Macro Update – 03/05/2025

[00:00:04.12] - Speaker 1
Good morning, Tim. Welcome back for our live session about macro together with Tim. Welcome. Thank you, Tim.

[00:00:12.07] - Speaker 2
Yeah. Hello Fabio. Hello dear viewers or listeners, I hope you're doing well.

[00:00:20.12] - Speaker 1
So before we start Tim, let me just go through our disclaimer as always for a few seconds.

[00:00:25.06] - Speaker 2
Yes.

[00:00:47.26] - Speaker 1
So we can get started. So this week we obviously had a big release. We have our new dashboard, our new models on futures, a lot of new things and, and today we're going to focus about macro. But then Tim is going to also show us kind of like his routine and how you can effectively use your mentor queue data to obviously look at the market. We have a lot of different charts, we have a lot of different quantitative models and then how you can set it up and look at data using the dashboard. So thank you Tim for this and I'll pass it on to you.

[00:01:22.13] - Speaker 2
Yes, right. But at first we will start as always with our little bit presentation. I build a PDF and as always we are looking a little bit over the last week. We are going over the next week. It's a short week, so it's a short part of the demonstration today but a lot of stuff is going on and I tried to cover it the best I could. So last week as always, SPX child on the left side, it's a little bit small and cramped because there's so much going on like in the last two weeks and this week it's really, really hard to pack all the stuff together and if so much stuff is going on I usually, yeah. Try to filter out all the noise and yeah look at the most important stuff. And this is what I try to express with this over here. Last week in xps we spx, we are traded below the yearly open. If you are into yeah, let's say technical analysis, those levels are kind of important. It goes from like daily, weekly, monthly and yearly opens has to do with settlement, who is in the trade, who is out, who get might stops out and.

[00:02:43.22] - Speaker 2
And it has also a little bit of psychological effect. I always call those, yeah. Levels psy up levels because you are actively down over the year. Right. If you bought SPX or the yearly beginning and if you are a futures trader, the yearly open futures es. Oh, I have the chart later. We can talk later about it. All good. And yeah, what we are seeing this is the right chart on the upper pane value and low momentum stocks. I mean they got hammered down as well, but not as big as growth risk tech high beta stocks. If you are a viewer of those little updates here, you know I always Watch the ARC ETF which is the leg one the right upper chart completely get hammered down. It was kind of interesting two weeks ago we had huge, huge put exposure shown in skew and risk reversals in your AR etf. So people were kind of aware I think that the last recent rally might come to an end but I didn't catch it. I had so much stuff open which we go over in the next slides. So yeah I also added CTAs down here beginning on the left hand side with the NASDAQ going over the Delia futures and then little table on the right side they are actively reducing the exposure right out there.

[00:04:29.24] - Speaker 2
There are many, many CGA models We're doing our own and but also Goldman Sachs tells us the same or JPM tells us the same and that CTAs so systematic buying futures trend following up or down isn't that very active on the long side they are actively reducing or deleveraging their exposure in equities. It's a very different picture in futures. That's the reason why I added the 10 year future CTA exposure in the middle. Pretty, pretty big rate of change. If you look at the table on the right side 10 year t note that's what we are watching 1 month ago CTAS have on crowded shorts. Let's say it like that. I know it is not that easy to say because in treasury markets you always have basis trades on which means you are hedge fund. You are buying the 10 year note physical because it has a high yield and pays you but you have to hedge this with futures. So this is represented in CTAs as well. It's a little bit are a part of it and it's also showing in those numbers here which from one month ago was -2.24%. Nevertheless the rate of change is quite significant to this day and helped a little bit for this recent rally in treasury futures.

[00:06:11.13] - Speaker 2
What's also have to be considered over there is the recent. Yeah let's say it risk on move in equities. I mean the ES loan from the 20th of February is down like 6%. It's a small correction but active money, active trading fast money. They are searching for other assets then. Yeah. And one of them are 40 bonds and help this little recent bond rally and to put all this together like one of the first presentations from me because we started in January was always the yeah term of uncertain development in markets. Someone builded the meme with Donald Trump and the voice act guy. I put it in the middle over here. It kind of fits because all the tariff chaos it's like everyone I know and everyone I talked with and there are people in my community they doing this stuff like for 20 years or 15 years some of the professional even to this day and they say it's very very chaotic. No one really knows the outcome of all this stuff. So yeah don't be surprised markets can tank a little bit on this also given the tremendous rally and yeah this led us to the fact that if I'm looking at my AS chart here on the right as of now we are trading at the levels from the election day so Trump bullish for stocks we don't know have to see next one the week ahead.

