Takeaways from Recession Watch

Published on
July 27th, 2019
14 minutes

Takeaways from Recession Watch

The Expert View ·
Featuring Raoul Pal

Published on: July 27th, 2019 • Duration: 14 minutes

Over the past two weeks, Raoul Pal has tried to determine the risk of a recession, and to gauge the potential consequences that could result. In this concluding piece, Raoul Pal explains what he's learned through the past two weeks of programming, and provides some insights about how best to invest both in a rebound scenario and in a downturn. Filmed on July 17, 2019 in New York.



  • TR
    Thomas R.
    28 July 2019 @ 11:54
    Thanks Mr. Pal & Team for an excellent series - this has been extremely helpful A suggestion: It would be very helpful with at very basic instructional video on trading eurodollar calls
    • PG
      P G.
      28 July 2019 @ 19:22
    • ST
      Shane T.
      29 July 2019 @ 01:41
    • JO
      Johnny O.
      29 July 2019 @ 04:43
      Agreed. Plenty of us in retail don't have access to Eurodollar calls. When I look at the charts of /GE eurodollar futures, I can't see it has moved up and down more powerfully than /ZB Treasury Bond futures, where I can buy calls.
    • JL
      James L.
      29 July 2019 @ 04:53
    • fh
      felix h.
      27 August 2019 @ 09:28
  • JC
    Jack C.
    10 August 2019 @ 23:53
    Great stuff Raoul. One point to make. No mention of Brexit by you or any of the other interviewees I saw yet it fits right into much of the narrative. Nothing even from Sokoloff. I get the US centric nature of the platform but Brexit (almost certainly no-deal) by 31 October is now 50/50 with betting markets. In trading, timing is everything and this event is coming straight at us on a 'known' timeline. You acknowledge the interconnectedness of markets and often wonder aloud about the potential triggers for instability so I'm surprised Brexit doesn't ever get into the discussion. Otherwise absolutely excellent.
    • EA
      Emma A.
      21 August 2019 @ 18:57
      Yeah, I wondered that too.
  • GS
    Gretchen S.
    3 August 2019 @ 08:05
    Thank you again for the most educative series. I felt like I was back in the weekly merchant trading meeting with the mind being teased and stimulated. There were a couple of talks by Jeff Snyder on the platform which had initially helped me understand the eurodollar market. Fast forward - i started hearing you talk about using the eurodollar futures/options market to participate in this. I started studying the options, studied the levels at which to buy calls, saw you trade ideas on GMI and was all set - then heard John Burbank say - he discovered the trade recently - thanks to you. That sent me on a tail spin back to the drawing board - if it took Burbank this much time to understand I am missing something. New obsession - figure out what I am missing in the eurodollar ;-) Thanks again!
    • KJ
      Kelly J.
      7 August 2019 @ 14:01
      Just get those Eurodollar option positions on if they make sense to you, Gretchen! Thanks to Raoul, John Burbank et al, I decided to build my biggest position ever of long only options, parlaying and putting at 100% risk a meaningful fraction of my profits on my zero coupon and long Treasury gains of the last few month to get a potential 5 - 10 X gain in the coming months, especially focused in my tax free retirement accounts. I put on a load before the Fed meeting, and added another Sunday night as soon as I saw the Chinese break 7 with the yuan. The Eurodollar option prices are slowly lifting out of their silos like awesome financial missiles which, if they hit their target, will explode gargantuan deposits of cash into our accounts in the next few months, (hopefully, not as the real missiles start flying due to escalating economic and geopolitical international tension) Many of the options have more than doubled already, and potentially have another 500-800% to go as the market slowly shifts its understanding of what’s happening in the world’s economy and financial world. This is what Druckenmiller did at market turns that made him a mint! We’ll see what happens. Much fun after sitting in more conservative investments for awhile! I'm with Druckenmiller's guess (and hope) that what's coming now will help remove the current President from office - I've been pulling for a recession/bubble collapse on his watch ever since he got elected, and I'm hopeful that, in his own self-and-nation-sabotaging brilliance, he may just have helped bring it on himself.
  • CG
    Col G.
