Insider Talks – March 2020 (LIVE)

Published on
March 3rd, 2020
Duration
58 minutes

Insider Talks – March 2020 (LIVE)

Featuring Raoul Pal and Julian Brigden

Published on: March 3rd, 2020 • Duration: 58 minutes

In this month’s Insider Talk, Raoul and Julian will be going live at 2PM EST on March 3rd to answer questions from our Real Vision Pro and Blacklist members.

Comments

  • BR
    Boyd R.
    4 March 2020 @ 21:13
    Can you advise the most liquid short eft to BKX and HYG Thanks
    • DZ
      Dan Z.
      11 March 2020 @ 00:21
      ProShares Short High Yield ETF (SJB)
  • NR
    Nathan R.
    7 March 2020 @ 00:09
    Thanks Gents. Superb
  • JK
    James K.
    6 March 2020 @ 03:45
    Do you think it would be possible to sequence a short IG bond etf after HYG goes down? Or will the BBB go no bid when HYG goes?
    • HM
      Harry M. | Real Vision
      6 March 2020 @ 13:08
      FWLIW, I think you will have a window. But I notice that HYG is already sliding. So does that mean the clock is already running on your window to short IG? Dont know. I can see there is a potential problem in IG (a big potential problem), but its not the first place I expect to trade badly. That said, it might have the best risk reward!
  • JL
    J L.
    6 March 2020 @ 10:21
    any chance whatsoever shorting could be restricted in the US?
    • HM
      Harry M. | Real Vision
      6 March 2020 @ 13:06
      Shorting is already somewhat restricted - SEC uptick rule. But could there be worse coming? Yes, its perfectly conceivable. The European example suggests that banks are particularly sensitive to the perceived need to impose shorting restrictions. The other way of doing it, if its necessary is just to announce a temporary bank holiday, while you work out how to stabilize things. Close the markets down for a couple of days.
  • B
    Brendan .
    6 March 2020 @ 12:16
    Great video guys. I am reminded of the quote " if you can keep your head, when all around are loosing theirs, you obviously don't understand what is going on" . US $ v EUR at 1.13 today 1.09 last week, maybe the expected yields on US v EUR treasuries will narrow in the near future and Europeans are taking their money back home, eliminating the currency risk? PS the quote refers to myself. BMC
    • HM
      Harry M. | Real Vision
      6 March 2020 @ 12:46
      Lol! I totally agree. It feels like they announced the Zombie Apocalypse and I missed the announcement cos I was watching "Antiques Roadshow". Keeping a very close eye on EUR. Looks like it might be breaking out.
  • MB
    Markus B.
    5 March 2020 @ 07:28
    Gentlemen, had to watch it a couple of times and I am terribly afraid to wholeheartedly agree with both of you. Equity markets are not sleeping at the wheel, they seem to hibernate in a parallel universe. Credit is extremely vulnerable. For the first time I hope Raoul will be utterly proven wrong with all his conclusions, otherwise the GFC will turn out to be a weekend at a Spa in comparison. Question to Julien: does your investment case long platinum / short Nasdaq still stand? Question to both of you: in case some of the well documented "balance sheet delinquents" - i.e. car manufacturers, shale, etc - go belly up, would you see the Fed stepping in and become the "owner of last resort" - or would that be simply beyond its capabilities? Appreciate the timely thoughts and the insightful contributions from both of you
    • RP
      Raoul P. | Founder
      6 March 2020 @ 02:49
      Thanks! I hope I'm wrong..
  • CW
    CC W.
    5 March 2020 @ 22:50
    I might have heard wrong, but I thought the part where Julian talks about # of firearms American own is a bit funny. He probably wants to multiply # that by two. I personally own around four and tens of thousand rounds. After just came back from Taiwan two days ago and seeing what is going on out there. I don't think the virus is that big of a deal. I think this will blow through. But not bullish of equity or credit because of what had happened in China. Supply chain is disrupted. I doubt there will be a mass exodus of companies leaving China because of virus. They leave because of the political environment. Virus is just another tipping point after last year's trade war. Next is the locus. The food prices will go crazy. That is my trade.
  • BT
    Brian T.
    4 March 2020 @ 23:00
    Raoul, In view of Mike Green’s work on passive and market dynamics: If both the key buyers of stocks and corporate bonds leave the market, and retirees are forced to liquidate, wouldn’t there be even more redemptions that lead to further selling akin to Julien’s short gamma scenario? Would love to hear your thoughts on this?
    • HM
      Harry M. | Real Vision
      5 March 2020 @ 13:12
