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Vuk Vukovic Profile picture
Vuk Vukovic
@wolf_vukovic
Vuk (eng. Wolf). Oxford PhD, runs a hedge fund @OraclumCapital (follow at https://t.co/RK3vtZ9iUK). Author of Elite Networks. Loves his family & cooking.
14 subscribers
Jul 14 • 29 tweets • 6 min read
The case AGAINST cutting interest rates.

A (long, but good) thread 🧵 1/28
The current administration is dead set on delivering a cut in rates, with Trump even calling for 300bps in cuts (down to 1.5%)

We might even get it next year when the new governor is appointed. Image
Apr 9 • 14 tweets • 3 min read
Is there more than one way to run a trade war? Certainly.

10Y yield hit 4.5% overnight.

That’s a lot of bond selling in two days. Is it China 🇨🇳 dumping Treasuries? Or is it EU 🇪🇺 pension funds (like they did with TSLA)?

Or is it “just” hedge fund liquidations?
🧵👇 Image When a country runs a trade deficit, i.e. a current account deficit (CA-), in pure accounting terms this means it’s running a capital account surplus (CP+)

In other words, when:

Investments > Savings = Exports < Imports

Or:

CP+ = CA-
Nov 18, 2024 • 20 tweets • 4 min read
A report from Goldman Sachs (came out before the elections) estimated average annualized S&P500 returns of only 3% in the next 10 years

Is this possible?

Let's dig in 🧵👇Image First of all, this is an unusually bearish outlook, esp given that SPX averaged an annualized 13% during the past 10 years.

They do provide a range from -1% to 7% (when excluding market concentration levels), but even the best scenario is very bearish.

1/19 Image
Dec 28, 2022 • 9 tweets • 3 min read
Oh yes, 2023 is going to be very exciting indeed :)
#ORCA #OraclumCapital

A quick story on why we decided to go and open a hedge fund? 👇 1/
This was a long personal goal of mine. However, I wanted a fund using a quarterly macro strategy, the same way I trade for my personal account.

Turning BASON into a tradeable strategy was actually inspired by many of our readers and followers.
Nov 9, 2022 • 4 tweets • 2 min read
#Election2022
No red wave in House. Senate will most likely stay Dem.

None of the “polling aggregators” got this right. Again. Similar story to 2020 really.

If we made so many errors predicting markets each week, we wouldn’t be in business any more. Just sayin :) For the record, our performance in 2020:
Nov 7, 2022 • 13 tweets • 4 min read
Should I buy dollars? Or is it time to get back into euros?

I’ve been long USD since Nov 2020 (bought EUR/USD at 1.21). It paid off handsomely.

So is it time to switch back with EUR/USD at 0.97?

Not yet. 🧵 👇 1/
 The relationship between interest rates and currencies is actually very simple and straightforward.

Higher domestic interest rates (w.r.t. foreign rates) =>

=> appreciation of domestic currency (w.r.t. foreign currency)
Nov 4, 2022 • 11 tweets • 2 min read
The economics of the Twitter "blue badge"

A few thoughts... 🧵

(maybe @elonmusk will take notice 😄 ) 1/
 If the majority of Twitter users cough up 8 bucks a month

so that the majority of users have a blue badge,

it makes it non-special.

Simple supply & demand - ample supply of a good makes it lose its value
Oct 10, 2022 • 17 tweets • 4 min read
This year's econ #Nobel Prize was awarded to three professors for their research on banks and financial crises.

What struck me is this: "The laureates’ insights have improved our ability to avoid both serious crises and expensive bailouts,"

Did it though? 🧵 👇 1/
 First of all, let me be clear that I do not express any doubts towards the academic contributions of profs. Bernanke, Diamond, or Dybvig.

I read Bernanke's pre-Fed work on the Great Depression & am familiar with their work.

In a purely academic sense - kudos to the winners! Image
Oct 10, 2022 • 4 tweets • 1 min read
Well, this is interesting - a #Nobel to the man who brought us QE :) One of the reasons why Bernanke was chosen to run the Fed back in the day was his contribution to studying the Great Depression and the failures of central banks.

An error he did not repeat during his tenure..
Oct 4, 2022 • 14 tweets • 5 min read
It’s been 15 months of doing #BASON predictions @OraclumIS and live trading them using our options strategy

I've shared the results with you every week, during good times and bad.

Now I wanna show you how a BASON-led full portfolio performed during this year's bear run 🧵 1/
 First, about the unusually good results (+155% CAGR, 10.6 Sharpe)

Basically, it's about (1) asymmetric skew - when we're wrong, we lose very little (up to 5%), and when we're right we can make considerably more.

and (2) profits are taken weekly (each Fri) and are compounded.
Sep 23, 2022 • 8 tweets • 2 min read
Recommendation: Investing courses on @MavenHQ you might be interested in

👇 🧵 Learning all about macro is just the first important step towards becoming a better investor and increasing your knowledge on the subject

The next steps - understanding how to build a portfolio or trade successfully - are just as crucial for success
Sep 13, 2022 • 11 tweets • 3 min read
The best thing about reading a book is when you can apply its lessons almost immediately.

