Of Escalators and Lift-shafts

Published on: January 14th, 2019

Bear markets are notoriously tricky to trade. Bull phases in bear markets and countertrend rallies can be bigger and longer than you expect. When the bear re-emerges, it is often fast and furious. In this piece, I take stock of where we are today and provide an update on the bellwether markets to set the groundwork for the next leg of the bear.


  • JC
    Jason C.
    15 March 2019 @ 17:49
    Julian, you mention: "As I’ve explained, when it comes to the long-term trend of the S&P, I use a simple metric and, with the 5- and 20-week moving averages below 50," Which Macro Insiders piece do you provide more detail on this? Like the simple metric just curious if i missed somewhere where you discusses more. Thanks
  • VD
    Viknesh D.
    20 January 2019 @ 00:41
    Hi Julian, thank you for the article. My question is on late-cycle inflation and the correlation with Crude Oil. With inflation pressures, how do you see that playing out on the performance of crude? My view is that in such a late phase and pre-recession, crude will rise and then fall in an actual recession whenever that may be, however it seems to have already made a high last year at around 76 for WTI. In spite of this, is there potentially yet another rally?
    • JB
      Julian B. | Contributor
      28 January 2019 @ 20:24
      Hi Viknesh. Re oil and inflation. My view is that oil generally leads inflation by about 6 months and not the other way around. Hence, why having seen the rate of change in crude prices peak at the start of 2018, CPI peaked in July. As for crude right here and now. I think we are essentially in the middle of a $45-65 range. Whether we can test that upper end depends heavily on whether the Fed is willing to step back from QT (see below).
    • VD
      Viknesh D.
      29 January 2019 @ 03:49
      That's clear. Thanks Julian!
  • DB
    Daniel B.
    17 January 2019 @ 02:26
    Hi Julian, this question is probably in a similar vein to Miguel G's question - I've been paying a lot of attention to volatility lately and Chris Cole's (Artemis Capital Mgmt) work titled "Volatility and the Alchemy of Risk" describing the events of 1987 where bonds and equities were correlated where the crash was triggered by the Fed's raising of rates into financial stress because of an inflationary spike. I've seen your call outs of wages data and compensation metrics in MI2 Thoughts from the Divide; is that enough to trigger an inflationary impulse that derails a long bond trade, or is that inflationary potential negated by other slow-downs in the economy (equities dropping, housing slowing, global growth slowing)? Or have I got my timeframes all confused and bonds are the "relatively" safe short-term trade?
    • JB
      Julian B. | Contributor
      28 January 2019 @ 19:35
      Daniel even thought our work suggests continued wage inflation. I think now that equities are faltering and the economic data is softening (tail wags the dog) we are past the point where stocks and bonds are likely to sell-off together in a fast 1987 type move.
  • AD
    Anthony D.
    17 January 2019 @ 16:39
    Julian, It appears the 354ish area is a good spot to reshort NFLX. There's a little gap just under the spike and reversal it did on its prior report date which began its descent to 240. NFLX reports today after the close. I've put my short chip on the table. I'm curious if you'd share your approach to this situation. Regards
    • JB
      Julian B. | Contributor
      28 January 2019 @ 19:30
      Anthony really sorry for the late response but congratulations on the level! Beyond that I'd just add that trading a bear is bloody hard so stick with the rules i.e. buy extreme weakness, be very disciplined with stops and take profits and don't forget to sell the rallies.
  • RM
    R M.
    18 January 2019 @ 19:03
    I have seen a chart (wish i could post it here) that central bankers of world are floating world with liquidity, mostly from China. If true, how will this impact assets? Understand China started about same time as Powell put in early Jan. Love to get your review of this, would be a big macro development.
    • RM
      R M.
      18 January 2019 @ 19:09
      Update: Danielle DiMartino tweeting about China flooding liquidity and @spiralcal has the chart.
    • JB
      Julian B. | Contributor
      28 January 2019 @ 19:26
      RM see my comments above re 2015-16 reflation scenario.
  • JS
    J S.
    18 January 2019 @ 22:11
    2015-2016 all over again?
    • RM
      R M.
      19 January 2019 @ 19:09
      Thats what I am hoping Julian and Raoul talk about. Have seen other reports of money supply injection as well. D’ont know the validity of the data or if the impact changes their assessment.....
    • JB
      Julian B. | Contributor
      28 January 2019 @ 19:25
      Hi JS...well my guess is that its still too soon for a formal shift on the balance sheet. However, judging from the recent stories on CNBC and in the WSJ they are getting nervous. Hence I do believe the 2015-16 scenario is a realistic one. In other words equity and real economy weakness = Fed pause (very slight chance of an ease) = reflation trade
  • DY
    Dmytro Y.
    19 January 2019 @ 16:19