    4 August 2019 @ 17:25
    This has been an excellent series with many different approaches and opinions taken into consideration in terms of both macro and micro. It will be very interesting to see how things develop from here.
  • JS
    Jamie S.
    30 July 2019 @ 06:00
    Hey - Why does a high dollar mean it is bad for the US? The US is a net importer, that means that when the dollar goes higher, imports are cheaper so they should be buying more - wouldn’t that increase demand and begin to stimulate the global economy? Thanks
    • AB
      ANIRBAN B.
      2 August 2019 @ 11:55
      A higher USD would weigh on exports (and therefor growth)
    • CP
      Chris P.
      4 August 2019 @ 01:18
      Just because imports are cheaper does not necessarily mean the demand is there. Example...Cars can be cheaper but that doesn't mean I need another one.
  • sd
    sabyasachi d.
    28 July 2019 @ 16:38
    Warm greetings from India!! Unlike may of your subscribers, I am a complete novice in macro investment. I stumbled upon RV a month ago and since then I have been on a RV binge. Being a passive investor, I have lost quite a bit at the hands of brokers, financial advisers and by simply following the herd. But what strikes me is how much the Indian markets are affected by global macro events and yet how there are no meaningful discussions in the the local financial press around them. Through RV, I hope to educate myself and others around me and hopefully get a crystal bowl view of how our local markets react. Given that as a retail investor we have little choice other than investing in the local market, I have recently moved away from stocks and into Gold and cash and sitting on the sidelines, observing whats going on. Even if the Dollar goes up, it will at least drag gold along with it, in INR terms. Thank RV again, you guys are generating some incredible content. I am a big fan of you Raoul, and Grant. Can I request the RV team to make some sort of a history series? For example many have refereed to the Japanese monetary experiments and how that may be repeated to set the economy into a limbo. but for a less nuanced viewer like myself it may be very helpful to know about it. Warm Regards Sabya
    • PG
      P G.
      28 July 2019 @ 19:19
      I love the history series idea, A vote from me
    • DL
      DAN L.
      29 July 2019 @ 01:41
      Agreed. A brief documentary like the Venezuela one but on Japan and its 20 year stagnation would be epic.
    • JM
      Jamie M.
      3 August 2019 @ 23:44
      History series would be amazing!
  • DS
    David S.
    27 July 2019 @ 22:20
    Thanks, RVTV for a great series. I decided to put my guesses on the table so I can learn from my mistakes. Notes from the smallest family office: The Fed must cut rates simply because the carry between other CB’s negative rates is just too attractive – buy bonds. As the Fed cuts, other CBs will cut also. The carry will continue and the $US will remain strong. Each CB will continue to monetize its national debt until one of them breaks – buy gold. The US administration will continue to weaponize the dollar. Rating agencies will not downgrade sovereign/corporate debt although they should – think MBS. A capex/tariff manufacturing and banking recession is on the way – excess corporate debt and flattening yield curve. The GDP will not go into a full recession as other sectors will supply enough growth to keep GDP out of negative territory – slow to flat GDP. At some point the stock market will retreat as many companies must pay off debt instead of corporate buybacks. This market pullback will be exacerbated by ETF selling in illiquid markets – increase cash balances. The closer to the US election, the more commanding is the Chinese tariff negotiating position. If China threatens to devalue from 7 to 9 at a critical moment, it could be their trump card. Inflation will remain low, offset a little by tariffs, as the internet vise continues to force some prices down – good for the lower and middle classes. Lower growth and lower inflation mean it will be difficult to time the options markets as the news stream will be confusing. The CBs and MMT could make this last a while. Good luck to all. DLS
    • RP
      Raoul P. | Founder
      28 July 2019 @ 02:43
      love it.
    • DV
      Donald V.
      28 July 2019 @ 09:38
      "Rating agencies will not downgrade sovereign/corporate debt although they should – think MBS." What's MBS?
    • AD
      A D.
      28 July 2019 @ 12:54
      Mortgage based securities
    • JH
      Jesse H.
      29 July 2019 @ 00:51
      Interesting - but I would respectfully caution you against thinking of events linearly, as your chronology suggests. Whatever happens, expect discontinuous change, not linear progressions. Human psychology and thus confidence in markets are fundamentally nonlinear, of course. Future political and market events will likely be also.
