Flash Update – March 24, 2020

Published on
March 24th, 2020
Duration
24 minutes


Flash Update – March 24, 2020

Featuring Raoul Pal and Julian Brigden

Published on: March 24th, 2020 • Duration: 24 minutes

Raoul and Julian come together today to provide a quick Flash Update and discuss the trickle-down effects of market movements happening now, the central banks' most recent policy actions, and the upcoming stimulus packages.

Comments

  • DR
    Derrick R.
    2 April 2020 @ 12:14
    Ok so Raoul seemingly tweeted this morning this dollar play is an 18 month window https://twitter.com/raoulgmi/status/1245675314744905728?s=21 This makes me a little concerned about my boatload of UUP calls expiring in September :O
    • SA
      Saad A.
      2 April 2020 @ 21:37
      Integrity ...
    • AP
      ANTHONY P.
      3 April 2020 @ 14:18
      I believe he said in another tweet that it is 18-36 months which would agree with what Brent Johnson has been saying of late.
  • DR
    Derrick R.
    31 March 2020 @ 20:10
    Question for those of you with UUP calls, do you have standing GTC limit sells out there already, or watching this like a hawk? Just wondering how you are trying to get out of this trade if it is a violently short squeeze
    • SA
      Saad A.
      1 April 2020 @ 11:35
      Every day is different for me. :)
    • JL
      J L.
      3 April 2020 @ 09:29
      dont go GTC on something that doesnt trade 23/7, at the very max go daily limit orders
  • SA
    Saad A.
    30 March 2020 @ 15:48
    I must admit am new to RV (4 weeks now) and am not sure what to make of this silent treatment? Any veterans among us cuz your views are most appreciated ..... Any one with more than one year with Pro RV? Trying to letter understand my space here
    • SA
      Saad A.
      30 March 2020 @ 15:49
      *better
    • AP
      ANTHONY P.
      30 March 2020 @ 15:59
      Two weeks for me and wondering the same, especially now when, as Raoul said, everyday is like a month.
    • SA
      Saad A.
      30 March 2020 @ 16:12
      Thank you Anthony, I hope some of the people here been more than a year so they can share with us their experience. ......
    • Dv
      Daniel v.
      31 March 2020 @ 09:09
      You want an answer why they don't react? Look at his interview with Dan Tapiero. At 52:40 Dan is actually saying that you must be pretty dumb to buy dollars last week. Then look at Raoul's reaction... I actually think we are right on this dollar trade but the lack of communication for me makes it very difficult to be a member of RV pro in the future.
    • CF
      Chris F.
      31 March 2020 @ 19:52
      I think you might need to go easy on them. He’s trying to run two business while under lockdown, have family time, etc. etc. I wasn’t necessarily expecting 24 support when i signed up last fall. If views change I’m sure something will be put out.
    • DM
      Davis M.
      2 April 2020 @ 11:47
      I was with Macro Insiders prior to it being changed over to RV Pro. The pace of updates/contents has significantly increased since it was Macro Insiders. I think alot of this has to do with the current volatility and world dynamics going on at this time. I am looking for and feel I am getting "macro" recommendations. I look at these as long term trades (6-12 months or longer) and not day-trader like trades.
  • AS
    Arpat S.
    1 April 2020 @ 14:13
    Do the new repo lines to be opened for other central banks in addition to the Swap lines change the thesis on the dollar trade? https://www.wsj.com/articles/the-fed-is-settling-into-its-role-as-the-worlds-central-bank-11585732095?mod=article_inline "The Fed will allow foreign central banks to use their U.S. government bonds as collateral for short-term dollar borrowing, under its new repo facility. The scheme begins April 6 and is scheduled to last six months." " It augments other existing facilities like the dollar-swap lines that the Fed has already expanded."
  • AP
    ANTHONY P.
    26 March 2020 @ 15:31
    I closed most of my positions in Raoul's FX trade today. There are two primary reasons: First, Julian explained that he expected a very steep decline at the end of the napalm run; I'm concerned that recent price action suggests he may be right. Maybe the Fed pulled it off, at least for now. Second, Raoul's Twitter feed includes a comment to the effect that he thought the Fed's recent actions could postpone the timing of the trade (without specific guidance I have to assume some of my options could become worthless by then). I'm disappointed to see this on Twitter but not here: Conversation Thomas Underwood @AussieUnderwood · Mar 24 Hi @RaoulGMI , a temporary reversal (dead cat bounce) was to be expected in the markets. What are the chances this unprecedented monetary policy kicks the implosion can down the road another few years? Raoul Pal @RaoulGMI Replying to @AussieUnderwood We cant tell but I think limited chance. it kicks it into the late summer, I think. 10:59 AM · Mar 24, 2020 I may be looking for a better entry point in the future. For now, I wish you all the best of luck.
    • Dv
      Daniel v.
      26 March 2020 @ 15:56
      I think he should follow up, it's not possible he has not seen the many requests over here. Or maybe he thinks we are all panicking, also in that case it would be good to let it know. That's the advantage at Hedgeye, if a trade goes against you, it will be discussed.
    • DR
      Derrick R.
      26 March 2020 @ 15:57
      It appears if DXY dips under 97, that would be cause for concern? Otherwise the trend is going and the macro forces largely haven't changed
    • SA
      Saad A.
      26 March 2020 @ 16:20
      Thank you @ANTHONY that’s really disappointing. Specially reading the below response From Raoul: “ My conviction is high but you ALWAYS have to assess if you are wrong. Once you have a trade on, you job is to assess everything that could make it go wrong.”..... not sure how to reconcile the above tweet with the response below? The issue for me not that the trade didn’t work for me as well, got stoped out yesterday, but rather the communication management. I will leave it there ..... stay safe all ....
    • JW
      Jesper W.
      26 March 2020 @ 16:55
      Looks like this dollar trade is going to be the worst I've ever made. Lesson learned, I guess...
    • MT
      Michael T.
      26 March 2020 @ 16:57
      Thank you @ANTHONY. Closed all FX positions.
    • JM
      Jake M.
      26 March 2020 @ 18:26
      Anthony, do you mind provide a link to this twitter conversation? I follow Raoul on twitter but I am not an avid twitter user. Not sure how to find such conversation...
