Perfect Timing Eliminates Trend

Published on
July 24th, 2017
64 minutes

Perfect Timing Eliminates Trend

The Interview ·
Featuring Alex Gurevich

Published on: July 24th, 2017 • Duration: 64 minutes

Alex Gurevich of HonTe Investments is a master trader and a highly accomplished fixed income and foreign exchange investor. In conversation with fellow macro veteran Michael Green, Alex brings his unique long term perspective and incisive opinion, to the uncertainties in the world of economics and asset flows, to crystalize the opportunities in global rates and FX that the consensus are missing. Filmed on July 10, 2017, in San Francisco.


  • my
    markettaker y.
    31 July 2018 @ 02:51
    Can someone please spell out the mechanics of Gurevich's leveraged treasury strategy? He buys the bonds, pledges them as collateral in a repo at libor(?), then buys more, pledge, repo, buy.. rinse repeat, all while collecting the interest on the pledged bond collateral?? Doesn't think result in an absurd situation where the first treasury is the only underlying collateral for a bunch more, and the speculator is collecting the coupon on the whole lot? Surely this cannot be what he's talking about, and yet it's not exactly clear. Also, how big do we suppose the account is of someone like this? 10m? 30m?
  • TS
    Tom S.
    26 July 2017 @ 10:04
    Really interesting and unique thoughts. Particularly enjoyed (1) comments on whether treasury should issue 50/100 year bonds and using 15 year old bond with a coupon of ~7% to illustrate this (issuer giving up convexity + left with huge liability for locking in a specific repayment rate for such a long time) (2) merits of overlay/unfunded position in USTs through collateralising equity portion of portfolio
    • JP
      Janusz P.
      30 August 2017 @ 20:32
      actually that (1) is what I'm not getting. Even if we assume the rates going down/bond prices going up (like his example of a 15yr bond) isn't that regarding the secondary market only? How is the issuer left with a bigger liability? Isn't the issuer supposed to pay back the face value? Why would the issuer worry where the secondary price is? I understand that if the issuer wants to buy back older bonds to roll into newer with the lower yield, then yes, that would cost them extra $ HOWEVER this is exactly the alternative cost of locking in that new lower yield. You can't eat the cake and have a cake. Granted that with shorter duration issuer would avoid that problem as interviewee points out. But consider this as a counterargument: even though the long trend is up, given the current interest rates at or close to zero coupled with massive CB bonds buying for years, that sounds like a different spot (for govs) to issue long dated bonds than was when when yields were much higher. Therefore the future price of those bonds is irrelevant, since there is no reason for the issuer to buy back those bonds early as they won't capture any lower rates. Unless someone believes rates at or around zero are the new norm to be followed by negative rates, which I don't think is the case, since everyone (hopefully including the CBs) finally gets to the conclusion that all those QE's do nothing for the real economy. I would appreciate someone pointing out where am I making the mistake above, as I'm sure I wrong, just don't know how. In other words, it seems to me that it does make a lot of sense to issue very long dated bonds (especially by high quality issuer) at super low interest rates and never look back till the maturation date, upon which they buy the back at face value, upon which you consider the cost of the capital depreciacion (infaltion) that means like a further bonus for the issuer. Should the inflation pick up somewhat and the issuer might get the loan over those years AND be (net) paid to hold your money in the end, equivalent to negative interest rates.
  • tW
    tgwtom W.
    9 August 2017 @ 15:56
    Down votes on an obviously brilliant presentation by Alex makes the case for what @MarkYusko would call #edge .
  • DS
    David S.
    2 August 2017 @ 22:07
    "Everyone" believes that FX markets cannot exist without the US having a negative balance of payments. Is this actually true? Or is it similar to house prices can never go down or many bad mortgages bundled together make a good mortgage portfolio. Can the world exist without a reserve currency and just FX markets? Just asking the question. DLS
  • PJ
    Peter J.
    2 August 2017 @ 08:18
