Daily Briefing – September 4, 2020

Published on
September 4th, 2020
Duration
45 minutes


Daily Briefing – September 4, 2020

Daily Briefing ·
Featuring Jack Farley, Ash Bennington, and Raoul Pal

Published on: September 4th, 2020 • Duration: 45 minutes

Real Vision CEO, Raoul Pal, is joined by senior editor, Ash Bennington, to reflect on a week of extreme price action. They analyze the dramatic crash of U.S. equities on Thursday and its connection to the speculative activity in derivatives markets. After weighing the significance of Softbank's unmasking as the big "NASDAQ Whale" that has been buying a massive amount of calls on big tech stocks, Raoul and Ash have a broader discussion about how volatility regimes evolve and bleed into each other. Raoul then provides a strategic update on his "unfolding" thesis, shares his thoughts on Europe, and explores the possibility of a W-shaped recession. Finally, Raoul and Ash discuss the "Festival of Learning" that Real Vision hosted this week, as well as give a sneak peek of Real Vision's new community feature, "The Exchange." In the intro, Jack Farley and Ash discuss today's jobs report and look at market volatility.

Comments

Transcript

  • AT
    Amos T.
    12 September 2020 @ 05:19
    Love the discussion on short gamma trade. Wondering whether the transcript will be available.
  • AA
    Andrew A.
    9 September 2020 @ 14:20
    One thing I love about Ash is that he always seems to ask the right question. When Raoul mentioned about the delta hedging he asked exactly what I asked the computer screen.
  • SB
    Sean B.
    9 September 2020 @ 01:20
    Excellent show, had wondered who was the big buyer of QQQ at the close last wed/thurs. Makes so much sense now.
  • YW
    Yowshi W.
    8 September 2020 @ 03:25
    please please improve the buffering for us with very slow internet speeds and low bandwidth..thanks!
  • PB
    Paolo B.
    7 September 2020 @ 00:15
    RV, What is the real time data you refer to? Thank you
    • PW
      Patrick W.
      7 September 2020 @ 18:56
      The one referred here is the https://tracktherecovery.org/. Other composites is the NY Fed Weekly Economic Index https://www.newyorkfed.org/research/policy/weekly-economic-index#. As for the Fed balance sheet referred to as one of the five drivers https://fred.stlouisfed.org/series/WALCL,
  • SB
    Stewart B.
    7 September 2020 @ 09:39
    Good questions Roger. The Exchange works well. Great point Raoul that liquidity events happen quickly and solvency events slowly. I enjoyed the lessons learned from failed trades section of the FoL. You would never find that on Bloomberg, despite many of the guests giving advice which later was shown to be very shortsighted.
  • MA
    Mike A.
    7 September 2020 @ 03:28
    Quite the contrast from the Tony Greer DB earlier this week.Raoul's deep understanding of how markets function and his Macro thesis is such a valuable resource along with his passion for keeping us little guy's out of market dislocations is really to be commended i know he has saved my ass on several occasions being a RV member now for oer a year.Thanks Raoul and especially Ash
  • SH
    Sahil H.
    7 September 2020 @ 03:03
    I became aware of Masayoshi Son and softbank after they took massive positions in many big startups like Uber, WeWork etc. and after seeing the fall out of the clusterfuck that was WeWork, I've come to the conclusion that Masayoshi Son is a loose cannon. He is an extreme example of what happens when you have big wins early on in your investing career and become far to over confident. Also with the exchange we need emojis. You can't talk about BTC with and crypto without rocket emojis.
  • MC
    Michael C.
    7 September 2020 @ 00:42
    One of the best Daily Briefings so far. Looking forward to The Exchange.
  • TS
    Tamim S.
    6 September 2020 @ 21:37
    Raoul's saying that he is expecting a W shaped recession, does that mean his insolvency light bolt shape depression idea is no longer being followed?
  • MB
    Matt B.
    6 September 2020 @ 15:06
    Yes, Q4 1999 a prop desk - at, in fact Goldman - was buying upside calls in huge size especially in the CAC40 in France. The market thought they were mad. But look at the chart. They made fortunes. And when the market took off to the roof, they then rolled their strikes up -- and coined it in again. Why can't it happen this time? Mind you, this time the size is so much bigger.