    • AP
      ANTHONY P.
      26 March 2020 @ 18:42
      https://twitter.com/RaoulGMI/status/1242465962961580032
    • SS
      Steve S.
      26 March 2020 @ 19:40
      Give Raoul some slack. No-one can get every call right. He gave you ideas, that doesn't mean you don't think for yourselves. I lost money in the USD FX trade to but I am not blaming Raoul for that. Sometimes thats the way the cookie crumbles. I made a killing from his ED and HYG Recommendations, so don't go off on him for this.
    • SA
      Saad A.
      26 March 2020 @ 20:48
      For me, it was not the call itself, you win some and you loss some that’s the. Way it is, it was the communication management and engagement level.
    • JM
      Jake M.
      26 March 2020 @ 22:40
      Steve S., we perfectly understand no one can time the market exactly right. However, this is called FLASH update. Meaning if something doesn't go out as expected, we would expect the timeliness to come out and call out what has changed, rather than seeing his change of stance on twitter.....
    • RK
      Robert K.
      27 March 2020 @ 02:41
      @Daniel, regarding Hedgeye, how else would you compare the service pros and cons?
    • Dv
      Daniel v.
      31 March 2020 @ 12:40
      @ RobertK I have been with Hedgeye for around 7 years and currently take a big package of their products. They are really shorter term whereas RV/Raoul is much longer term. They both have and had more or less the same ideas coming in to this: bonds, gold, usd, etc. I'm not here to promote Hedgeye but I'm happy with their input and proces.
  • AP
    ANTHONY P.
    30 March 2020 @ 15:31
    Wishing you well Steve. I'm waiting for the "all's clear" from the powers that be before re-entry.
  • AP
    ANTHONY P.
    30 March 2020 @ 04:31
    Watching Forex and for the first time in what seems an eternity, the USD crash may have paused. Guidance from JB and RP would be received like feet for the lame. What do you think now boys? Has a consensus emerged? Buy, sell, or hold? To/at what levels?
    • SA
      Saad A.
      30 March 2020 @ 08:57
      Ditto!
    • SS
      Steve S.
      30 March 2020 @ 14:13
      Hi Anthony. I shorted GBP/USD last week at 1.23. HODL
  • AP
    ANTHONY P.
    30 March 2020 @ 11:35
    Could this movement simply be some kind of month end rebalancing (i.e., merely a head-fake)? Another question I have is whether the Fed and/or the US Gov has any other types of tools (besides swap lines) that it may apply to FX in the future. For example, could we see an official devaluation/reset of the dollar by proclamation? Could the Gov give the Fed the power to buy foreign securities and/or debt? Anything else?
  • YO
    Yoshitaka O.
    27 March 2020 @ 17:23
    An update on the USD trade would be amazing... it’s already down 3% since the initial trade recommendation. Does Raoul not use stops? I am aware Julian is very disciplined with his stops
    • DR
      Derrick R.
      27 March 2020 @ 23:38
      In my opinion EVERY trade recommended should include strike range, stop limit, timing. Since I’m new here and not experienced, for a while I thought these are not mentioned because there are rules of thumb for this stuff. But I am not sure
    • DR
      Derrick R.
      27 March 2020 @ 23:45
      Also, Raoul tweeted about it today: “ Urgh, these dollar swap lines are causing a rapid unwind of the very recent dollar funding pressure. However, I only view this is temporary in nature, painful though it is...but as ever, lets see...” I’m sure at the first sign of trouble he would update us. RV could use an alert feature.. heck, just an insiders Twitter account that’s locked to only us would be great... I subscribed on twitter to get notifications when he tweets and that’s how I saw this one.
    • YO
      Yoshitaka O.
      30 March 2020 @ 00:13
      Today he tweeted that he had trimmed some USD positions for GMI
    • SA
      Saad A.
      30 March 2020 @ 11:09
      Link pls
  • HS
    Hamish S.
    29 March 2020 @ 07:35
    @Raoul P. Do you still expect the USD to run stronger? Surely the likes of EUR have peaked given month end?
    • YO
      Yoshitaka O.
      30 March 2020 @ 02:28
      More updates on the USD trades here outside of Twitter would be very much appreciated. This entire thread seems to be either forgotten or ignored
  • SA
    Saad A.
    27 March 2020 @ 19:30
    I thought to share the below interview with Brent Johnson explaining this ” dollar milkshake” trade, I found it insightful and and learnt a lot. https://youtu.be/blaySIwqJOY I believe it's a couple of days old..., Enjoy and stay safe......
    • AP
      ANTHONY P.
      27 March 2020 @ 20:17
      George Gammon also has a related white-board video you may find interesting Saad.
    • SA
      Saad A.
      28 March 2020 @ 06:27
      Will look for that. Thx
  • SS
    Steve S.
    27 March 2020 @ 14:58
    Just re-entered the Short GBP/USD trade at 1.23. Its run up a lot in the past week.
    • Dv
      Daniel v.
      27 March 2020 @ 15:41
      Me too. My Stop-Loss will be at/around 1.25.
    • Dv
      Daniel v.
      27 March 2020 @ 16:21
      wow, USD crashing yet again. This is getting a huge % move.
    • SS
      Steve S.
      27 March 2020 @ 16:29
      Yep, getting burned again on this USD trade. I have June calls on UUP too. But I am going to ride out the storm. Sticking to my guns.
    • AP
      ANTHONY P.
      27 March 2020 @ 16:35
      It has retraced about half of the napalm run in about a week. Isn't this exactly what Julian was concerned about, i.e., a precipitous decline in the dollar once it topped?
    • SA
      Saad A.
      27 March 2020 @ 17:38
      I just couldn't let you guys suffer on this trade while on the sidelines, just went back in with Sept calls 28 at 0.52. Don't have strong convection at this point as it seems this thread has been forgotten by RV.
  • YO
    Yoshitaka O.
    26 March 2020 @ 16:52
    I’m guessing many people are getting screwed on the USD long trade now. Grief
    • Dv
      Daniel v.
      26 March 2020 @ 17:25
      I'm thinking of adding to my position today or tomorrow. It's better to build up a trade than to go in/out at once. But I'll probably go for september calls again.
    • Dv
      Daniel v.