    • DS
      David S.
      2 August 2019 @ 02:05
      Jesse H. - Thanks, your advice is spot on. Each event will affect and distort all my other guesses. I put these down to keep me honest when looking back to what I though on July 27th after hearing the whole Recession Series. If it is not in writing my memory makes me look better than I was. Thanks again. DLS
  • DS
    David S.
    27 July 2019 @ 23:44
    The Fed could cut a quarter of a percent point and maintain its current balance sheet. That would give the market as much as they can now without looking like they are caving to pressure. DLS
    • RP
      Raoul P. | Founder
      28 July 2019 @ 02:42
      If they do that, they will ignite the dollar...
    • DS
      David S.
      1 August 2019 @ 20:40
      The Fed is stopping the balance sheet runoff at the end of August just one month before it was scheduled to stop. I thought that it would be a little sweetener to help offset the 0.25 percentage point rate reduction instead of a half or more. DLS
  • EF
    Eric F.
    29 July 2019 @ 02:24
    Raoul / guys, you’ve really got to put something together to go over the bond trade. This seems to be the more rewarding / less risky option but I know a lot of people are uncomfortable with it. I do think a video running through the basics, risks and fundamental mistakes to avoid is crucial at this point. Yeah, more experienced guys who are comfortable with bonds will say go figure it out yourself, but I think ignoring the many requests for this I’ve seen many items is a real mistake. I really hope you do something about this, otherwise for people to miss the trade is a travesty and somewhat undermines what RV is for.
    • js
      jim s.
      29 July 2019 @ 04:21
      I second that. Bonds have not been my thing and understanding the trade structures would be very helpful. At least some discussion in Think Tank would be valuable
    • JO
      Johnny O.
      29 July 2019 @ 04:32
      Agree. And can retail do it with ETFs (and which ones TLT, IEI, IEF, LQD, ZROZ)?
    • AS
      Ameet S.
      29 July 2019 @ 14:05
      bonds are not hard to understand. But teaching bonds requires some mathematics.
    • JB
      Johan B.
      29 July 2019 @ 18:37
      Good idea. För a Swede its also difficult to trade some of the ETFs and other products assoiated with the Bond märkets.
    • JO
      Johnny O.
      1 August 2019 @ 15:22
      Without wanting to over-emphasise a sample size of 1, but 1 day after the Fed rate cut I can see that the Zero Coupon ETF (ZROZ) is up 1.67%, Treasury Bond futures (/ZB) are up 0.8% and Eurodollar futures (/GE) are up a pitiful 0.03%. Are we sure Eurodollars are the right instrument to buy calls on?
  • RX
    Robert X.
    30 July 2019 @ 23:15
    It’s amazing: wages and salaries were up in June on a year / year basis 5.5%, of course PCE was up only 1.4%; equities at all time highs - of course we need the Fed at the zero bound. More cowbell, please! Not gonna argue with Raoul though, the guy is on fire.
  • AM
    Artur M.