  • FG
    Flavio G.
    6 September 2020 @ 12:53
    Ohhh no, not a scammer. Not James Altucher.
    • FG
      Flavio G.
      6 September 2020 @ 12:55
      https://www.inc.com/sonya-mann/james-altucher-cryptocurrency-get-rich-quick.html
  • FM
    Felix M.
    5 September 2020 @ 22:08
    Will real vision ever create a trading course in the future?
    • RP
      Raoul P. | Founder
      6 September 2020 @ 12:12
      Yup. Working on it.
  • JS
    Jon S.
    5 September 2020 @ 02:04
    I have noted that the RVDB is not behind paywall anymore. We as essential members do not have the opportunity to listen to Raoul so many times. Friday is probably the favorite day for essential members and while having all RVDB behind a paywall, but not be an option for RV. We would be grateful if the Friday one is kept behind the wall when Raoul talks and from time to time make it free for everyone. However, it is a little bit frustrating to see that one of the main interviews of the week, probably the most important one is not behind a paywall. Many thanks for your understanding and I hope other users can add or comment as well in this respect. Have a long good weekend everyone.
    • JS
      Jon S.
      5 September 2020 @ 02:47
      One thing to add, as Raoul speaking of new content on this one. I just wanted to detail that I am not exactly referring to the above video, but I was making a kind of general comment. Looking forward to be able to post our own content and ideas hosted by RVDB. Great initiative!
    • AY
      Andrey Y.
      5 September 2020 @ 04:48
      I have become an essential member and now plus one in a big part due to how much extra value above the expectations the RV delivers. I would love to see even more awesome and delightful content spills from higher paid chapters into lower paid or free ones. It helps to make the return on investment into the membership faster. Looking forward to join the pro tier :)
    • AT
      Amy T.
      6 September 2020 @ 11:15
      I understand what you mean, now that the daily briefing is free content, the value for being an Essential member is less. However, I’ve become a member from RV’s YouTube channel, so by making daily briefing free, it will make RV grow. I would suggest maybe release more of the older Pro videos for essential members, so they can see the value to make the switch.
  • JP
    John P.
    6 September 2020 @ 09:00
    I love financial twitter. I hope the RV forums work out.
  • KA
    Kevin A.
    6 September 2020 @ 01:13
    I can’t wait to find out the tenor and strikes on the SoftBank call options. I suppose that it is plausible that big funds start to try messing up SoftBank’s trades. They probably have already figured out where SoftBank is exposed. The fact that SoftBank is behind these trades makes me feel great about mostly being out of tech equities right now. They are some of the worst risk managers I have ever seen.
  • DB
    Dave B.
    6 September 2020 @ 01:02
    such an affront to Sriracha. how dare you lol
  • GB
    Geoff B.
    6 September 2020 @ 00:30
    Loved this. Raoul always adds value. The Exchange initiative sounds super interesting. Thank's guys.
  • MT
    Mike T.
    5 September 2020 @ 19:10
    Regarding the Softbank story I have a small dose of sceptisim that the FT article - link below - is entirely 100% acurate as published. Certainly a Market Maker can hedge short calls by buying stock BUT this is normally only if the MM is concerned with poor liquidity. In those stocks with optimal liquidity both the underlying stock and its Options e.g. the five Nasdaq leaders I believe the MM's would be less inclined to buy stock as a hedge on the short Calls, with optimal liquidity. This is only a working theory, I have no evidence. Anyone have the contact details for the supreme leader and Master of the Financial Market Place Universe i.e. Ken Griffin CEO @ Citadel, perhaps Raoul could ask him, as he wont take my call :-) https://www.ft.com/content/75587aa6-1f1f-4e9d-b334-3ff866753fa2
  • IN
    I N.
    5 September 2020 @ 18:56
    What a way to end the fiscal year. I want to call this the "end of speculation". The only signal I am getting is that we need to invest in real productivity, period.
  • RM
    Robert M.