      26 March 2020 @ 17:56
      Okay, so I just added to my UUP sept call28 position at $0.56 (Although we might go down further in the coming days).
    • MT
      Michael T.
      27 March 2020 @ 00:00
      I will add some UUP sept calls tomorrow...
    • SA
      Saad A.
      27 March 2020 @ 05:33
      It would great if we can here from Raoul on this trade first.
    • DM
      Davis M.
      27 March 2020 @ 11:36
      I bought UUP 3/19 at 28. It's down 4%. Nothing has changed in the basis for the trade and I will be adding 50% more to my position today. You're only screwed if the price is lower when you sell. If the basis for the trade changes, Raoul will let us know. No need for him to provide daily commentary.
  • CS
    C S.
    27 March 2020 @ 01:34
    A few assorted thoughts - Should we revisit the gold up/dollar up trade bantered around last year? Possible for gold and USD to rise together in these circumstances. If USD goes down, then gold will rise. So there is a hedge still that could be included. I aslo remember Raoul commenting, that the dollar run would particularly be a risk when the hypervolatility settled, after the end of this month. But again, not quite clear on the timing expectation. When I look at the big charts (S&P, USD, etc) it still looks on a rudimentary basis, that this could be eye of the storm stuff. Julian mentioned we will know over the next couple of days/week whether nuclear winter USD risk had been snuffed. Guess we're close to that point, but not conclusive. At what point would Julian declare nuclear-winter averted?
    • AP
      ANTHONY P.
      27 March 2020 @ 01:58
      Excellent points and questions C. S.
  • Dv
    Daniel v.
    26 March 2020 @ 06:19
    @realvision, Would it be possible to create some sort of forum on trades instead of just below a video. On that forum we can exchange information. I find the stuff I'm reading here very insightfull. The disadvantage is that after a few new videos, everybody moves along and nobody posts here anymore regarding the UUP trade, for instance. It could have the structure of a forum with several subjects. I think that would be a big extra for subscribers.
    • JM
      Jake M.
      26 March 2020 @ 13:50
      yes. that's really great idea. I volunteer to create such forum site if this can be done ASAP :) Only thing needed is authentication for realvision pro members.
    • JH
      Jon H.
      26 March 2020 @ 19:31
      Agree 100%. It will add significant value if we could follow a topic/investment recommendation over time and be notified when someone adds a comment, replies or mention us. Lots of people here add a lot of value, but when we're not notified and all topics from a "Flash Update' is mixed in the same thread, we miss out. Please like this and I will email a copy to Raoul
    • JW
      JW2 W.
      26 March 2020 @ 20:20
      Agreed. Trade advise is issued and the follow-up is simply not consistent and especially in this turbulent time when things seem to change on a daily basis, more 'just in time' feedback would be of great benefit. Not sure if the RV team has the bandwidth to do this though, but the community feedback on a forum would be valuable in and of itself. I also suggested that we ought to have a way to see all of our comments in one place, for example list them all on your profile page. This way it's easier to search for responses. Comments are scattered all over the place and it's difficult to remember when you commented on what.
  • JM
    Jake M.
    26 March 2020 @ 14:17
    for those of you interested, I have created a google group called rv-rpo-forum (yes, I misspelled it abit to have small visibility to the outside world) If you are interested, either create a gmail account (if you dont have google account or you dont want to reveal your person gmail) or you can use your existing gmail. And paste a message like below in the flashupdate comments section "join rv-rpo-forum: example@gmail.com" I will send the invite. This way I know it's from a pro member.
    • JM
      Jake M.
      26 March 2020 @ 14:18
      the forum allows more interactive with notification for exchange of information, discussion of thoughts, to benefit everyone of us in learning and trading Raoul's ideas successfully. As some one else said, it would be tragic if Raoul's thesis is correct but our trade still fails because of poor execution.
    • Dv
      Daniel v.
      26 March 2020 @ 14:26
      Than you. I would be interested but I guess Realvision would like to have a look at this first before we go outside of this website.
    • DR
      Derrick R.
      26 March 2020 @ 14:47
      While I think some solution is needed, RV may want to provide something here to keep the info from leaking out as memberships change. Example some folks could just start unsubscribing from RV and just use this mailing list to get the same info..
    • JM
      Jake M.
      26 March 2020 @ 15:07
      @Derrick R. yes. that's true. Let's wait for the engineering team at realvision to come up a solution.
    • MT
      Michael T.
      26 March 2020 @ 16:36
      +1, creating a forum on this website shouldn't be problem...
    • JH
      Jon H.
      26 March 2020 @ 19:34
      Great Jake! I'd love to join "join rv-rpo-forum: jon@talk.no" (Google based)
    • JH
      Jon H.
      26 March 2020 @ 20:04
      I'm all for doing it. Then we'd have a forum for longer lasting discussions until RV has made the adjustments to this forum. When RV launches the upgraded forum we won't need it. I'm certain RV wouldn't mind at all. @Jakem - what do you think?
  • AB
    Arawata B.
    26 March 2020 @ 19:00
    I dont know which way the USD will go except I expect it is going to be volatile. Everything is else is volatile. Some of the hysteria and panic (both personal and financial) over Covid-19 is starting to abate (for now). I expect there will be a second wave when reality of the damage on main street sets in. But no-one knows the new reality and what it means personally (health / jobs), the effect on the economy, and the disconnected financial markets. The USD was extended from its breakout and a pull back was expected. I guess the question is when the second wave effects of Covid kicks in does the USD follow through...
  • GK
    GRIGORIOS K.
    26 March 2020 @ 08:38
    Can we get an update regarding Raoul's suggested FX, UUP, TLT, etc trades?
    • YO
      Yoshitaka O.
      26 March 2020 @ 09:06
      I can see many people freaking out now as the trade is going in the opposite direction! It would be incredibly helpful if Raoul can also advise on position sizing as I suspect many MI viewers oversized their bets in a misinformed manner, particularly on the back of Raoul’s “long usd wear diamonds” conviction.
    • RK
      Robert K.
      26 March 2020 @ 14:27
      I can buy several year's worth of RV Pro subscriptions with the losses I'm seeing now with UUP calls... so yes indeed, some updates on this please
    • RK
      Robert K.
      26 March 2020 @ 14:28
      And to add, if you suggest some trades, please also state rough time periods
    • JL
      Jack L.