    Julian, thanks for this comprehensive report. Really nice.
  • MG
    Miguel G.
    15 January 2019 @ 12:27
    Julian, in the past you've made the argument that if Powell pivots too soon he runs the risk of running inflation hot. I couldn't agree more and since the Dec. fall we had in equities its become quite clear Powell low risk tolerance to lower equity prices. My question is if they are already pivoting on the margin after only a 20% drop in equities why even recommend buying any bonds at this point. To me it seems like the risk/reward is terrible from these levels and are better left alone. Wouldn't a fed pivot smoke the long bond as forward inflation is a huge component of where rates are headed? Its actually scary how addicted we have become to a stock market that can't ever fall and now that were beginning to see Powell's pain tolerance, unfortunately low, Id be more in the camp that bonds are far too risky when weighing all the potential things that could go wrong.
    • JB
      Julian B. | Contributor
      16 January 2019 @ 22:09
      Hi Miguel, you raise an interesting point "why even recommend buying any bonds at this point". Well the main reason is clients have different needs and time horizons. To which I will add that frankly I was a little surprised how quickly Powell blinked (I don't think he's folded fully just yet). However, if as it seems you are focused on the bigger picture, yes I'd avoid Treasuries. While we may see lower yields for the next few months, as Powell sits on the side lines and the data weakens the big picture as you point out is horrible.
    • MG
      Miguel G.
      18 January 2019 @ 11:32
      Spot on Julian, I am focused on bigger picture and see other places to park my money that are far less risky. Love your work and what you do keep helping this macro insiders community win.
  • JC
    Jason C.
    18 January 2019 @ 02:10
    this level of tactical, actionable game planning content is excellent! love it, please keep it up as things progress and u see the turns. many thanks
  • TA
    The A.
    14 January 2019 @ 18:31
    Hello Julian, I have a question regarding your silver chart. In previous posts where you used this chart, the long term trend line you used was the upward sloping red line. Why is the long term trendline now suddenly a flat line? It seems to me that the long term trendline is still the red line and that we saw a (probably) false breakdown below it and are now close to coming back above it. To me it seems that silver bottomed exactly where it should bottom by retesting the january 2016 low and gold also bottomed at a very interesting place. for gold see the following chart: https://twitter.com/BruniCharting/status/1077963254746529792 for silver see this: https://twitter.com/BruniCharting/status/1077962412668735488 I would love to hear your opinion. Thanks in advance!
    • RM
      Richard M.
      15 January 2019 @ 16:29
      Question: on p. 13 Julian references a silver chart but there is no silver chart (just the EEM chart). Am I looking at an "updated" In Focus that cut that chart out???? Thanks for any clarification!
    • RM
      Richard M.
      15 January 2019 @ 16:39
      Oops, I see the silver chart in the Appendix on p. 15! Ignore my previous comment!!! <sorry about that!>
    • JB
      Julian B. | Contributor
      16 January 2019 @ 22:16
      Hi Joeri At least when I like to look at bubbles the "long term" trend line really has to go back decades and in silver's case that's the blue one. That said at this point, its academic because right here and now its the line just above $16 that counts and that's what I'd trade off if and when it breaks. PS. thanks for charts
    • BC
      Brent C.
      17 January 2019 @ 14:05
      Joeri, That tag of the downtrend line for gold in late 2018 also coincides with uptrend in place created from 08 & 16. I agree, a very interesting place. Coincidentally, (or not), gold bottomed in 1999, not in 2002 when the dollar finally peaked. Coincidentally, (or not), I've kept the chart from Greg Weldon in my book since last year where he noted CRB underperformance to SPX was the 2nd lowest on record at the time - it proceeded to match lowest ever later in the year. The previous low was June 1999.
  • HO
    H2 O.
    16 January 2019 @ 16:26
    Gents what do you make of the dynamics with the US Treasury balance, as in the government department? Pretty significant over-issuance last year, which will get spent down in Q1, assuming the government reopens. This should feel like a couple of months of QE in the financial system (say 200-300 billion), followed by another smack of QT when this adrenaline wears off. This should be mid-Mar as debt ceiling politics kick in again. This shortage of funds has been driving the dollar recently, and the ebb and flow should make the dollar index, USTs and risk assets a bit of a roller coaster coming up.
    • JB
      Julian B. | Contributor
      16 January 2019 @ 22:16
      Interesting let me chew on that thought
  • JW
    Joel W.
    14 January 2019 @ 22:58
    Thanks Julian. This is just what I needed right now.
  • NO
    Neil O.
    14 January 2019 @ 22:15
    Really helpful, actionable piece, Julian. Very well argued and put together. Thank you.

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.