      This is a possible scenario Brian. JB talked about short gamma risks. RP has talked about a "doom loop". The one you described is not the only vicious circle one can imagine. Markets have "deselected" traders who have an inclination to be long of volatility or gamma for the last 10 years. Retirees have been rewarded for the last 30 years in stocks and credit. One can argue that a component of this is the fact that there were a herd: they all needed to save for retirements together. A lot of people don't understand quite how heavily their pensions are invested in corporate credit. In many respects its one of the few games in town big enough to accommodate pension funds. So if there is a bad economic cycle just as these retirees look to pull funds from their pensions, its not clear who is going to replace their buying or absorb their selling. Ultimately this could lead to "gate-ing", simply because there isn't enough liquidity in corporate bond markets to absorb substantial outflows. That said, I wouldn't expect the ultimate losses to be very big in high quality credit. Its in lower quality credit that the real risks lay. Cos if you think of a 6 year duration portfolio, it only takes about 6 years for it to go to cash if the underlying securities are "money-good". Of course, that's not entirely comforting if you needed cash right now.
    • BT
      Brian T.
      5 March 2020 @ 19:05
      Thanks Harry. :)
  • AD
    Anthony D.
    5 March 2020 @ 14:49
    Raoul, does the low volume in the HYG puts concern you? Or do you expect an significant increase when the ETF breaks lower?
  • JF
    John F.
    3 March 2020 @ 23:27
    Thanks for the insights, Raoul and Julian, you both underscore the gravity of the situation.. Any reason not to buy HYG puts now, before the price moves, and if so what duration and strike price would you recommend? If not, what gives you pause right now?
    • RP
      Raoul P. | Founder
      4 March 2020 @ 03:52
      don't finesse too much, maybe aug $75 puts ?
    • am
      alexander m.
      5 March 2020 @ 11:04
      Would it be better to wait for implied vol to come down a little from here?
    • AD
      Anthony D.
      5 March 2020 @ 14:46
      Raoul, does the low volume the HYG puts ..put you off at all?
  • TH
    Tom H.
    4 March 2020 @ 13:48
    Could any guidance be provided on what to do with junior gold miner positions? The price of gold is going up but we don't seem to be seeing a corresponding move in the gold stocks. Is it a better idea to sell off those positions and buy back in after the potential crash? Thank you for the amazing information and for RV as a whole.
    • HM
      Harry M. | Real Vision
      5 March 2020 @ 12:35
      Junior gold miners are always a lagged, leveraged play on gold prices. Its not unusual for the metal to rise substantially before you get any play in junior miners. Of course this makes sense, given that management and local conditions/situations are such an important factor in the performance of mining stocks. But in the same way, the price of the stocks is probably not as closely tied to the metal on both the way up and the way down. Without detailed knowledge of the specific stock it doesnt make sense to offer advice. That said, standard trading rules apply. Capital preservation is always the priority.
  • am
    alexander m.
    4 March 2020 @ 14:14
    Raoul, when estimating the fatality rate of covid for people in the retiring age bracket do you think that this could have a material affect on reducing the strain on the pension system to a manageable level?
    • HM
      Harry M. | Real Vision
      5 March 2020 @ 12:23
      A good question although a rather dark subject. At the margin yes, simply because its the extension of longevity (and expected longevity) which has made so many pension funds insolvent. So clearly reducing longevity will help. But the other side of the coin is the reduction in asset values. I think the recent fall in stocks and rise in bond prices has done way more damage to pension solvency than the expected gains from potential longevity decreases. The decline in bond yields and stock prices (if it persists) have made the existing pension obligations much much harder to meet. So right now, no. Pension funds solvency has actually declined precipitously in the last two weeks. Of course, if average life expectancy drops a lot then this wont be true. But I am sort of hoping that isnt the case. Cue the "bring out your dead" Monty Python video.
  • IS
    Ivar S.
    4 March 2020 @ 14:21
    I have a question in regards of investing in gold. In the recent interview with Dan Oliver he stated that investors should be really careful with who their claim against due to a potential insolvency risk when you make your claim. Considering the potential meltdown that is predicted, is buying GLD sensible to gain the gold exposure, or are there any better alternatives you would recommend??
