In for a Pound

Published on
December 13th, 2018
Duration
16 minutes

In for a Pound

Trade Ideas ·
Featuring Peter Boockvar

Published on: December 13th, 2018 • Duration: 16 minutes

Peter Boockvar, CIO of Bleakley Advisory Group, highlights potential equity volatility danger in 2019. He suggests the British pound and gold as the best ways for traders to position themselves for what he sees as an impending economic downturn in this interview with Justine Underhill. Filmed on December 7, 2018.

Comments

  • EF
    Eric F.
    26 December 2018 @ 08:15
    Informative update and enjoyed it. London based and I think no deal Brexit looks likely and that would be catastrophic for the pound, so I’d avoid this trade.
  • DY
    Dmytro Y.
    17 December 2018 @ 06:14
    1) early 2018 Peter predicted Gold to be 1450-1550 by Dec 2018... 2) demand for silver the physical investment from retail investors is at lows! It’s not growing. It has fallen sharply! Peter look at latest Silver Institute report! Watch interview of CEO of First Majestic where he says retail sales of their silver are 95 percent down.
  • MS
    Matt S.
    16 December 2018 @ 08:34
    This guy needs to strengthen his shoe and jeans game....
  • DR
    David R.
    14 December 2018 @ 07:23
    I note that Mr Boockvar's picks for 2018 around the start of this year all did well. Impressive!
    • DY
      Dmytro Y.
      17 December 2018 @ 05:50
      In early 2018 he predicted Gold to go US 1450-1550 by year end. Gold was at about usd 1300 at a time of his trade idea. I don’t see how his ideas worked well!
    • DR
      David R.
      17 December 2018 @ 08:59
      Dmytro, I was referring to his hour long more comprehensive interview on macrovoices and/or the financial repression authority, and a follow up discussion later. Didn't see what you speak of so that might be elsewhere. Anyway, might give the gold another few short months to see whether it indeed fails as you suggest.
  • EL
    Eriksson L.
    14 December 2018 @ 05:14
    What should we buy for Gold? IAU ETF? What about silver? Thanks!
  • DR
    David R.
    14 December 2018 @ 00:57
    Indeed the weak dollar appears set up to tumble in 2019-20, likely even worse than its 20% collapse in 2017. The dollar's subsequent recovery has been overlapping, corrective and feeble, failing to get above 97 to the minimum 99-100 level to raise its long-term status from bearish to neutral. Thus USD remains in a structural, long-term bear market. The next wave, #3, is usually the biggest wave and this will be down. Also, as explained in Erik Townsend's (MacroVoices) outstanding new book, we're probably getting close to the issuance of a gold-backed Chinese/Russian offshore crypto-currency (as China in fact now owns more gold than the rest of the world - and per the golden rule whoever owns the gold makes the rules). That will take the world by storm and rapidly end the reserve status of the dollar and money parking in the T-bills issued by the insolvent US gov't/Treasury, causing big tumbles in US assets and the US standard of living. No opinion on GBP, but the smart money appears to have done well lately being long select EM bonds in local currencies unhedged - one of the better trades for the latter part of 2018. Expecting more from that if USD weakens. Good luck.
    • DR
      David R.
      14 December 2018 @ 10:11
      Oh-oh, the GBP and EUR are currently down sharply today, with EURUSD trading below the key 1.13 support handle. Let's see how the day and week ends.
    • DR
      David R.
      14 December 2018 @ 10:16
      With EURUSD back down near 1.128, dollar bears do not want to see EURUSD fall and stay below that 1.1214 low from last month.
    • AM
      Andrew M.
      14 December 2018 @ 10:52
      FX is relative and people have been calling for a $ crash for decades. The financial world can't just extract itself from the $ (and Eurodollar) system. They've been trying in earnest for years. And i seriously doubt the US will roll over and let it happen - usually precedes wars lol. Imo, US bonds remain the only deep, liquid, developed market in the world that hasn't been completely eviscerated by central banks (term premia aside). Euro and Yuan are basket cases. Canada and Sweden are no better, while Yen and Pound make up barely 25% of the DXY... So far, hedging costs and relatively strong oil (until now) have put a lid on $ strength. As inevitably happens, the next crisis will see massive collateral runs and foreign banks and investors won't care about hedging costs (I've spoken to money managers that say they will tilt toward US duration next crisis). $ may slide a bit lower in the short-term, but unless there's global growth or reflation (not happening) you will probably see it begin to strengthen into the next crisis and US slowdown, whereby it will explode higher.
