Re Eurodollar futures; I have been educating myself on these instruments and also bought a few contracts to see how they behave (Dec 2020 and Dec2021). My question is, when does one sell ? Does one let them run to expiration date or is the recommendation to take profit at some time before at a predefined target ? Thanks.

HI Harry, they talked a lot about bear / bull steepener, I don't understand how that would affect the "buy TLT" trade the Raoul is recommending. What happens to TLT if fed cuts rates? Is there a combination trade here that I am missing?

Great piece. New format is really nice. Near the end there is talk about EEM(?). As in the ETF EEM? Raoul mentions doing currency first and waiting to short EEM later, and then when around 38 to 40. The ETF EEM has been above 40 since November. Was he talking about something else?

Guys great conversation. I think Harry will add more and more as he gets use to both of your style, but now Raoul will have more time to talk :)). Question/Thought: I'm 100% committed to the bond trade via Eurodollars and some 10 year notes. But as we know this is a negative delta strategy (bearish the S&P) and since the equity market will react positive to the interest rate cut in the beginning, I believe it makes sense to be long /ES or the micros as a hedge to the ED trade. Is a short/long strategy that seems to be kind of a sure thing. Thoughts?

I like the new structure,more information conveyed and less confusion . How does one participate real time for questions,i must be missing the notice?

OMG! Harry is an AI, isn’t he? Regardless, ‘he’ is a wonderful addition and he adds great value to the format. Bravo!

What is the eurodollar ETF symbol Julian was referring to? Thanks

Harry, please do post that trade Julian was discussing without the ticker. Thanks.

Potential catalyst in Uranium (i've been watching the space since Raoul's In Focus piece). Trump's 'Nuclear Fuel Working Group' will (according to the link below) resolve later this month. Wyoming governor, Mark Gordon, stated that he spoke directly with Larry Kudlow – presidential advisor and co-chair of the NFWG – who stated that President Trump's budget will include $150mil annual spend on domestically-produced uranium for the strategic weapons reserve for the Department of Defense. The obvious beneficiaries of direct-gov purchases are the current and near-term US producers, URG, LAM... CCJ could go too. I'm a tad excited about this... https://cowboystatedaily.com/2020/01/31/wyoming-uranium/

This comment refers to current positioning but first I want to mention that I just watched Raoul's Skype repo-rama on RVTV. Ending the piece with Barton was the icing on the cake. A proper deep dive insight into repo even though not all questions answered and probably never will be because it seems nobody really knows! However, I think there were a few light bulb moments in there for anyone trying to wrap their heads around repo and liquidity mechanisms. Essential viewing at precisely the right time given the current state of both the equity and bond markets so thanks for creating that film as I know I asked for something like that in one of my earlier message on MI. "Ask and thou shalt receive" :) So it brings up some questions I have for current MI positioning (see further down this post). An outstanding question I had from the repo film was what's causing the shortage in cash? At the end Raoul tried to say it was likely because market participants such as hedge funds need more cash every day to fund their new positions and day to day business. If that is so and presumably those positions are mainly relative value positions made up of trades in bonds and equities of all flavours and varieties, is this finally confirmation that the Fed and Treasury General Account (TGA) pumping cash on a regular basis into the system is simply being siphoned off and traded because the users of that low interest rate cash are doing with it what most people do when they can borrow cheap money which is to leverage that money and use it to invest in products where they can get a much higher return and then they finesse their choice of positions based on the repayment timeline. So whether it is QE, long dated, not QE, short dated they trade accordingly and that all works fine with low volatility, low rates at the margin and equities and stocks only going in one direction. The problem comes as was given in the example on the film by one of the other commentators, when rates swing not only to the higher end of the band (due to less cash more securities and less liquidity available) but also spike well over (for example in September last year to nearly 10%) then relative value hedge funds are forced to close positions to manage total risk and position sizing on their books as they would be concerned about being able to repay the cash loan at much higher interest than expected and also not knowing how long those sudden higher rates might occur for, potentially exacerbating the problem. I am leaving regulatory minimum reserve requirements for banks and hedge funds out of this as presumably they are a fixed, assumed part of the liquidity puzzle and not really the ongoing driving factor behind the constant need for liquidity. Comes back to my original question how and why are liquidity shortages occurring if everyone's supposedly making money hand over fist being long equities in a low volatility and low interest rate environment? Is greed for placing ever more new positions and new business what is driving the constant demand? When is enough enough? Is this in simple terms the mechanisms that are creating both the steady march up (sometimes explosive in growth stocks) of equities? Likewise if shortage of cash and sudden rate spikes cause sudden drops in equity markets and the market participants rely on more liquidity being pumped into the system whether from Fed repo, future QE or the TGA to restore order and marginal interest rates then surely this is the argument to explain why bonds and equities are rising basically at the same time and that it will go on for a considerable period of time especially when Barton suggested that it's the TGA that has all the ammo now really and that they can use it to add liquidity much quicker than the way the Fed does at the moment (notwithstanding any future official QE that takes place). If this is the case then I question the vanity equity trades on at the moment (short S&P, Short NDX, short Apple) and the taking off of the short USD/MXN trade which acts as a hedge when the current MI portfolio (speaking from the point of view of when I joined MI only a few months ago) doesn't have one that deals with risk on/long equities going on for the foreseeable future. My next question is about the current bond positioning. At the moment we have long dated Eurodollar, ED calls, TLT or 10 year notes. Based on the repo film again where it talks about front dated and long dated changes with regard to trying to uninvert the yield curve, can someone explain what the relative implications are for price action across the tradable bonds set i.e. from treasury bills to 2 year to 10 year and longer. What are the risks to price action to all of them individually and relative to each other in both an inverted yield curve, a flat yield curve and a rising yield curve. Does the optimal treasury bill/note to be long of (in the case of inverted with rates going to zero) need to change? Are 10 year notes or TLT simply more likely to accelerate in price action to the upside in price with a steepening inversion on the curve relative to short dated treasury bills and are therefore the preferred ones?

