I don't think that'll actually happen. If there was a $25 up spike in oil prices from here I would look at that as a very very ripe shorting opportunity because I don't think prices can go $25 higher and stay there because the shale revolution will be restarted, the bakken will be relaunched and those prices will come back down.
So I don't want to bet on the up spike I'm not convinced it will happen if it does happen I'll definitely bet on the mean reversion. Frankly that's all I can really see at this point for trades.
Raoul: So to add on about oil. Oil is interesting to me because if you remember I made a very public forecast on oil way back in 2015 I think it was, when I said look I think oil is going to fall to $30 dollars a barrel it was like at 110 at the time and luckily it got there these things don’t always work out that way but it did and the reason I had a lot of faith was twofold one the dollar was going up and I thought it would go much higher which obviously is the normal nature of oil prices so that helps that.
The other thing was speculative position in crude oil was all time high in fact if I took the trend going back from the early 80's it was seven standard deviations above that trend and well over three standard deviations maybe four standard deviations from the trend in the last 20 years or 15 years. So the position was huge.
If I look at it now again, I'm looking again at my Bloomberg screen as we speak it's equal to where it was. So it came, all the way back down, it's got all the way back up. So the market is wildly gigantically bullish on crude oil and that is something that starts looking like an opportunity to me on the short side.
I get what you're saying about the price risk which is always the danger of shorting crude oil it's always a bit of a negative gamma trade. So it makes it a bit nervous but I still think that crude oil comes lower so I’m bullish in that.
I've seen a similar situation with copper driven by China and a few other things where copper position is wildly extreme and so I start to think well too much reflation is priced into these things maybe there’s an interesting opportunity on the short side.
Erik: Yeah I very much agree with that I want to be short equities here and I want to be short crude oil but I don't dare to touch either trade from the short side right now because there's been so much bullish hysteria in the equity market. I don't know what's going to happen to you know sell the inauguration. OK I've said sell quite a few times in the last few years and been wrong so I want to be short but-- emotionally I want to, I can't bring myself to do it because there's just been-- every time I say OK the market can't possibly go higher than this it ends up going higher.
In the case of crude oil, I'm convinced that this rally has played out from a fundamental standpoint. It’s that hysteria risk that if it happens it's a fantastic opportunity to go short. I would consider puts on crude oil here as a speculation that maybe they'll go lower. But I don't want be an outright futures here I'd rather be in puts on futures and have a very limited downside if Trump scares everybody.
If that happens – I don't think it's a real risk – I just think it's hysteria and look at there's actually been an increase in residency applications in Chile because there are people freaking out about Donald Trump so much that they want to be in the southern hemisphere for when he starts the nuclear war that's a fact. This is hysteria and until it settles down I don't want to be on the short side of the oil trade unless it's an options or something protected.