Comments
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DWHi Julien, thank you for your great work! For the first time in 10 years of actively investing money I really feel being ahead of the mass instead of following it. I have a question for Julien following the August Insiders Talk. Julien laid out his perspective on Bunds, especially the chance of a sharp correction in Q4 2017 or beginning of 2018. He also mentioned the DAX to be a potiential "victim" of a correction in Bunds. It would be awsome if Julien could lay out his analysis on Bunds and DAX for the next month, until Q4. Does he think it makes sense to already scale into these trades or does he see higher prices for DAX and Bunds until then? Appreciate your work. Kind regards Daniel
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KTHi Raoul, In your thesis on the demographic secular cycle and this video you only account for BB's and Millennials, what about Generation X. I understand its a smaller population over a shorter time frame but surely we must have some impact. Your thoughts much appreciated.
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RIJulian/Raoul - Do you see any similarities between the current market and that of the mid-1990s that warrants further attention? There seems to be a reasonable probability that today's market mirrors that of 1993-1995 given a variety of similarities, including: S&P 500 P/E ratio (valuation) versus VIX (complacency); USD system liquidity transitioning to deficit from surplus; gold price technicals (likely continuation of bear market); etc. We have seen many of these data points presented in Real Vision (e.g. via Daniel Want, SentimenTrader, Variant Perception, Nautilus, etc). Have you investigated the mid-90s as an analogue? Thanks.
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RAI'm playing the potential hedge against Equities and Bonds declining together with Cash and what I consider to be an "insurance policy" with Jeff Cole's Artemis Capital's Vega Fund. Being an early RV TV subscriber I watched his very first video with RV and decided his Vega fund would be a perfect diversifyer for my portfolio (he has done 2 RV interviews and think both are very much worth watching). To me the sizing of this "insurance policy" is critical. My take on what Jeff is doing is that he gives up the smaller VIX changes to fund his fatter tail positions which should pay off in more extreme volatility situations. My "insurance policy" does cost me money, albeit less, IMO, than some alternatives, but does allow me to keep some legacy Equities that have large tax consequences to deal with if sold. Jeff is an extremely bright guy and has the chops to trade VIX products on my behalf through his fund, IMO. If you will watch his 2 RV videos I think you can quickly see exactly what his strategy is. The Artemis folks have been very easy to work with as well.
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JMPlease, please consider only answering user questions towards the end of the broadcast video. I felt your answering questions at the beginning broke your momentum. I'd like to get your thesis out up front and then go from there. Thanks
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DYDear Julian, Unemployment in south Europe is very high. Debt load is very high. How do you see this with your thesis of growth in Europe and rise in interest rates if I understand you correctly. Besides demographics in Europe are negative too which is perma deflationary (as per Raoul). Could you please answer to this here or in any next publication or video. Many thanks
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JLHi all, just a general question for the more experienced traders on here. I am looking at the 10y bund yielding 0.39 right now while DEC17 futures seem to be heavily backwardated to SEP right now, roughly 161.5 vs 164.4. Have I got anything wrong or is this a common occurrence in a bond market? Thanks
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CSThanks for the MI service Raoul/Julian. I'm not a sophisticated 'investor' (dont have much time for a multiplicity of markets/trading vehicles) so my main interest/value in the service is your impressions on whether things are likely to turn risk on/off, a little on timing etc. I'm more of Raouls longer-term mindset (I'd rather trade 1-3 times a year than on a weekly or even monthly basis). Im happy for you guys to get on with what you do knowing you share those impressions what the time is ripe. (The tools I use to 'leverage' those impressions is of course my responsibility/business.)
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RMJulian, What are your thoughts on the Biotech ETF (IBB). I feel like we are in the early stages of when the bulltrap starts rolling over. I tend to struggle with timing. I am more like Raoul in the sense that I get an idea, but I need a longer time frame for things to pan out. Is there anything you do specifically that could help me with timing trades in general?
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agWe might be getting a war or something like it re North Korea. How does this change the macro outlook if at all ? And if it does change the macro outlook, what should we expect going forward ?