    • HM
      Harry M. | Real Vision
      5 March 2020 @ 12:15
      Considering counterparty risk is always wise. Its also worth noting that counterparty risk is usually wrong way risk. That said, the SPDR GLD ETF is not obviously a serious counterparty risk compared to say, a Russian bank. I can definitely construct a scenario in which the ETFs are unable to fulfill their commitments and need to be unwound. Back in the 30s for example, FDR ordered the UST to confiscate private gold holdings. My memory is that they actually had Treasury agents inspect all bank safe deposit boxes! But you have to admit that's quite an extreme scenario (for now!). The guns, ammo and tinned food crowd usually recommend that some proportion of private gold holdings be in gold coins or mini ingots, which have the benefit of being portable. Personally, I use mini-futures in trading gold. That isn't an investment recommendation, and traders using futures need to be comfortable with them. But its certainly another simple approach. But it wont help if the Federal Government pulls an FDR 2.0.
  • KE
    Kathryn E.
    4 March 2020 @ 23:00
    Awesome chat guys. Thank you
  • CL
    Cyril L.
    4 March 2020 @ 17:51
    This was timely and really helpful. Thank you.
  • MW
    Marco W.
    4 March 2020 @ 07:22
    If risk-parity is no longer working, there is only one way to hedge the deleveraging - short USD index (i.e., buy EUR/USD, short USD/JPY) through options. I guess not many people dare to do.
    • BS
      Bevyn S.
      4 March 2020 @ 14:39
      I'm short USD/JPY and have been since last week. I'd rather be that than short us equities. I do have this constant fear that the BOJ is going to take me out back and shoot me at any moment tho...
  • BS
    Bevyn S.
    4 March 2020 @ 05:31
    Any recommendations for brokers that offer FX options? Retail trader here. Question to anyone
    • AM
      Aengus M.
      4 March 2020 @ 11:03
      Interactive Brokers has FX options on futures (Globex)
    • BS
      Bevyn S.
      4 March 2020 @ 14:01
      Thanks!
  • BR
    Boyd R.
    4 March 2020 @ 10:23
    What is the most liquid inverse / short ETF for high yield credit if you don’t want to play puts on HYG Thanks
    • HM
      Harry M. | Real Vision
      4 March 2020 @ 12:52
      Not sure which is the most liquid. The ETF JB was referring to was the SJB. One should note its negative carry.
  • KV
    Kos V.
    4 March 2020 @ 11:09
    Question to Julian. What is the reason TSLA is not on the list among AMD, MSFT, AAPL?
    • HM
      Harry M. | Real Vision
      4 March 2020 @ 12:51
      Tesla has proven incredibly tricky to trade well despite having a chart pattern that just screams "bubble". So of it is the heavy short interest. Some of it may be the controversy the stock attracts. Either way, as others have said, its both a fascinating case study, and a bit of a cult. All that said, I can completely understand why you ask the question.
  • PL
    Pete L.
    4 March 2020 @ 12:14
    Gents. Just referring to the comment about “holding cash” whilst also being negative on the prospects for European banks. Can I remind everyone within the EU to familiarise themselves with the intricacies it the EUs Banking Resolution and Recovery Directive 2014 (BRRD). Cash is great in a crisis provided it remains yours! Thanks. Pete
  • JS
    J S.
    3 March 2020 @ 23:52
    Thank you for your comments. How would you assess your own reactions and feelings towards what is happening right now versus 2008 or 2001?
    • RP
      Raoul P. | Founder
      4 March 2020 @ 03:51
      similar to worse
  • DL
    Dominic L.
    4 March 2020 @ 02:33
    Is keeping large amounts of cash in the bank safe? Other potential solutions? Thanks as always for such valuable content.
    • RP
      Raoul P. | Founder
      4 March 2020 @ 03:51
      yes, for now.
  • J
    Jim .
    4 March 2020 @ 03:00
    Great stuff guys. Raoul a quick question if you have never bought Bitcoin, what is the best way to get exposure? Thanks
    • JS
      John S.
      4 March 2020 @ 03:30
      Buy it on an exchange like Kraken then move to a hard wallet like Trezor. The What Bitcoin Did podcast recently did a comprehensive Guide to Bitcoin
    • RP
      Raoul P. | Founder
      4 March 2020 @ 03:50
      open an account - kraken, coinbase et
  • DD
    Donal D.
    4 March 2020 @ 03:22
    Great discussion but please God things will not turn out as bad as expected! I have a question on the banks ticker that was being discussed it sounded like BKS but that is Barnes and Noble. It could be my hearing so perhpase Jukian meant KBE which is something he shorted before? The ticker for the hospital bed company mentioned by Raoul is HRC Thanks
    • RP
      Raoul P. | Founder
      4 March 2020 @ 03:49
      BKX is the banks index