Insider Talks – February 2019

Published on
February 7th, 2019
Duration
31 minutes

Insider Talks – February 2019

Featuring Raoul Pal, Julian Brigden

Published on: February 7th, 2019 • Duration: 31 minutes

The Bear market rally has been vicious, but will it last? Raoul and Julian give pro tips on surviving the violent market swings and what key assets and levels we need to watch as an indicator of where we're headed next. Filmed on February 05, 2019

Comments

  • DD
    Derek D.
    8 September 2019 @ 17:43
    When I hear centrist I hear left wing. The center is left. There's only one thing you're not allowed to be: far right. Far left is a cute teenage phase. Far right is an evil nazi. What does that tell you about who's in control of the narrative?
  • JC
    Justin C.
    14 February 2019 @ 02:49
    I’ve decided to play precious metals via ultra high grade junior to mid-sized miners that can operate profitably at wide ranges of price. It’s worked very well with Kirkland Lake, Wesdome and Silvercrest Metals.
    • RK
      Robert K.
      23 February 2019 @ 23:45
      with you on this one. for simpler play GDX also ok.
  • lD
    lance D.
    7 February 2019 @ 19:20
    Nice conversation thanks ALSO my daughter wants to buy a property, the timing worries me .. if you can confirm or deny that I'm right to be worried maybe i could get her to read the response .. So basically the question to 'macro daddies' IS MY DAUGHTER ALLOWED TO BUY A PROPERTY THIS YEAR ? i tell her to wait & she rolls her eye.
    • JB
      Julian B. | Contributor
      9 February 2019 @ 09:06
      Hi Lance. Its always hard to make a broad generalisation about property prices when the market is so geographically diverse and subject to local idiosyncrasies. However, in general we believe that affordability needs to improve dramatically to match supply, especially for new homes and demand. Therefore, we have a Mexican stand-off where the outcome I suspect is falling activity. So at a minimum if you daughter is fortunate enough to be able to afford a property at present, I'd tell her to try and buy something off a developer who is feeling pain. Drive a hard bargain.
    • lD
      lance D.
      10 February 2019 @ 11:29
      Thanks Julian for the reply...developers here in UK mark Up the asking price and give all assorts of incentives atleast in Birminghamthey do, driving a hard bargain would be like a ‘cat trying to bury shit in on a marble floor’ anyway thanks and all we can do is try to identify the developer that is feeling pain and see if I can get a real steal . Cheers & enjoy the rest of your holiday .
    • PC
      Paul C.
      10 February 2019 @ 19:10
      Fellow Brummie in the house!
    • lD
      lance D.
      11 February 2019 @ 17:16
      Hahaha..... Great Barr
    • lD
      lance D.
      11 February 2019 @ 17:18
      anyway enough of the small talk we should link up and chat these markets over a cuppa LOL
    • PC
      Paul C.
      17 February 2019 @ 09:03
      Good shout, Lance... my email is pscurtis.itpm@gmail.com. Although if we're gonna be chatting about these markets i may need something a bit stronger than a cuppa!
    • lD
      lance D.
      17 February 2019 @ 19:36
      Haha.. Horlicks it is then. I will drop you a note this week Paul Cheers
  • TM
    The-First-James M.
    10 February 2019 @ 01:56
    Raoul. Where do you stand on MMT - Modern Monetary Theory, and the probability a Western Government tries it in the not so distant future? Do you think this could be the spark that transforms the deflationary outcome you see coming into an inflationary one? I'd also be curious about Julian's thoughts? If you don't respond here, it would be great if you could discuss this in a future Insider Talks if you have a view - strong, or otherwise...
    • JB
      Julian B. | Contributor
      14 February 2019 @ 07:15
      At this stage, I think its just a convenient theory that extremist politicians can use to justify what at the end of the day is simply profligate, populist spending. However, I do believe that societally that is where the cycle is going. So that in the next downturn the demand for more activist government involvement will grow via more regulation, spending etc. Essentially the days of free market capitalism are over and that is definitionally inflationary.