VelocityShares Short LIBOR ETN DLBR - This might be the ETN Julian was talking about. It seems to tract the 2021 EuroDollar contract fairly well. I will stick to the futures contract since I like the liquidity and Trading hours of the futures contract. I would note this ETN lacks liquidity and you better like volatility with a 17% + swing on Feb 5th contrast that with a 0.11% move on the 2021 Eurodollar futures contract on the same day.

I have a question about the Eurodollar trade, Raoul. What happens if we get a change in Basel 3 (or something similar) to provide extra liquidity in lieu of the Fed adjusting the overnight rate? I’m thinking the Fed may want to avoid rate cuts for two reasons: 1) The knock-on effects of the old “3 cuts then a stumble” saw. They want to avoid that “stumble” with number four, and 2) A lower overnight rate could actually cause cash to flee into other assets causing a liquidity trap. Perhaps lower rates exacerbate the problem?

Where is Harry, I thought he was supposed to post responses on behalf of Raoul and Julian

It's great to see you are trying something different. I personally liked the old format too, it was always great to listen to Raoul and Julian and see some charts ad-hoc from Raoul's screen :) I have probably a silly question about yield curve control as Fed recently mentioned they'd like to cap yield rates. Is this going to impact Bonds trade in any way potentially? Thank you.

Harry is a good addition to the format. It is also good to have the piece published on a Friday. The release date has tended to be midweek for quite a while now. Personally, I find that I do not have the time left after a long day at work assimilate the content and take advantage of any trade ideas.

Really really liked the addition of Harry to the mix. A moderator can prevent some of the unintended "talking over each other" effect that has been noticed before. It also gives more time for each (Raoul/Julian) to think a little before answering a question or discussing a topic of interest. It will also be really nice to have someone dedicated to answering some of the questions posed in the comments section as I noticed a lot of times (not always though) that no one ever responds to a question that I see and would also liked answered. So, a big thumbs up for the new format! :-)

Excellent conversation as always! Harry's participation as moderator added a bit of structure and came across quite well. Question for Raoul: For those of us who are long Dec 2020 ED calls at 99, what are your thoughts about rolling to Dec 2021 rather than remaining as-is? Thanks,

Buts its not locked down. I read as late as today you can take plane from Sweden to China and China to Sweden today! So unless you close Sweden as well it doesn't matter.

Thanks fellas, for trying a new format. I think it adds plenty of value, particularly if it can foster greater participation in the comments section.