related to the “race to the bottom” in global rates. We believe that narrative is now vulnerable.


  • MG
    Miguel G.
    20 September 2019 @ 13:45
    Nice work Julian but your conclusion got me a tad confused on your outlook from here. You make a compelling case of why yields could continue to move higher from here but then in your conclusion you state that it may just be a "episode" rather than a "trend change". So would it be fair to characterize your outlook as being constructive to higher yields for now but will need to see more of this picture develop before you're ready to fully commit to the view that we are in the midst of a trend change? Thanks
    • ag
      anthony g.
      26 September 2019 @ 18:09
      Agreed - which is it ?
  • wj
    wiktor j.
    19 September 2019 @ 13:38
    Good stuff. Do you guys know what the Fed bought in the repo market? Was it us debt or CLO'S? I find it relatively close to some companies having downgraded thier debt that there is a problem in repo.
    • GP
      Geoff P.
      20 September 2019 @ 11:33
      I believe it was an over abundance of shorter term USTs on dealers books. These REPO transactions are not QE like bsheet expansion. They get unwound the following day. They may get reinitiated, but it's a constant daily unwind. The collateral is all USTs (not an LEH situation).
    • GP
      Geoff P.
      20 September 2019 @ 16:40
      They just added 2 week term REPOs to the daily REPOs. When do they chuck it and just go QE4? Saw a good chart showing a combo of growth and QT putting excess reserves at pre-QE3 levels. Very interesting. DX at the top end of the recent consolidation after an inside day yesterday.
  • MS
    Michael S.
    19 September 2019 @ 17:03
    Need some help. Is there a chance for major distortions to arise in Euro Dollar or Libor mkts. meaning, I'm leveraged to take advantage of ease, and they turn against me due to the crazy stuff going on in the dollar shortage dynamics ? Right now, I'm pretty plain vanilla. Long T-Bonds and adding back to Gold. Also, using Libor product ETF. Go easy on me, these seem like naive questions but... Thanks.
  • SS
    Shanthi S.
    17 September 2019 @ 02:48
    Great stuff. Thank you very much.
  • JK
    James K.
    16 September 2019 @ 21:47
    Agree with analysis...have “sensed” the Macro changes also ...but.. Devils Advocate - “what if” all those chart reversals are actually flag or reverse flag formations .... ?
  • LJ
    Lucille J.
    16 September 2019 @ 21:09
    Just once I would like and honest commentary low interest + buyback + defict + federal reserve intervention = bull market (ponzi scheme)
  • AM
    Artur M.
    16 September 2019 @ 18:10
    Thanks Julian, I would like to mention here CFTC NON Commercial Net Positioning. Name, 1y z-score, 3y z-score UST10Y, -0.55z, -091z UST2Y,064z, -0.28z UST5Y, 0.62z, 0.99z UST Bonds, -0.35z, -1.11z Eurodollar, 1.69z, 2.77z Everything under 1 is not so extended on longer time frames, below 0 need to add to positions. So UST looks far from extended. Eurodollars are close to 3 sigma (z score) which I can agree is not looking good on 3 year basis when looking at positions. Imo the reversal is purely technical and to some extent short term cyclical, see TLTs in August-September last years. At the same time econ data is just starting to look bad. (all comparisons to consensus is just BS) And rates corrected a lot while GC (Gold) just holds positions. The only worry that I see for EDZ9 positions (that somebody mentioned here), is founding issue as EDZ9 / EDZ0 contracts are heavily shorted against EDH contracts ) These contracts have a spread of today 40 bps to FF. But this could resolve itself like in 2000 and we could go higher quickly. but this is speculation and an other story.) I know that CTAs are not non commercials but if we just have a correction here, CTA will be adding again. Just wanted to share my observations Thanks for your update and views //Artur @Ar2go2
    • GP
      Geoff P.
      16 September 2019 @ 20:40
      Thanks for posting the z-scores Artur. I'm curious about the ostensible over positioning in ED. Perhaps a 1 or 3 yr z-score is less comparable to interest bearing Ts during a zero rate environment. That is, one might expect speculative positioning in ED to be short bias with FF at zero going into the first rate hike cycle in over a decade. Certainly with the first rate cut cycle since 08, the swing to long might be dramatic. I'd be curious to comp ED z-scores from other rate cut cycles with net specs as a percent of OI. Just a thought. Still very eye opening stat. Thanks.
  • B
    Brandon .
    16 September 2019 @ 16:52
    probability that EDZ0 trades to 98.00 ?
  • CH
    Corey H.
    16 September 2019 @ 00:42
    Great read. It seems the geopolitical developments / exogenous shock risk is ever present. Curious how you see the middle east oil strike in some form impact your analysis?
  • KA
    Kelly A.
    15 September 2019 @ 20:45
    Excellent. Thank you.
  • GP
    Geoff P.
    15 September 2019 @ 11:45
    Did the ECB spark a rate trade unwind that would affect these positions by allowing a portion of the reserves to be held at the ECB at 0% vs buying bunds at negative? It seems as if the trade started to unwind a bit before the ECB but that could have been profit taking in advance of the meeting. It sure seemed to be exacerbated after the ECB.
  • JQ
    JACK Q.
    15 September 2019 @ 08:58
    Julian - how much of a fixed income correction do you reckon we see? EDZ0s already had a 50bps pullback from the highs, possible for another 50bp+ here?

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.