[00:07:59.20] - Speaker 2
I mean it's a half week but two important numbers today 10am EST the ISM service PMI we all know the US heaviest view to the service industry it's around 78% of GDP is big number should be watched. The question I have here is if those numbers are coming better will this really be change the tone of the market Right. I have seen selling, selling selling. We have seen multiple days where equity futures were down beyond one day standard deviations VIX is up and yeah I don't think it's a number that will change much on the upside. So if you are a day trader and you're in the markets today maybe late wait until 10pm steady reaction. I think said rip is a good idea but no advice Friday NFP of course yesterday I have read a paper from is it Anna Wong? It's she's a pretty good analysis from Bloomberg and she nailed like the last three or four NFP numbers pretty to the point like 5,000 in dispersion over there so not that really much and she said the number should come in significantly lower right. So yeah that's the reason I read I wrote over there.

[00:09:38.17] - Speaker 2
Are we prepared for it? Think of the market as you have insurance hatches on worst case for those insurance hatches would be you get so much momentum out of NFP numbers you don't need that much insurance. They don't know you don't need that much hedges anymore. They may get dumped if spot prices are moving significantly higher. Also the market making process behind it can cause quite a significant squeeze and but in the end we will know tomorrow at 8:30 in the morning and also tomorrow 12:30pm EST Jerome Powell speaking right. It will be watched because it's a long time ago he made a speech like that and what I have been told from someone who is really familiar with the situation they Kind of want to know from the Fed and also from the FOMC what they say to the recent developments in tariffs and with Donald Trump. I know they always say monetary policy and politics is they are kind of divided does not go together but we all know it do kinda. So yeah could bring some volatility on Friday as well. Why is it like that? Last week CBOE research paper they do it like quarterly heavy options skewed and the SPX CBD TE volume in February miss out 56% already.

[00:11:28.17] - Speaker 2
That's pretty, pretty high. That's sometimes the reason you have those extended moves into the markets. If you are options trader and if you have like watched the last few days in the close. If you have like on Friday those massive, massive passive buying flows that we had from and over months where we had a MOC imbalance from like 9 billion which is pretty pretty high in SPX. Those zero DTE contracts, if they are choosing wisely in kind of strike they gain so much in money and value they become even more popular. Right. And that's a trend that is. Yeah ongoing. And it's also a little bit of the reason why we are doing this stuff here right where we are talking about options and why we are trying to print a service to you. And for the next two days things to note will the growth scale in markets will materialize? Obviously NFP is a number where the market will gages a little bit the sector outperformance stuff. I have showed you on the first slide IBM like yesterday Donald Trump made an announcement that he was aware of the big down move in small cap financials.

[00:12:54.08] - Speaker 2
It has it has to do with Canadian retarrofing the US and he has advised Mr. Ludnick to go into this a little bit. So will we see kind of relief what's going on in tariffs and how do markets react to eco data? I have mentioned it with the ISM example for today. I'm not really sure that this tier 2 data matters that much today. What's in favor on a daily basis? The bond move. We have spoken about it in the last on the first chart already. And yeah what's mandatory these days. Check those positions daily. It can change on a dime with all that fuss is going on. And yesterday I watched a little bit from President Trump's speech in front of the Congress and my favorite quote out of this was more economic discomfort in economy possible. Whatever the that means. But take it as a hint. Maybe there's something bigger going on. We don't know. We just React to our data and what we can do or not. Little recap from the 19th of February. I tried to. Yeah, told you what's going on on the other side of Dupont. If you are watching from the US I labeled it as Europe is changing like three weeks ago.

[00:14:25.15] - Speaker 2
And with the recent developments last week I just say Trump, Zelensky, White House war, blah blah blah. And what's going on in Europe and how they will react to it. I have pictured the idea that it's maybe a good thing to invest in EU defense stocks. And on the other side, if you want to have exposure, that makes sense in terms of macroeconomic. Yeah. Trading. You can also sell European bond futures against it. And what can we say? It's worked out pretty good. But unfortunately the chart is so small for me here. I have to look over here. Yeah, a few different stocks out of the UA from the 19th of February in Germany up 25% we can go over to Italy. Leonardo up 25%. Avo 17, we can go to Sweden with Saab up 20% we can go to the to the UK BAA systems, they are up 19. Babcock International, 10 up defense stocks. Right. More increase in the UAE in defense and spending. You can do your research or ask me if you know me. I don't know. And structuring a trade over there, isn't that really hard. On the other hand, the bond sector, this is the F.