    • DR
      David R.
      14 December 2018 @ 17:22
      Andrew, if there is US stagflation, which seems like the highest probability outcome ahead, the dollar is likely to get crushed as it has in the past with stagflation. As real assets and even commodities soar while financial assets (like US paper backed by debt of an insolvent nation) are sold. As for the dollar index levels, at around 97 the DXY is currently still down about 7 points from its level of 104 this month two years ago, and massively down from its level of 164 back in 1985. Never say never as it's slightly possible that somehow the phoenix could rise from the ashes. More likely, the unstoppable shift of power from West to East, will continue and accelerate, tho not in a linear path of course, making it most likely that the dollar will resume it long-term weakness along with the West's ever-weakening share of the global economy, as per the in-depth research reports of Macro Insiders this year and other analysis. The next big winner besides gold? The emerging monsoon empire as per Raoul. Makes sense, as does Mr Boockvar's work. For now, short America, long gold for 2019 (finally?). Happy trading.
    • AM
      Andrew M.
      14 December 2018 @ 20:01
      Thanks David. I think it's all about time horizons and when a slowdown in the US materialises. If the US is headed toward a recession then $ should get bid, ala the dollar smile theory. Interestingly, I spoke to Stephen Jen recently (he came up with the theory), and he is still bullish $ / beairsh EM. Although this was before the Fed's "dovish pivot", and he thought the Fed was behind the curve (they were if you look at how loose US fin conditions were, but the US economy can't take positive real rates of like ~1% lol). I just can't see where the reflation / growth / good news comes from when looking at China, EU, Japan etc. If the US is in trouble in 2019, these places are staring into the abyss. I could be wrong. The biz cycle could keep on going, China could stimulate more aggressively, and EU political risks and ECB monetary U-Turn could be smoother than anticipated (certainly a lot of the negatives are priced in). I just think the odds are stacked in favour of the $, almost by default. It's really hard to get bullish on euro or RMB for me. Longer term, $ is done for sure. Gold will defs rally, and I am mildly bullish considering real yields are turning down and gold is so under-owned (and I'm not a $ bull right now, just not a bear and think that EU weakness could be a factor). Gold, gold miners and UST duration look attractive here, I agree, even if you have to weather some losses / pullbacks in the near term.
    • AM
      Andrew M.
      14 December 2018 @ 20:08
      Also, an imminent US balance of payment crisis just doesn't seem that likely to me, not yet anyway. >$20 trillion debt seems huge, and it is. but then think about financial flows. Global credit and tradeable debt is roughly 250 trillion. If you think that US debt, at least in the short to mid-term, still reigns supreme (vs high yield, emerging market debt, loans, and even investment grade), then it should catch a massive bid in the event of a global crisis of some sort. The $ / EM carry trade alone is trillions. Suddenly, you have a lot of money chasing a relatively modest source of high grade collateral (denominated in US dollars). Best of luck.
    • DR
      David R.
      14 December 2018 @ 22:37
      Yes Andrew, it's indeed about the time horizon. On my tech chart, I have the greenback in the midst of an ABC move, in which the A wave higher is completing, a multi-month B-wave lower will be next (coinciding with Fed throttling back and USD yields across the curve possibly dropping which will weaken the dollar and help EM), followed by a bigger dollar move higher in wave C (down goes EM). In EW theory, this 3 wave corrective sequence (overall higher for the dollar) is followed by a 5-wave impulse wave much lower later (dollar down, eventually to new cyclical lows much later). I guess that would be a period during which the smile was finally back in the middle. We'll see. Thanks.
