Daily Briefing – September 14, 2020

Published on
September 14th, 2020
Duration
28 minutes


Daily Briefing – September 14, 2020

Daily Briefing ·
Featuring Jack Farley, Ash Bennington, and Ed Harrison

Published on: September 14th, 2020 • Duration: 28 minutes

Real Vision senior editor Ash Bennington hosts managing editor Ed Harrison to discuss the animal spirits that are driving this market. After reviewing historical financial panics, Ed and Ash take another look at whether options mania is exerting influence on equity price action. They explore the "Softbank narrative" through the lens of volatility investor and arbitrageur Benn Eifert, and examine how speculators are buying options from market makers who are forced to delta-hedge their position, as they don’t want to take a directional position. Lastly, Ed and Ash look forward and see if there is "another shoe to drop" as fall approaches. In the intro, Jack Farley and Ash Bennington discuss the OPEC's latest monthly oil market report.

Comments

Transcript

  • JS
    Jon S.
    16 September 2020 @ 06:40
    He said the cartel?
  • AJ
    Adam J.
    16 September 2020 @ 04:24
    Whats the probability of them reducing leverage / market access for retail investors in the next few years if all the newbies wipe themselves out?
  • BK
    Brian K.
    15 September 2020 @ 22:09
    Great episode by Ash and Ed on the retail investor and options for stocks.
  • KR
    Kevin R.
    15 September 2020 @ 22:07
    What's with all the soccer talk, are you a sports announcers or financial experts?
  • AH
    Austin H.
    15 September 2020 @ 17:32
    I really love the insertion of soccer during Ed's into!
    • DM
      Dominic M.
      15 September 2020 @ 21:04
      Yeah so do I. I don't follow soccer but Ed's enthusiasm is infectious, and it's nice to take a mini-break from all the Very Serious stuff going on right now.
  • DM
    Dominic M.
    15 September 2020 @ 21:02
    Great conversations Ash, Jack, Ed—thanks to all.
  • FG
    Flavio G.
    15 September 2020 @ 08:27
    It's easy to be gloomy: Nobody can blame you if things turn sour. I've heard Ash being market-negative since I 1st saw him on this show. Markets have proved him absolutely wrong. And even if markets drop like a rock tomorrow, attitudes like Ash's will prevent you from joining the upside party that has been this last half-year. That opportunity is lost, forever. The thing is: The ECONOMY is DIFFERENT from the MARKETS. This seems so difficult to understand for some people. Ed, on the other hand, is perfectly conscious of these facts and lives by the famous phrase: “the markets can remain irrational longer than you can remain solvent.”
    • FL
      Fabrizio L.
      15 September 2020 @ 09:46
      yes man, that opportunity is lost. but make sure you see the next one forming while you ride the lost one....
    • AB
      Ash B. | Real Vision
      15 September 2020 @ 14:23
      I’m very conscious of the fact that markets can continue to run up, despite underlying economic fragilities. Ed and I have both continued to stress that point.
    • DL
      Dan L.
      15 September 2020 @ 15:54
      Allowing for irrational exuberance under random time-frames essentially gets you no-where (at least beyond short-term momentum) in terms of signal and timing. I prefer to take Ash's point that markets and the economy must reconcile, must essentially mean-revert, as valid under a framework that accounts for Fed policy and distortions in the dollar (by which I mean the competing effects of investors seeking both yield and value preservation as the dollar begins to fail as a stable unit of account). Under this view, a sideways chart for equities might actually constitute the sort of mean reversion Ash has been talking about. (And this could even happen in tandem with a significant rise in DXY). Call me irrational, but what I want is know what I can use as a stable base currency in order to make rational sense of these markets.
    • FG
      Flavio G.
      15 September 2020 @ 16:57
      Ash, we are here to make money, not to be rational, not as an intellectual exercise (for those aerobics I have theoretical physics or philosophy). Discourse needs to be focused on realities, not "should bes".
  • GH
    Gloria H.
    14 September 2020 @ 23:28
    Thanks for the heads up re the Benn Eifert interview; this fits into my ongoing options self-education. But what I really want to know is — JACK — what are the names of the gorgeous doggos in the picture behind you?
    • JF
      Jack F. | Real Vision
      15 September 2020 @ 00:25
      Yellow one is Chance, black one is Esme!
    • AB
      Ash B. | Real Vision
      15 September 2020 @ 00:33