    5 September 2020 @ 17:11
    Would love more clarity on Raoul's thesis as I was confused by his comments today. For some reason, always thought the liquidation phase was after the hope phase and referenced the rise in bankruptcies that would happen as the economy declined (hence liquidation of businesses as well as securities as defaults rise). Today, he said the liquidation phase was stock based and related to March, then we just had the hope phase, and then referenced bankruptcies, which are company based but will impact stocks and debt for those companies. So essentially what I thought, but just want to make sure I got the terminology correct as he discusses in future. Assumed liquidation phase (i.e. bankruptcies) would lead to the typical grinding down in the market as this news occurred.
    • AT
      Anthony T.
      5 September 2020 @ 18:23
      March rapid selloff = Liquidity crisis, which was stopgapped / mitigated by Fed announcing "infinite QE" April - End August = Hope phase, where stock market rallies in hope of V-shaped recovery (and turns out, Softbank buying massive calls forcing dealers to delta hedge...) September onwards = start of Insolvency phase (bankruptcies)
  • KP
    Kaushal P.
    5 September 2020 @ 12:49
    Great interview as usual. I feel like there must be some reason SoftBank is acting so reckless if the FT piece is true. Are they about to blow up? US banks are ok so far but I feel like Deutsche Bank or SoftBank or maybe a Chinese Bank may be the Lehman moment of this crisis. Hard to imagine all this whipsawing In the real economy and even worse in stock markets and someone doesn’t blow up
    • RM
      Robert M.
      5 September 2020 @ 16:56
      The Softbank move is just another red flag in a series of flags that happens at market tops. Explains a lot of the relentless up moves on some stocks. Will be interesting to see if derivatives continue to drive market prices next week.
  • CM
    Christopher M.
    5 September 2020 @ 16:02
    I think Spain's spike is best seen in the context that only 1% of its population have been or are cases. Even if the infection rate is underestimated by the case rate 10-fold, that would still only put Spain at 10%, the bottom of the lowest of herd immunity thresholds. So, Spain probably could get much worse, but that's because it was never hit hard in the first place. Spain could probably spike a lot, but that doesn't mean that Britain will ever see a second wave, or that NYC will ever see a second wave.
  • LC
    Lee C.
    5 September 2020 @ 15:40
    On what planet is 8% unemployment good news? Better than expected? Aren't you people sick of being fed and reporting narrative?
  • IO
    Igor O.
    5 September 2020 @ 14:43
    Haa. It's Texas hedge SoftBank doing. No guts no glory.
  • JH
    Jack H.
    5 September 2020 @ 14:30
    I'm incredibly interested in running some sort of automated sentiment analysis on The Exchange...
  • MR
    Michael R.
    5 September 2020 @ 13:47
    Thanks from me, the "little guy investor/trader". You explain things so that I can go and study and investigate on my own. Really like "Jack of all trades" Farley, would like to see him narrate some interviews. Really enjoy when you describe the exact construct of the trades, i.e. "put spreads" etc. Thank You.
  • DP
    David P.
    5 September 2020 @ 01:56
    I think it was Lyn who mentioned the Wile E Coyote term. She definitely mentioned it in RPs interview with Lyn.
    • TL
      Timothy L.
      5 September 2020 @ 13:10
      Yeah it was definitely Lyn. She gets the cred! lol
  • wj
    wiktor j.
    5 September 2020 @ 06:36
    Awsome idea Raul. Just have 1 rule. No politics. No election discussions.
    • CJ
      Christopher J.
      5 September 2020 @ 12:56
      and politeness
    • CJ
      Christopher J.
      5 September 2020 @ 13:01
      Great to hear about how this gamma hedging works - retail investors just don't have a clue about any of this - super interesting when you start getting into the nitty gritty
  • RK
    Ron K.
    5 September 2020 @ 12:17
    Super exchange, I just keep on learning. One correction, I believe it was Lyn Alden who originally coined the Wile E. Coyote moment we are in. Have a good holiday weekend all.
  • RM
    Russell M.
    5 September 2020 @ 12:14
    How can yields go up with the Fed ready to create unlimited credit?
  • RM
    Russell M.
    5 September 2020 @ 12:07
    Sounds similar to the problem created by Portfolio Insurance in the 80’s.
  • Jv
    Juri v.
    5 September 2020 @ 09:49
    LOVE this weekly wrap up, keep doing it Raoul & Ash :-))
  • JF
    Jess F.
