I do look forward to continue to read should he post an update on this topic on exchange once everything fully settles down. I am learning and want to learn.

Thank you for the feedback Percy. You may very well be correct in that I am indeed not qualified to provide a crash course on VIX, particularly if you have not been active on the Exchange and therefore are not familiar with my ongoing work, activity, track record, as well as my background in actually trading/rolling futures on the listed derivatives desk at Goldman. Which is why I emphasized everyone (who isn't yet involved) to go on the Exchange, because I can't educate about a VIX roll spread while pointing out abnormalities and potentially actionable market signals within the same 10 min video. I would agree that pointing out a few similarities between what I'm seeing take place and how it reminds me of what happened last year with CL -$37 (which I also remember as I was trading it live myself) is not an effective nor appropriate area to go into for teaching purposes. But again, teaching VIX/futures 101 is not the purpose or intention of this. I'm working off the assumption that you already know the space, and I'm just giving a heads up "hey- check out what's going on here..." but without using too much unnecessary jargon so as to not lose someone in language (and not in concept). If you're saying that I don't qualify to educate/qualify to speak about volatility trading because of your perception of my OWN lack of understanding of the space, and are saying this based on 40 seconds of video as I fly through a comparison to crude trading negative, then with sincere respect, I would say that ironically it may actually be yourself who may be unqualified to make such a judgement about me. And there are many on the Exchange (and elsewhere) who would agree with me (not agree on the market view, but agree that you aren't familiar enough with me to make that or even a positive judgement). If however you ARE already familiar enough with me to be able to make that judgement, and then you feel that I am unqualified to speak about the VIX, then that’s perfectly fine. Which once again, all goes back to just joining the conversation on the Exchange, and then your concerns of qualifications/lack thereof will be far more clear. The reason I bring up crude trading neg as a companion is because that was an extreme scenario for which I'm reminded of the similar traits and setup. If you think I'm saying that WTI crude = SPX 1m implied vol index, then.. obviously.. that’s not what I nor anyone would ever think or say. There are literally infinite ways that CL and VX are different that it makes no sense to point out differences, and in fact it would only make sense to point out similarities or temporary analogous and conceptual themes, which is why I did just that. CL and VX have monthly expiry (as opposed to quarterly only). USO & UVXY are wildly popular among retail investors. Both funds attempt to provide something as close to their respective underlying spot asset prices/price action on a short term basis, and both (used to) do so by owning the front and 2nd month contracts of their respective futures. This 1&2 month holding structure was a primary contributor for USO's spectacularly mismanaged roll execution, in which they remained Long on such a large % of open int, with expiry coming head to head in a matter of hours. there were no bids for futures contracts about to expire, why would there be- new longs would be opened in the soon-to-be next front month. futures broke the zero bound and cleared at -$37. Now, I'm watching UVXY see inflows that nearly doubles its AUM in a single week. As shares get created, new VIX contracts need to be bought. I'm watching front month vs 2nd month VIX futures spread blow out, then really blow out, as Long rollers see it more and more difficult to find any bids to hit on front, and liquidity only thins out. This makes for a VX "bear steepening"at the front end of the VX cure (which, idk if you're aware, but 2m-1m VX is directionally lockstep with SPX underlying). UVXY is materially impacting VX1 to the downside (which thereby pushes SPX to new highs again and again). And if waves of UVXYinflows and share creations kept happening to record levels, then that's going to impact the VIX term structure all the more, and thereby impact SPX cash. This "1m + 2m futures" structure is what USO immediately ran away from as they made changes to the fund's structure to disperse its expirys for greater flexibility beyond just month 1 & 2 - meaning, that specific structure can entrap a mandated fund, as USO learned the very unprecedented hard way taking WTI crude $37 below free. Those are the parallels. Yes, I'm aware that there are no such things as VIX rigs set up to pump light sweet VIX out of the ground, among many other non-parallels to crude. But the aforementioned parallels are something that the current situation reminded me of, and didn't think it would be a disqualifying thing to mention. I spend an enormous amount of time and energy helping a lot of people understand markets on the Exchange, voluntarily and enjoyably so. So I take it extremely seriously and alarmingly to hear that you are concerned of my qualifications to do so, hence this Long response. So I ask that you please familiarize yourself with my previous work and reputation built on the Exchange, and if you still feel that way, then I need to know exactly why so that I am not causing others more harm than good without even knowing. If however you just happened to make a comment without expecting this kind of answer, that’s ok too, I'm not trying to give anyone a hard time, but still please just let me know either way, and then perhaps you can help me improve from there. Much appreciated, thanks!

