Daily Briefing – April 3, 2020

Published on
April 3rd, 2020
24 minutes

Daily Briefing – April 3, 2020

Daily Briefing ·
Featuring Jack Farley, Ed Harrison, and Raoul Pal

Published on: April 3rd, 2020 • Duration: 24 minutes

Real Vision CEO Raoul Pal sits down with Managing Editor Ed Harrison to discuss the astonishing unemployment statistics and the U.S. dollar rally amid the ongoing liquidity crises roiling in asset markets worldwide. They analyze the progress of the COVID-19 pandemic and explore whether the market has accurately priced in the rolling shutdown of global supply chains.



  • IP
    IDA P.
    4 April 2020 @ 12:23
    note on working from home... I have an office in Milan to see clients when necessary, but I have been working from home for years (I'm single and self employed) and it has enabled me to be home when my daughter was growing up and would return from school, and it has enabled me to save time: instead of going back and forth to the office everyday I have had time to do exercise in the morning before work. I don't have to rush to prepare dinner when I get home, I prepare it with no stress at all now, ecc. After a while you learn how to divide time between work and family, my noise cancelling earphones have helped also. I hope that one positive aspect will be that working from home may become a new norm for many people who want to raise their children and have a career without having to compromise on either.
    • JM
      John M.
      6 April 2020 @ 22:09
      Reducing all that commuting not only saves people time but is also helpful for the environment, less pollution.
  • JO
    JOHN O.
    6 April 2020 @ 20:09
    I've been to the liquor store on Little Cayman. They must hide the Campari and Orange La Croix somewhere in the in the gift shop for the locals. Excellent discussion BTW.
  • JV
    Jan V.
    6 April 2020 @ 17:59
    Great work guys keeping us informed like that! Much appreciated.
  • SH
    Sven H.
    4 April 2020 @ 15:17
    Why not invest in a mic? Getting very tired of the awful quality sound in most Real Vision videos.
    • EF
      Eric F.
      4 April 2020 @ 17:47
      RV does seem to have pivoted from studio to live for more fresh content. I think this makes sense, especially now. I do think some the audio quality has been horrible, so this is a reasonable request. I’m at point where I just don’t see the point of video. It seems a waste of time to watch 2 people speaking, when I can listen to them with no loss of understanding, value or comprehension etc.
    • ML
      Mark L.
      4 April 2020 @ 17:56
      There is a downloadable mp3 available under the "audio" tab above.
    • RP
      Raoul P. | Founder
      4 April 2020 @ 19:30
      We are using mikes. Im on an island in the middle of nowhere with bad internet. We have no ability to do anything about it. During "peacetime" we film in our studios in NYC and London and other locations with soon crews, camera crews, etc but in "wartime" it is impossible. We work with what we have. I cant even get anything delivered easily to where i currently am. I cant go anyway either as Im quarantined.
    • MR
      MARK R.
      5 April 2020 @ 09:59
      Northmantrader? :)
    • ar
      andrew r.
      6 April 2020 @ 16:39
      The sound quality is fine. It's your computer/phone.
  • RD
    Riki D.
    5 April 2020 @ 22:55
    Excellent conversation gents. My question is, does the normal safe haven contra-cycle relationship still exist between gold and the dollar under the current market circumstances, ie gold (physical and miners) drops when USD rises, or is there a new paradigm that see's both rise at the same time. Additionally, what happens to gold if there is a sell off of the dollar, due to some unknown intervention from the Fed?
  • EK
    Edward K.
    5 April 2020 @ 19:01
    Am I getting this right? Reference is to Eurozone integrating fiscally but implication is that global rules based regime will devolve into regional partnerships.
  • PS
    Pavel S.
    5 April 2020 @ 11:08
    Amazing, thanks guys. Will be refreshing a lot on Monday for Raul´s expert view :)
    • GC
      GianCarlo C.
      5 April 2020 @ 16:36
  • WM
    Will M.
    5 April 2020 @ 16:07
    Great discussion!!
  • TR
    Tommy R.
    5 April 2020 @ 03:29
    What’s the best way to trade Forex options for this USD trade? Is it just the Futures market for foreign currency pairs? (Ie: /6C, /6E, etc)
    • MT
      Mike T.