[00:16:08.21] - Speaker 2
FGVL. FGVX. Those are bond features 10 or 20 years from the U.S. they tanked a lot this week like over 6%. Why is it like that? We have talked about it three weeks ago, all the spending, all this chatter about debt ceiling, all the stuff. This money has to come from somewhere. Right. It does not grew on trees. So it's likely it will come out from the one market which means debt creation in the eu. More issuance in those markets means more supply, means prices are going down, bond yields up. Yeah, that was kind of the idea worked out what what I did. I bought Saab Leonardo. And how is it in France the Salt aviation. Because Rheinmetall and Rank I couldn't buy them. And I already had like rhinemetal shares like 2023 like one year after the war. So I had already exposure over there. And for the bond futures I yeah just had puts in the X futures. We are tasty works. It was my expression to show this a little bit. It's connected of course and yeah turned out pretty well. But let's go over to the U.S. our most favorite market starting with the big picture but it's really interesting actually ES futures here on the left we are trading below it's the red line 200 DMA or the yellow line which is the 100 DMA and the green line which is the 50 DMA.

[00:18:04.02] - Speaker 2
So it's fair to say we are in a small correction territory. I also mentioned the fact that we are erased the so called trumpet in futures or stock markets in general which was ignited by. Yeah, the election day was the 5th of November last year I guess. Yeah. This down move had brought in significantly momentum into volatility of course. So VIX Yesterday peaked around 26. Yeah. Do you say 26?

[00:18:39.11] - Speaker 1
Right.

[00:18:41.02] - Speaker 2
Interesting skew down below here shows a little bit of a put bias. It looks like 25 might be short term ceiling. The thing behind this was I think we had it like two weeks ago. We have spoken about VIX already that into the complex test already buying and customers are long vega which is volatility in vix. So you have upside exposure in this and if there is realized volatility mapping kind of with implied volatility which can move significantly higher. There was a great research paper from Nomura I had which told us there's easily a 10 point handle baked in and Vix. The Vix was around 15. Now it's a 25 area. I don't have exposure over here. I missed it to be honest. And trading volatility is always a thing. That's the reason I have this little sentence on the right side. You have to have a waterproof framework on it looking at different metrics and as you can see with the net expiration G chart on the right side there's still upside exposure. Of course people are wearing those hedges already. The VIX future curves are inverted a little bit like Monday. Yeah, Monday into the close and the fun month compared to the next month in VIX futures.

[00:20:31.28] - Speaker 2
Yeah it's trading positive right now 30, 32 basis points. It's not dramatically but it shows you there's actually a pretty pretty high demand in fixed futures. That's mostly due to hedging in the market making space because those fixed options in the book of a market maker day logically bring their exposure a little bit up. So they have to buy those mixed futures. And what you have to watch now is always how is the spot market reacting to volatility? If the spot market goes down significantly, VIX has to move as well. And also if the spot market is green and I know if the spot market is. Yeah, red and the VIX is green. Those are movements where I would rather wait to short volatility. Right. It's a little bit too early but yeah, those are movements should be watched. And if you're a customer from us of course you can also also watch the SKUs, how positioning will be changed. But a lot damage has already done on the downside. And for volatility, I mentioned it, the correlation between spot prices, that's mandatory to watch these days. So we are coming nearly to the end of the PDFs.

[00:22:13.17] - Speaker 2
We're going a little bit to the FX space right now. First of all, DXY index over here significantly down already this week. All the tariff stuff in the US has brought in a little bit of a chaotic movement. So those yeah crowded dollar long set we had the two years are starting to bleed out a little bit. Of course, always currencies are traded against each other currencies. Right. Like the euro US dollar or the euro yen and they are outperforming significantly this week. It has to do with the story which we had the two slides ago from the government spending, defense spending in the eu. If the EU government bonds are going down, yields going up, usually epic spot prices are following, pushing even more pressure on the dollar. And if you are long enough into the market to remember the first term of Donald Trump, a strong dollar was never in his favor. Right. So maybe history repeats. I don't know. A lot of it is different from the first term. But the dollar weakness seems to be. Yeah, follow this playbook. And what's interesting, usually dollar weakness sometimes is labeled as bullish for stocks.

