1. Our CEO, Luke Rahbari at the end of 2017, beginning of 2018 after returning from a trip to India and Hong Kong said on FBN that he thought relations & conflicts with China are going to be the biggest news story for the year.
  2. EAI has consistently said that there is plenty of oil in the world and production costs are keeping oil prices at these levels, not global demand. Now with a weaker global growth outlook, oil is being punished further.
  3. Luke Rahbari has been consistent that with every meeting and headline, that there will be no deal reached with the Chinese on traffic or trade (FBN, Angela Miles).
  4. He was one of the first to suggest that the Chinese are trying to drag negotiations as long as possible in order to get closer to the US elections where they would not have to face President Trump, or Mr. Trump would be desperate to make a deal. A theme echoed by the President this week.
  5. We have been consistent that you need to own Volatility, hedge your long portfolios. FBN, Angela Miles.
  6. After today’s action with the added tariffs and the Fed lowering rates, we have some new outlooks for the market:
  1. Volatility will now normalize and trade in the 16 to 20 range of normal volatility until the US presidential elections kick into full gear and the democratic nominee is chosen.
  2. Emerging markets will become more volatile the previously expected and trade with a much higher relative Vol compared to the US and developed markets.
  3. Global growth will slow and oil demand will continue to flat line and move lower, but not more than 10% lower from here.
  1. China and the US (THIS IS A BIG PIVOT FOR US) will reach a partial trade deal by the end of the year and it will look like this:
  1. China will begin agricultural purchases from the USA. This is the easiest thing to agree on for both sides and both sides need some common ground to continue negotiations.
  2. The Chinese government will (for a time, depending on how the negotiations progress) stop the flooding of Fentanyl from China to Mexico and the USA. If you want the playbook on this, read your history on the Opium Wars in the 19th Century. https://en.wikipedia.org/wiki/Opium_Wars
  3. The Chinese need to cut some sort of deal with President Trump now in case he is re-elected and they need some good faith.
  4. The deal the Chinese will get from a Democratic Presidential winner or candidate will not be much better than whatever they have with Mr. Trump now. If Mr. Trump loses the election, he will still have a twitter account and republican lawmakers will never let any weak deal pass without using to their political advantage to punish the new President and the Democratic Party. The new President cannot afford to look weak on China. 
  5. There is only the possibility for a marginal victory for the Chinese if Mr. Trump loses the election and great losses if Mr. Trump wins and they have not cut or conceded something before the election results are known.
  6. Huawei is one of the most important topics of the trade war and the Chinese strong-hold on global 5G. Do not expect that to be solved before the election and expect the US military and all their suppliers to stop using Huawei tech in their software/hardware. Expect the US to push this ban in 202 on NATO and NATO joint forces.


  1. So what to do? What to buy?


  1. Buy volatility and use our EAVOL index to hedge your risk-asset
  2. Buy stocks with strong cash positions
  3. Buy dividend-paying stocks
  4. Avoid middle-tier stocks, weak fundamentals
  5. Buy stocks like they were real-estate. Buy the best house on the block, buy the worst house on the block (for an upside shot) and own volatility with both. 
  6. Treat your portfolio like a barbell. Great stuff at one end, some dogs on the other, for the two sides of the barbell, avoiding all other things in the middle and when the barbell is too heavy, move to lower weight, reduce exposure so you can lift the barbell. Don’t let it crush you.