    The illusion of money! The best description of the current global debt and IMO money printing PARTY
  • sp
    shashwat p.
    2 August 2017 @ 06:19
    I think this interview will age very badly. Will revisit in 2 year
  • TH
    Tom H.
    29 July 2017 @ 18:22
    The swiss franc story would be worth a full discussion. Not only is the Swiss National Bank like a huge hedge fund, but, fun fact, it's listed on the Z├╝rich stock exchange.
  • pm
    preston m.
    28 July 2017 @ 09:51
    This is one of the best on this content to the "content" on the mainstream finance shows.
  • JE
    Jos E.
    27 July 2017 @ 11:09
    ****ing brilliant
  • DF
    Dominic F.
    24 July 2017 @ 12:10
    Really interesting. Love Michael Green's discussions and Alex is great too. On China, Been saying for ages that Australian/Canadian property is vulnerable if China deval and CNY is repatriated either by choice or by Chinese government decree.
    • PN
      Paul N.
      24 July 2017 @ 23:18
      If china devals, theres no more reason for chinese to keep sebding $$ offshore. Chinese demand for property here in Sydney will dry up. Australia will have big, big problems.
    • DP
      David P.
      26 July 2017 @ 10:47
      The AUD drop should cushion it unless the commodity prices go through the roof. But in that case, big miners are a buy because the Aussie will not go as high as normal. Big aussie miners might actually be a good edge to the Sydney/Melb bubble.
  • RI
    R I.
    26 July 2017 @ 03:06
    These two are among the most intelligent and dead right analysts on earth.
  • Nv
    Nick v.
    24 July 2017 @ 11:00
    The comment about long term bond issuance seems strange. Surely issuing 50-year bonds at near record low rates make an immense amount of sense to governments, not bond buyers
    • PH
      Philip H.
      24 July 2017 @ 13:44
      Especially if they are targeting higher inflation you actually want to be a debtor!
    • JH
      John H.
      25 July 2017 @ 23:51
      Have read Alex's book (a must-read). And here too, he looks at things in ways that open my mind. Fantastic. Do disagree that tapering drove dollar rally. DXY is 2/3 euro-bloc and DXY only really moved in 2014 when the ECB's reaction function started changing and the EUR started moving.
  • MS
    Matt S.
    25 July 2017 @ 17:27
    I felt like a 10-year old boy sat at the table with his dad and his dad's best friend, listening to them talking about things I couldn't understand - but I was so proud of my daddy anyway, such a smart guy!
  • JM
    John M.
    25 July 2017 @ 04:24
    Very ood interview. I believe Alex has been bearish CAD $ and wondering what his latest thoughts were?
  • JL
    Jim L.
    25 July 2017 @ 03:21
    very good interview thanks!
  • HS
    Hubert S.
    24 July 2017 @ 21:30
    Fully understand the carry argument for Swaps, Eurodollar- and Treasury Futures. However from 2018-2020 there is a risk of a "The Fed helping to get rid of Trump" (Midterms, impeachment or reelection). Maybe Alex can comment if these things play a role in his handicapping ?
  • TL
    Tianyun L.
    24 July 2017 @ 19:28
    Mike, any chance of an interview with Peter? Pretty please?
  • VS
    Victor S. | Contributor
    24 July 2017 @ 16:43
    Was an interesting interview and sophisticated....but gents you can borrow by printing eg QE but you cannot print the interest. Ask any SHYLOCK ! He will gladly rollover the loan if you pay the vig but break your legs if you want to borrow the vig!
  • KV
    Kuba V.
    24 July 2017 @ 16:35
    I always like to hear Alex and Michael did a good job ;-)
  • HJ
    Harry J.
    24 July 2017 @ 16:29
    Mike your something. Could listen to your thoughts for hours! Great interview as usual! Thanks
  • DM
    Daniel M.
    24 July 2017 @ 14:43
    I love Alex. Sharp, clear mind.
  • DK
    Damian K.
    24 July 2017 @ 13:14
    Great interview. Alex is a no bs guy with a non-dogmatic thought process. His reasoning behind trades is just so valuable. His book is also fantastic and highly recommended. Thank you!
  • AE
    Aleksey E.
    24 July 2017 @ 12:20
    Call me crazy, but if you short the schatz & long treasury futures, you get a nice dollar-neutral yield-spread trade? What are people's thoughts?
  • TJ
    Terry J.
    24 July 2017 @ 11:47
    Alex is always so persuasive on the simpler ideas and why not as it obviously works! Great to hear his valuable insights again.
  • JV
    Jason V.
    24 July 2017 @ 11:42
    A privilege to listen to such a conversation. RVTV is without peer.