    27 July 2019 @ 13:43
    Fantastic two weeks, thank you. For me EuroDollar trade is the trade of the decade, and I will explain why below. But first I want to take the chance and say thank you to you Raul as you helped me to changed my and my families life. In 2014-15, your reasoning and information that bigger investors start to get into Bitcoin, gave me confidence in adding big to my bitcoin investment. Since then both me and my wife could leave our jobs and we live now in Malta, Europe instead of cold North. So thank you, I want you to know that your generous sharing makes a difference. Today I'm 100% occupied with macro investing, data science for finance. So now to the eurodollar trade that to me has much much greater probability of giving 5x, 10x payout than bitcoin ever had in 2015. I'm old data scientist and I have never work inside financial institution, which has been a curse as I had to learn everything from outside. The positive thing has been that I could objectively evaluate different views from data quality and analysis point of view. For this trade Jeff Snider is the central one for me. He was able to apply correct analysis on right level to the available data such as dismantled TIC data , without exposing himself for Simpson paradox, where many analysts fail today. From that the drawn correlations and conclusions are easy to accept, if you understand the process was correct. If you understand Jeff's thinking of eurodollar systems and the key drivers that apply, you know that the main stream narrative is wrong and there is today very little that central banks can do as the changes are systemic and take time to reverse even if they understood the root cause and wanted to do something about it. What makes this bet asymmetric is that so many bond pros don't get this big shift and are on the other side of the trade. So things like trade wars or central banks are not key drivers. The key driver is eurodollar dealers like banks, institutions World Wide that are restricting lending of dollars (their balance sheet capacity/ or synthetic dollars) in very leveraged global eurodollar system. This means that bonds are bid even at negative rates because this is the highest collateral and insurance for liquidity shocks. Leveraged dealers don't care about making money, they want just to survive end of this cycle. If you get this, UST bond yields have only one way to go and that is down. I recommend to follow Jeff at @JeffSnider_AIP (twitter) and https://www.alhambrapartners.com/commentaryanalysis/ but it's not a easy read. Now to “Kill my darlings”. There are still risks to this trade. Besides getting the timing right, the biggest risk is that some of the sovereigns start to default. Italy? We have here two cycles that interact, this can mess up this trade. Some refer to it as Kondratieff cycle, I prefer to call it ECM cycle from Martin Armstrong's work. What's interesting about Martin is that he actually invested a lot of money in collecting financial data even from ancient times that he then correlated, and there is a lot of wisdom coming out from that. Martin is perhaps not the most fascinating speaker, but this don't matter to me as data and analysis are very, very valuable. I was not on this trade from the beginning because debt defaults are very likely at the end of this ECM cycle, however until trust in governments is totally lost the mechanics of how eurodollar system works should be in play. So to sum this up, for me it's 80% conviction trade. I have already started to position in eurodollar options. This probably will be the highest conviction trade of my life. Thanks to RV and Raul for this 2 weeks here that have been important to me as confirmation. Timing is still difficult. Most of falling rates should play out to the end of the year as more and more pple change the narrative. GDP yesterday had recreation vehicles (RV) and automotive as biggest part of consumption surplus. We know that's not true and the number should be below 1.5, but this is the game that will go on and will impact confidence and timing. I think in the end it will be the striped liquidity in ED system that will force one default too many. We will see. God Luck Artur @Ar2Go2 (twitter)
    • RP
      Raoul P. | Founder
      27 July 2019 @ 14:04
      Wow! Great message and Im so pleased I could help make such a difference. This is what Real Vision is all about and why Grant, Remi, Damian and myself started it. This is why our 80 Visionaries come to work with a passion and a smile. Thank you.
    • AM
      Artur M.
      27 July 2019 @ 14:20
      No thank you, Raoul and RV
    • AM
      Artur M.
      27 July 2019 @ 14:24
      Here is also analysis from Tom McClellan, more and more pple are getting on the trade: https://www.mcoscillator.com/learning_center/weekly_chart/fed_needs_a_half_point_cut_now_and_more_soon/
    • JS
      Johannes S.
      28 July 2019 @ 03:40
      Dear Artur, for someone who never did anything in the Eurodollar market, where can I get myself educated so I may get a thorough understanding of this trade, it’s risks and implications?
    • AM
      Artur M.
      28 July 2019 @ 12:50
      Johannes, make sure that you have access to eurodollar markets as it usually takes time. There are many shitty brokers, so this should be your priority. It takes quite some time to get it in place set up all permissions and transfer funds. Test to buy 1 option so that you know it works for sure as often when you want to make the transaction for the first time errors are shown. I helped a friend to set up an account at Interactive Broker and that just happened. Read the error and act accordingly. Than you can read basics on wikipedia and investopedia. The heavy stuff to build your conviction and understand the market deeply is by reading https://www.alhambrapartners.com/commentaryanalysis/. You need to go back at least to beginning of the year. This is not easy read but if this stuff was easy everybody would do it so be patient and try research stuff you don't understand. Then you have Raoul and his team here. Raoul's experience validates what Jeff is showing with help of his analysis. Read Raoul's exiting story on twitter about eurodollar trader. https://threader.app/thread/1139692973711511559 Good Luck Remember , luck is a function of probabilities, get your probabilities right and you get lucky. Artur @Ar2Go2 (twitter)
    • mc
      michael c.