      26 March 2020 @ 18:15
      Sheesh. People are writing as if they expect every trade to magically work out. I'm 70% underwater on UUP June 19th CALLs at the moment but not panicing. Panic emotion is never useful and one should always shun it in oneself if humanly possible. In these highly volatile markets my view is that since I've already been forced to be 70% committed to a loss, is it really worth cutting these losses to protect the remaining 30% today? Or on a 85-day time horizon is it better for me to keep the optionality in case UUP again reverses suddenly? My answer is to hold it, for now. Can evaluate whether to exit if modest gains pull the trade back to 50%-or-less losses in coming days/weeks.
    • RK
      Robert K.
      26 March 2020 @ 18:51
      Jack, I am in a similar situation unfortunately. Do I expect every trade to magically work? No, but I do believe in the experts and in their detailed research and risk/reward analysis. Plus, it was said the trade was intelligent risk-taking etc. "This game is all about intelligent risk-taking and I see an opportunity to be REALLY big in the dollar trade with less volatility and less headline risk. " (March 18) Hasn't been very intelligent at all so far. I'd like to be corrected in the short term... Also, when mentioning "long UUP" in the March 18 report, I'd also expect at least some clarifications regarding timelines like it was done with other trade recommendations before. The devil is in the details.
  • JM
    Jake M.
    26 March 2020 @ 16:46
    Purely my thought: Roger from the March 25 daily briefing also holds the same view as Raoul that dollar will rise. Regarding the timeline, he really thinks the market has already priced in all the aggressive deleveraging recently for the dollar (hence the recent spike in dollar index before the fall). What hasn't been priced in is the impact of the shutdown around the world on the dollar debt driven service sector around the world. In particular, dollar debt, lack of demand due to shutdown, non-US unlimited QE, all these factors will play out in the next 2-3 weeks to 3-4 months to drive dollar higher. Since the news headline recently has been US centric (QE, fiscal stimulus, etc) and its effect seems to be clearly on driving dollar lower, I think maybe I will wait a little until the theme changes. The dollar index drop might be good opportunity to buy cheap.
    • AP
      ANTHONY P.
      26 March 2020 @ 17:56
      Thanks. So far I held some September positions and am keeping an open mind for a reentry point ahead. It seems I've watched countless videos and read countless descriptions of the Dollar Milkshake Theory. I don't want to say that that is Raoul's FX trade because this is complex stuff and I'm limited, but it seems to me to be at least related. It seems like it really could be an unbelievable trade, but I need more clarity especially about timing positions. One thing that strikes me is that Julian (on a personal level) seems to hope it never comes to pass. It makes me wonder if we are talking about financial armageddon if it does.
  • AS
    Arpat S.
    25 March 2020 @ 00:13
    Question for Julian: You mentioned beaten up leveraged mortgage REITs (like EARN) in your last update as well. You like this for a snap back trade because it is so beaten up but what is the macro tailwind behind the trade? -Is it the FED buying unlimited MBS now? -Is the current macro environment - lower rates etc. positive or negative for this asset class? Just trying to understand your idea. Thanks.
    • HM
      Harry M. | Real Vision
      25 March 2020 @ 23:12
      The Fed is taking unlimited amount of Agency MBS as collateral. However that is not necessarily getting to the MBS REITS. They are levered and the mark to markets on the mortgages they own are bad. Its not exceptional for them to run at 9x leverage. As a result, they dont have enough equity or term finance to hold their positions because they relied on short term funding (repo) to hold those positions. If MBS REITS are a good idea will be because the funds can slow the process of taking their collateral until alternative sources of capital are available. So its really a trade on the financing of the MBS market regularizing. One might also think that the chances of forbearance might be good, as its a bad look to take advantage of a financial crisis which has its roots in a pandemic to make a "killing". But clearly there are risks.
    • JM
      John M.
      26 March 2020 @ 17:37
      Any thoughts on Commercial MBS? Seem to be getting a lot of negative press. Is there way to short these?
  • AS
    Alan S.
    25 March 2020 @ 02:28
    A bit disappointed to learn that Raoul's conviction to the US dollar is less than it appeared last week based on his view of moving money to "US dollars NOW". Seems to me one would think when you shout NOW, the strength of that conviction would be rock solid, not, 'well, ya, maybe' less than a week later.
    • DR
      Derrick R.
      25 March 2020 @ 03:21
      That’s not what I heard. He said 1] my view has not changed; and 2] I don’t see any other way this goes than the dollar going up
    • AP
      ANTHONY P.
      25 March 2020 @ 04:08
      I also heard Raoul originally describe the trade as "risk on".
    • AS
      Alan S.
      25 March 2020 @ 06:09
      @Anthony P. Yes, "risk on", not the issue I raised; not sure what your point is?
    • AP
      ANTHONY P.
      25 March 2020 @ 07:25
      @ALAN I understood "risk on" to mean the trade was not guaranteed to be a winner, but you are going to try it, now is the time.
    • TE
      Timothy E.
      25 March 2020 @ 10:49
      @Derrick Raoul starts talking about this at -9 minutes, and says that he's not sure whether the dollar will move down or up at -8 minutes.
    • DR
      Derrick R.
      25 March 2020 @ 11:31
      @Timothy I heard that part too.. I watched this part again, you're right he does suggest it's a hunch, problem is after his original tweet I went long UUP because at that point it seemed a certainty based on his language then. However, for whatever reason he hasn't come back to say this is a more risky bet now than before, or that we should consider exiting, or whether we will be able to exit without heavy losses if the thesis doesn't play out. I suppose a lot of us here are wondering the same thing, how much has our risk increased on this trade since it was proposed?
    • TH
      Tom H.
      25 March 2020 @ 12:08
      When Raoul or anyone suggests a trade, jumping in based on the level of conviction in their voice is a terrible idea. You shouldn't be placing any trade on your don't understand.
    • RP
      Raoul P. | Founder
      25 March 2020 @ 12:56
      My conviction is high but you ALWAYS have to assess if you are wrong. Once you have a trade on, you job is to assess everything that could make it go wrong...
    • DR
      Derrick R.
      25 March 2020 @ 13:04
      Thank you for engaging with us in the comments, Raoul!
    • SC
      Sean C.