      5 April 2020 @ 09:00
      /6C, /6B, /6E /6J, and their Options are listed on Globex. There is DXY (USD index futures ) but is listed on ICE, however the ICE market data fees are a rip off, so I personally focus on Globex futures only so if I wanted to get long USD you could short /6E. However you specificaly asked about Options, but didn't say if you're looking to buy options or sell (short premium) options. If considering BUYING always, always, always remember whilst it can work on occasion, the mathmatical probabilities of success are OVER TIME , overwhelming in favour of the Option SELLER. In the long run, anyone that regularly buys options for a directional play will end up dead meat. At the time of writing for short premium Options traders, the highest premiums (highest IV%) to sell for a $$ credit are in /6c and /6b. One other way to play USD is to use the ETF UUP, but I'm personally of the view the Options on UUP are not viable for trading purposes e.g. less than optimal liquidity and the IV Rank for UUP is relatively low at 32, the premiums in /6c and 6B are much more attractive with IV Ranks at 57.2 and 46 respectively. Others may disagree with me on the point of using UUP. Lastly, before the end of this month, a new futures exchange, now fully approved is due to go live https://smallexchange.com/ This new exchange will have a USD Futures product symbol FX.SME, Small Dollar Index. The Small Exchange will, initially, also offer the following Futures. 10Y:SME Small 10yr Treasury Yield index 75:SME Small Stocks 75 Index GO:SME Small Global Oil Index PRE:SME Small Precious Metals Index
  • GC
    5 April 2020 @ 08:56
    Raoul, I share your bulllish dollar thesis. Enjoyed your description of the Eurodollar system imbalances. How do you square this with what we have seen in the FX swap and cross currency bases mkts over the past week, where we have seen dollar funding trade at a discount to LIBOR? Eg 3mth EUR/USD cross currency trading at +66bp, the highest in history? This is the one aspect of the present market setup, which seems to mitigate against the 'napalm' DXY move in the short-run? Thoughts?
  • NI
    Nate I.
    5 April 2020 @ 04:43
    Here are some positives. The air quality in my city has never been better (at least within the past decade of high quality particulate measurement), traffic congestion is non-existent and without the jet engine pollution, the sky is a beautiful deep blue that I've not seen since I was a small child 50 years ago. I feel terrible that people are sick and dying from this hideous disease, but a possible silver lining in this dark cloud would be to retain some of these positives from people traveling less & working at home when the disease abates. I hope business leaders and schools will see that working and learning from home is possible and permit our society to accrue some of the benefits.
  • PT
    Pete T.
    5 April 2020 @ 00:25
    Raoul. Can you see the Eurodollar pulling back in any appreciable way? I'm bullish on it as well, and am looking to reposition for Dec 2021. Love the Daily Briefing!
  • DS
    David S.
    4 April 2020 @ 19:50
    It is interesting that President Trump tweets that Russia and Saudi Arabia are close to an agreement and the oil market goes up. Then the OPEC meeting is delayed, and oil goes down. Even I could make money on oil if I knew what the tweet of the day was before the market. DLS
  • jK
    jack K.
    4 April 2020 @ 19:25
    Hello RV, I'm new to the channel so I come with a new bias. In my view this is a debt crisis. Corporate debt in 2008 was almost zero which since then has exploded. So this is debt which needs to be payed back, for as long as int rates have been close to zero has meant only one thing that is the economy is slow- which means that we have been in a slow economy for years and it has been a cross the world. In-spite talking heads saying the economy is booming look at the markets. I went to a Mercedes dealership a few years ago and noticed I can buy a car for less than a Chevy, it has been a bargain for a while. There such examples of supply and demand out there if you look around and connect the dots. I agree that the $ has a sudden surge left in it unless the feds do something drastic- but I m not sure how to play this safely, FX markes, options, ETF's or just go into cash? Just wanted to get an idea what your all thinking or doing. Thanks in advance.
  • AK
    Andreas K.
    4 April 2020 @ 07:39
    Excellent conversation by the both. RP explains stuff so well. For an amateur like me it’s hard to understand the volatility numbers and things like short gamma. Maybe an idea to explain this stuff? Or advise on a book that explains this terminology? Thanks and enjoy the weekend!
    • CP
      CRAIG P.
      4 April 2020 @ 09:15
    • PP
      Peter P.