      28 July 2019 @ 12:56
      I am a little confused . Please help. If Raoul and others feel the dollar screams higher then why the bet on the Euro /Dollar. What am I missing. Thanks
    • AM
      Artur M.
      28 July 2019 @ 14:07
      Michael, you are confusing FX euro/dollar with eurodollar interest rats. Two totally different things
    • AM
      Artur M.
      28 July 2019 @ 15:54
      Guys, I have pined to my twitter the 2 graphs that matters most for me from Jeff's work. It's a comparison between 2000 and 2019 with respect to federal fund rates and eurodollars. https://twitter.com/Ar2Go2 Good Luck
    • AK
      Alex K.
      30 July 2019 @ 04:48
      Hello Artur, thank you for your great analysis and I couldnt agree more. I have a question regarding your EuroDollar options trade: Which strike/expiry combination are you expressing it through to get the best asymmetry for your view ? https://www.cmegroup.com/tools-information/quikstrike/options-calendar-interest-rates.html EuroDollar Future ExpiryDec 19 (GEZ9) trades at 97.93 (implying a 3m LIBOR of 2.07) and EuroDollar Future Expiry Sep20 (GEU0) trades at 98.33 (implying 3m LIBOR of 1.67) at the moment. As the FED Meeting comes up, did you choose a) more the 'longer term' options on short term futures as for example 11Oct19 option expiry 98 calls based on EuroDollar Future DEC19 expiry (GEZ9 trading at 97.93) @ 0.08 offered or more short term options on later future expiry as for example 13Sep19 option expiry 98.375 calls based on EuroDollar Future Sep20 (GEU0 trading at 98.33) @ 0.09 offered? I would really be happy to hear your view on that as your analysis very much resonates. Thank you and all the best, Alex
  • BP
    Bob P.
    27 July 2019 @ 13:21
    Raoul,be more specific about precious metals in the months ahead. What's your view on that? You didn't talk about it in this final piece.
    • RP
      Raoul P. | Founder
      27 July 2019 @ 14:05
      I short term long GDX but I think that the dollar will rally so gold will back off. That will set us up for the big PM trade in due course... maybe 9 to 12 months away.
    • JH
      Jesse H.
      29 July 2019 @ 23:03
      Respectfully disagree. Confidence has really deteriorated, and that, in my mind anyway, is the key factor driving gold. Gold may back off a little, but it won’t move much. I can see gold and the dollar going higher together, to Brent Johnson’s point. To Greg Weldon’s point today, which I think was crucial, we are seeing a decoupling of gold from the dollar. So gold will be less sensitive to moves in the dollar - it has its own bid and own set of drivers right now, I believe, related to investor confidence (or lack thereof) in fiat currencies and the suite of significant macroeconomic and financial challenges we are facing. My two cents, anyway.
  • MM
    Michael M.
    29 July 2019 @ 19:19
    Exceptional series in EVERY sense. Thank you. Bravo Raoul!
  • JR
    Jon R.
    29 July 2019 @ 18:52
    Raoul, if memory serves you've been bullish on gold as have many of your guests who share your recessionary outlook. How does that correlate with your strong dollar forecast? Thanks in advance.
  • KC
    Kenneth C.
    29 July 2019 @ 18:46
    Fantastic series and a must to frame your downside and what may be signs towards it.
  • Sv
    Sid v.
    29 July 2019 @ 18:13
    RV. Excellent series. Thank you
  • CL
    Cyril L.
    27 July 2019 @ 20:15
    Hi Raoul, thanks for the series it's been super interesting. I agree that shorting equities is tough - lost a decent amount of money trying it in 2015-16 - but what do you think about puts with the VIX still at very low levels? Or a straddle/strangle?
    • RP
      Raoul P. | Founder
      28 July 2019 @ 02:43
      If tou can do that, you should buy Eurodollar calls instead.
    • CL
      Cyril L.
      28 July 2019 @ 19:10
      Thanks... I'll look into that.
    • JH
      Jesse H.
      29 July 2019 @ 00:54
      Interesting Cyril - have you looked at the formidable work of Chris Cole and Artemis Capital in this regard? I suspect that Chris and his team are about to become a whole lot wealthier in the next 12 months. Very savvy guy and investor who articulates his ideas brilliantly.
