And Raoul do you have a price target for HYG?

Raoul's initial trade idea was puts with 75$ strike price expiry June.

Right but that's just the strike price... Wonder where he thinks it may end up.

Just buy $TLT, it's more duration than 10Y but it's under 20. And it's super liquid.

Thank you Christopher will dig into it

Yes, I was going to email Milton but now that I've seen someone else mention it -- I haven't been getting any email notifications about RV Pro / Macro Insiders postings. Please advise -- it would be very helpful to get an active notificiation any time new RV Pro content is published. Thanks.

Update -- I figured it out. I had set my RV subscriber account email preferences to "Unsubscribe from All Emails."

The IV on that is gonna be insane, it's probs better to just short the spot with leverage. But of course risk manage properly

I'm having a heck of a time trying to find any forex usd.brl currency pair. Is there a spot forex market for this currency pair?

Be careful on $GE now it's at these levels as it has embedded Libor risk in it, it's NOT a pure play rate play ($ZQ = this, but it's illiquid). The reason GE Futs (e.g. EDZ2020) didn't hit 99.9 like ZQ did was Libor risk. This 'cost' GE about 40bps, and if you had calls this is important, as that 40bps would have put the calls from $0.5-0.6 to $0.9+. But there is Libor risk, especially with banks looking shaky. This is linked to Repo of course, so you are starting to literally gamble with many 'known unknowns'. And most of us did the $GE trade for the rate play, not Libor play (I certainly did it for rates, and I'm out now totally). The FRA/OIS spread is the spread you need, but it's based upon 3m Libor, which is not helpful for GE Futs that are longer dated, e.g. Dec 2020. So the way to approx it is to simply look at the delta between the EDZ2020 chart and the ZQX2020 - November, NOT December, as Fed meeting is 16th Dec, and ED Dec expired 14th Dec... And ZQ is calculated differently to ED, ZQ is the average Effective FRR for each month, whilst ED is 3m Libor on expiry. This is why people like Alex Gurevich don't recommend the $GE trade, and instead to go for more pure rate trades instead. Now FRA/OIS could of course also decrease, meaning $GE goes up too... Just ask yourself if you want that risk tho when the trade is really about rates (for i'm guessing 99% of people reading this)

do you guys think the fiscal stimulus signals a reversal in trend such that we should start cautiously piling on equity?

I think its not going to help at all...

and more risky you can short the banks...US and Europe..US can be KBE...do you know any ETF for Europe?

This is quite good and informative.

My reply suppose to be for the above summary.

to Alberto A. Europe Fin ETF, google shows EUFN.

Thank you CD!

I'd also love to get some info here. Maybe future updates could give a little guidance towards the time scales involved etc as you see fit.

I like it.

Which ETF to short you have in mind?

With you on that one. 4x in a few days. Implied vol was bewilderingly low. Thesis seems very sound. Much appreciate how RV and especially MI gives us frameworks, not just trades. ED calls have been a winner, even if exited a little early along with Raoul. Now have HYG and XLF puts - going well. And self-directed EMB puts may turn out to be not so much the icing but the cake. Thanks Raoul and Julian for sharing your wisdom and to RV for bringing us great minds like Mike Green, John Burbank and Alex Gurevich, among many others. Helps us learn how to think for ourselves. Not sure how we’d navigate these extraordinary and challenging times without your analytical and practical pilotage. 🙏🏼

Interesting thesis - what would your timeframe and strike price be ?

Bid/ask spreads on EMB June puts are extremely wide, not sure if that is a viable trade. Am I missing something because otherwise I’d like the trade?

That sounds very interesting, I have little experience pricing and timing this. I guess Jun or Sept with Raoul's time scale for HYG, though this being outside US could be a factor. Anyone have ideas of how to price it?

Like over the longer run...

My guess is ETH has a huge part to play for the digital revolution of finance along with BTC. If you are keen on ETH and haven't yet, take a little time to look into Decentralised Finance (DeFi) movement. Along with that the Enterprise Ethereum Alliance (EEA). Both of these point to adoption which is key.

Thanks for asking this burning question for me. I'm light on outright fixed incomes but more concentrated on steepeners now.

I actually dont know! negative rates?

I think aggressive rate cuts + big fiscal stimulus packages = steepening of the curve. I agree with the view that monetary policies are not going to be enough to fight the virus. Fiscal should elevate long-end yields. But again, Raoul said 10Y is going to zero, too. If that's the case then we do need front-end to be negative. :-(

we're in similar situation, light on outright heavy on steepener =] all the best bud!!

Will do

+1 on this request to hear your comments on counterparty risk when buying options, long puts in particular. Also liquidity risks to the underlying ETFs (in the case of ETFs) if applicable. Thanks for your ongoing work Raoul.

You are missing the future. We cant trade todays numbers you have to trade the numbers in 4 weeks. Its going to all come down to the US.

Like Wayne Gretzky says, skate to where the puck is going to be not where it currently is.

COVID-19 I live in San Mateo, just outside SF. Run a real estate biz, from SF through Silicon Valley.... I meet and know a lot of people in the biz, a lot. Before the SFO airport was shut to China flights 3 weeks ago, about 42,000 people each and every week came back/forth from China, 84 flights a week. Yet I don’t see or hear about any significant amount sicknesses around here, none ... The virus started months ago in China while the SFO flights were still going non-stop..... Something is off ....the numbers are off .....

I live in San Mateo County also

Julian is on this bet and I think its a good one

both.

I prefer forwards but options is fine or futures.

Expect volatility but you can hold on for more upside. You size it as big as before...

Did into the archives to see Julian and my thinking over time. The videos are a good start...

Can't speak for Raoul but yes I think he just misspoke, the idea all along was to buy HYG puts or short HYG, he clearly hasn't changed his mind on credit (that'd be surprising given the developments).

Sorry, yes, buying puts...

It will get more volatile but I think rates go to zero. I think banks are safe in the US, for now. Who knows in the longer run (12 months). We will remain vigilant but my guess is this is a pensions crisis and not a banking crisis.

hyg is an etf

JNK. Or in my view EMB, but it's a different beast.

I bought sjb in a couple accts that don’t allow options.... it worked today and tracked hyg well

Agree. Video is better at this point. Transcript later would be nice for history and documentation purpose.

In some ways text is preferable to video. Text / graphics on the screen are inherently faster to process & far more information-dense than video. On RV's side I also imagine printed reports are logistically easier to produce. They can be done any time, any place, no need to dress, shave, attend to lighting / sound / connectivity issues, etc. To put a number on it I'm comfortable with a Text:Video update ratio of 4:1.

Correction -- sorry, I though this comment pertained to the previous March 6th written report. I hadn't reloaded my browser and it wasn't showing the "March 9th" date clearly. I retract my comment.

They haven’t tested enough people to know. As Raoul stated, things will become much clearer in the next 2-3 weeks.

I should add, I noticed when the market halted Monday AM oil, gold futures and several other commodity futures still traded including their options

They closed after 9/11 - it just means you cant trade...and that means you cant manage risk

Ya, no kidding ... But at end says short S/P & HYG ...

Buy puts, sorry...

I think avoid ETF's as they have some liquidity issues possibly. Fund a gov bond mutual fund that is just indexed or slightly active and hold that.

I guess Raoul means to buy HYG put options. His March, 6ths flash Update states "Buy HYG June $75 Puts".

Thank you!

Thanks

The US pension system and banks will buy all of those and then some..demand is ENORMOUS

No, I think that is fine.

*Raoul