      4 April 2020 @ 11:15
      Personal opinion -> for insight into that other world of volatility & gamma, and if you have the time look up Real Vision videos with Chris Cole. Then the wonderful Mike Green lives & educates in this space. Finally for a real time reflexivity view look up the hirsute Charlie McElligott.
    • mm
      mark m.
      4 April 2020 @ 19:12
      Think of Delta as speed, and Gamma as acceleration. Gamma is like a positive feedback loop, short gamma is like a negative feedback loop.
  • IP
    IDA P.
    4 April 2020 @ 13:56
    question for Ed Harrison and Raoul Pal: so it's not possibile that a G8 gets together to devalue the dollar by changing the rules (the rules that R. Pal mentioned at the beginning of his interview) ?
    • EH
      Edward H. | Real Vision
      4 April 2020 @ 19:03
      I don't see that happening because, right now, we're in a relatively non-cooperative political environment. Moreover, while many EMs want to see the dollar go lower, G8 countries don't necessarily want that given the impact on their terms of trade. Germany, for example, is much more trade-dependent than the US. So they would be hard-pressed to agree to that
  • SP
    Simon P.
    3 April 2020 @ 23:56
    Hi Ed and Raoul, I listen the Daily Briefing every day, it is very good thank you. I have studied all the potential drugs that are presently testing. The law of large numbers suggest that we have a very good chance to have something efficient, tested and approved by the end of April. Good enough to avoid hospitalization. I think it is very positive, it changed a lot the tail risk that you are talking about. What do you think? Simon
    • EF
      Eric F.
      4 April 2020 @ 00:58
      The law of large numbers? - How is that relevant to creating and testing a cure to something that we still seem to not have complete knowledge about, and that can be implemented as a cure that is not worse than the disease? I’m all for speeding up processes, but likewise this is super complex and even a good solution with side effects can have devastating results. Let’s all be positive but i think it’s delusional to think we can see a fast-tracked solution in April.
    • SP
      Simon P.
      4 April 2020 @ 02:33
      See by yourself; https://milkeninstitute.org/sites/default/files/2020-04/Covid19%20Tracker%20NEW4-3-20-2.pdf
    • EF
      Eric F.
      4 April 2020 @ 16:43
      Simon, we’re talking about ramping up testing to 100,000 people a day here in the UK. That’s a politician’s target - not even his promise! That would take about 2 years to test everyone. Just think about that, and yet you’re talking about an approved cure by the end of this month.
  • NN
    4 April 2020 @ 16:42
    How dollar swap lines can affect USD's trajectory? What other mechanisms can the FED deploy to prevent DXY from potentially moving to 120 or 130? Cause that would be catastrophic for the world economy
  • ML
    Mehdi L.
    4 April 2020 @ 14:54
    The lightning bolt shape HAHAHA
  • SS
    Sam S.
    4 April 2020 @ 13:50
    What happens when a VACCINE is announced? Does WAR breakout to get Covid-19 off our or put in the back of our minds? Chinese are promoting changing the internet protocols to track friggin everyone! ID2020 Bill Gates, Bloomberg giving $1.5 Billion to John Hopkins and CDC relies on private & corporate donations, Gates again?
  • AG
    Alexandre G.
    4 April 2020 @ 05:38
    Thanks Raoul, how many cubes for Campari-Lacroix Orange cocktail ?
    • MJ
      Markku J.
      4 April 2020 @ 10:05
      Also, what is is called? Perhaps something along the lines; "Bitcoin Booster", "Bitcoiner" etc. "Moon Shot" is taken, I'm afraid. It could be simply "Little Cayman" or something about quarantine.
  • CP
    CRAIG P.
    4 April 2020 @ 09:03
    What is Ed’s Twitter “handle”?
    • PW
      Patrick W.
      4 April 2020 @ 09:10
  • UJ
    Ulf J.
    4 April 2020 @ 08:31
    I donated to an interesting energy project in blockchain crypto economy is real........... https://new.siemens.com/global/en/products/energy/topics/connect2evolve.html. Ed and Raoul great briefing.
  • TF
    Theo F.
    4 April 2020 @ 07:55
    You've never talked about crypto in these daily briefings. But it's part of your entry announcement. 🤨🤨🤨
  • UJ
    Ulf J.