    5 September 2020 @ 09:45
    Having never participated in Social media, facebook, twitter etc., I am looking forward to the new exchange. I've been an RV member for a few weeks now and it'll be great to have a forum to pose questions and hopefully get answers. Great work you guys for building a network that will make bubble TV irrelevent. Thanks Raoul for all you're putting together.
  • JR
    John R.
    5 September 2020 @ 07:42
    Great level of discussion. I've been a DIY investor for 12 years and this is the best content I have come across. Recently signed up with my son who's starting an Economics degree
  • ZK
    Zoltan K.
    5 September 2020 @ 07:37
    Great RVDB piece, candid and unbiased. Thank you. A potential explanation for the call option buying could have been that the alleged buyer also provided some (but not all) of the delta to the market maker. I understand they are large holders of these stocks, e.g. could be replacing some cash positions with call options. Market still could rally, thin August volumes. Would be interesting to see whether there was some put option buying as well at the same time.
  • JS
    Jon S.
    5 September 2020 @ 07:33
    Just wondering if Raoul sees the topping pattern he will share with everyone on the essential tier... I just did not get the name of the pattern. He called it broadening top but the broadening top is a higher highs and lower lows until it breaks on the downside... but he said the price tries to recover the higher high but then it falls? is like a double top? Is there any graphic representation of what he meant to refer? Many thanks.
  • MH
    Muddshir H.
    5 September 2020 @ 07:07
    Great work raoul
  • WA
    Wissam A.
    5 September 2020 @ 06:28
    Raoul can you bring Nick Leeson for an interview?
  • Hv
    Hannah v.
    5 September 2020 @ 05:57
    I’m so excited about the EXCHANGE!!! Finally! Thanks Raoul and Team!!!! I’m hungry for education, discussion and getting involved. 😍
  • MA
    Mike A.
    5 September 2020 @ 05:16
    Raoul /Ash Another great episode guy's and thanks Raoul for keeping us in the loop on the Softbank trade. Watching everything go down today was a bit scary hoping the bottom would hold .Definitely a ton of risk out there right now..Go easy!! Weird how quickly markets flop from Tony's earlier blog to now Raoul's
  • AB
    Alastair B.
    5 September 2020 @ 05:15
    236 upvotes, zero downvotes. Impressive
  • JS
    John S.
    5 September 2020 @ 05:10
    Ash playing it straight with technical questions followed by Raoul's cogent explanations yield "must-see TV"!
  • JA
    Jordan A.
    5 September 2020 @ 01:07
    Not everything was down. Copper, cattle, a few other agricultural things were up, and zinc was hardly down.
    • MN
      MYLENE N.
      5 September 2020 @ 04:31
      are you #Hedgeye Nation? lol
  • MN
    MYLENE N.
    5 September 2020 @ 04:28
    I hate those stupid thread formats lol Can't wait for The Exchange. I'm new to the investing/trading space as a former interior designer. It's a totally different world with it's own language :) I was hooked after watching Danielle DiMartino Booth interview Lacy Hunt.
  • PB
    Pieter B.
    5 September 2020 @ 04:18
    Legendary!
  • SZ
    Sarjan Z.
    5 September 2020 @ 03:51
    But the video recordings from day 2 of the festival are not even uploaded as yet. The one about “biggest screw ups” didn’t work LI e and recording is not uploaded either. Not sure why it takes so long to upload these when the RV live are available immediately. Is it just me?!?
  • MD
    Matt D.
    5 September 2020 @ 03:32
    Great DB as usual Ash and Raoul. I will recommend friends of mine (non-financially aware) watch this for their own benefit/learning. Interesting comments on Softbank. Thanks - oddly I made a random comment on Hugh H twitter feed this week (he was posting about Japan and neg. rates) about the correlation with the Nikkei (fut) and the Aussie market and now I am connecting the Softbank dots... And if things go pearshaped! I agree with your sentiments Raoul, however politely put :) The Exchange will be deadset awesome.
  • AS
    Arjan S.
    5 September 2020 @ 02:59
    You guys should consider making this one free. That’s the best explanations of gamma/delta hedging and how it Effects markets that I’ve ever heard.
