Insider talks – May 2018

Published on
May 5th, 2018
Duration
34 minutes

Insider talks – May 2018

Featuring

Published on: May 5th, 2018 • Duration: 34 minutes

Both Raoul and Julian see many markets hanging at key levels and think investors should be cautious not to end up on the wrong side of the boat. Positioning in many assets seem extreme and a random unanticipated trigger can start the avalanche. Filmed on 3 May.

Comments

  • DY
    Dmytro Y.
    26 May 2018 @ 14:42
    Julian, what do you think of recent pull back in TLT rates 10 years from 3.10 down to 2.98-2.95? You were predicting rates to go higher and now the market is doing opposite. Short term blip or a reversal to you? Thanks to comment
  • LD
    Lance D.
    15 May 2018 @ 17:30
    awesome video as always love the actionable ideas too .. itching to engage on twitter but i just aint confident that i would not be just talking complete nonsense .. there is shit loads i want to ask...... BUT i do not know how to explain my thoughts/questions and would be worried I'm talking gibberish LoL . but hey hope to one day have an intelligent macro conversation with you all... Cheers
  • NH
    Neil H.
    14 May 2018 @ 17:16
    Both Raoul and Julian make a number of valid points about why there could be a serious market correction. one thing you have not discussed is repatriation of capital from overseas. Wont all this capital coming back cause corporations to use this cash to buy back their stock like Apple has, causing stock prices to rise? Also history tells us that the equity market rallies after every mid-term election, so why would it be different this time? Lastly is it your contention that higher oil prices and yields over the short term combined with the Fed hiking will kill the market over the short term? Thank you.
  • MG
    Miguel G.
    11 May 2018 @ 13:37
    Julian and Raoul you mention the parallels of 2000 and with the potential of rates close to peaking at least in the short term, what are your thoughts on staples and telecom. Its been an area thats really been beat down with yields rising and like spring of 2000 when the nasdaq peaked and rolled over these outperformed in a major way. Do you see a possible outperformance in these two areas and a possible area to hide as the more growthy sectors like tech carry much more risk?
    • JB
      Julian B. | Contributor
      14 May 2018 @ 14:17
      Miguel you are completely correct. However, the tick is timing. May I suggest you read the reply I sent to Nate I. below
  • LD
    Lance D.
    13 May 2018 @ 15:16
    Hi guys Could you please go over the vxn/vix thing again that was in last months video.... . (It's twisting my melons man) 'Happy mondays'
    • LD
      Lance D.
      13 May 2018 @ 16:22
      OK i have found the piece about vxn/vix in the Q&A video ....But what does 5.5-6.5 Vol spreads look like ? i wrongly assumed that it was the range of a simple bar chart . please tell me how i measure a vol spread . cheers
    • LD
      Lance D.
      13 May 2018 @ 16:24
      Sorry it is actually the range of a bar.. yes ?
    • LD
      Lance D.
      13 May 2018 @ 16:33
      Nope sorry about this ..i thought it was a the range of a bar never exceeds 6.5-7.5 vol spreads but i don't see this ..so back to the first question . What does a vol spread look like .
    • LD
      Lance D.
      13 May 2018 @ 16:40
      ahhh could it be the from peak to trough is rarely above 7.5?
    • rc
      ryan c.
      13 May 2018 @ 17:52
      VXN - VIX = spread between VXN and VIX. So if VXN is 25 and VIX is 15, then the spread is 10.
    • LD
      Lance D.
      13 May 2018 @ 21:07
      nice 1 Ryan appreciate that . thanks
  • ls
    lucas s.
    6 May 2018 @ 19:20
    Julian can you elaborate on your comment around 18 mins in suggesting you intend to add to commodities once the final dollar flush you have predicted comes to pass. Is this based on your expectation that the next move will be the precursor to a tradeable dollar bear market over the medium to longer term? Is there something other than the dollar that you are looking at in terms of providing a catalyst for your view?
    • JB
      Julian B. | Contributor
      9 May 2018 @ 21:02
      Hi Matt. So as we have discussed, we think the $ has one more leg higher and the risk is that it is potentially a vicious ugly, risk-off, napalm run. Once that has peaked, I will look to aggressively add a broad range of commodities to our current core commodity holdings of gold and especially silver at current levels. That's because after it spikes, I below the $ goes lower over the medium/long term for numerous reasons from a combo of loose fiscal/monetary policy, loss of singular reserve status, our need for inflation etc.
  • JH
    Jonathon H.
    7 May 2018 @ 11:19