[00:23:52.03] - Speaker 2
And guess what, it's not built this. It's not like this this time. So let me set up TradingView real quick. We need six E futures. I have it over here. Right. So and now we are going briefly over to the new dashboard which probably shows you here already. And I have to open it as well, of course. So. Right, that's the new dashboard. Okay. If you missed it, it was released like two days ago. Fabio. Right. And I always have my stuff pretty organized. It's now like in TradingView on the right side here with the watch list, which is pretty cool. And there's some new data in it of course for futures we have pretty much all the stuff you need. And let's imagine you want to be trading FX this week because you have read some of my research and you all think the Euro will trading higher compared to the dollar because we are trading futures and the 6e and all the other FX futures are always paired against dollar and yeah you kind of know the story I have told you. And now we are going a little bit into the technical stuff and trying to.

[00:25:20.23] - Speaker 2
Yeah. Find out what's going on and how I would structure it. So let's imagine yesterday that's the reason why we have the 4th of March over here as a little calendar where you can change this down here trading view levels and yeah I have to prepare this stuff just a little bit quick. Yeah. So what I always do looking at the market yeah as a whole thing in terms of Netgex for all expirations. So this shows you the 6e and what's baked in for all options trading into this. And just by eyeballing how the exposure is over here you can see those areas 0.5, 0.55 something has to happen over there. Right. So let's assume we have this long trend because the recent developments in the EU and the dollar weakness is favoring a long trend and we want to check out positions. So now of course you cannot say all those people here creating positive gamma how long it's kind of requires a more digging in into the options chain. But in futures I made the experience it's already an advantage if you have like 2, 3 maybe an equity futures 4 or 5 levels which showing actually interest.

[00:27:12.29] - Speaker 2
Something has to happen over there. Right. So this looks a little bit thin because those four charts are showing the next four expirations. So this over here is actually from today. Right. And NFX futures it's kind of thin. You can't compare it that much to equity futures where a lot is going on with options. It's due to the reason options in FX there have the permission to be alive or be traded in this market and they also serve as some sort of. Yeah a hedge sometimes also a directional bet but yeah not in the amounts like in other assets. Right. So keep in mind and FX has to do with swaps and all the stuff we can't track this. So let's go look into it a little bit deeper and what's already obvious on the right side of this chart here there's also the same area of our 0.105 it's also shown on the left hand side down here. So for yesterday if we would have looked yesterday in it we already know this is maybe an area where something could happen. Right. Going over the options metrics again we can see G Dex is positive.

[00:28:48.20] - Speaker 2
It's pretty pretty healthy. Right. You have like those days red here does not mean the FX future goes down, it just means more volatility. Let's keep it to this. But overall we can see. Okay, it looks kind of positive. Yeah. Then it shows you also the key levels. But we will discuss this in the chart and I have to switch my window. Just give me two seconds here.

[00:29:47.01] - Speaker 1
Yeah, and just while, while you do that, Tim, just to remind everyone. So everything that Tim is showing you is available via the dashboard. So we do have promo going on right now. So if you guys join us, you can join our premium or pro plan. Today we're going to be live trading with Patrick at 10am Eastern. So stay tuned there. It's going to be available on on YouTube and X. So that's going to show you kind of like our process, what we do within the group. And then of course if you join today, you can also benefit from our bonus here of joining two live trading session next week. I'll pass it back to you Tim and.

[00:30:26.25] - Speaker 2
All right, so yesterday 6e future March contract, always the reminder from me, check out which contract is the most liquid, especially in FX futures. It's the March one. We are going into it and we already have done our Vento Q levels into the chart and we have spoken about the level from 1.05. This thing here in the red is the whole session that you have can. Yeah. Traded on this. And if we are looking right over here, this is the only significant pullback that you have gotten during this day. Right. And if you look at the timestamp it's 10:30 which means for us there was actually yeah, selling due to the open which is for FX futures 8 in the morning was the daily high. But also during 9:30 where also a little bit of volume comes in. I don't know why. Maybe people think 9:30 is also a good time to trade FX. But it's atst usually the open. If there's a little bit selling move into. Into this area that we already mapped out with our GX levels. Right. So what's the trade here? If you are doing a little bit of TA and technical stuff on top of it, I don't do it.

