Where’s the Pain Trade?

Published on
August 5th, 2019
17 minutes

Where’s the Pain Trade?

Trade Ideas ·
Featuring Michael Purves

Published on: August 5th, 2019 • Duration: 17 minutes

Michael Purves, CEO of Tallbacken Capital Advisors, is closely watching the divergence between stocks and bonds. In this interview with Alex Rosenberg, Purves makes sense of this discrepancy with an analysis of the differing factors influencing those respective markets. He also explains how an uptick in global economic data could catch many investors offsides. Filmed on August 2, 2019.



  • JC
    Joe C.
    5 August 2019 @ 14:52
    Michael Purves has been on Real Vision periodically over the last year or so making exactly this argument. He was bearish on bond proxies (REITs, Utilities) at exactly the wrong time last year based on... valuation? And he's continued to double down on a bearish bond (higher rates) bias despite the data screaming that yields will head lower. Instead of serious introspection on how a data-driven thought process would lead one to get the call wrong, he continues to push the higher rates argument that has misled so many investors over a cliff. Listen to the thought process here. "What if the Eurozone data gets better, what if China stimulus takes hold, that ricochets into Eurozone data, that lifts yields higher, that will be exported into our market here, raising rates"? Is this seriously an actionable trade? The call was wrong. Please own it.
    • DR
      David R.
      5 August 2019 @ 17:05
      Yeah it happens. Risk mgmt is key. I was wrong about the dollar - or rather I'd say early (jury is still out). EMFX rose significantly against the dollar (until today or so), but DMFX and especially the Euro have actually dropped. But key technical support has held, and today the dollar is puking so the turnaround might (I said might) have started. Eventually, my chart says the dollar index is going to the lower 80's. Only a break above 104 (ie, where the dollar index traded 32 months ago) would invalidate the bearish dollar thesis. EURUSD is bullish against 1.095, and last week's 1.103 was a great EURUSD buying opportunity as EURUSD could challenge 1.20 in the coming months. Swissy has gained 400 pips and the Yen has totally shredded the dollar, but I expect Yen will reverse shortly while those European currencies break out sometime. The dollar looks vulnerable and that's what precious metals are saying, even if they're getting a little ahead of themselves?
    • JC
      Joe C.
      6 August 2019 @ 06:29
      Ah yes, you were the one telling me to "at least learn to read the basics of a chart" when I commented on Amelia Bordeau's video that the Euro was heading lower back in March, right? At least you own your mistakes. You should do a Trade Idea video for Real Vision in lieu of this one.
    • rw
      rory w.
      1 November 2019 @ 08:33
      This guy was obviously let go from his last firm. I agree that he couldn't have been more wrong about the macro. This is the kind of guy that blows up peoples pensions and moves on like nothing happened. I feel sorry for anyone that trusts this incompetent person with money.
  • rw
    rory w.
    1 November 2019 @ 08:30
    I love the fact this guy has been long banks and short utilities for the last 14 months. This guy was just fired and made his own firm. This guy has to be one of the poorest traders on wall street. Why does Real Vision give this incompetent person so much face time?
  • WB
    William B.
    13 August 2019 @ 02:28
    I really don't find this series to be helpful.
  • GG
    Gary G.
    12 August 2019 @ 05:53
    Trade what you see, not what “you think”. Price is the only fact!!
  • GL
    Gregory L.
    7 August 2019 @ 19:08
    These were all opinions and hope, no data to support.
  • KE
    Kathryn E.
    6 August 2019 @ 02:20
    How can you compare the eurodollar positioning with the point after the last cutting cycle ended? People short ED on hiking and go long on cutting cycles, why would position be any different? I would agree if the comparison was that the positioning matches the peak of the last cutting cycle, meaning people think the Fed is going to cut faster and more than they have previously done.
  • DS
    David S.
    5 August 2019 @ 17:17
    Good luck with your new company. Nice to hear a contrarian position, but it is a really hard sell. It is time to stop saying the market is up 20% this year without referencing the Dec. 24, 2018 decline. In like manner, not here, it would be nice when saying earnings met expectations the year over year earnings were also given. DLS
  • MP
    Mate P.
    5 August 2019 @ 10:04
    Fair enough...so where would this 'big economic uptick' come from?
    • TS
      Taranvir S.
      5 August 2019 @ 12:19
      Trade deal! (which wouldn't happen anytime soon)
    • DR
      David R.
      5 August 2019 @ 14:53
      It could be a nominal uptick only, not in "real" terms, based on the obvious major devaluation in currencies almost everwhere. Like how stocks rise nominally but not in real value, although stock indexes are now very negative even nominally since the start of 2018. Thus gold, silver and bitcoin are up massively YTD; that's your "tell" that currencies are massively depreciating in terms of real purchasing power this year... the 1-2% inflation narrative of gov't is BS. The US government and others lie like a sidewalk. ShadowStats pegs US inflation at 13% currently, using proper stat methods like used in the past before BLS tinkered with them to intentionally under-report inflation, while Peter Broockvar recently measured US inflation at over 6%. So USA is in fact in a major economic contraction with negative GDP growth for two years already. So is almost everywhere else. But inflating while lying about it can manufacture an illusionary "growth uptick" in reporting terms.