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PGMention is made of buying a put on certain FAANGs and related and Bunds. What sort of time frame would you look at - Sept, Oct Dec? Cheers
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TJ'Sure would be helpful to show some simple charts to illustrate the points you are making, e.g. the shift to a rising yield curve ahead of a recession, or the manner in which, say, Euro/Singapore EURSGD might have moved in the previous risk-off episode.
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SBRaoul Pal, do you have any updated thoughts on the oil price? Especially since the Russell Clark interview? Thanks.
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NBTwo pertinent topics I am raising. I had posted some analysis and questions within the comments section of Raoul's "Decision Time for the Dollar" and Julian's "Emerging Markets" pieces last week. Have not seen any responses/feedback on those from them but I just raise them in this thread for renewed awareness. Shanghai Comp seems to be on verge of upside break out and EEM already experienced an upside break out which is sticking thus far. Additionally many are pretty bullish on Emerging and Overseas markets at this stage. One of them being Jeffery Gundlach who recommends shorting the SPY, going Long US Volatility and long EEM. I realize Julian makes the case in his Emerging Markets piece that the Eurozone behind the curve on inflation stance which will lead to rising rates and decline in European bonds will whack the emerging markets. But from a charting/price action stand point EEM is looking pretty strong having just broken to the upside of a 10 year downtrend channel. Is this a fake break in light of Julian's analysis about the ECB bind? Also Shanghai comp looks ready to have a triple top or a break out on third attempt at about a 3 year sideways to upwards consolidation. So again, will this be a fake move based on Raoul's comments about Shanghai Comp looking like it's topping out in his related piece? Food for thought based on recent price action and sentiment turning quite positive for emerging and Asian markets.
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PGPS just listening today - post the "zuma" secret ballot in RSA and seems to have hit ZAR any future thoughts on ZAR
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GLThank you for another great video with excellent points, as always from you both. On a bond-stock sell of, possibly emanating from Europe: it seems difficult to envisage anytime soon in view of ECB bond-buying and relatively softer inflation expectations based on swaps (but, yes, they are higher than last year). Also, on a possible DAX correction, we now have a better and more broad-based economic backdrop in Europe providing support. Since the bund sell off in Apr 2015, we now have CSPP @ a EUR60bn per month clip to contend with. Yes, there could be another loss in faith in QE, as in 1Q 2016, but there is so much 'FOMO' still in markets that make it difficult to see how things pan out. The Fed's handling of its B/S is very interesting indeed and how markets react to this (EM in particular) will be a trigger to watch.
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RMWould like to see some regular disscussion of whats happening in China, as the third horseman of the global macro environment, otherwise first rate discussion.
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AMWhat would it take (from a data standpoint) to see the Fed back away from its recent comments about shrinking its balance sheet? How would this impact your view of the USD? Would this impact the ECB's path? Raoul hinted at starting to think about a steepening yield curve as a result of Fed rate cuts. What is the likelihood of seeing Fed rate cuts in conjunction a shrinking balance sheet? Lots of very good insight in the comments section here. Terrific thought process in these interviews. My brain is starting to hurt.