      25 March 2020 @ 13:20
      @Tom H. The problem is if you go away and research the idea and then come back 24 hours later in several of the trades suggested recently you've missed the move.
    • SA
      Saad A.
      26 March 2020 @ 12:00
      Reading Raoul’s response above, it seems something has possibly gone wrong .... may be timing
  • MT
    Michael T.
    25 March 2020 @ 20:21
    my June $UUP calls are down 60%. After watching this video I am wondering about the timeline of this "napalm run"...
    • Dv
      Daniel v.
      25 March 2020 @ 21:11
      I agree. The timing is terrible. I do believe in the thesis but this could take a lot more time for it play out. I bought the september calls in UUP as well as the june calls.
    • DR
      Derrick R.
      25 March 2020 @ 21:16
      This is my biggest question, I suspect we are seeing a dead cat and you can exit closer to par on this trade soon, but yes what is the timing. My calls are mostly September.
    • JM
      Jake M.
      25 March 2020 @ 21:16
      Hi Daniel, what's your strike price, expiry, and the price you paid?
    • Dv
      Daniel v.
      26 March 2020 @ 06:25
      I bought calls june 28 at usd 0.83 the day after Raoul came out with this call. And on the 24th I bought september 28 calls, at 0.82
  • JM
    Jake M.
    25 March 2020 @ 21:36
    Even if if Raoul's dollar thesis is right, I think it would be worthwhile for him to give a RV pro talk deep diving some of the tactical strategies he employ to enter his positions. On the $UUP calls for instance, in hindsight, the IV for UUP was super high (possibly all time high) when he said "NOW" is the time to enter dollar in his Flash Update. I should've tactically added UUP call options a little by little as the IV drops.
    • DR
      Derrick R.
      25 March 2020 @ 21:47
      Yes! Tragic if the thesis is correct but the trade fails as we are on our own with tactics.
    • MT
      Michael T.
      25 March 2020 @ 23:09
      I agree, "NOW" means high now... and a high level of certainty. Made the same mistake, did not average in.
    • JL
      Jack L.
      26 March 2020 @ 00:53
      Concur. Went quite a ways in on the UUP trade when RP said "now" -- but hey, this isn't Mutual of Omaha or a Prudential lifetime annuity. Double-black diamond slopes, ladies and gentlemen. Nobody can ski our runs for us. I'm holding UUP Jun 19th $29 strikes 65% underwater for now. We'll see how things go...
    • MT
      Michael T.
      26 March 2020 @ 01:54
      agreed, still hoping this trade is just a Double-black diamond slope and we don't hit a crevasse.
    • Dv
      Daniel v.
      26 March 2020 @ 06:08
      I agree. Would be great if there was some sort of forum on trades instead of just below a video. On that forum we can exchange information. I find the stuff I'm reading here very insightfull. The disadvantage is that after a few new videos, everybody moves along and nobody posts here anymore regarding the UUP trade.
  • SY
    Shuo Y.
    26 March 2020 @ 01:03
    Hi Raoul, For people who haven't close the put option position on S&P, would you say it is the better to close it in current situation or wait a few more weeks to see if there is any drop. Thanks!
    • AS
      Arpat S.
      26 March 2020 @ 01:31
      Raoul and JB think this is a bear market rally and they are sellers of this. Meaning they expect a lower level on S&P soon.
  • DR
    Derrick R.
    25 March 2020 @ 21:50
    Am I the only one nervous that the unemployed report tomorrow is going to nuke our dollar bull position? XD
    • JM
      Jake M.
      25 March 2020 @ 22:02
      yes. My 3 cents: Tomorrow I am going to load up on TLT (another short term recommendation by Raoul in Flash Update). If Raoul's thesis is right on Fed needs to do something to get rate to 0 ASAP (and massive unemployment would be ground for this), I feel this would hugely weigh on the dollar in the short term.
    • HM
      Harry M. | Real Vision
      25 March 2020 @ 23:28
      Im not so worried about that right now (famous last words). I think everyone knows its going to be shockingly high. The real problem is not when we go to 5% unemployment overnight. Its when we get to 12% and we don't know when it ends. Plus, its not like other countries (apart from some in Asia) have lower Cv19 risks. What is a bigger problem is the lack of a social safety net in the US. Its not clear whether the ad hoc policies which will be adopted will serve the purpose. What worries me more about the USD is when it becomes clear that this will run for much longer than anticipated and therefore require an order of magnitude more fiscal deficit. Think about debt/gdp when both are gapping in the wrong direction.
    • JM
      Jake M.
      26 March 2020 @ 00:21
      @harry, thanks for the insight. Can you elaborate on why you worry about the strength of USD when US debt skyrockets while gdp tanks? How does that compare to Raoul's thesis (essentially keyed on the structural issue of serving offshore US debt)?
  • MD
    Michael D.
    25 March 2020 @ 05:38
    Thanks for the update gentlemen. @Raoul - what would a “debt deflation” look like It seems to me that the administration is caught in a dilemma between preserving jobs versus preserving lives. Awful situation.
    • HM
      Harry M. | Real Vision
      25 March 2020 @ 20:01
      Let me give an answer pending Raoul's answer. Forgive if it diverges from his. The most recent example of a debt deflation is the Japanese example. The most well documented example of a debt deflation was the Great Depression. The feedback loop is as follows. Lower asset prices lead to debts exceeding the assets values which collateralize them. This makes credit hard to obtain and reduces propensities to consume. Lower GDP puts pressure on earnings and wages. Which feeds into lower asset prices (real estate etc) resulting in a deflationary self-reinforcing cycle. Bond prices go up and stay up cos inflation is very very low. Equity prices go down and keep going down, cos there is no pricing power in the economy. Debt becomes very hard to pay back, and collateral often is relinquished resulting in banks becoming cheap sellers of said collateral. And you are absolutely right on the dilemma between preserving jobs and preserving lives. Worth noting that there is a case for "travelling in hope". The President would be well advised to argue that the hiatus in the economy will be brief. Telling people it will be extended would add to the bearish psychology. Better to tell them it will be brief and then revise the forecast later. Have you ever seen the "Yes, Minister" "4 stage strategy" https://youtu.be/nSXIetP5iak
    • AS
      Arpat S.