Weston, I found myself enjoying reading your writing a lot more than what you said in the video. It looks like I would have to spend a lot more time on exchange doing reading from now on.

Thank you Percy! That’s all I can ask for, and all I’ve BEEN asking for- from everyone. And to be absolutely clear, I’m not thanking you for your kind words or your agreement (although appreciated as well), I’m thanking you for actually going to the Exchange as I had asked, and finding out for yourself. If you then want to criticize, challenge, disagree or what have you, I would be equally thankful that you at least bothered to actually find out more about me/what I do and what we’ve been doing within the community. It shows that you prioritize your intellectual curiosity and fact finding over purposely avoiding productive discourse in favor of recycled arguments that have already been addressed on the Exchange. Also gives you a ton of credibility from my end and a much more open ear. If you want to criticize me, you can do so for poor presentation on camera with extremely limited time, at least relative to the quality of various content that I have posted on the Exchange. Be it this topic or the various others. I think that’s exactly your point, but you conveyed it much more diplomatically. You’ll also notice that I have many videos up myself, but since I’m in more of a host role, and with more time, I’m better (less worse) than speeding through a few mins of RVDB as the guest. And I encourage you to add to any discussion or comments/criticisms for any of my posts, content, analysis etc on the Exchange. I don’t have all the answers, I never claim to, and I don’t know what I don’t know. I am forever a student of markets/life, just trying to absorb as much as possible and be a little smarter than I was yesterday. The Exchange is what allows for that better than any other mechanism, and the more thoughtful minds we can add (like yours) the more we have to leverage, and the sharper we as a community continue to become at scale. I’m based in Tokyo, so this RVDB was taped at like 2am my time, and nearly 30 hours later at 6am the following day, I still hadn’t slept yet as I had much to do, including trying to get the people in this video comments section to “go to the exchange.” “See what i wrote on the exchange.” “I address this on the exchange” again and again. I basically gave up because clearly, people are avoiding doing so for whatever reason, but not for my lack of pointing to the Exchange. Why that is, I really don’t care as i have zero interest in people with zero interest - a self-resolving problem. But I’m glad I actually checked here once more to find that you actually DID go to the Exchange, so now it was all well worth it for me (hopefully for you too). So thank you sincerely Percy, and I’ll see you on the Exchange!

I do, I’m constantly questioning cause/effect, correlation/causation, and if previous relationships still apply and to what degree. But what specifically are you referring to? Which leads which (if either/or), VIX/options market ↔︎ cash? And if so, to which direction, both ↑ + ↓? Incredibly vague and therefore unanswerable question

"When you have the spread [of near and far VIX futures contracts] widen out, that dictates the direction of the S&P. When the spread widens, S&P goes up. When it contracts, S&P goes down" I'm intrigued and will look at what you have posted in the Hive but it feels rather too convenient for me.

Idk what “feels too convenient” means. I don’t even know what the word “convenient” means in context of what you’re questioning. If you’re genuinely intrigued, I’m genuinely happy to grab a bunch of links from my writing about this market mechanic (VX2-1 spread vs SPX) and post them directly here so as to save you time from digging through my 751 posts on the exchange. But please explain what “convenience” refers to. And rather than ask if I’m confusing cause and effect, why you wouldn’t just try to find out the answer to your question first - everything I've ever published on record is on the Exchange and I’ve only been encouraging anyone to look every one of my market views, trades ideas, dialogue etc. So as I said very directly, yes I do “confuse” cause snd effect, likely far more than I probably realize. I’ll further be very direct (vs your purposeful vagueness) and just say that it def does not seem like you have any actual “intrigue” (and frankly I don’t care, it’s all out there published and public, for your “convenience”), but if I’m mistaken and you’re a serious trader or actually interested in something you haven’t yet come across before, then just be direct. Ask me whatever you want and I’m obviously more than happy to share whatever/help however I can

I'm interested in this too and think it is a valid question of market dynamics, whilst options clearly can have a significant impact on their underlying over the appropriate time frame e.g. gamma squeezes/short dated expiries, tail events. Intuitively you would think the underlying volume (S&P500) vastly outstrips its traded derivative notional at a wider time horizon. I assume there are periods of lower liquidity where the potential is more prevalent but as general rule the underlying should be the dog, to the VIX's tail.

i believe steven van metre also has been suggesting TLT may rally into the summer.

