Macro on the move

Published on: May 14th, 2018

The markets have shifted away from just looking at equities and rates. The dollar has now entered the fray as well. If the dollar rally is sustained, it will have wide-ranging implications.


  • JL
    J L.
    14 May 2018 @ 17:01
    Thanks Julian for the update. To both you and Raoul: I was wondering what you think about shorting stocks along fixed income (volatlity adjusted), in order to create an anti risk parity trade, rather than just betting against bonds. Sounds like a trade you both might agree on? Looking forward to your next debate.
    • JB
      Julian B. | Contributor
      16 May 2018 @ 18:56
      Hi E.F with our institutional clients we have been pushing the core short in 10yr Treasuries since 2.3% and added selectively. However, we understand that higher yields comes with consequences for markets and the real economy. Hence, as you suggest we have selectively "hedged" the bond position with shorts in stocks ie an anti risk parity trade. That said at present we aren't short developed market stocks. Instead, we have a hedge via the long $ trade.
  • SV
    Steven V. | Contributor
    14 May 2018 @ 20:25
    What do you both think about XLP? Major topping pattern or near-term buying opportunity?
    • JB
      Julian B. | Contributor
      16 May 2018 @ 19:01
      Steven it looks like we've had a clean break of the up channel since 2009. That said it looks like we could get a decent bounce here.
  • RI
    R I.
    16 May 2018 @ 13:09
    Thanks, Julian. Raoul - keep buying bonds for us.
  • MG
    Miguel G.
    18 May 2018 @ 10:58
    Julian, probably asking a little to much with this question but what kind of move do you think the US dollar can have this year. All the macro work I have suggests that the bull case improves for the dollar 2H which is why Ive been waiting on buying gold. Also, I see a potential for an inverse head and shoulders on the weekly dollar chart which would take the dollar to 100. Thoughts?
    • JB
      Julian B. | Contributor
      23 May 2018 @ 16:31
      Hi Miguel...always a little tough to calculate the magnitude of the $ move for the simple reason that it tends to run until at some point it becomes toxic i.e. EM or credits break. As for levels we think in EURUSD levels (I'm assuming you reference to 100 is for the DXY?). Anyway, our targets are 1.15 and big picture 1.05
  • DY
    Dmytro Y.
    23 May 2018 @ 06:08
    Hi Raoul, would you please be able to clarify one important question. Since 2016 (the time i started to follow you) you had been pretty bearish and cautious and basically telling this equities market is overdue for severe correction. Very recently on Twitter you said to someone else that you do not hold any single short position on equities or stock market. Question is: how do you position your own portfolio? are you in any US equities? are you fully in cash? how the 2 things (being generally bearish and not being short any single stock) co-exist. Thanks a lot to advise if possible.