      25 March 2020 @ 22:03
      Thank you Harry for taking care of us by replying to all our questions when Raoul and JB are busy. I read all your comments and appreciate them a lot!
  • AS
    Arpat S.
    25 March 2020 @ 00:51
    Raoul, I love your thesis thesis on the dollar. But, I need to understand it better. You are essentially saying that with the shutdown of global trade/business, corporations who have 13T of USD debt, are not going to get any dollars that they would have otherwise used to make debt payments. So, they need to look for dollars somewhere else. Now, after losing all this business, If these corporations remain solvent, then they will create demand for more dollars, yes. But, why can't this demand be met by going to their local bank, who in turn goes to the country's central bank, who in turn has access to the swap line? If these corporations don't remain solvent in this scenario, then there is no demand created anyways.
    • JM
      Jake M.
      25 March 2020 @ 01:50
      Not saying I am totally correct, but I suppose Raoul's argument is that the situation is so bad that banks don't want to risk lending out to these businesses in fear of them defaulting. Then, there's the argument that why central banks can't just lend to businesses directly....
    • SN
      SATISH N.
      25 March 2020 @ 01:59
      My understanding is that mechanism to funnel dollars from a foreign country's central bank to local bank to local business does not exist. Raoul touches on this briefly in the video (13:45), I think. If those local businesses go bust, that would implode the offshore dollar credit market (there is no global CB that can backstop this), leading to global deflation, which would also strengthen dollar. Not sure if I have all this straight, but this is my understanding.
    • HM
      Harry M. | Real Vision
      25 March 2020 @ 20:31
      The implicit mechanism is that Fed lends to foreign CB, which lends to its local banks (against local collateral) which lends to its customers. Customers must have appropriate collateral and will be subject to an appropriate haircut. Given the pandemic has adversely affected many businesses, there will be solvency questions and collateral valuation questions. It is easy to see why many companies/funds may not get the access to dollar credit that they had before.
    • AS
      Arpat S.
      25 March 2020 @ 21:58
      Thank you Harry for taking care of us by replying to all our questions when Raoul and JB are busy.
  • KC
    Ken C.
    25 March 2020 @ 00:27
    Raoul & Julian, Sometime can you all discuss if the 50% stock 50% bonds portfolio is still a good strategy.  It seems with interest rates so low they will not provide much of a hedge for stocks plus bonds do not provide any income. What should we do with the fixed income part of ones portfolio? Julian, you had mentioned dividend paying stocks?  If inflation picks up will stocks do better than bonds in that scenario?
    • AW
      Andrew W.
      25 March 2020 @ 02:21
      When did they say it was a good strategy? I don't think you've been paying attention to these guys at all...
    • JM
      John M.
      25 March 2020 @ 04:39
      My understanding is they thought 50/50 would be a bad strategy, i,e, the risk parity trade
    • HM
      Harry M. | Real Vision
      25 March 2020 @ 20:35
      Risk Parity is not exactly a 50:50 portfolio. In many ways thats more reflective of the "Balanced" funds of my youth. Risk Parity is more when funds notice that bonds usually trade inversely with equities but with a -20% beta. So if they borrow cheaply at the short end, they can run a portfolio of 5x Bonds vs 1x S&P and have a "hedged" book with more carry and lower risk. Until that -20% beta changes to +40%. At which point the fund is not "hedged" but massively geared, and has to scramble to sell to de-gross its book.
  • DR
    Derrick R.
    25 March 2020 @ 01:00
    Should the fact that an exit on the dollar trade hasn’t been mentioned mean that there will be plenty of time to exit? I’m a bit nervous now to hear decent opposition to the dollar thesis, and uncertainty around the timing even if there is another run upwards how long before it crashes
    • HM
      Harry M. | Real Vision
      25 March 2020 @ 20:26
      The question of the dollar comes up frequently at MI2. It might be better to say that its constantly under close observation because it is so pivotal, but that so far its not the moment to reverse positions. As JB said, we have just had the feared "Napalm run". But its way too soon to say the coast is clear. The way things are setting up, its very easy to see that the dollar may well have a long way to correct when the coast is finally clear. Keep your head up.
  • NR
    Nathan R.
    25 March 2020 @ 01:04
    Every small/medium business client I have spoken with over the past week already have sales already down 50%+. Some have only a few weeks cash. Firings have well and truly begun. I think WH has some advance numbers and they are scared to death. Personally believe reopening is a mistake until end of April at the earliest but Julian’s comment on guns is well taken. I had dismissed comments around that subject before but if job losses go to 20% for six months...Houston we have a problem. When PMI and unemployment data roll out and everyone is with their kids (for us, April 24th minimum) all day for weeks, staring at their 401(k) balance and worried about their job....today will definitely be a dead cat.
    • HM
      Harry M. | Real Vision
      25 March 2020 @ 20:22
      Quite so Nathan. Also consider the possibility that stories concerning differential availability of respirators may start circulating, and that it may be considered necessary to quarantine some specific cities. Not everyone is happy to remain in martial law lockdown, and not all places which are locked down will be fully policed. I am a great believer in the wisdom of crowds.
  • TE
    Timothy E.
    25 March 2020 @ 01:31
    Julian said the Fed probably won't write off the debt holders. Would it be a play to go HYG (iShares iBoxx $ High Yield Corporate Bond ETF) long right now?
    • AW
      Andrew W.
      25 March 2020 @ 02:23
      No!
    • DR
      Derrick R.
      25 March 2020 @ 03:22
      In one of the daily updates, they mentioned LQD ETF
    • HM
      Harry M. | Real Vision
      25 March 2020 @ 20:20
      Not sure what you mean. HYG is currently outside the pool of acceptable collateral at the Fed (not IG). That said, given that IG credit is now fully acceptable at the Fed a lot of balance sheet has been freed up. JB has taken profits on his HYG short. But credit is still a s*it show. Watch BIZD US to see what is happening to Business Development loans.
  • AA
    Alberto A.
    25 March 2020 @ 01:37
    Thanks for the timely flash update. We have indeed a dollar dilemma. I hear both thesis and it makes sense. I understand that even if central banks solve the plumbing through the swap lines, this is still a loan between banks, therefore demand for dollars anyways as the debt is in dollars. Is this correct? If so, the I guess the strengthen dollar thesis has more probability to work out. Thoughts please?