Raoul made his suggestion at the end of the week that GME was doing cartwheels; the idea being that if GME caused a cascade of margin calls and liquidations that caused the whole house of cards to collapse, people would rush into bonds. That danger is quickly dissipating it seems. Hugh is suggesting the opposite, based on a completely different timeline, which more or less boils down to the reflation trade => post pandemic global Mardi Gras, roaring 2021-2022, etc, based on his observations of the behaviour of people who come to his island, which I assume is a fun place.

I think this comes from living on little islands. They used to send people to little islands for punishment. Now its jumpy tax exiles who love them, always looking over their shoulders.

Younes, You mentioned that the "That danger is quickly dissipating it seems." I don't think the danger is dissipating, quite the contrary... Take a look at this interview Feb 8, 2021 of renowned value investor CIO of GMO in Boston talking about BUBBLES using the words Confidence, Enthusiasm, Hysteria, Zero Interest Rates, Speculative Fever, High Leverage, Unprecedented FED responses, Over The Counter volume growth from 80-million per month to 1.1 trillion per month. ITS A SCARY VIDEO https://www.youtube.com/watch?v=oE0dtr0iuKg

Oooopppsss... I posted the wrong video for Jeremy Grantham CIO of GMO Boston. Here is the correct video: https://www.youtube.com/watch?v=RYfmRTyl56w

Luis, looked at the Grantham video. I guess its not the only video from smart experienced folks who are waving red flags. But is anyone listening, does anybody care? With margin at a record high and markets having such dramatic narrow leadership, I truly fear the coming crash will "end" or at a minimum dramatically change our civilization for decades.

If the economy recovers bonds go down. If it doesn’t this year bonds go up. It is expected that it does so rates should go up. That said in our shop we see two big risks. 1. The vaccine doesn’t work as advertised. 2 A geopolitical event like China invading Taiwan or an attack on Iran. In the end it is a jumpy market that hangs on the news of the day. Also it looks like the death of the oil industry is premature. 2021 will be another crazy year. Buckle you seat belt. Anyone who really think they know the future this year is smoking some of that funny stuff.

Thanks a lot Max, much appreciated!

Hi Vladimir, Thanks for the comments. First, idk if you happened to miss that part of the video or I didn’t explain it well, but I’m pretty sure I clearly addressed that CL -$37 physical settlement/delivery in the video. I appreciate you hearing me out for the few mins I had to cram in a whole lot. That said, I wish you also heard that part about going to the Exchange, where you can read my original post (where we had this crude futures cash vs physical discussion, which is why I specifically mentioned it in the video). I also wish you had been on the Exchange and part of the conversation, as your insight on the UVXY roll schedule would’ve been great value add vs a would’ve-been-lost comment on a separate venue (here) away from the ongoing discourse, and after the fact. My response would be- I didn’t know of the UVXY roll schedule so that’s very helpful. However that wouldn’t actually change anything regarding the mechanics, which is evident in the VX2-1 and VX3-2 spread blowout & SPX ↑for the last several days (except today when VX2-1 as well as VX3-2 spreads compressed and SPX stopped pushing for new ATHs & instead ↓). For which I have charted out on the Exchange but cannot show here nor take time to explain in the video. It wouldn’t matter what the roll schedule for UVXY would be, all that would matter is what % of remaining OI they would hold. If everyone else had already rolled out of Feb contracts say like 4 days ahead of expiry, and UVXY was the only long holder of VX1 at 100% OI, then they would still need to roll, even if it’s 20 contracts. And when they try to sell VX1 → buy VX2, where’s the VX1 bid? And then you’d get a widened VX2-1 spread all the same, pull spot VIX ↓, rally the SPX, until expiry and front month var swaps that have been pricing VX2 at +5v (or whatever) above VX1 suddenly becomes VX1 → SPX ↓.