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NBHi JULIAN, One set of thoughts related to your Tech sector and bubble stock focus would love your views for the community here .... Just like to add to the overall theme you are focusing on when it comes to Tech sector and Nasdaq mega-cap money drawing "darlings" being a prime candidate for a meaningful correction due to over-extended nature. Specifically that is to keep an eye on the Semiconductor sub sector within the Tech sector. Very often I see this as a leading indicator of what the Tech sector eventually does. Thinking of Semi's as the "nuts and bolts" of the overall Tech sector since their wares go into all things Tech. Keep an eye on the SOXX index ( and various Semi ETF's like SOXX, SMH and XSD ). To me they all look like they are floating along potential break down territory with rising wedged in price action and negative divergences on various oscillator indicators. The setups look to me very similar to the period leading up to the last major selloff which occurred leading up to the mid 2015 time frame which is when the major correction occurred from running into the secondmonth of 2016. The ETF SOXS ( 3X leveraged inverse of SOXX ) would be a potential play eventually once we see a true break to the downside of this setup. This is the corresponding ETF to the TECS "tech sector" ETF ( also 3x leveraged inverse ETF ) which Julian pointed out may be a vehicle to participate at the right point. Just a general ADVISORY to all who don't know though ( I posted something akin to this on one of the other MI comment boards last week sometime ): As with all leveraged ETF's be careful though as they are "leveraged" and also suffer from "decay" over time if they either trade flat or decline against you ( due to the mechanisms the ETF must employ to replicate 3X inverse ). If anyone does not know about what I am conveying here just search the web to study up on risks or leveraged ETF's and the "decay" they can suffer from. Take a look as longer term charts of any of the inverse ETF's and you will see they constantly decline except for a few bouts of over performance to the upside. They are best used only as a smaller hedge against longs or if one is very confident at various carefully measured and tightly rules based trades to try and grab over-performance during specific market conditions one feels very confident in. Just be careful with them and understand them fully first and ahead of the time you may plan to use them. JULIAN ... bottom line ... what's your view on Semiconductors being a good leading indicator and also a prime candidate to participate in larger degree to any downside correction ... perhaps to an even greater degree ... than the larger Tech sector overall? Thank You
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bcHi, is it no longer possible to download the audio? It is super helpful to be able to listen while commuting. Thanks for the great content!
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HBI love the line "failed reflation" as this ties many of the discussion topics together. Some disparity with Weldon on RVTV with regards to USD, but he suggested TECS to play US tech weakness. Got put spreads on IBM and NFLX but want to add more exposure here. TSLA & NVIDA or TECS thoughts? Seems like the parabolic shape with necklines on these names are forming up perfectly to Julians original piece.
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NBHi Julian and Raoul, Just want to pass these ideas along to you. Something that's occurring to me now that I've been interacting with MI. Can you and your MI Team possibly consider adding a slightly more tactical element to MI which would provide some more incremental engagement in terms of current observations and/or actionable updates? Similar to how Julian had mentioned he had conveyed to institutional clients to sell EUR/USD recently? Not sure how you could fit in something more tactical in nature to MI. I don't believe the comment boards which are all independent of one another and reside underneath each posted content piece/video. But perhaps a separate section within the MI main page where you or your Team could post during any given month your charts of interest and/or current observations ( when applicable ) which you feel worthy to pass along geared towards a some incremental tactical thoughts or guidance? The content could render most recent posts first. Fully realizing this is a "Macro" service, what I am suggesting I think would help fill some of the gaps in the minds of many here in between the once per week content deliveries and enhance overall engagement and member to member interaction as well. Additionally, one aspect of the comments sections I have thought thru. There is no way for us to know whether there are new comments or any comment we have posted has received any new replies without going into each and every separate content related thread and scrolling thru scanning for new content or replies. Might it be possible for MI to add some ability to visually signal us within each content graphic on the main MI page as to whether there has been any new comments and/or replies to any comments we have posted within that content's associated thread which would then allow us to drill directly into that comment section directly? Thank You for considering these ideas!
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NBHi Julian. THANK YOU for your reply to my questions about the commodity complex below. One follow up QUESTION line of thought... does your reply imply that you also agree we will or should see a relative "catch up" ramp up in the commodities complex ( I know you prefer the food related stuff ) as part of this equities bull market cycle before any longer term downside pressure is placed on this massive bull run? Realizing also that you see the growing potential for some sort of meaningful correction in the meantime? Point being, relative risk/reward might imply that the commodities complex offers better reward potential as compared to equities. On the flip side, if the USD Bull case is still in tact and the USD turns that would imply renewed pressures on commodities complex. Finally, I think under your current thesis you are essentially saying that any measurable upcoming decline in equities should be "bought up" since you don't see a major burst unfolding just yet? Any particular sectors you feel would be better over others to focus on buying during a meaningful dip? Better to go for the previously over performing sectors like Tech and Cyclicals? Or better to go for the ones that are already suppressed like Commodities, Energy and Precious metals. All subscribers I believe would be interested to see what your more tactical oriented viewpoints and strategy on this might be. Thanks
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ggNice discussion. As a retail investor still trying to figure out how to use MI, hopefully be clearer in next couple of months.
