What bond trade are you considering?

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Thanks for Detailed Update, but on the Closing you reference Druckenmillers bearish view ... didnt he changed his view couple of weeks later after the NY interview (and made me feel worse staying in mostly cash): Druck May: https://www.bloomberg.com/news/articles/2020-05-12/druckenmiller-says-v-shaped-recovery-for-u-s-is-a-fantasy Druck June: https://www.cnbc.com/2020/06/08/stanley-druckenmiller-said-hes-been-humbled-by-market-comeback-underestimated-the-fed.html

thanks Raoul, very compelling - if it wasn't already, it certainly is now. Battle stations manned and ready, thanks for early release.

I was saying that same thing to myself on may way to work. How do we get inflation with > 15% unemployment. I just don’t see it — maybe in a few years, but not in the next 12months. Great piece.

I'm scared

Can we think about effects of possible government (not fed) interventions? How about a $1T infrastructure building program, puts around 10m people back to work outdoors ?

Congratulations on finding your own created index, BBBGMI index that is correlated to a number of things. As you know much better than I, correlation does not equal causation. It is interesting, true. Bears watching, true. I agree with you and believe you that the bond market is what to watch. Like what 2 yr, 5 yr, 10 yr all did today. Starting to see movement in the right direction on the /ZT August 110.5 calls you recommended we take a small position in a few weeks ago. But have a hard time buying into the arguement on the dollar rise just because of a correlation to a new index you created. I know it's just supporting evidence to your already existing thesis. All in all I am very thankful for all the work you, and Julian and the RV team do for us. Thank you!!!

This is my visualization, we saw a massive tsunami approaching, as the tide went down we freaked out and built a wall, now the tide is coming in and the wall is only making the volume of water larger on the other side, if the wall breaks, the destruction will be even worse then if there was no wall at all. We better hope the Fed knows what they are doing, otherwise they would have only enhanced the economic chaos.

much appreciated Raoul, I will be interested to hear you commentary on what has transpired since the report was published ie changes to banking / Volcker rule / company buybacks etc bonds etc dramatic drop yesterday, nearing critical support levels escalating Covid negative news it seems the markets have been left with 2 days to dwell on this data and build up panic for a big sell off Monday Your comment "The liquidity firehose is about to reverse. Yes, the Fed will step back in eventually, but not with the SPX at 3000. They will come back when there is more pain" has me thinking we won't see an immediate stimulus reaction, which would lead to further panic selling

It will be interesting to see how this next deflationary push affects gold and gold equities. I think the latter are likely to be sold off for liquidity, but not sure gold itself will sell off due to what should be the apparent clear and present systemic instability. As always, incredibly well organized data, interpretations and conclusions are summarized here. Cheers to you and your team for the EXCELLENT work you do! Have a great weekend.

Just finished reading the report - I feel like I ran a mile at speed ! It is fascinating to see you expose the underlying dynamics of an exuberant equity market vs a real economy problem. Continue discussion on the RV Fans Slack channel...

Raoul, I stuggle with the dollar UP for a very long period given Julian and Hedgeye see it as a short. I lean in your direction! Given that I avoid futures, what are your thoughts about buying the ETF-EUO (2x short Euro)? Your report is excellent particularly the BBB Credit and Bank Index comparisons. Ed Harrison's Daily Briefing from last night totally supports your banking risk analysis and points out that the FED is seriouly concerned, as well. Would you short the bank index XLF or KBE at this point?

You mention the Stimulus measures being temporary except loans and that this won’t help in a solvency crisis / only helps in a liquidity crisis, can you explain this a bit more please ?

Salutary warning Raoul, thanks.

Raoul, it is a great piece and it looks like it will all play out as you describe it but I do wonder if the behavior of the fed and governement are fully assessed. Just playing devil's advocate here but what if the Cares act continues in some form and consumption remains artificially high? The 2nd wave may give the leverage needed to do so. And what if the fed starts increasing its balance sheet once more, absorbing the impacts of the treasury? As "social worker" Powell confirms, he doesn't care about inflating the asset bubble in the process. They have done it for a decade already and feel a lot of support in their actions (especially by congress). Also, if the big BBB's face solvency issues down the road, the governement could still bail them out and safe the equity holder in the process, even if they need to absorb a minority share for the governement. Who will stop them doing it? With a democrat in the house this socialization of society might even accelerate. As long as deflationary pressures continue and the dollar shows sufficient strength, monetary and fiscal spending may look like the perfect solution for the problem. MMT all the way! Of course, eventually the release valve will be the dollar and stagflation will be the end result. Do you think the scenario above is not realistic? Or do you believe that this scenario might play out but that the governement will be too slow to act so we need to deal with the insolvency crisis first in the short term?

Thanks Raoul! Awesome again! I was hoping you would touch copper in this one... Why is it not aligning with your deflationary view (most of the other commodities are).