Weston, regarding 100% holder of OI - there is always a counterparty in a trade. Someone sold that contracts to them and looking to cover as well. Also UVXY is not the only ETF, there are plenty, some of them long Vol, some of them Short, they partially offset each other. Unlike with oil rolling, schedule is pretty much the same for all of them, no one is waiting for the last several days to roll. Even if they can't sell, they may let them expire, it is not Oil again. You could replicate VIX at expiration with option contracts if you need to. In my opinion the VIX term structure is a reaction function to changes in market conditions/options market, not the vice versa. The spread may probably help to explain some of the market expectations, but without emphasize that it is the spread that dictates the market moves :) Have you checked your thesis on a history? We had huge Contango and backwardations in the past. I don't remember it was an effective predictor. The only time there was a relatively noticeable market feedback to the VIX futures, when there was a crash of XIV/SVXY on February 05, 2018. They were Short Vol and Vol spiked more than 100% intraday. Losses triggered the liquidation of several ETFs and they had to buy back ALL VIX futures they previously shorted. That was a really huge liquidation event after market close. But even then it was the market in the first place.

English accent?!? Hugh would spit out his Manhattan if he read that.

Obviously you haven't been to Scotland...... Tell HH to his face about his "english accent" and you may well get a "Glasgow kiss"!

I think that Hendry is hard to understand... He´s like an old and wise history teacher but at the same time, he´s quite exentric lol. Btw, go to Belfast, Northern Ireland, UK and there you will be really struggling to understand the English accent people have. XD Hendry´s accent is just an standard Glasgow one...

If you think HH accent is hard to understand you need to meet the average Glaswegian! As a Scot myself, from Ayrshire, even I had to ask some folks to repeat what they said during conversation! I believe HH is interesting but have a hard time believing his success with Eclectica was just chance and not genius. Interesting video clip on Hugh is here: https://player.vimeo.com/video/443847804

Hey Mark, yep I actually realized that myself, it’s a valid point. So my main message is obviously what I spent the bulk of my time on/wrote up about on the Exchange (assuming you haven’t looked) - the second part of what you point out, thst was the point of my being on RVDB- to go out publicly and make a market call. What happened was, as we began filming right off the bat Jack referred to the VIX as the “fear gauge” as it’s generally known. And given the unprecedented record breaking level of call buying activity, they actually moved vol skew → smile (this isn’t anything new/original obviously). Entire implied vol “norms” have been thrown away (or set aside) even at the index level and not single stock vol exclusively, and underlying ↑, implied vol ↑should still be a red flag but not from downside hedge demand but call demand which is a whole different concern. So I just quickly noted and threw that in in response to jack before getting into my actual point. Now, I’ll also say- just because retail has bid up call premium doesn’t mean it’s a black/white blanket issue. Many different variations and inputs on many different VaR models out there and most/all are still programmed as is/was, and to be tiggered accordingly. VIX surges to 40 is not like some hyper bullish vol move lol, that’s index ↓. And then I’ll also once again say- this question, absolutely valid as it is, hasn’t/wouldn’t have been asked on the Exchange because of people’s familiarity with me and my ongoing work and commentary, so I encourage you to join in. But otherwise, yes it would seem like a self contradiction

wow, a great analogy, Christian. A great film as well (and a favorite of Hugh's, I believe)

Hi Christian, I don’t think I’m philosophically smart enough to understand your matrix reference. However, indeed you raise a valid point on the index for a VVIX/VIX move of that magnitude- and had you asked me the same exact question but on the Exchange, a lot more people would be able to learn from it + we can use charts tables links videos and other tools rather than be in this comments only closet. The reason I said ±10% is because of limit up/down, which far more people would understand “±10%” than “limit up/down,” and given the very limited time we have, I’m not going to get into - broader message is two way significant sized swings in the index would occur which would then lead to mayhem all the same. Yes I’m aware that there is no 10% increment in limit up/down, there’s 7% and 13%, so I’m just taking the median, which is a round figure (had I said “7%” then that would be oddly specific, “10%” everyone knows is meant as an approximate). I’m also aware of 20, which may/may not trigger, and frankly I don’t care what the exact deviation calc is for a theoretical broad based concept for which the message is simply to say “very large swings in SPX that would result in chaotic confusion.” And then once again my foremost message to get across is - let’s discuss on the Exchange. So, I encourage you to do so, and we can all figure out “exactly” what SPX levels would trade on a string of days that sees VIX 21 → 5 → 40. And again, if SPX was +30% at cash open followed by limit down 20 & done for the day, would calculating exactly what the corresponding index reaction really even matter? Prob bigger fish to fry then. So again, thanks for the commentary and hope to see you on the Exchange 👍

Great points, Weston. I agree the Exchange is far superior for discussion. Trouble is, there is friction to creating a new topic; there's no link from the video comments to the new topic unless you leave a comment pointing towards it, meaning it gets less visibility; and you lose the start of the discussion, if there are already several comments posted. @Weston N. @Jack F .Is there a way you could improve the link between video comments and Exchange threads? Perhaps have a 'Start new topic in Exchange' button as an alternative to 'Reply' in the video comments. This would also insert a link in the video comments for anyone who's interested in digging deeper.