    Hi guys, thanks very much for your super interesting thoughts. Could we get an opinion on the DAX here. If US equities are potentially vulnerable, is the DAX an order of magnitude more exposed here. May this be a better short play in your opinion? The service is really coming in to its own, keep it up. Regards, Jonathon
    • JB
      Julian B. | Contributor
      9 May 2018 @ 20:50
      Hi Jonathon. The DAX is almost always a higher beta trade on the downside that the S&P. So since 1987, we've seen 7 20% plus drops in the DAX and with the exception of 2007-08, the DAX always falls more than the S&P. Usually by about 50%. Personally, I'm not sure I'd short the DAX here, as it likes the weak Euro. You might want to use the same metrics I explained to Nate. I (above) and once they tell you to sell the S&P just sell the DAX instead.
  • NI
    Nate I.
    9 May 2018 @ 06:25
    I'm hesitant to short, despite deteriorating fundamentals. CBs have an unlimited supply of money and they are buying US equity. Thoughts on that?
    • JB
      Julian B. | Contributor
      9 May 2018 @ 20:42
      Nate...as we discussed, major equity tops are slow to form and require many months of sideways chop. Here's a simple metric that I like to use as a check for bullish/bearishness. So on the S&P I take the 5, 20 and 50 WEEK moving averages. When the 5 cuts the 20 week to the downside = a dip and typically you drop to 50 week. However, when 20 week breaks down through the 50 = sell. That worked in 2000 and 2008. We also had sell signal in 2010, 2011 and 2015 but the moves were averted by Fed policy actions, which quickly resulted in buys (20 week crosses 50 to the upside).
  • SD
    S D.
    9 May 2018 @ 05:29
    Would be interested in your views on Europe through the summer, when if or how a banking crisis will emerge, and how the politics and the economics are going to come together. It looks volatile.
    • JB
      Julian B. | Contributor
      9 May 2018 @ 20:34
      Personally, I think the trigger for Europe's next down leg remains Italy. They are still struggling to form a government and whether we end up with new elections or not the pro EU political elite will be increasingly marginalised. The likely 5Star/Lega government has NO interest in sticking with Brussel's dictated spending caps and as yields rise (as the ECB slows QE) the combination will be toxic. That said probably a Q4 issue.
  • SD
    S D.
    9 May 2018 @ 05:42
    Hi Julian, I would be interested to understand how the 1.15 and 1.05 targets for euro relate to the strengthening usd. I mean the dxy. And how that relates to the yen. Which is also strengthening. Except you expect euroyen (and sterlingyen) to weaken. So this means usd yen are preferred against euro. But that's a big move in euro. Plus, what's your timeframe estimate for that move in the euro?
    • SD
      S D.
      9 May 2018 @ 18:41
      Oh. Whoops. Can you put a delete button on these things please?
  • SS
    Sam S.
    8 May 2018 @ 20:37
    Very well done! Smooth and easy to follow and follow-up on with our own homework. Julian, you've really sharpened your presentation skills-----it's not easy but this was so pro! Thx for the Twitter connections. All the best always.
  • JL
    J L.
    8 May 2018 @ 09:01
    slightly off topic does anyone know why the German 2 year Schatz futures are backwardated with the rate at minus 60bp? Thanks
  • NH
    Neil H.
    7 May 2018 @ 17:30
    Raoul commented that everyone is short vol not just on equity but everything else. We saw what happened when everyone was short equity vol can you expand on the implications of all other asset classes being short vol and how that might play out.
    • CS
      C S.
      8 May 2018 @ 06:26
      Later in the interview, Raoul reiterated there being a short-vol in gold, which made me wonder whether that affect the short or long side.
  • LD
    Lance D.
    6 May 2018 @ 19:10
    My twitter is @urbantrader75 if you guys could follow me that would be awesome.. my twitter is set to private and I'm led to believe that unless you follow me i can not ask any questions? the reason its set to private is my mates have no interest in markets and will just take the piss (dumb plumbers) also there are a lot of sales peeps that try to befriend me .. so if you could request to follow me i can accept and communicate with you this would be great Cheers Lance .
    • CS
      C S.
      8 May 2018 @ 06:20
      Get another twitter handle for your investments, lance
  • IJ
    Ian J.
    7 May 2018 @ 20:39
    Raoul is fired up. Love it!
  • TB
    Thibault B.
    7 May 2018 @ 17:30
