Bond Market Play on Sovereign Debt Bubble

Published on
April 25th, 2017
4 minutes

Bond Market Play on Sovereign Debt Bubble

Trade Ideas ·
Featuring Mark Spiegel

Published on: April 25th, 2017 • Duration: 4 minutes

Mark Spiegel, Managing Member of Stanphyl Capital Management, outlines a long term short position based on what he thinks is the biggest bubble in the world at the moment, European and Japanese sovereign debt.


  • BA
    Blair A.
    28 July 2017 @ 01:28
    Greetings RTV subscribers. Welcome to your first trade recommendation. Today allow us to introduce you to a cute trade shorting the BOJ and ECB. Its known as The WidowMaker. Why you ask? First a moment of silence for all the Japanese widows who lost husbands shorting BOJ treasuries years ago. Second, lets all lock our windows.........
  • RM
    Roberto M.
    25 April 2017 @ 13:58
    what about japan?
    • RM
      Roberto M.
      25 April 2017 @ 14:01
      meaning..what is catalyst there? seems they have been printing forever and at this point that system is rotten (their central bank buys equities).
    • JU
      Jay U.
      15 May 2017 @ 03:46
      The catalyst in Japan might be a pickup in global inflation - the general reflation trade thesis. Not saying I believe it, but its a case that might be made.
    • JC
      John C.
      15 May 2017 @ 19:32
      the problem with this is as several other RV videos have shown is that inflation isn't really picking up other than energy and that is dying down now so we might not have inflation for years to come. When it hits it will hit hard but they can keep this game going on for a few more years I think
  • MZ
    M Z.
    25 April 2017 @ 21:30
    Question please - "short BNDX" - is there a inverse ETF to accomplish this for less sophisticated folks out here in RVTVland? Thanks for any answers...
    • MV
      Michael V.
      26 April 2017 @ 14:57
      you might want to look at buying the bndx puts. The cost is all right, if you believe the underlying thesis.
    • JC
      John C.
      15 May 2017 @ 19:31
      re buyng BNDZ put you can only go out til Dec 2017 (about 214 days) and they aren't necessesarily cheap but it's a way to go. I just worry that the EU can keep this nightmare going a year or two more and you might be right but your options don't go out long enough
  • M.
    Milton ..
    3 May 2017 @ 18:04
  • TW
    Thomas W.
    29 April 2017 @ 09:55
    Isn't the "max 5% downside" call a bit too sanguine? With an average maturity of 9 years I am not sure I'd sleep well. Euro Bund Sep 172 calls have a delta of .07, I agree that it's a long shot but we've seen stranger things happen in QE land.
  • MA
    MarketStudent A.
    27 April 2017 @ 04:44
    Like the series. The summary is missing to mention that the idea is to "SHORT" BNDX
  • CT
    Christopher T.
    26 April 2017 @ 22:06
    You could also short BWX or go long euro banks.
  • JH
    John H.
    26 April 2017 @ 21:51
    Cheaper to short with futures, as some have pointed out. Also, before shorting this, I'd want to know what the breakdown is, esp. how much is Northern European which have euro-zone breakup re-denomination risk.
  • TM
    Todd M.
    26 April 2017 @ 13:57
    Nicely focused thinking and reasoning here. Much better than the longer Tesla interview.Good focus, clarity and great editing!
  • AL
    Alfonso L.
    26 April 2017 @ 04:00
    I like the trade, but I'm not sold on the math here. The problem is that I'm losing .75% for the short, and then when I look at it on IB, they are charging me 2.53% to borrow it. I believe I get credit for the sale, so that's saving me a few dollars on my margin because I get the use the cash, but pay the borrow, but seems to me like I'm going to be going backwards at about 2.5% here annually. Yes, this might have a positive value to be short here because the debt is clearly inflated, but I'm paying a near certain 2.5%. You won't catch me long on this trade, and I would love to do it for a .5% or perhaps even .75% fee because I'm getting use of the money, but at 2.5% it's just a bit too rich for my blood. That said, I'm the (wizard) who pays 100% rates to borrow garbage stocks and short them. This just isn't a garbage stock -- it's a government run ponzi bubble and as we've seen with Japan those can go on for a very long time. Bet with the house is generally the right choice. Japan has a lot of debt -- they are going to keep rates low. The EU, I'm in agreement -- those rates are going to rise.
    • HS
      Hubert S.
      26 April 2017 @ 09:26
      Yes, the borrow is expensive for such an instrument. As correlation in FI is so high, one may better short futures in OATs, BTPs or even BUNDs and roll it quarterly. It will cost less and by very liquid.
  • SD
    Stephen D. | Contributor
    26 April 2017 @ 02:30
    The asset class is definitely vulnerable for a massive sell off. It's almost inevitable. But paying 2X the yield for the borrow is a bit offputting. Conversely can I really triple my yield by buying and borrowing this animal or is that just the investment banks who can do that?
  • MA
    Michael A.
    25 April 2017 @ 21:38
    I'm always wary (even though this is Real Vision) when people openly discuss trades like this. Of course, he put together a great case, but if there's anything i've learnt in my time investing, it's to do your own research. As the old adage goes: "Markets can stay irrational, longer than you can stay solvent"
  • PT
    Pamela T.
    25 April 2017 @ 17:02
    Love this series. Succinct and actionable! Real Vision is the real deal!! Thank you!
  • TM
    The-First-James M.
    25 April 2017 @ 13:56
    Beautiful case. Thanks.
  • TW
    Tom W.
    25 April 2017 @ 12:57