    • TM
      The-First-James M.
      15 February 2019 @ 02:32
      Thanks for your reply Julian. I suspect Raoul may flesh out an opinion on this subject over the coming months/years, if he hasn't already. When I hear Steve Keen - a bloke who usually talks sense IMO - seemingly expounding the benefits of MMT, I have to question my hearing. I don't understand the difference between this and what was tried in Weimar Germany...
  • JK
    James K.
    10 February 2019 @ 05:55
    SPX up five days in a row going into Tuesday's high; Been higher 97% (last 33 times one failure) of the time in the next five business days which would give target to next Tuesday for a higher high. Outside chance SPX could make it to November, December highs near 2800 range.
    • VD
      Viknesh D.
      14 February 2019 @ 09:40
      Agree! My calculations brought me to 2790-2810 then downhill from there
  • DB
    Doug B.
    12 February 2019 @ 03:09
    Due to changing conditions, you have changed your positions a bit - fair enough. It would be great if you updated us on past recommendations, specifically the short calls on SPX, BKX, GOOGL, XOM.
    • EF
      Eric F.
      12 February 2019 @ 21:01
      Agreed. I do think updates on past trade recommendations is a good idea. I appreciate you may not feel you should hold hands but it does seem like changes in thinking are not being reflected in live trades and I personally think there is an onus on the service to match the 2. I also think the flash alerts have died off and really do hope this isn’t something that comes alive just around renewal dates etc.
  • MW
    Marco W.
    9 February 2019 @ 00:54
    The easiest trade in bear market is always 2-5 year bond as Druckenmiller described. USD hedged india bonds are the best given the inflation, election as well as global tailwind. Just a theoretical trade because it is not available to most. USD is more volatile than 2-5 year bond but still a relatively easy trade because of recession. Other economic is a leveraged version of US. US recession means others falling harder so that USD rise. Short stocks is the most difficult because unlike bond and USD this trade is to fight against central banks, governments, medias and people around. Personally i think the best is to talk more and do less when excited as in Christmas and talk less and do more when cautious like now. But at the end short stock is just a reflection of the highly competitive nature of (almost) every trader. One need to counterbalance oneself and overcome this slightly, and trade more in bonds and less in shorts.
    • AG
      Abhimanyu G.
      11 February 2019 @ 14:32
      What’s the logic behind USD hedged India bonds? There are USD hard currency bonds available for India quasi sovereigns which are relatively liquid.
  • MC
    Mark C.
    9 February 2019 @ 05:42
    Is this a good timing to enter into the Dec 2020 Eurodollar trades?
    • FM
      Fraser M.
      11 February 2019 @ 08:11
      Marc - my 2 cents worth from experience in trading Eurodollars is that you’re better off using the Dec 2021 because it gives you extra time to be right about a recession (Dec 2020 and Dec 2021 are trading very near the same level)
    • MC
      Mark C.
      11 February 2019 @ 11:24
      Thanks. I'll look it up. If it's about the same price then it does seem to be a no-brainer to capture this macro theme.
  • RW
    Richard W.
    11 February 2019 @ 08:29
    Just watched this. Understanding the great uncertainty around the current circumstances in markets is really helpful. It's so easy to fall in to the trap of thinking that there is a "right" answer, and that it should be traded. I found the lack of clear views as to what will happen next very helpful!
  • NI
    Nate I.
    7 February 2019 @ 19:21
    I have Julian's fears while holding my short sales with white knuckles, but I find myself in Raoul's camp. Balance sheets are so insanely leveraged that most tangible book values are now significantly negative. The handful of darlings that pushed the market up and up are finally wilting. Even cult stocks like TSLA are having difficult getting upward traction. I haven't tallied it, but I suspect the S&P 500 as a whole now has a negative tangible book value. Mountains of corporate Baa2 and Baa3 debt that's on the verge of being cut to speculative causing God knows what chaos in the bond market. Couple that with dismal economic data plus political turmoil and I'm just not convinced that the central bank can blow this bubble even bigger unless they were to go completely insane and start buying equities in addition to bonds.