    Thank you for the great updates Raoul and Julian! Raoul I know you were looking at Korea a while back - any further thoughts there? Kospi implied vol only 3 pts off the historical lows, and the EWY chart overlay with EEM is basically the same. KRW is also at a cyclical low and most of the political news is probably baked in - what if the CNY narrative returns?
  • bb
    brian b.
    7 May 2018 @ 05:03
    Raoul, URA hit its stop, you have not mentioned it again since the original piece, and now it bounced back a fair amount. whats yoru thinking on it now? and a suggestion, you guys often talk and show charts where its close to breaking a important level, and if it does you think there is a good trade to be made. an email or something when it happens would be very appreciated.
  • RI
    R I.
    7 May 2018 @ 03:23
    Good gracious, gents. One word: stagflation. It’s staring us in the face. Discuss it. Thanks.
  • GL
    G L.
    7 May 2018 @ 00:13
    Another excellent piece! One thing about the stronger dollar move: it only started to pick up markedly when the US 10yr came close to and hit 3%. Raoul mentioned he sees the US 10yr not staying at these levels, and dropping to 2.85 or lower, which may soften some of the USD strength. Also, part of the USD move is repatriation of corporate cash. This is one-time effect, and as long as the US is in the late-stages of the cycle growth, with Europe strengthening (although coming off - we need more data points) and Asia growth still solid, the bulk of the flows are likely to remain outbound from the US to faster growth regions. Yes there is softness in China, but this is to be expected as they basically made things perfect last year and don't want to overheat their economy. China is the driver of the USD, and OBOR is the driver of that, so unless there is a dramatic shift in that engine (possibly due to a situation that gets out of the control of the PBOC), further USD strength may be a while off, or not as dramatic as expected. We are in uncharted territory here. It is very likely the USD spike higher is not as dramatic as in previous episodes and something else materialises.
  • ls
    lucas s.
    6 May 2018 @ 19:20
    Julian can you elaborate on your comment around 18 mins in suggesting you intend to add to commodities once the final dollar flush you have predicted comes to pass. Is this based on your expectation that the next move will be the precursor to a tradeable dollar bear market over the medium to longer term? Is there something other than the dollar that you are looking at in terms of providing a catalyst for your view?
  • JS
    John S.
    6 May 2018 @ 00:07
    Excellent Raoul - what's your current thinking on uranium miners?
    • RP
      Raoul P. | Founder
      6 May 2018 @ 15:38
      Still long but a bit bored of them right now... but will sit tight
  • JM
    James M.
    5 May 2018 @ 17:27
    Cheers I thought that was a very good segment. Few questions if possible. 1. Raoul's excellent call on MMYT is already up 25%. Do you think we take it and try get back in after a correction, as the USD looks like it could rip as you fellas have been saying and crushes EM? Or hold and add to the position on a correction as too risky to let it go as it has multiple years left t run? 2. Pile in to soft comms as adjusted for inflation they look the lowest price ever in decades and with the massive short position in soft comms from big players selling vol reviled by Raoul in this episode could really rip especially if we get weather dependent events like 2011/12 and risk off situation? Cheers
    • RM
      R M.
      5 May 2018 @ 17:31
      FYI, Mike Oliver at MSA is very hot on soft comms for this year. He has a fascinating service.
    • RP
      Raoul P. | Founder
      5 May 2018 @ 17:32
      I like your thinking... MMYT, it all depends... if its a 5yr plus position then you have to stomach periods of 30% pullbacks which make you feel stupid but if you'd made some nice profits and haven't sized it for a long term trade, then take some off. Softs are getting very interesting... but a strong dollar, if that continues, will make them hard to own... but its an area to buy into weakness
    • JM
      James M.
      6 May 2018 @ 09:30
      Thank you to Raoul and RM for the reply. I appreciate it greatly. Cheers!
  • SD
    S D.
    5 May 2018 @ 19:48
    Thanks. That was really helpful.
    • SD
      S D.
      6 May 2018 @ 02:32
      This piece is why I subscribed. Very, very useful.
  • SD
    S D.
    5 May 2018 @ 19:42
    Seems to me the world is bankrupt.
  • RM
    R M.
    5 May 2018 @ 17:28
    I find MI Insider Talks to be the most valuable part of the subscription. There is high quality in your interactions, and even occasional disagreements. I do follow your twitter musings but think all subscribers would appreciate more frequent Insider Talks, even if only for a couple of minutes, on an as needed or weekly basis. Thanks for considering!