Global Macro Monitor

1. Trump Leaves Office By Year-End
   There is only one thing Trump likes more than power – money.  As his legal troubles grow exponentially in 2019, the president has an epiphany that he could lose all his wealth.  He cuts a Spiro Agnew-like deal and resigns from office in return for leniency.   The markets rally into the announcement but Trump doesn’t go easy and dog whistles to his base as he hits the exit.  The U.S. experiences a period of political and social instability.   Stocks sell-off hard.
   Long American water cannons

2. China-Taiwan Conflict Gets Hot; Xi Launches Peaceful “Human Wave” Attack On Taiwan
   

   War scenario games continue to evolve, but a very real threat could come from neither hard weaponry nor cyber hackers. In the case of Taiwan, a “peaceful invasion” may unfold, with a fleet of, say, 100,000 mainland Chinese arriving by private boats with the intention of settling in Taiwan. Surely this would be an incredible test of the “One China” policy and a potential game-changer in South China Sea geopolitics. – Japan Times

   Long Taiwanese water cannons

3. Brits Vote To Remain In Europe After Second Referendum
   The House of Commons can’t pass a BREXIT deal, and the British government orders a second referendum. The “People’s Vote” results in a landslide victory for the remainers.  Cable initially rallies to 1.35 on the referendum announcement  where it experiences some volatility on the back of mass protests by the BREXITeers.     The pound trades to 1.50 as the landslide victory becomes more evident.
   Long British water cannons and pound sterling

4. Apple Nosedive Continues; Reinvents Itself As a Medical Services Company
   Apple begins to lose market share to cheaper smartphones.  Revenue growth turns negative, and the stock trades briefly with a double-digit handle.   The company starts to reinvent itself into a significant medical hardware and services company.
   Short Apple above $150/long at $100

5. Trouble In The Treasury Complex; Monthly Auctions Begin To Sputter
   Several of the Monthly Treasury auctions experience rough sailing as foreign demand continues to fade (for a plethora of reasons) and supply grows.  Markets also begin to fear more supply as talks of an infrastructure deal get serious.   The Fed is forced to suspend its balance sheet reduction to reduce the size of monthly auctions, all in the name of softening economic data.   Long speculators get smoked in the first quarter as interest rates drift higher after hitting their lows on the second trading day of the year.  Market pundits are perplexed as rates move higher into a softer economy.  Bond Market Conundrum 2.0 cometh.
   Long American water cannons/Short the 10-year at 2.55 percent

Disclaimer – Before bombarding us with hate email, make nasty comments, and dance on our grave if we get a few wrong, please understand and think hard about the nature of tail events and what it means to be mispriced.  Our trades are not recommendations, may or may not be in jest, and we may or may not execute all or none of them.