Meeting Of Minds – May 2019

Published on: May 28th, 2019

Raoul’s Meeting of Minds piece below examines the mess behind the poster child of excess speculation: SoftBank. Likening the business practice of Masayoshi Son to a three-card shuffle, he sees the impending demise of SoftBank as systemically important. Julian’s, analysis builds on the case for a second- and third quarter economic slowdown in Europe as involuntary inventory needs to be worked off.

Comments

  • lD
    lance D.
    5 June 2019 @ 13:06
    Thanks for deciding to introducing MI on top of RVTV it has helped a novice like me tremendously AND I'm amazed with the understanding of guys/gals members that take the time to post on the blog.. allowing me to get that little more out of the service...so thanks to you guys too .. I personally have not made a lot of of money... BUT.. the money that i have saved from making daft trades is Brill ,, the education my level of understanding has grown so fast recently shit just seems to be more clear in my mind & finally starting to clicking into place( was always the kid that took that little bit longer to get it than everybody else HAHAHA = confidence in this service has Grown too ( I was a little skeptical at first not knowing if it just another site just trying to just cash in of its users SO NOT THE CASE !!! sorry for my initial skepticism Hahaha) Anyways enough of all this soft talk -just keep up the good work all . PEACE & OUT Y'all !!!!!!!!!!!!
  • PW
    Pete W.
    29 May 2019 @ 14:45
    Raoul, I discussed your Softbank view with an ex colleague and GS alumni who is currently working for Softbank. His response was:”I’ve traded SoftBank since 1995 and know all of Masa’s tricks better than even Raoul. I have not been impressed with a single partner at the Vision Fund and think almost all the really big bets stink. ( I do think Wework will survive but at lower valuations.) I have never seen Masa as arrogant as he is now and it is truly shocking that not one of his lieutenants will stop him even when he’s clearly making enormously questionable decisions. It will soon be a great short. I am much more comfortable about 9434 the SB Mobile new listing. “
    • RP
      Raoul P. | Founder
      1 June 2019 @ 00:56
      WOW!!!
    • DB
      Daniel B.
      4 June 2019 @ 01:14
      100% a great short - down 21% since the time of writing! I'm short (a little @ 10,300 and gonna press hard for the gap fill from 9,360 > 8,650)
  • CL
    Charl L.
    1 June 2019 @ 01:46
    Still time to add more bonds / eurodollar futures or have we missed it and need to wait for a retrace ?
    • DB
      Daniel B.
      4 June 2019 @ 01:09
      My $0.02; add them on any pullback to the extent your risk appetite can tolerate it. I'm trading shorter term futures (Sep-19) because of the acceleration in rate cut expectations so (I think) there's minimal risk of a full retracement on the short end (ED & 2Yrs) of the yield curve
  • CH
    Clifford H.
    3 June 2019 @ 22:59
    Gentlemen, Fantastic work I really appreciate the analysis. I have a question related to the Fed’s ability to reflate. The market is now pricing in 3 cuts this year. While it remains to be seen to what degree they follow through, it’s clear that they will do something. My question is how we will be able to tell if they will be able to successfully reflate the cycle (1998) or if their attempts will get overrun (2001 and 2008)? Should we watch the dollar, other currency pairs, credit spreads? I’m undecided on what the ultimate outcome will be, but would appreciate any insights as to what telltale signals will illuminate the path forward. Thanks Cliff
  • DB
    Daniel B.
    30 May 2019 @ 01:52
    Hi Raoul, Without putting words in your mouth, are you advocating a short on SoftBank now (or three weeks ago when written) or is there a more appropriate time? Asking our of curiosity; is there upcoming trades in credit/debt markets in the macro playbook down the path?
    • RP
      Raoul P. | Founder
      1 June 2019 @ 00:56
      Im mulling this for GMI. This was a GMI piece not an MI piece but yes, it makes sense.
  • MS
    Mark S.
    31 May 2019 @ 23:50
    I've been buying puts on oil. Do you have a view on price based on dollar higher and deflation environ. Realize you don't have a position. But I live in a part of the world that depends on oil price at a certain level for economy so thought it would be prudent to buy some. As such it has started to perform. Also bought Euro $ options 99.5 in Dec 20, and Jun, Dec 21, expect IV to lift but it has not budged yet. Are you anticipating a lift in implied vol? Lots of vega in those as you know.
    • RP
      Raoul P. | Founder
      1 June 2019 @ 00:55
      Agree on all your trades. Short oil and long vol in ED...
  • DK
    Dimitris K.
    30 May 2019 @ 09:06
    Richard T. is right about BABA's DDIS amount. I guess Raoul used the CNY amount. Nevertheless, I am trying to understand the risks of the VIE (variable interest entity) structure of BABA and BAIDU. I found Raoul's approach very reasonable. This structure makes investor feel uncomfortable at minimum. Any comment will be welcome.
  • NO
    Neil O.
    29 May 2019 @ 09:30
    Warrior Justice section - sounded like Raoul was describing Grant Williams and a lot of the RV interview subjects too. Amusing.
  • RT
    Richard T.
    29 May 2019 @ 04:26
    Raoul DDIS for Baba defaults to CNY even though it is a US stock. Debt is CNY123bn so about USD17bn
  • RM
    Ron M.
    29 May 2019 @ 03:02
    In the late 90's I sat on the board of a nationalized bank that Son bought after the bursting of the Japanese Bubble. At first I was a bit surprised at Son's lack of finance knowledge (granted, the bank was a disaster and quite complex), but was impressed with his business acumen and deal making skills (he exited at the right time to another member of the consortium). Debt does always catch up and no doubt that will happen here. I wonder how much of SB's debt is domestic (Japanese) vs. from the Middle East?
  • MG
    Miguel G.
    28 May 2019 @ 17:07
    Awesome updates for the upcoming risks these coming quarters.