    • FM
      Fraser M.
      11 February 2019 @ 08:18
      Use put options to ease the white knuckles!
  • SN
    Sean N.
    8 February 2019 @ 20:29
    Nice conversation guys. Good to see you guys doubting yourselves like the rest of us. Curious about Raoul's comment that we haven't seen real hard negative economic data yet? It felt like he was more confident about this a month ago? For what it's worth, I lean towards Raoul's point of view, and the Feds easier stance won't make much difference now. It's really a confidence game now, with likely more negative to mixed hard economic data to start coming in. Might be useful to have a calendar of major potential macro/data events that could set this off again. Wonder if Macro Insiders would do that for us?
    • FM
      Fraser M.
      11 February 2019 @ 08:16
      I experienced first hand the start of Japanese ZIRP in the early ‘90s while trading derivatives in Tokyo and it was clear further easing did little to nothing for the economy. The stock market’s reaction eventually caught up with that reality.
  • JM
    Joseph M.
    11 February 2019 @ 01:00
    Raoul, the DAX is starting to descend here. Other weaker indices might indicate we are heading lower. Enjoyed the workshop. Regards from Houston. Joe
  • AS
    Alan S.
    8 February 2019 @ 15:48
    Why would there be a bear market in bonds, if QE is likley? What am I missing?
    • JB
      Julian B. | Contributor
      9 February 2019 @ 08:59
      Hi Alan, I think we are a long way off another round of QE. However if and when it does occur judging by the experience of QE1, 2 and 3 bond yields rose the minute the programmes were launched. As to why I think the answer is simple. QE is reflationary and in that environment why would you hold the risk free asset?
  • SM
    Sean M.
    8 February 2019 @ 12:21
    This is also the first year where the tax reform hits individuals. Wondering how this will affect both the political climate as well as the economy.
  • SM
    Stuart M.
    7 February 2019 @ 16:47
    Great conversation guys. Wondering if you have a favourite part of the 'hero' fixed income trade Raoul - treasuries? (across the curve?)
    • RP
      Raoul P. | Founder
      7 February 2019 @ 19:07
      December 2020 Eurodollar interest rate futures or 2 year note futures.
    • DB
      Daniel B.
      7 February 2019 @ 23:56
      I'm taking Raoul's advice and moving straight into the 2YR and EuroDollar trade once this next leg down is done. This bear rally has been a headache to say the least...
  • PF
    P F.
    7 February 2019 @ 21:03
    I have the feeling that the next down leg in the equity markets will eventually come and catch a lot of people by surprise.
  • RA
    Robert A.
    7 February 2019 @ 19:13
    Excellent one and thanks guys—message received. Not going to take much for me to cover the few shorts put on @ 2600-2650. Who needs the static it just hurts the head....and uses up emotional capital that needs to be husbanded for later battles. I’ve said for years—“I’ll run out of emotional capital before running out of capital”! Macro Insiders has been very useful to me.
  • MC
    Minum C.
    7 February 2019 @ 18:04
    Really enjoyed the conversation about political polarization and societal dysfunction, especially where you tied it in with QE, offshoring, and share buybacks.
  • JG
    John G.
    7 February 2019 @ 17:40
    Another helpful conversation. I have been shorting the SPY's here because of the weakening global data but the risk to a bearish position is definitely the Fed. The Fed Put is back in play but it is a matter of how much stock market pain the Fed is willing to take. I think a slow decent would keep the Fed from taking easing action until the data shows a high risk of recession. In that case, Raoul's call looks like the most probable. Another 10 - 15% crash could force their hand sooner and Julian's fear would be correct. As they said, we just have to stay tuned.