[00:32:13.09] - Speaker 2
So I don't have it here in my chart. I watch other stuff which I will explain a little bit later. But just look at the volumes down here, right. All the selling move from up here down to this has shown a fair share of well of volume. Right. But in this area over here which is Gex1 there's actually a big chunk of volume. Right. And if you are a believer in a so called Volume analysis which you should check if you are new to it. You can see those five minute candle over here shows a big big week alongside with big green volume. That's so called stopping volume. Someone is in there aggressive market sellings or buying into passive bios creating a ceiling which is like magic around the 01 1.05 area. Right. It does not take this level exactly to the tick. Okay, but that's not a problem because with the levels you have your areas where you can be active. Right? Right. And even if you think what is this G free? Right. We broke to the G3 level over here. And even if you are not much into the option space and you think wow, that's the level I should buy.

[00:33:51.29] - Speaker 2
Chester told me you will make it stopped out. But you have a second chance down here. But you are well educated and you know your stuff from the options market. You also know GEX free means in the language of Mentor Q it's not the highest GEX level, right? GEX1 is the highest. It was GEX0 a year ago, but yeah, it's now GEX1. And that's the reason why I in my charts have just those three levels out of gex. The other ones you can see here like a call resistance gamma walls and the HVLs that's even more option stuff. But I mean you will learn it if you're interested in this. But from our little preview that we had, we already mapped out this area here which we tagged 1030, right? And then we went up, we went up beyond the one day max move. So the first standard deviation of the day was already broken around 1:15pm EST and we are going big, big higher. This means for you there's actually big momentum and big trading because people over here are really, really cool to buy beyond these one day standard move. So standard deviation move is always mathematical, right?

[00:35:38.01] - Speaker 2
And for what is a good example to expl for bonds, if the 30 year bond future set B moves beyond those one day min or one day max levels, that's actually a big thing because it's an asset that rarely moves beyond those standard deviations. Equities can do it really easily, right? Because they move other, they have other better, they have more volatility baked in. And for FX it's also a pretty big thing, right? D6E is already up today.083% and it's not even 9 in the morning, right? I mean you have Asia, they are buying, you have London, they are buying. But DF expires in the US Are already on the desk since half an hour and there is no big down move. Right. So they are okay with higher prices. If a price trade is beyond one day max and they're still follow through, it's just momentum. And yeah, there is a question from Samba. What are the bottom two lines? That's how I trade the two bottom lines. The man I hate those colors. Even know how they call it in English. I guess it's magenta but let's make it yellow. It's more easy on the right side.

[00:37:13.25] - Speaker 2
So hear me out. Trading FX futures. I wrote a primal like few months ago into the discord and it's basically the same what I've did over there. And the L line over there is the so called yield differential, right. FX futures, FX whatever spot options, they tend to move with the yield from the underlying government bond. Right. And if you build a spread out of this with this del one down here which is basically the Euro two year yield versus the US two year yield. So you comparing the yield from the government bonds, how the spread is, Is it pretty near? Is it pretty wide? If this spread is pretty wide like here, the asset you are trading to 6e tends to move higher because FX usually follows yield. I mean just look at bond yields this week, how they are where they are and look at dollar where it is. Right? This correlation is not like one all the time. It yeah can vanish a little bit but usually it's a good indication. And the yellow line down here is in there because I told you like four or three slides ago about the bond futures in the eu, right?

[00:38:38.15] - Speaker 2
If they are going down it usually means the Euro goes up a little bit and yeah, but today is the fifth, not the fourth. So let's go over a little bit. Pretty easy change. Now we are doing exactly the same looking over net gags and we can see okay, we are trading thick in areas here where is pretty pretty big exposure. A little bit below like 1.525 but nothing big has changed. Right. The momentum is going on. Gamer conditions are positive. Implied wall is a little bit higher 11.4.5. That's. That's normal. That's good. If you have momentum to the up to the downside, implied wall has to follow a little bit. It would be more concerning if you have a big up move and implied wall isn't that high. Right. Has to match each other and for today it looks like. This. So let's keep more color. So those are the levels from today, right? I have added a little bit of a volume Profile over here. Because we can actually prove Our thesis from tkx1level from yesterday which is still the same, right? Volume profile wise. Look at this. Big, big chunks here that have been traded actually pretty significant if you compare it to today.