And @donnelly_brent's book Alpha Trader is full of great practical advice!

Things I used this week:
1. Avoid gap risk!
2. Pre-mortem for each trade
3. Be tight/aggressive The set-up:

I had a SPY 408c Sep30 position opened last Thu.

Mainly to act as a new hedge for my (larger) SPY short position.

Yesterday I opened a QQQ 310c Sep30 to take advantage of the rally a bit further

Overall, I'm net long going into the week. And it's going well.
Aug 9, 2022 • 19 tweets • 6 min read
Yes, we're back with our competition today.

So let's go through a quick thread of what's been going on in the markets during the past few weeks,

and whether the 10% 🐻 rally is over or not...

+ some cool new stats from the #BASON

🧵👇 1/
 Despite having yet another high inflation print on July 13th (9.1% CPI),

and the Fed hiking another 75bps two weeks later bringing the FOMC rate to 2.5%,

the markets rallied to over 10% the past 4 weeks.

Why?
Jul 1, 2022 • 19 tweets • 8 min read
You might have missed @michaeljburry's tweet mentioning the so-called Bullwhip Effect.

What is that?

And why it matters for anticipating #inflation?

🧵 👇 Image @michaeljburry 1/
When retailers have too much inventories stockpiled,

because of earlier supply chain issues,

they will eventually be forced to drop prices to get rid of all the excess inventory.

This is happening because of the Bullwhip Effect. Image
Jun 25, 2022 • 15 tweets • 3 min read
A lot of great comments and constructive criticism over yesterday's thread - thank you all!

A few more points I wanted to clarify...

The main one being - this is not a "this time is different" argument, quite the opposite actually :)

🧵 (much shorter)
1/
 A "this time is different argument" would mean

that Dalio's Big Cycle is a historical stylized fact, while I'm claiming that this time it doesn't apply.

No.

My argument was that the Empires' Big Cycle framework is not an accurate portrayal of historical cause & effect.
Jun 24, 2022 • 46 tweets • 25 min read
I read @RayDalio's new book, “The Changing World Order”

in which he claims the US “empire” is in its final stages of decline

Interesting, but with all due respect, he’s wrong.

Here’s why 👇 (long thread 🧵 ) @RayDalio 1/
Dalio's theory falls in the typical Malthusian fallacy trap:

it juxtaposes linear resource production with exponential debt creation (private & public sector overleveraging)

and concludes that this cannot last.

Just like it failed to last in the past for other Empires.
Apr 12, 2022 • 25 tweets • 8 min read
Bullish or bearish?

Let's see 👇 🧵 1/ Let's start with the bearish arguments.

Rampant #inflation is killing consumer confidence

Which is down to recession-time levels

(source: Uni of Michigan)
Mar 11, 2022 • 21 tweets • 6 min read
Yesterday's 7.9% CPI didn't even take into account the escalation in prices due to the war in Ukraine and Russian sanctions.

Inflation will, unfortunately, continue to rise despite earlier trends of supply chain easing 😩
🧵 👇 1/
 In my previous threads I first explained why the source of inflation this time wasn’t entirely monetary:

Feb 28, 2022 • 20 tweets • 4 min read
M. Thatcher once said: “being powerful is like being a lady.

If you have to tell people you are, you aren’t.”

Consider this in the context of Vladimir Putin.

Consider it in the context of a man trapped in his own golden cage.
👇 1/
There is no such thing as absolute power.

Putin’s power & wealth are only relative to his presidency.

If he ever leaves office he will either be killed, imprisoned, or killed in prison.

There’s no retirement for this guy.

His no. 1 priority is...
Feb 26, 2022 • 8 tweets • 3 min read
Since Russia invaded Ukraine on Thu, S&P500 went from -2.5% to +1.5% in one day, continuing +2% on Fri (cum +6%!)

NASDAQ grew a cumulative +8% since Thu dip!

Why are markets rallying during a terrible war in Europe?

Very quick thread 👇 🧵 1/ Are investors just brutal warmongers looking to benefit from other people's misery?

No.
(Well, some might be, but not most)

Markets are forward looking; investors anticipate medium to long-term consequences of major events.

Investors also *hate* uncertainty.
Feb 11, 2022 • 21 tweets • 5 min read
Why were supply chain issues such a huge driver of inflation?

And when might they ease out?

Everything you want to (need to) know about the supply chain crisis.

Thread 🧵 👇 1/ In my previous thread I explained why I think the 7.5% inflation does NOT have a strictly monetary origin.

What is its origin?

Over the past year, prices are up mainly due to a post-COVID driven mismatch in supply and demand.