Sam R. (Idk if this is even replying to you correctly, I ironically don’t know how comments section works lol, sorry if this ends up somewhere NOT in response to being below Sam R’s message) You are exactly on point correct with every word you said. In fact I can even tack on a few more myself of UX unforced errors that you didn’t mention. And because I’m not a developer / code, I too am a first hand frustrated “victim” myself (I still take personal responsibility to try and get fixed/improved, hence not being able to count as a real victim). But you’re totally right. And even worse, you’re even acknowledging the advantages / superiority of the Exchange, and yet, apparently you STILL prefer to forgo that for a more simple/smoother integrated interface. That says a LOT. I truly appreciate feedback. Can you do me a favor please and just shoot me a quick email weston@realvision.com I was going to do it myself but then I saw there are a hundred+ “Sam R’s” lol. Not urgent, just want to get your thoughts on something - and THANK YOU (seriously lol)- for being very pinpoint direct and detailed!

I got the impression Hugh was bullish specific areas of risk and not just raging bullish on everything. I suspect the relatively low allocation to equities represents the reality that he may not currently be strapped to his trading chair every day as he is not managing a fund. One of the great things about capital markets is when things go bat shit crazy, you don't have to play...unless you manage money professionally.

Thanks Mark!

I agree!

Haha thanks Roy-san🇯🇵

Stuart- I couldn’t agree more and this is something that seriously troubles me frequently on the Exchange. It’s encouraging to see that at least the crypto sector is more balanced than traditional institutional finance, but that’s a low bar. And even if someone didn’t believe in/care for diversity of thought or just basic moral sense, and are just purely money driven, then get some more women top down in. Whatever one thinks of Cathie Wood, you can’t argue figures. She’s now surpassed JPM in AUM. What do you think we can/should do?

How? Please explain.

I don't think electric cars can feed back into the grid as yet. Seems to be something that is still in the planning stage. Will be great in the future though. https://www.nbcbayarea.com/news/local/climate-in-crisis/making-a-difference-using-your-car-to-power-your-home/2454424/

I’m north of Dallas. Rolling blackouts for millions of homes. It was also terribly cold (single digits, low teens during the day) which drastically reduces the efficiency of Lithium Ion batteries. Also, the outages were not a routing issue or downed lines, but rather a shortage of total power to meet total demand. Grid connected electric cars would have made the situation significantly worse as they would have added gross inefficiency to the total system. ~10% loss when charging due to conversion plus ~23% loss due to cold plus ~10% loss due to inversion In some specific cases it might have been helpful but certainly not this one.

Agreed!

Thanks PJ! This was already up on the Exchange since last week, so you could’ve traded the SPX upside/reversal today (if that’s your thing), or even better, we could get some of your insights!

Thanks Dennis, I assure you I’m not- I’ve just watched a lot of RV (seriously) lol

Cheers Pierre-Luc!

Hi John, the actionable content could be: sell treasury bonds, buy commodities and base metals miners. also get as much equity in "party" companies like cruiseliners and vodka distilleries as you can get your hands on (I am interpreting his words) Of course, Hugh's analysis, like everything on RV, is not investment advice nor trading recommendations. I just respectfully disagree that this segment wasn't actionable

Thanks Marc!

Glad to hear, thanks for sharing your feedback, Benjamin

I’d like to echo Weston here and add that my desire is not for the discussion to stop it was for the conversation to shift from determining who was or wasn’t virtuous to finding out how to make the system work better.

I don't think it is a one off, either. I think it is a direct outcome of T+2. Their solution architecture requires a T+2 solution and to offload risk they are required for fine print and the ability to force customer pain. That will never last and will feed technology change>>> directly to DeFi solutions.

Kabuki theatre.

It's a good gig if you can get it.