  • JI
    JWD I.
    4 September 2020 @ 22:24
    What does the strategically placed hot sauce bottles and liquor on the pool table mean? Love RVDB....its such a big part of my weekday routine!!!
    • VD
      Vishal D.
      4 September 2020 @ 23:01
      awesome easter egg. RVDB makes covid bearable
    • AM
      Aaron M.
      4 September 2020 @ 23:52
      Look at Raoul's Twitter 'replies' and find that thread...
    • JI
      JWD I.
      5 September 2020 @ 01:51
      Now it makes sense Aaron. Thanks!
  • LS
    Lewis S.
    5 September 2020 @ 01:43
    Living on the edge with those sauce bottles on that felt there Raoul.
  • sc
    sung c.
    5 September 2020 @ 01:41
    Thank you Raoul and Ash. I learned a lot from this video.
  • DT
    David T.
    4 September 2020 @ 23:23
    SoftBank will be a Lehman moment again.
    • JS
      Jon S.
      5 September 2020 @ 01:26
      Yes most probably they are into so many risky businesses hit hardly by pandemic.
  • sc
    sung c.
    5 September 2020 @ 01:26
    Thank you for explaining what effects are being placed by Mr. Son with his options play.
  • BD
    Bryan D.
    4 September 2020 @ 23:04
    Is there any way to tell what the rough maturity dates are for the softbank options to understand how long this convexity will be in the market?
    • NK
      Namic K.
      5 September 2020 @ 00:56
      I second the inquiry!
  • JM
    JOSHUA M.
    5 September 2020 @ 00:51
    I really appreciate all you're doing. I've been a financial advisor for 10 years and you don't learn this info anywhere else. Thank you for what you do.
  • JI
    Janne I.
    4 September 2020 @ 22:13
    Fridays whit Ash and Raoul are the best
    • PD
      Peter D.
      5 September 2020 @ 00:34
      Appointment TV ,,,,,
  • NR
    Nathan R.
    5 September 2020 @ 00:31
    Destroying a superb Rioja and drinking this in as well. Happy Friday!
  • RC
    Rafael C.
    5 September 2020 @ 00:11
    Love the Zacapa Centenario bottle on the pool table - quite appropriate to kick-off the weekend and unwind after the week
  • RL
    Renee L.
    4 September 2020 @ 23:58
    Thank you Raol! - leave the BS at home.
  • BK
    Brian K.
    4 September 2020 @ 23:58
    The Exchange - F***Yeah
  • SP
    Simon P.
    4 September 2020 @ 23:57
    Great explanation about why the dealers need to cover the calls they sell. This is why I am here.
  • bm
    brian m.
    4 September 2020 @ 23:41
    Dont ask what Raoul was up to on the pool table
  • CM
    Cory M.
    4 September 2020 @ 23:41
    Raoul talking about Call pressures and knock offs, market insider for sure. This moment was even better than the Festival of Learning. Best RVDB ever; best Friday ever. Amazing. Thank you.
  • TC
    Timothy C.
    4 September 2020 @ 23:36
    Is that tabasco, Sriracha and rum on the pool table?
  • PM
    Paul M.
    4 September 2020 @ 23:28
    Ironically, I deleted my Twitter account earlier this week. The signal to noise ratio was too low and taking up way too much time. I look forward to the new platform and to engage in real value added conversations.
  • AT
    ALAN T.
    4 September 2020 @ 23:19
    Tabasco Vs Sriracha. Tabasco by KO?
  • RL
    Ron L.
    4 September 2020 @ 23:18
    Great piece gents, one of my fav episodes, especially loved the explanation re the delta hedging and how dealers had to buy/force to cover the underlying securities when you have the type of wale (e.g. Soft Bank) as well as simply the sheer spike of shorter term dated call option buying as late. Also, as an immigrant myself, huge shout out to the Sriracha placement!
  • ER
    Ernesto R.
    4 September 2020 @ 23:02
    thanks Raoul , Ash and Jack and all the Real Vision Team this has been amazing week I just resew the interview that you talk about HH amazing thanks and keep sending the knowledge please
  • NN
    Ninh N.
    4 September 2020 @ 22:46
    Sriracha.... I see you are a man of culture :)