    • SN
      SATISH N.
      25 March 2020 @ 01:48
      That is my takeaway too on dollars.
    • AP
      ANTHONY P.
      25 March 2020 @ 05:09
      That's not what I heard. I heard agreement that CB to CB exchanges are easy. In particular, CB in country X prints local currency and uses Fed swap lines to trade that foreign currency for dollars printed by the Fed. However, Raoul seems to say that the ultimate dollar demand resides with foreign corporations. The following Twitter post from Brent Johnson provides one example of why the need for many dollars may arise now: https://twitter.com/SantiagoAuFund/status/1242535883099627520 For some reason that I don't understand, Raoul seems to think it likely that getting dollars to foreign CB's via swap lines still fails to enable the foreign corporations to get their hands on those dollars. Thus, the swap lines likely fail to solve the ultimate problem (private foreign corporations need dollars and can't easily get them). For some reason that I don't understand, Julian seems to think that getting dollars to CB's via swap lines might be sufficient to enable foreign corporations to get those dollars. Both seem to agree that the data will soon reveal whether the swap lines did the trick or not. That's what I heard.
    • SA
      Saad A.
      25 March 2020 @ 05:30
      @ANTHONY .... I believe the thinking here is that foreign CBs will be hesitant to lend to corporations in a deep economic downturn as CBs will not trust corps to be able to service such debt (in any currency). But again, if CBs are not lending to corps then where is the demand for $ will come from? Somewhat circular ;) Not sure if this makes any sense .... guys please set me straight.
    • AP
      ANTHONY P.
      25 March 2020 @ 07:19
      @SAAD Without suggesting I really know, the demand would come from contractual obligations that the foreign corps have and that must be paid in dollars. The Twitter post I linked to provides an example in which foreign corps (presumably handling leveraged financial transactions with US banks) need dollars due to 1) margin calls and/or 2) increased margin requirements. Another example, might be a loan taken from US bank by a foreign corp in which a monthly payment in US dollars (or final settlement) happens to come due when US dollar revenue is down (maybe US tourism stopped due a pandemic or the price of oil dropped by 40%). If problems like these occur with one foreign corp, that corp has a problem. If these problems occur with 30% of a country's corps, then the country has a problem and they are more likely to use their CB to solve that problem. To the extent that I understand it, it's more likely to be something like foreign CB's can't take corporate debt as collateral so private banks must be intermediaries but private banks refuse to lend. Honestly, I really don't know.
    • SA
      Saad A.
      25 March 2020 @ 08:42
      Grateful for your insight @Anthony!
    • AP
      ANTHONY P.
      25 March 2020 @ 09:11
      @SAAD I'm afraid we are the blind leading the blind. You may find this helpful too: https://www.project-syndicate.org/commentary/covid19-dollar-debt-crisis-by-philip-turner-2020-03 Best of luck!
    • SA
      Saad A.
      25 March 2020 @ 11:27
      Thank you again and stay safe.
    • SN
      SATISH N.
      25 March 2020 @ 16:21
      Another issue is Fed has swap lines only with a handful of countries' central banks. Current swap lines don't help address the problem that corporations in EM countries may face.
    • HM
      Harry M. | Real Vision
      25 March 2020 @ 20:18
      Several excellent points. I note the following. CB bilateral swap lines exchange local currency for dollars. CBs are not constrained. Local CB can then take local currency collateral in exchange for dollar loan with suitable haircut from a local bank. Bank can then decide which of its corporate clients it trusts enough to loan dollars to. RIght now, some geographies with substantial dollar funding needs are not covered. I consider this an oversight or perhaps delayed because they were not recipients of dollars in the GFC. So the structure has to be setup to handle this (local laws etc). I am sure they will eventually sort these kinds of issues out. However I am not sure that any individual corporate outside of the US will get access to dollars at the same terms it had before. Depends on collateral, and profitability to the bank. FX swaps are definitely going to be rationed compared to before. Not good.
  • AS
    Amit S.
    25 March 2020 @ 02:21
    I work in WM for one of the largest US banks, and as I write this we have stopped trading in XAU for clients - complete halt! Yesterday bid/offer spread on XAU were $20 wide. And then GS comes out with buy Gold reco for their clients. Something's brewing up.
    • JM
      Jake M.
      25 March 2020 @ 03:10
      noob question: what is WM?
    • BD
      Bryan D.
      25 March 2020 @ 04:14
      Wealth Management
    • CS
      C S.
      25 March 2020 @ 06:06
      It seems to me, speaking of currency, and the saving of debt (and the system) at all costs, and whether we collapse into a deflationary hole or reflate into a highly inflationary, debasement of money period, the ultimate currency, and trade, is gold.
    • CS
      C S.
      25 March 2020 @ 07:56
      Amit, what do you suppose is 'brewing'?
    • AS
      Amit S.
      25 March 2020 @ 08:57
      Update: miners are going offline due to CVD-19, hence paper XAU market is broken as there is no incremental physical Gold available as underlying collateral. Hence wide spreads and eventual halt in paper trading. Further CME has increased maintenance margins for Gold futures. All coming together. Further, went to a local bank here in SG to buy bullion - it was freaking packed! I usually buy every year during the Hindu festival of Dhanteras - the crowd today was 7 times worse.
    • CS
      C S.
      25 March 2020 @ 09:19
      Thanks for the update, Amit.
    • HM
      Harry M. | Real Vision
      25 March 2020 @ 20:11
      I came to the same conclusion Amit. Unlimited transfer of private sector balance sheet to the Fed is only one part of the recipe for a explosive rally in the price of hold. Increasing expansion of deficits, as well as additional financial repression. See what happens when/if YCC comes to the US.
  • JM
    Jake M.
    25 March 2020 @ 02:28
    does any one know where I can look at LIBOR OIS spread on a daily basis?
    • HM
      Harry M. | Real Vision
      25 March 2020 @ 20:09
      Great question. I think possibly FRED. https://fred.stlouisfed.org/series/TEDRATE Let me know if that doesnt work. If you see what I saw, it gives you some idea of the stresses in the system.
  • AH
    Ali H.
    25 March 2020 @ 05:07
    Julian, can you please confirm how are you buying the physical ? futures, etc or physical? hearing potential trouble at COMEX delivering the underlying Silver. Any views? thanks
    • TH
      Tim H.