    4 April 2020 @ 07:48
    I think of a book with Author Naomi Klein The Shock Doctrine The Rise of Disaster Capitalism. You need some kind of shock so the people accept a radical change like the way of economy and USD as the reserve currency. We are on the way to use blockchain and crypto I am bullish on Etherium. We don't need paper money when we go into space like Trumps space force.
  • BF
    Bret F.
    4 April 2020 @ 07:03
    Hong kong dollar fix break???
  • VH
    Victor H.
    4 April 2020 @ 05:37
    In all seriousness, the comments from Raoul on the US Dollar in this video is the most beautifully eloquently articulated explanation I've ever heard during this covid-19 madness. Thanks for constantly providing such valuable contents every single day, RV!!!!
  • AC
    Andrew C.
    4 April 2020 @ 04:10
    The world has to change?..... I think it’s more somebody has to change the world! I see the world just continuing to bumble along under the current leadership. Where is our Churchill, our Lincoln, our Caesar? Even Australia had John Curtain in WWII, who just stood up and said “this is what we are doing, shut up and come along!” Nobody can answer this question for me, and this lack of real leadership is our biggest problem!
  • sh
    steve h.
    4 April 2020 @ 03:27
    Thank You Raul and Real Vision, Thru your guidance. Finding, Hedgeye thru Real Vision..I have learned some much in the last year.. I was able to go to cash and help my best friend and his family go to cash. I am down very little.also learning to short some things. I owe Real Vision so much I recommend your Co. to everybody.. Raul you said you are building your company because you want to help the little guy. Well you did help my family and I was able and trying to help people in my life. Thank You....
  • JK
    Jim K.
    4 April 2020 @ 02:06
    Hey Raoul, can you elaborate on how with money/ dollars being fungible how Basel III and the Volcker Rule have eliminated the ability for DB NY to lend USDs to DB London? Great stuff guys! Thanks and stay safe.
  • YO
    Yoshitaka O.
    4 April 2020 @ 01:43
    Raoul decided to button up today!
  • DS
    David S.
    4 April 2020 @ 01:32
    I am watching the movie Dr. Zhivago for the Nth number of times – great movie. It helps me with my perspective along with nature walks – six feet apart. I hope each of you can find a way to balance your perspective too. DLS
  • ML
    Mike L.
    4 April 2020 @ 01:26
    Speechless. Amazing content. keep up the great work gents
  • NL
    Nikola L.
    4 April 2020 @ 01:20
    Raoul touched very important point about people manufacturing goods without having customers. This is a point I have been highlighting to friends who keep saying "but China is restarting". They still struggle to answer my question of who is buying Chinese goods (besides medical products) as US and EU are shutting. Even my own retarded Oz Gov started to shut the country down. I thought I was going mad and missing something.
  • PB
    Patrick B.
    3 April 2020 @ 23:22
    Ditch the books in the background mate. You’d have more credibility with a Che Guevara poster
    • RA
      Robert A.
      4 April 2020 @ 00:26
      Sorry to disagree Patrick, but I like the Common Prayer Book. After seeing what it was in the comments the other day I looked it up on Wikipedia.....and have ordered a copy. If it’s good enough for Ed, it’s good enough for me. Of course, my wife and I spent 11 years in a row cycling around the French country side for a month at a time so maybe I just relate to Ed and watching that wheel go round and round while smelling the air and watching the scenery go by.
    • EF
      Eric F.
      4 April 2020 @ 01:15
      I like to read comments to get insight and views that challenge and expand my thinking. This isn’t one of them and if you wrote it to look like an idiot, well done, you succeeded.
  • AK
    Adam K.
    4 April 2020 @ 01:14
    Killer material. I really enjoyed this one!
  • HE
    Henry E.
    4 April 2020 @ 01:12
    Hey Ed and Raoul: Great discussion as always, thanks for letting all of us join in... My view from listening to all everything is, we'll see: - INFLATION in all consumable goods (think food); and - DEFLATION in assets (used to purchase consumable goods). Case in point - in the USA where I live, 9 mm Luger handgun ammo is up a mere 100% in ONE MONTH (sample of demand inflation). And, I don't even want to know how much my vacation home value has fallen. There are ZERO real estate showings anywhere.... Best, P.S. - dear RealVision, can we have at least ONE episode of 'Happy, Happy...' a week. This is getting really depressing! OR at least put a WARNING LABEL on the really difficult one to listen to....
  • ns
    niall s.