[00:40:52.25] - Speaker 2
I mean this chunk here was built out yesterday already 8. It is 8:30 so and today it's not even that big. So what does it mean? This level was really, really important, right? We mapped this out with our mental cues stuff that we have, we have seen confirmation and we can also say from the volume that has been traded over here that those vix down here from yesterday, 10:20, 10:25am they got bought pretty, pretty significantly, right? So for today it's the same thing. Do I have a marker? Yes. We are already trading above the 1D max. You can see over here. It's really really interesting, right? I mean it was six in the morning. I don't know if you guys want to trade 6 in the morning FX futures. Me not I would wait. But it get already bought, right? It's some kind of the lower edge from the volume profile over here. And it shows you that this stuff, even if they are just mathematical born not necessarily due to options, they are important and they get watched pretty, pretty extensively. So if you are in the trade, I would hold it. If you want to trade it today, there's a little bit of a problem, right?

[00:42:39.08] - Speaker 2
What's above nothing, right. And don't trade if you don't have it, take profit. So what we can do now is it today? Yes. We can go back to this chart and just have a look by eyeballing how it looks over here. Right. So I forgot the number. We are trading at 1.07. 1.07. Wait, 1.07. It's roughly this area which means this exposure here is already being traded, right? Same here. The upside is missing a little bit. What we can now do is hope or waiting for a little bit of a pullback. The only problem is you already had this in the area of the one day max. So this is at least a product I want to see. Right? And let's put in a little bit of a risk reversal. Let's say the thesis behind us, we want to trade from the 1D max up to daily high. But FX love those numbers. So let's say into the 75s. I usually use 20 ticks. That's just out of the blue, right? That's just brainstorming right now. Something like that. I want to see what I never do is just place A limit. Right. And hope it's going well.

[00:44:51.17] - Speaker 2
I of course will observe this a little bit. This is then why I I have those confirmations in my charts. Right. The yield differentials. Volume of course and yeah volume profile. Just by eyeballing what happens over here and what is a little bit interesting over here. GEX1 remember right. It's the second biggest GEX level. This would be a really cool entry. So I would rather aiming to this right. If you want to play it conservatively nice round turn to the highs would also would be idea trade from GEX 2 to the 1D max. Already. Right. So this is stuff I watch daily. I didn't set my alarms a little bit over here, a little bit over here. And then it's just. Yeah a waiting game. Just trading always and yeah this is basically how I yeah kind of connect if something is going on in the market. Right. I mean we have mentioned the 6e performance. Why it is trending and then it's always mapping the technical stuff against it. It's a little bit different from asset to asset. If you guys want to see other assets just. Yeah, let me know. We have a little bit of time already 14 minutes.

[00:46:41.08] - Speaker 2
So but this is the story for FX and I how I would probably do it. And on the other hand because those trades are. Would rather trade like two or three days, not just intraday. I then do always the same in the next morning. Right. Look how the levels have evolved. Oh okay. The X1 level has pulled a little bit upwards. Also the call resistances like obviously this level is a huge one over here. So I want to see a shift up a little bit with the trend right now I have a drink.

[00:47:23.23] - Speaker 1
And maybe Tim like what would be interesting if we go back to our dashboard. So we released a new model for futures. So for those who are trading futures we release our futures curve this week. So maybe like sharing some insights on kind of like how you will look at it and how you would interpret it and use it for your trading. Maybe let me, let me just share my screen. I'll just show how to, how to get it. Yeah, I'll just share my screen. All right. So within your dashboard you have a future section right here. So within the future section you can kind of customize the layout of each of these modules and you can add basically your widgets right here. So you have all these options. I already added the futures curve and we can see it all the way down here. So I can move it up and if we go for example to our Crude oil. Crude oil, for example. We can see our futures curve right here. So what we see is the current curve and then what we see is the historical one. So one month ago the curve was up here.

[00:49:06.17] - Speaker 1
The red one is five days ago and this one is yesterday.

[00:49:09.23] - Speaker 2
Yeah, usually for those stuff I always used other tools. So it's cool we have it now in one place because it's always really, really annoying to have like 20 websites or like two workspaces to have all the stuff together. Basically what you are seeing here in CL is a good example. The futures curve always represents the price from the different contracts. Right? So if you are looking from the left to the right, it starts on the left side with the actual contract that's trading in futures in cl it's like clj, which is the March one and it's the highest price as you can see. Right. So yesterday settlement, the green one was like 69ish. And the further out you go you can see it expiration state on the downside, the fiber, down goes the price. Right? That's predation, which means right now oil is more expensive than. What's wrong with my damn camera here? Sorry. So right now oil prices are higher than they are in the future. Normally for commodities it's tilted to the other side, right? Because usually in cl, hg, aluminum, whatever, soybeans, the demand in the future is higher because people tend to consume more.