      25 March 2020 @ 06:39
      Phau. Phag
    • HM
      Harry M. | Real Vision
      25 March 2020 @ 20:06
      I put in a question to JB on how he recommends buying physical. Last time I checked physical was trading at a 30 dollar premium. Will be interesting if that is not arb'ed away. The short term concern is that there may be difficulties in making good delivery in near term contracts due to CV19. The longer term concern is that governments may impose restrictions on ownership in the future.
  • AK
    Andrew K.
    25 March 2020 @ 16:38
    agree with JB that we are in the bounce now. I am largely missing it. I suspect most people are largely missing it. it dawned on me this morning that it is completely logical for the snapback to be as quick as the sell-off. there is a lot of bad news that is going to hit over the next month. the supposed stimulus still needs to get thru Pelosi's crazy congress. it' also not clear whether or not the fiscal package will be productive at all for economic growth going forward - unlikely. separately, I was a bit taken aback by the headlines overnight re: countries cutting back on food exports, but it's logical given the uncertainty. hard not to see bonds continue to rally for now.. the world really only has one financial asset safe-haven market for the time being .. and, so RPs $ view likely has a lot of room to run (after some consolidation after the largest monthly outside reversal in the $-index I recall ever seeing). man, I wish I was back in the seat!!!!
    • JM
      Jake M.
      25 March 2020 @ 16:44
      what do you mean by "monthly outside reversal" in the $-index?
    • AM
      A M.
      25 March 2020 @ 19:09
      Jake. It is a potential monthly outside reversal - a huge range 94.65-102.92 so far. Opened month 98.12 and currently 101.68. It's a green candle at the moment. If it closews the month black below 98.12 it would be a monthly key reversal or outside month.
  • SA
    Saad A.
    25 March 2020 @ 18:47
    Got stoped out $UUP - good luck guys....
  • RY
    Roy Y.
    25 March 2020 @ 14:30
    Thank you for the Flash Update ... As always, super interesting to listen to you thrash out your ideas ... My two pennies worth ... On the dollar shortage, here's an interesting artcile by Daniel Lacalle, which argues for a sustained strengtheing in the US$ (if not, then, a dollar that is unlikely to weaken) ... Link: https://www.dlacalle.com/en/despite-massive-qe-and-congress-bill-the-us-dollar-shortage-intensifies/#more-10668 Also, for context, Zoltan Pozsar's article is superb ... Link: https://research-doc.credit-suisse.com/docView?language=ENG&format=PDF&sourceid=emcmt&document_id=1082246841&serialid=0b2M%2FIRv1F1JMLaFoTy3mHLeusulr%2F%2Bi2siJQjbrrwI%3D&cspId=1929372245381636096 For illustrative purposes ... If I'm looking athe data correctly, UK banks still seem to be 'very' short of US$ ... BoE US$ repo operations can be accessed through BoE website ... LINK: https://www.bankofengland.co.uk/markets/bank-of-england-market-operations-guide/our-tools Scroll down towards the bottom of the page for data. (UK Banks have borrowed a total of $33.405 billion since 18 March $8.210 billion 7-day funds + $7.245 billion 84-day funds; 23 March $500 million 7-day funds; 24 March $3.555 billion 7-day funds; 25 March $7.705 billion 84-day funds + $6.685 billion 7-day funds) Presumably, if the US$ shortage cannot be alleviated but continues to intensify, then we trully have the risk of a 'global great depression' ... And that's when my gradnfather got wiped out ...
    • SS
      Steve S.
      25 March 2020 @ 15:31
      are you Short GBP/USD then?
    • RY
      Roy Y.
      25 March 2020 @ 16:54
      Yes ...
  • Dv
    Daniel v.
    25 March 2020 @ 16:46
    $UUP getting dumped today, same as yesterday. We had a good run last week but maybe just a correction.
  • JM
    Jake M.
    25 March 2020 @ 13:19
    Raoul, thanks for clarifying your conviction. But, what is the timeline you are looking at for the dollar trade to play out? Several months? For instance, is Jun 19 Call at 28 on UUP a little too early? Maybe we should wait till some kind of technical reversal back to bull to get in?
  • AP
    ANTHONY P.
    25 March 2020 @ 12:10
    Gentlemen, Japan just used the Fed swap lines to get $32 billion into private hand yesterday. The EU and the UK will hold similar dollar operations today 3/25 and Norway, Sweden, and Denmark will do the same tomorrow 3/26. May I ask? Will the result of these operations provide us with any substantial guidance with respect to the FX trade? If so, what should we look for? Thanks.
    • RP
      Raoul P. | Founder
      25 March 2020 @ 12:55
      Personally, I don't think it matters. I think swap lines help banks in those countries but not corporates who hold a lot of the debt.
  • YC
    Yves C.
    25 March 2020 @ 11:50
    Thanks so much for the great trade recommendations. Possible to comment on suggested sizing of positions as well next time?
  • MC
    Michael C.
    25 March 2020 @ 03:56
    Can you to get Jeff Snider back on for his views on US$ plumbing. He's the guru on this. His latest blog suggests a flight from US$ and Treasury yields is not a real concern until growth and inflation pick up on the other side of this crisis. Until then the collateral shortage goes on.
  • SG
    Steve G.
    25 March 2020 @ 02:40
    Hold the guns mate. we all going back to work in 3-4 weeks. hahaha. great update
  • SD
    S D.
    25 March 2020 @ 01:54
    Really appreciate these flash updates.
  • jl
    john l.
    25 March 2020 @ 00:18
    What did Julian say at the very end? Was a little hard to hear. Did he say, “I am a seller of rallies.”?
    • AP
      ANTHONY P.
      25 March 2020 @ 00:56
      That's what I heard and I think Raoul said, "Yeah, I am too."
    • CS
      C S.
      25 March 2020 @ 01:11
      Thats what I heard
  • AP
    ANTHONY P.
    25 March 2020 @ 00:58
    I appreciate the clarification/update, especially on the respective FX trade expectations.
  • jR
    jacco R.
    25 March 2020 @ 00:44
    Can you provide the transcript of the call? Thanks
  • ph
    phil h.
    24 March 2020 @ 23:51
    Good to see the disagreements