    3 April 2020 @ 23:25
    I came across this interesting note on the Italy page of worldometer coronavirus count this evening while doing my virus homework , I have always preferred to look at actual death stats rather than case numbers to assess the progress of our invisible enemy and this note seems to back that approach : Italy: the real number of COVID-19 cases in the country could be 5,000,0000 (compared to the 119,827 confirmed ones) according to a study which polled people with symptoms who have not been tested, and up to 10,000,000 or even 20,0000,000 after taking into account asymptomatic cases, according to Carlo La Vecchia, a Professor of Medical Statistics and Epidemiology at the Statale di Milano University. This number would still be insufficient to reach herd immunity, which would require 2/3 of the population (about 40,000,000 people in Italy) having contracted the virus [source]. The number of deaths could also be underestimated by 3/4 (in Italy as well as in other countries) [source], meaning that the real number of deaths in Italy could be around 60,000. If these estimates were true, the mortality rate from COVID-19 would be much lower (around 25 times less) than the case fatality rate based solely on laboratory-confirmed cases and deaths, since it would be underestimating cases (the denominator) by a factor of about 1/100 and deaths by a factor of 1/4. Food for thought over a nice cocktail .
    • RM
      Robert M.
      4 April 2020 @ 00:08
      People like to focus on the mortality rate with stats that are incomplete. How many people have it? How many deaths have been mis-classified. I tend to focus on total deaths and what is happening in the hospitals. When you see hospitals being overwhelmed in Milan, Madrid, and NYC, army trucks hauling the dead in Italy, freezer trailers to hold the dead in NYC, and doctors and nurses dying due to taking care of their patients, you realize this is much different from other diseases we have dealt. Focusing on what's happening in real time vs figuring out the trailing mortality rate for me is more useful in determining the impact on markets and society.
    • EF
      Eric F.
      4 April 2020 @ 01:10
      Interesting but I don’t think you can really take many positives from that approach. If as many people have / had it then yes it dilutes death rate relatively, but not absolutely. It also means it’s super contagious, which is also not a positive. Facts are facts and it’s overwhelming health systems and on course to double the average death rate in some places.
  • RA
    Robert A.
    4 April 2020 @ 00:31
    Really appreciate the positive @ the end. After watching Raoul and Julian on Macro Insiders this afternoon and segueing into the Daily Brief, trust me it was much appreciated. Whats funny is that with all the work everyone is putting into the most excellent Daily Brief I dare say the most taxing part is probably to come with that “something positive spin” at the end. Love the creativity.
  • TS
    Tamim S.
    3 April 2020 @ 23:05
    Did he say the S&P 500 is going to drop to 666 ?
    • B
      Bob .
      3 April 2020 @ 23:58
      No, he quoted someone else as saying that, although that person may have been indilging in gallows humor. On the other hand, 666 would be about 80% off ATHs and if indded we are heading into a depression then 666 may seem very possible. Let's hope not. i think the eventual development of a COVID-19 vaccine will be the turning point, but because so much damage will be done by then it will be a long way back.
  • BB
    Bob B.
    3 April 2020 @ 22:49
    What about Fed/ECB dollar/euro swaps? Do they transact to bypass regulations?
  • WM
    William M.
    3 April 2020 @ 22:43
    Enjoy the bike ride, Ed! Thanks guys!
  • JT
    Jayne T.
    3 April 2020 @ 22:41
    Normalized earnings of $170 at 11 P/E due to inflationary expectations. $1,870 target on the S&P.
  • RB
    Rob B.
    3 April 2020 @ 22:32
    Short of a miracle I do not see a scenario where next week will not be very ugly.
  • BB
    Bob B.
    3 April 2020 @ 22:27
    you running late - still waiting :(
  • BB
    Bob B.
    3 April 2020 @ 22:25
    Is the next tool to shut down short selling?
  • DS
    David S.
    3 April 2020 @ 22:23
    What can a fund that must by covenants be 90% invested do? They will sell at the speed of the ability of funds to change their covenants. Right now the market is vastly overpriced to any calculation of net present value of profits – what profits?? Just my opinion, but the market will go down dramatically when everyone understands they will be left holding the bag. This is just human nature and common sense. DLS
  • GM
    George M.
    3 April 2020 @ 22:06
    The cue ball moved since the last many videos! :)