Tag Archives: short gold

Most Professional Investors Headed The Wrong Way First: A Global Macro Strategy View

MarketsMuse editor note: below insight courtesy of Rareview Macro LLC’s global macro strategy newsletter “Sight Beyond Sight” is a great read for investment professionals who want to start off 2015 on the right leg.


Neil Azous, Rareview Macro
Neil Azous, Rareview Macro

Wrong Way First (“WWF”) Trading

An astute market practitioner that we are fond of once coined the trading phrase “Wrong Way First” (“WWF”). WWF refers to the risk the professional investment community is exposed to at the beginning of every New Year – that is, the first trade will be a reversal in the consensus positioning and inflict severe PnL duress.

While it is true that substantial wealth is only really created over time (i.e. by investing), the money management business is beholden to the Gregorian calendar and that means performance resets at the close of business on December 31st. Put another way, if you manage money for a living you’re only as good as your last best trade.

Therefore it should be of little surprise that professionals begin each January more focused on not getting caught up in a New Year’s malaise rather than trying to take advantage of opportunities by adding new risk or pressing 2014 positions. The memory of last January, a month which included the unwind of the long Japanese Nikkei and Chinese Yuan carry trade strategies and inflicted severe PnL duress, is still too fresh to forget. This is especially true considering it took the macro strategy six months to climb out of its negative PnL hole and it was only saved when the US Dollar theme sent down a ladder to climb up.

While there are many key discussions underway to start 2015 it is important to highlight that the dominant theme emerging from our discussions with any risk takers is concern over a WWF trading theme materializing. Such is the nature of this business, especially for absolute return strategies.

Our interpretation of these conversations is that the tolerance level to withstand PnL duress around any theme that is currently at a momentum and sentiment extreme – such as long Equities, fixed income duration, and the US Dollar, short Crude Oil, and underweight Emerging Markets – is very low.

As way of background if you apply this theme to actual positioning it reveals that the top WWF candidates across the major asset classes are: Continue reading

Macro Trading View: Short Gold v. Long Silver; Long Euro Stoxx 50 (SX5E) versus Short S&P 500 (SPX)

Below excerpt from a.m. edition of Sight Beyond Sight, is courtesy of global macro think tank, Rareview Macro LLC

Neil Azous, Rareview Macro LLC
Neil Azous, Rareview Macro LLC

New Strategy – Short Gold vs. Long Silver

This morning we sold 3000 GLD 12/20/14 P112 at .63 to close.

We rotated our short Gold bias using put options into a short Gold versus long Silver spread using futures.

The updates were sent in real-time via Twitter.

Below are two illustrations: A “monthly” chart of long Gold versus Silver and a matrix containing our trade construction details.

Note that this is not a short-term “tactical” trade but rather an intermediate term “strategic” trade. As such, it will be managed with greater latitude in terms of risk.

Similar to the 200-day Moving Average (200-DMAVG), we find long-term Linear Regression Channels can be a strong technical indicator.

For those not familiar with Linear Regression Lines, it is a line that best fits all the data points of interest and consists of three parts: more

Smart Money Says: No Gold Needed As Capex Spending Kicks In to Global Economy

For readers focused on expert views re: the precious metals, and in particular Gold, below a.m. note courtesy of macro-themed analyst Paul Krake to his “View From The Peak” audience of institutional investment managers provides a “bid-on” to market observations made last week by Neil Azous, principal of “bespoke macro strategy boutique” Rareview Macro LLC, and the publisher of “Sight Beyond Sight” :

Neil Azous, Rareview Macro LLC
Neil Azous, Rareview Macro LLC

“..Short gold has been one constant theme for VFTP for the past 18 months and I do not see any reason to adjust this structural stance. The reasons to be short gold are long and varied but they all go back to my basic theme that as the world becomes less risky, the need for safe haven assets declines. If real interest rates are on the rise then gold will decline. A more sophisticated thesis is being proposed by my good friend Neil Azous from Rareview Macro, an extremely thoughtful and thorough daily overview of the investment landscape (www.rareviewmacro.com). Neil’s argument revolves around a revitalized global capex cycle that will be driven by a spurt in bank lending and the global economy playing catch up after five years of underinvestment across the developed world. We have this expressed via our long energy (XLE) / short consumer discretionary (XLY) basket but short gold is also an excellent expression of what will be the end result of this recalibration of the capex cycle: higher global growth and higher real interest rates…”

Courtesy of View From The Peak
Courtesy of View From The Peak


Paul Krake’s observations are available via http://www.viewfromthepeak.com.hk/.

The “Sight Beyond Sight” newsletter authored by Neil Azous is distributed to leading investment managers, Tier 1 hedge funds and top gun traders across the universe of sell-side, cash trading desks. Additional info at www.sightbeyondsight.com