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RMThanks for the list!
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JBHi Neil First off. Think you need to be careful which commodity index you watch. I personally, think the GSCI is too oil weighted. I like the CRB spot, which hasn't declined as far. Within the commodity space I really like food as my work suggests we are getting 4-5% inflation. As for equities I'm not in the massive top camp. At least not yet. What I am worried about is a sharp reset driven by Europe as bond yields reset for much higher growth/inflation. Given the market set up with super low vol, heavy retail investment may look more like 1987 than 2000.
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JMHi Raoul and Julian. Both of you seem to think that the fed reducing its balance sheet will be very important in the future for markets. However, Raoul, you stated that you attach a higher probability that rates will rise when the fed reduces its balace sheet. Julian, you explained a few weeks ago on RVTV that rates could very well decline during this inverse QE. I am in the investment sell side and most reports I read from business banks, they seem to think that the fed reducing its balance sheet will lead to higher rates. Personally I think rates will decline for the simple fact that QE lead to higher rates during the actual QE programs. (contrary to popular opinion but as Julian clearly showed) It would be interesting if you could discuss this in the next video.
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NBRaoul and Julian. Thank you for the in depth discussion. Some questions and thoughts which have been in my mind and I believe dovetail well into your joint discussion and would really like to receive feedback on. In observing commodities charts ( using GSCI Index primarily ), despite equities markets being strong globally, emerging markets and China breaking out ( many well respected market observers have become quite bullish on overseas and emerging markets I might add ) and USD weakness ... commodities are weak. In prior market cycles, it seems, equity markets have not really topped out until commodities markets have heated up and pressured global economies thru inflation rises and subsequent "bubble pin prick" CB raise rises. How do you feel about the thesis that equity markets will NOT have a chance to top out until we get commodities really heating up first? And, if so, is the real "undervalued" macro long play within the context of the current bullish run in markets generally actually residing within the commodities complex? In other words, rather than attempting to squeeze further profit out of the current equity market bull run, perhaps the higher reward vs. risk is in the commodities markets as they will eventually catch up to the equities markets and pressure global economies and equities eventually to the downside? I realize Julian is calling for inflation heating up in Europe due to his described ECB mis-steps keeping things too easy in the face of declining and low oil and energy prices which will lead to higher "behind the curve" catch up rate rises that, presumably, would pressure commodities even further? But with commodities still suppressed at this stage relative to previous market cycles is there room for commodities to run faster to the upside than equities before the plug is pulled on the equities bull? Commodities are in a consolidation trading range it seems and quite "unloved" at the moment. So really interested to understand how you see commodities playing into your overall thesis and views at this stage. Also how precious metals fits into all this for you? with USD declining hard recently yet precious metals not responding very vigorously to the upside in response, I feel that this is a "tell" on the notion that precious metals still have further to go to on the downside and or sideways consolidation before they have a chance to really break out of their bear market and heat it upside. Finally, is I look at a chart of USD/EUR ( I realize most quote and look at EUR/USD but there is a reason I refer to USD/EUR for the different perspective it offers ) ... it seems to me a case can be made that there was a large inverse H&S pattern between 2003 and 2014 ( LS 2003-2006 , Head 2007-2010, RS 2011-2014 )with a break out to the upside in 2015 and that the recent decline in USD/EUR "may" simply be a "back test" within context of the sideways break out pattern running from 2015 to present of that large inverse H&S pattern break out. Again, really interested to see your comments back about that and all the other points I've raised here. Thanks!
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NCGood piece. Raoul, can I ask on EDZ8, I believe you're recommending buying a call spread which often makes sense if the top part you're selling has some value and is higher in vol. I believe it was a 98.75 - 99.25 call spread but if I look on the screen, you're onliy getting one tick for selling the 99.25 call. Why not just buy the 9875 around 4 ticks? If you're really right this could pay off nicely.
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JVBrilliant work. A privilege to listen to and immensely valuable.