    • WM
      Will M.
      15 December 2018 @ 03:14
      Excellent reasoned arguments from both David and Andrew. My primary concern is Europe. It just feels that everything is going "tits up" for the EU and the ECB. Division is growing and the Euro is clearly a fabricated currency that primarily suits Germany and very much cripples the PIGS. With EU wide weakness, and the impending back down of Macron's French reform attempts, plus the crucial backstop of Deutsche Bank by Merkle, the EU seems to be careering toward recession and lower rates, at least until the free market asserts primacy and drives rates much higher. So it seems to me the US$ and possible bonds/bills are the only game in town for large amounts of cash. Where else are people going to go? Yen?, Yuan, Swiss Francs?.... the liquidity is just not there. This could push the US$ unexpectedly higher, perhaps very much higher. I think Martin Armstrong has some excellent points on this issue. Ultimately the $ is likely to collapse yes, but perhaps it has one last 80s style soaring value for a few quarters.... Finally, a soaring US$ will kill EMs due to dollar loan obligations.
  • sl
    suman l.
    13 December 2018 @ 21:38
    she said " the knock on effect "
  • RM
    Robert M.
    13 December 2018 @ 21:01
    The strong reasoning required to back up these many strong assertions was MIA.
  • AK
    Anthony K.
    13 December 2018 @ 19:54
    Whether or not Peter is correct, he always presents a clear and concise analysis.
  • DS
    David S.
    13 December 2018 @ 16:33
    I have a half position in the GBP and hope that you are correct. The fact that central banks are out of ammunition is a good thing. Markets may focus on fundamentals instead of the central bankers. A lot of the financial leverage and engineering will be rationalized. You are probably correct that 2019 will be a problem. Keep your powder dry. DLS
  • JT
    John T.
    13 December 2018 @ 12:10
    I don't agree on the UK thesis. Having followed the whole brexit farce closely, it doesn't appear to me that markets really comprehend the consequences of UK leaving on WTO-terms (the no-deal scenario). The outcome that seems more likely by the day. And, in a tightening world economy, the thesis for 2019 I believe in, nobody will be there rushing in to save them Tommys.
    • AM
      Andrew M.
      13 December 2018 @ 15:40
      Agreed. Peter is bearish $, but not sure £ is the best cross to play that since Brexit is impossible to price - and a no deal would be catastrophic for the £. A beaten down EM currency (ZAR, RUB, TRY) may be better. I know short USD:ZAR is a big call of Morgan Stanley's for 2019. I personally don't see that panning out and think the $ should strengthen vis-a-vis EMs (risk aversion side of dollar smile theory) but each to their own!
  • CS
    Christopher S.
    13 December 2018 @ 10:33
    For those of us in the UK to me it would make sense to leave some of your savings unhedged, then be overweight gold in your portfolio purely as an alternative to fx. Certainly if his scenario plays out I'd be very happy.
  • AM
    Andrew M.
    13 December 2018 @ 09:48
    Good summary. Re gold - Real rates have topped out across the curve, some of the majors (Barrick, Randgold) have been flying, and even the indices (GDX and GDXJ) look to have bottomed. Keep in mind that gold and miners are very out of favour, under-owned & real rates are now MUCH higher than in 2016 (the last major rally) and the set-up is nice. The only major headwind would be if rates take-off again or the $ rallies (the latter being possible). Surprised he didn't touch on USTs, however. If the Fed "pauses" (they have never paused and resumed hikes btw...) then it's time to load up on duration imo. most liquid market in the world that's denominated in $s. meanwhile hedging costs could come down, banks will rush for collateral, and even at ~3%, US government bonds offer some of the only developed govies with the yield to really rally down (ala 2012 and 2014)...
    • my
      markettaker y.
      17 December 2018 @ 02:09
      greatly benefited from your comments on this page Andrew M. - please do it more on other vids!!