[00:50:37.18] - Speaker 2
In Seattle it's like last year, I think last year in February it flipped in backwardation. So the main takeaway if this looks like today like backwardation is there's more volatility into the front month. Right. Because now if you have like five millions of oil barrels into your inventory and you have to hatch it, you might sell it in 100 days, three months for 67. Right. Because the curve is tilted downwards and you would lose money. Okay. You don't want to lose money. So we trade the front contract to upset this loss. That's the process behind really simple. Right. Futures curves is basically just storage cost and maybe delivery costs. Yeah. Not maybe because every commodity has to be delivered. So it's just cost hatching. Right. Of course you have also the speculators like us, we are trading this stuff along with the big boys. But usually the bigger people in those markets are just hatching out storage and delivery costs. So yeah, for you.

[00:52:08.20] - Speaker 1
Now the other way that you can trade is with, with spreads or time spreads they're called. So where you could potentially like bet on the change of the curve. So if you think that for example, the oil curve will revert from backwardation to contango because there's an event coming. Then you could basically trade those spreads benefiting from the change in the curve.

[00:52:33.19] - Speaker 2
Yes, that's a thing I want to point out a little bit later because as you said we have here today, yesterday, five day and one month ago and those spreads are changing. Right. So the green curve might be a little get closer to the red dotted line or to the yellow dotted line. And this is yeah, what FAO called a spread or calendar trade in futures. It's pretty, pretty advanced and you have to do the maths behind it. But there are several ways to trade it actually and with the help of this you can. Which is pretty cool even by eyeballing. Okay. The spread like five days ago to the actual month was way, way bigger than just two days ago and was huge compared to one month ago. Right. So if you are would have listened to my stuff in January where we have spoken about the recent oil price development and we say, man, this looks mechanical, right? This pretty, pretty big pump. That doesn't make sense. It's not backed by any underlying stuff that's going on in oil futures. This would be your trade shorting down the curve. Right. It should be also expressible with options.

[00:54:00.19] - Speaker 2
Right. Because you have options for March and June, December contracts. But yeah, of course with futures I do this stuff sometimes with bonds, but other story. But yeah, future price growth. Ncl. It's mandatory to watch from my side to be honest.

[00:54:22.06] - Speaker 1
That's awesome. All right, we have five minutes left. Let's hear if we have any question. Guys, let us know. And thank you, Tim, as always. Amazing.

[00:54:36.25] - Speaker 2
Yeah.

[00:54:43.10] - Speaker 1
Yeah. Let us know if you have questions on the new stuff or what Tim went over and did we miss something?

[00:54:52.28] - Speaker 2
Oh, bottom two lines we have directional. Can you please explain the importance of two lines in the GEX plant? I'm not sure what your meaning is number but those GEX lines are labeled with 1, 2, 3, 5, 6, blah blah. However, too much you want to have in your chart they are always labeled how much. Yeah. How much exposure they have, how, how big they are, how relevant they are. I mean it changes from time to time. If you're plotting a GAS one level into the SPX chart like one month ago, it's a different one than today. Right. Because GEX and markets is not always that high or that low. It's always, always relative. But from my side I just watch free all the time across all the assets because I like to. Yeah. Wait for my entry and wait until it made sense and then fire up the trade. That's the reason behind it.

[00:56:01.19] - Speaker 1
Yeah. All of that is explained within our guide section. So if you come, I just posted the link in there as well on on the comment. Just come to our guides and we explain what gamma levels jacks 1 to 10. So you have everything here, everything you need is is available there.

[00:56:20.27] - Speaker 2
Exactly.

[00:56:22.25] - Speaker 1
All right. So thank you team. Thank you everyone. Thank you for watching as always. Please check out our promo for this until March 16th is going to be available and then later in about an hour we're going to be live again with some live trading with Patrick. So don't miss that will be a good one and see you guys very soon.

[00:56:44.15] - Speaker 2
All right then have a great day. Don't do stupid stuff and see you all. Bye. Fravio.