      @Jack: Esmé is a Salinger reference. In keeping with the literary theme, is Chance a Jerzy Kosiński allusion? https://en.wikipedia.org/wiki/Being_There_(novel)
    • CM
      Cory M.
      15 September 2020 @ 13:32
      For Chance G, with Love and Squalor.
  • LE
    Luke E.
    14 September 2020 @ 23:01
    I love when you guys talk options. Its a topic I know very little about and not a product I’ve ever used. If anyone has any good books about options please let me know. Keep up the great work on the RVDB!
    • FD
      Frank D.
      15 September 2020 @ 09:11
      You might want to check out Sheldon Natenberg, Option Volatility & Pricing.
    • LE
      Luke E.
      15 September 2020 @ 13:20
      Thank you Frank. I will check it out!
  • FL
    Fabrizio L.
    15 September 2020 @ 09:39
    did you really say this time is different?????
  • SB
    Stewart B.
    15 September 2020 @ 07:55
    Love you guys. It is interesting that 'portfolio insurance' was the derivatives tail wagging the dog in '87. A very different scenario today, but I wonder if we might end up with a similarly unstable system!?
  • IM
    Ian M.
    15 September 2020 @ 07:33
    Thanks guys, i love the football anecdotes Ed, keep them coming!
  • VF
    Vassilios F.
    15 September 2020 @ 03:27
    I'm waiting for the Real Vision feature that warns you if Ed is going to talk about soccer and then promptly skips over that portion of the video. Besides that, love ya Ed!
    • JR
      John R.
      15 September 2020 @ 06:42
      I think you mean Football not soccer.
  • DG
    Dave G.
    14 September 2020 @ 22:50
    I think the other thing that has amazingly fallen off the radar is covid. What if we have a major spike in cases this fall will there be another lock down?
    • AB
      Alastair B.
      15 September 2020 @ 04:31
      Look at the second wave of the Spanish flu in the UK in winter 1918
  • LR
    Lou R.
    15 September 2020 @ 01:52
    3 - 1 to the Blues Ed! Felliow CFC fam here ;)
    • EH
      Edward H. | Real Vision
      15 September 2020 @ 04:12
      Off to a nice start!
  • MD
    Marco D.
    15 September 2020 @ 04:01
    Jack and Ash went shopping for shirts together this past weekend..nice boys
  • RC
    Reese C.
    15 September 2020 @ 02:08
    Jack always delivers the best intros.
  • DB
    Donna B.
    15 September 2020 @ 01:43
    Wonky, in the weeds. Love it. Nice job Jack, Ash and Ed!
  • VN
    Vitali N.
    15 September 2020 @ 00:46
    Ash, I would have also bet that CTA's would have done well in this environment. The ones that offer mutual fund format (although there are some obvious limitations there) have not done so - AQR, Abbey - basically flat both YTD and over the last 3 months...
    • AB
      Ash B. | Real Vision
      15 September 2020 @ 01:00
      It will be interesting to watch how it shakes out...
  • GB
    Germain B.
    15 September 2020 @ 00:21
    Disappointing performance by Ruben Loftus Cheek Ed but we will take the 3pts!
  • DS
    David S.
    14 September 2020 @ 23:29
    The value of corporate stocks can and are separated from the real economy from a value investment point of view. We are dealing with a simple supply/demand curve now. There is a limited supply of stocks to buy. There are even fewer stocks that many investors know and want to buy. There is a pile of money flowing into the stock markets from many directions. It does not matter from where. It is simply a massive amount of leveraged cash chasing a few stocks. When the flow of funds from all over the world invested in the market slows down, supply and demand will lower the market price. If interest rates are normalized, the price of stocks will be re-evaluated. Until then it is a trader’s market. The precious metals/Bitcoin seems to be a side market reacting to money flows in the same way – money in, price up. It seems almost like collecting Pogs in the 1990s. We continue to assume the real economy will someday be reflected in the classic valuation of stocks. Maybe not, or it may take longer than we think. DLS
  • MJ
    Marcus J.
    14 September 2020 @ 22:51
    Ed could have been shorting housing here in Australia since he was a whipper snapper trading options in 1999 and having his clock cleaned the whole time
  • LL
    Ludovico L.
    14 September 2020 @ 22:18
    And you have to only take a look at Reddit's WallStreetBets community and the sprawl of Youtube videos on their posts and users to see the enthusiasm/mania that retail traders have in taking positions using saved up cash/government subsidies in options to view this retail phenomena. Some posts are gold but most users just post bets gone very right or very wrong...