Meeting Of Minds – June 2019

Published on: June 28th, 2019

Raoul’s extended Meeting of Minds piece this month consists of two pieces he provided to his institutional client base in GMI at the beginning of June. In it he continued to press on his expectations of US domestic and international slowdown, easing monetary policy and falling global bond yields.


  • MS
    Mark S.
    28 June 2019 @ 19:00
    Thanks for your great work Raoul. Cheers.
  • KB
    Keith B.
    28 June 2019 @ 19:44
    Fantastic Raoul, great read. thanks
  • DS
    David S.
    28 June 2019 @ 21:46
    Wow, epic read Raoul.. I've been puzzling gold as another play on all this for a while. Rates going negative, potentially more QE, etc. and recent gold breakout get me excited. But dollar screaming higher and oil potentially tanking make me very nervous. What a puzzle...
  • JS
    John S.
    29 June 2019 @ 00:32
    Love it!
  • RM
    R M.
    29 June 2019 @ 01:35
    This looks like a great weekend read, thanks! For Julian and Raoul, was just reading about the EU announcement on INSTEX, their new system to trade around SWIFT. I may be misreading this, but at first blush it appears to be a big middle finger to Trump and the dollar. I am hoping one of you guys covers this in the next piece. It seems the world is finding a way around all the US pushing and shoving. I would also assume T will not take it lightly. Looking forward to it!
  • ab
    amit b.
    29 June 2019 @ 04:12
    All great. Date at bottom should be 2019!
  • JS
    J S.
    29 June 2019 @ 13:13
    Thanks for sharing. Since May 31st, there has been a pretty significant bounce in most assets/charts. Does that changes your timeline and/or perspective?
  • KA
    Kelly A.
    29 June 2019 @ 15:45
    Everybody... a question: Given what Raoul has laid out, do you think TLT be a safe way to own bonds for awhile? Thanks
    • JL
      J L.
      2 July 2019 @ 20:40
      Daniel I am not that conviced 10Y+ yields will bounce if there is no cut, this stuff can work backwards
    • KA
      Kelly A.
      2 July 2019 @ 00:21
      Thank you, Daniel. Good thinking. good plan.
    • DB
      Daniel B.
      1 July 2019 @ 03:09
      I’m staying away from Bonds until one of two things occurs 1. Raoul gives the all clear in a flash update because we’ve had a bounce in yields 2. The Fed doesn’t cut in July and yields bounce because so many cuts are priced in
  • KA
    Kelly A.
    29 June 2019 @ 20:58
    I keep thinking about this amazing piece from Raoul. One question: IF USA and China can reach some kind of trade accord fairly soon, does most of the argument for serious worldwide economic slowdown evaporate? --at least a bit? [Yes, retiring Boomers will have some affect even and USA-China get along, but isn't nearly so impactful on markets without a USA-China disruption.]
  • SC
    Shiny C.
    30 June 2019 @ 03:26
    Hi Raoul, is there any particular reason that 2Yo2Y% is used (in Libor & Fed BS) instead of any other durations? Thanks!
    • BR
      Brian R.
      20 July 2019 @ 01:24
      He meant datamining
    • RP
      Raoul P. | Founder
      6 July 2019 @ 10:59
      After extensive work, it seems to best fit the economic cycle over time.
  • FO
    Frederic O.
    30 June 2019 @ 10:48
    Epic food for thought! This is an article worth paying for. Do you or anybody else have an idea of the timing for when the dollar will go vertical? It did in mid July 2008, about one or two weeks after the FED paused on their cuts. I’m thinking that as soon as they hit zero on the rates, that the same will happen this time around.
  • ZW
    ZH W.
    1 July 2019 @ 08:13
    Fantastic piece, Raoul! I can see your high conviction in this long bonds trade, i.e. despite the recent run of bond, you believe market *still* hasn't fully priced in how much and how fast the Fed is going to cut. Julian seems to have somewhat different views. Can't wait for these month's Insider Talks when you two discuss this topic! Again, great work. Really appreciate it.
  • YW
    YM W.
    1 July 2019 @ 09:42
    Great piece Raoul! Do you not think the Fed has woken up to the fragility of this complex system after the December scare? Do you not think that a preemptive rate cut by the Fed could kick the can for long enough for a trade deal to be made between US and China? Presumably this could delay Phase 2 of you Doom Cycle for a lot longer than people would expect.
    • RP
      Raoul P. | Founder
      6 July 2019 @ 10:58
      I dont think the Fed cut is preemptive3, I think its too late..
  • MB
    Markus B.
    1 July 2019 @ 14:30
    Raoul, relevant indeed. The Chinese PMI reading of 49.4 supports your outlook on the Chinese economy. The US ISM Manufacturing reading of 51.7 was firmer than many expected. I know it is a number you and Julian follow closely. Any comment or reference from your side appreciated, here or in Insider Talks.
  • RH
    Rob H.
    1 July 2019 @ 19:15
    I read an article on Wolf Street and he brought up this argument for the fed to be patient for longer. "Let me just throw this out there for us to kick around: The Fed has already accomplished more with its verbiage so far this year than it had in the past when it actually cut rates multiple times, all the way down to near zero, and did trillions of dollars of QE. We’re already seeing the first results." He points out we have already seen the 10-year yields get crushed to 2%. So might we have to wait a little longer than July for the first rate cut? Maybe they do disappoint in July since rates are down and inflation data has also ticked up as well. Maybe this is your reason for getting us out of the bond trades for now.
    • KA
      Kelly A.
      2 July 2019 @ 00:23
      Rob, love your thinking on this. And Josh Brown on CNBC also has warned about making bets by predicting the Fed for July. Thank you.
    • HO
      H2 O.
      1 July 2019 @ 20:39
      Agree in principal, financial conditions in the US have eased much more than the GS series cited in RP’s piece indicate. But, not cutting in July would be as much of a mistake as the last rate increase. They may cut pause cut, rather than cut cut cut, so they can try to maintain some semblance of credibility. This piece is too bearish on the US economy and cycle.
  • PS
    Patrick S.
    2 July 2019 @ 12:44
    Raoul, With your 24 and 36 month leading indicators flashing red, when does one start to execute trades that will take advantage of this scenario that you have painted?
    • RP
      Raoul P. | Founder
      6 July 2019 @ 10:57
      For GMI, I have trades on already, for MI - I'd waiting until we start to see the credit market turn. Just uses HYG as your guide.
  • PN
    Paul N.
    3 July 2019 @ 09:14
    Alternative Scenario to the Doom Loop: Every time the market threatens a fall the Fed uses aggressive QE and provides emergency liquidity to stop it, matching the outflows from retirees and preventing a wider crisis. We end up in a drawn out zombie period where the Fed effectively funds the retirements of the boomer generation and rates remain at near zero. This keeps happening until political instability (MMT?) overturns the whole cart.
  • AP
    Alexander P.
    14 July 2019 @ 11:55
    First post on RV MI....Think the piece is spot on and just have to wait for it all to shake out -agree it could be soon. GFC was well underway in Feb 07 starting w New Century, but took another 1.5yrs to fully bake. Additional piece of the puzzle that will be fuel for the fire is bond market liquidity (there is none). I-banks have GUTTED trading dept's and won't/can't act as market makers as they did in the GFC. In 2014/2015, when oil crashed, $bn bond issues were trading down in points on 3 lot transactions. When this all plays out, there will very little liquidity for fallen angels, HY, CLO's, Structured Products, etc...the places where you had to go for any yield the past 5yrs...