191 Comments

Hi, I try to get an overview trough various marktet commentators on different scales and from different perspectives. You are one of the best, with the most relevant content and right most often. I often plan my portfolio decisions based on your 4 quadrants. For me it would be helpful if you could refer to it more often. Ideally in the end of each weekly update. saying which quadrant we are in and where we are moving towards and if the indications building up are likely to be sufficient to cross the line to another quadrant or if we are more likely to see only short lived momentum that is very likely to come back and if it therefore would be best to stay positioned as one is. Your work is highly appreciated!

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Hi, thanks for the kind words and the valuable feedback!

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Hey Alf, i largely agree except on Gold/USD. I still think gold will hold well simply because I dont think the fed will hike if something breaks.either way, i dont see the risk reward there.

Why the JPY/EUR? Also would really enjoy a Bank of Japan post from you

Thanks!

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Hi! Gold is priced in USD and owning US Dollars has become all of a sudden very attractive due to higher (real) interest rates.

On Japan, I will release a piece soon!

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Thanks Alf. Your officially a celebrity (58K followers).

I do not understand the Gold trade against the US Dollar. It seems to me that with increasing rates, the US debt will substantially increase and Gold would be a good hedge against US Dollar. TIA

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Hi Phillip, thanks for your kind words!

Gold is priced in USD and owning US Dollars has become all of a sudden very attractive due to higher (real) interest rates

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You mentioned long TLT as a possible idea going forward. Isn't the over supply of US bonds in the absence of any significant buyers in size going to be an issue for TLT? Isn't short HYG a safer place to be given the continued expectations for slowing growth (my expectations, maybe not the Fed's).

Thanks (Macro Rookie here).

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Hi Paul,

I'll talk about a couple of bond trades this week.

Stay tuned!

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It would be nice to see a model Long/Short portfolio with weights including the percentage of cash to hold. Thank you for all help

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Hi Mat, working on it :)

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You are on fire! Thanks Alf. And would love to see more bond market 101

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Soon on your screens :)

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Another great piece as always - thanks you Alfonso. Two quick followups:

1. Somehow am not able to find the "xxx and equities are going to tell us how restrictive we are" quote in the powell press conference transcript (https://www.wsj.com/articles/transcript-fed-chief-powells-postmeeting-press-conference-11655326563)

2. Can you talk a bit more about your short closing btp-bund? I understand Italy is to set to gain from potential ECB interventions. I have a few shorts on EZU so I'd like to check if the landscape is changing.

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Hi!

1. You can't find it there because he addressed that verbally in the Q&A.

2. I closed my BTP/Bund short as the ECB is working on an anti-fragmentation tool and that would have highly penalized my trade.

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Hi Alf! Outstanding article, as usual. As a suggestion, could you continue your Bond 101 intro to explain the ASW spread? Thanks a lot for all your work!

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Thanks for the kind words!

It's on the to-do list.

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Hey Alf, great work as always! You asked how can you help us more... So you’ve been guiding us very well through all of this. By April you were telling us to move to cash. That’s great! Thank you!

However, a lot of folks (including myself) have personal wealth in vehicles that seem difficult to move to cash. E.g retirement accounts (401k, Roth, IRA etc), gifts to children (529, UGMA), company stock (RSUs, ESPP, etc), and finally our house/mortgage. I’m not panic selling, but I also feel as though my hands are tied and I just have to ride it out. Is there a better way?

Thanks!

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Hi Avinash!

If going to cash is not an option because of tax/other reasons, the only thing you can do is purchase some hedges (puts/short strategies on equities for example).

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Hi Alf... really enjoy you content and advice.

I don’t have the opportunity to be in cash or USD. I bought Danish money market funds because of very low volatility. Is this mimicking cash as I want or am I missing something?

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In that case, I'd try and own cash or cash equivalent instruments in my own currency too.

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Hi Alf- Thanks for posting so much awesome content! (And it’s free)

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Welcome, Danielle!

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Did I miss something? Where is the long only portfolio?

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Not there yet, Gary :)

My broad prescriptions in the meantime remain the same

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Thanks for the quick response. I follow all your work.

42macro Sub

Gary

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The most obvious trade out there to me is to be short bond vol. are there any direct instruments you know of (other than putting together an option strategy oneself)

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Will write something about bonds this week, but I like where you are going :)

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Alf, where can someone learn about the relationship between different markets (equity, bonds, commodities, etc), money, debt and macro in general?

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I'll make sure The Macro Compass becomes that place, Slye! :)

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Hi Alf. Can you point us to where we can find your long only ETF portfolio please?

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Hey Frank!

You can't find it yet as I am still working on it.

For now my broad prescriptions remain the same I've been putting out for the last 7 months: stay away from high-beta risk, and increase your exposure to USD and cash.

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Hi Alfonso,

Would you consider short European banks (Sx7E Index). It looks like a perfect downtrend since early January. My idea is to buy a Put 80 September when the recent relief rally is fading as i am not convinced the ECB credibility about anti fragmentation will last for long.

Any view?

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Hi Laurent!

For this trade to really work you need fragmentation risks to increase, hence you'd be betting against the ECB credibility. It might work, but Europe really wants to raise rates and therefore they will try to contain fragmentation risks that could hamper them in the process.

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Suggestion to add to the newsletter: you could have a "theme of the week" or "trade of the week" to consider e.g. Uranium, mining stocks (e.g. Glencore, Vale, Rio Tinto etc). Perhaps best not as endorsements but as food for thought / ideas to watch and get smart on for entry over the medium term

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