Quick Emerging Markets Trade

Published on
September 18th, 2018
Topic
Trading, Emerging markets, Macro
Duration
14 minutes
Asset class
Equities

Quick Emerging Markets Trade

Trade Ideas ·
Featuring Michael Purves

Published on: September 18th, 2018 • Duration: 14 minutes • Asset Class: Equities • Topic: Trading, Emerging markets, Macro

Michael Purves, chief global strategist at Weeden & Co., has a contrarian view on emerging markets. He lays out his bullish thesis and explains how to make the trade in this interview with Brian Price. Filmed on September 17, 2018.

Comments

  • RP
    Reinaldo P.
    21 September 2018 @ 11:54
    I think you should find the way to show those p&l options charts.
  • PC
    Peter C.
    20 September 2018 @ 07:19
    Today, I just sold EEM Nov 16th calls but at 45 v 44. They are essentially covered calls.
  • PC
    Peter C.
    20 September 2018 @ 07:14
    Glad to hear about EM; Tech stocks - BAT, FANG;....
  • AR
    Abishek R.
    19 September 2018 @ 08:43
    Wonder how this trade will be affected with Trump's January deadline for 25% tariffs on $200Bln of Chinese imports. I would assume Michael might consider rolling forward his call options to April'19 considering its probable that both US nor China would act (Blinking) before the set January deadline.
  • SS
    Steven S.
    18 September 2018 @ 20:05
    A hallmark of B.S. is unwavering dogmatism. While I disagree with the premise that EM will have near-term strength, that RV gives ample time on their platform to differing viewpoints and divergent theses is highly commendable, deserving of intellectual respect. Yet another aspect of RV which makes it a... ummm ...lodestone for the investing community.
    • BP
      Brian P. | Real Vision
      18 September 2018 @ 22:59
      SAT verbal 800?
    • DR
      David R.
      19 September 2018 @ 07:37
      So then you're on the opposite side of Gundlach and Dalio. How much AUM do you have? As long as dollar weakness persists, albeit not in a linear fashion, select EM's will keep doing well like they already have for a month, far outperforming all US assets. Today so far the weak dollar is down against everything again. DXY should get down to 93 today or this week, a plunge of 4 handles month-over-month, as the weak dollar has drawn a series of lower lows and lower highs for >20 months. If anything, dollar weakness is likely to accelerate, given the overwhelming dollar bullish sentiment, the break of key dollar support on the charts and the prospect of US political turmoil.
    • SS
      Steven S.
      20 September 2018 @ 23:35
      780. Math was 800. David: I'm in the camp of strengthening USD and continued weakness in EM, over the next year or so. Certainly could be wrong. My models have USD increasing against CAD, EUR, GBP, and JPY. I see overseas USD demand increasing, putting additional pressure on EM. In a decade, I expect VNM, EIDO, SCIF & SMIN, FXI, etc. to greatly outperform SPY. I'm betting on a large SPY correction in 2019 for all the standard reasons: buybacks decreasing, central bank QT, consumer/sovereign debt contraction, and VIX moving substantially to the upside. Just my personal AUM. I'm a mathematical modeler, not in finance. As of today, one year return: 78.89%, Three year annualized return: 37.73%, Five year annualized return: 22.47%. Currently starting to move from roughly 90% US equities to long vol instruments, very select biotech, tech, large construction stocks (looking for an infrastructure bill next year), and USD. DXY back to 98-100 range in 12mo. I have plenty of respect for Gundlach and Dalio, but am comfortable taking the opposite side of their views from time-to-time. Just my 0.02 USD.
  • DR
    David R.
    18 September 2018 @ 19:19
    Previously agreed with this thesis (USD going down, EM going up again) but the EEM is a poor vehicle because it includes junk that will weigh you down. Better to buy the stocks or else to a lesser extent country-specific funds. He glosses over the technicals - which are the most important consideration - while going on & on about fundamentals which are usually of little relevance as markets are irrational - would have liked to have seen more technical discussion to bolster his case. Don'f forget to also buy EM bonds in local currency, which will help hedge you against the weakening dollar while paying 6-10% yield. Gundlach & Dalio are apparently in I think I've read.
  • PC
    Peter C.
    18 September 2018 @ 18:57
    Fair analysis. I don't follow why one should use options in this trade though. Would buying outright a lot better because you don't have to fight the vol and theta?
    • MT
      Mike T.
      19 September 2018 @ 07:27
      I'll give you one reason why buying outright is never an optimal use of capital at least for those using a Margin account. With a margin account if going long outright by default even though you might not think it, mechanically so to speak you'll be borrowing money and therefore paying interest. When you trade options (or futures) the cost of carry is built into the price. By regulation one has to have a margin account to trade options, but in reality you never have to borrow money to trade options. When going long stock in a Margin account you do 'borrow' irrespective of having spare available cash.
  • ZY
    Zheng Y.
    18 September 2018 @ 09:17
    could we not asking the guy show up again. always with some bad intention.
    • BP
      Brian P. | Real Vision
      18 September 2018 @ 14:37
      I don't follow. Is this how your local bar feels about you? Heyo!
    • ZY
      Zheng Y.
      18 September 2018 @ 16:02
      check all trading ideas he presented, u will find it is very interesting.
    • DR
      David R.
      18 September 2018 @ 19:08
      If you want more than zero credibility, you will need to elaborate with examples.
  • ZY
    Zheng Y.
    18 September 2018 @ 09:17
    could we not asking the guy show up again. always with some bad intention.