    • CL
      Cyril L.
      29 July 2019 @ 18:11
      Jesse H. sure I have, Chris Cole is great I agree
  • KK
    Konstantin K.
    29 July 2019 @ 17:44
    I really like the consolidation of different views as it paints a better picture of reality.
  • GF
    Gaye F.
    29 July 2019 @ 17:19
    This has been a tremendously helpful series. Cannot thank you enough!!
  • SS
    Sam S.
    29 July 2019 @ 13:26
    One minute in and Raoul's opening statement is so genuine and humble. I've got to believe all of us do the same, at some point we have to "make a call" on our work study. Well done, fantastic delivery of mind blowing Recession Watch Series! Thumbs up!
  • SF
    Shariff F.
    29 July 2019 @ 12:36
    May we all come out as winners after the dust has settled! HUAT!!
  • DN
    Daniel N.
    29 July 2019 @ 12:12
    Hi everybody! It's great work you do Raoul. But i'm seriously concerned about dollar. If it is a shallow recession everything stays the same and the dollar will rally. If it is a deeper one or "the one" it probably will rally at the beguining but it then will tank deep into a debt and forever low rates ocean like the Titanic and then comes the reset, because all the rest currencies will be allready in the ocean floor (add to that currency wars). The only thing that would maintain the dollar in a rally is the eager for the currency in international markets, so everybody sinks. Please bring Peter Schiff and Jim Rickardds about the subject, but in debate form if possible. Cheers from sunny Spain! You are invited to Madrid anytime!
  • JO
    Johnny O.
    29 July 2019 @ 10:43
    Just trying to understand the opportunity. Eurodollar futures went from $94 in 2007 to $98.5 at the end of 2009, then got dull. That was the big interest rate decline. (I can't immediately see earlier than that but it was almost certainly more gradual.) Treasury futures had a more prolonged climb. Then interest rates went up a little in a now-aborted tightening period taking Eurodollars down to 97.1. Currently at 97.8, is the assertion that they'll climb back up to 98.5 or even 100 as rates approach zero; or can LIBOR go negative? It doesn't seem like a massive percentage move, and so the calls selected need to be juicily leveraged. Alternatively, something about a more pure play on LIBOR and offshore USD means that these things are gonna rocket more spectacularly than bonds? Or maybe the attraction is the high probability: the market says the Fed has to cut and there are reasons to expect more cuts, whereas a big juicy move down in equities that by so many standards is long overdue and getting more due is going to be prevented for as long as possible (and is difficult to trade). The idea that this resolves in the next few months is certainly attractive.
  • WJ
    Wasim J.
    29 July 2019 @ 09:42
    Awesome sires !!
  • BD
    Bryan D.
    29 July 2019 @ 08:46
    Also an outlier the Fed cuts 30bps. Fed Funds has been setting 5-6bps above IOER so they may make another 5bp adjustment to the corridor between Reverse Repo and Interest on Excess reserves.
  • MB
    Michael B.
    27 July 2019 @ 12:47
    Great series. Raoul the vast majority of viewers I would think have no access to Eurodollar futures. I certainly don’t. Would calls on the SHY for example be a suitable alternative. Love RV and GM
    • RP
      Raoul P. | Founder
      27 July 2019 @ 13:09
      Problem is that there is no leverage in those so they dont move a lot.
    • lD
      lance D.
      27 July 2019 @ 13:22
      i have access to eurodollars- and I'm So a basic bitch !
    • RL
      Robert L.
      27 July 2019 @ 14:28
      Ditto. For those (apparently few) of us whose primary investments are in IRAs without the ability to use margin, what is the trade (besides gold)? This is a reason I'm not renewing Macro Insiders. Very interesting, but recommended trades typically are not something I have easy access to, so harder to capitalize on the cost.
    • ly
      lena y.
      27 July 2019 @ 16:37
      Is there an indirect trade that is related to eurodollar futures? For the ones who have no assess to future market!
    • JS
      Johannes S.
      28 July 2019 @ 03:43
      Yes, glad for some pointers for those of us who are not familiar enough, or don’t have access to Eurodollar futures. What’s the second best trade to executive in this view?
    • JO
      Johnny O.
      29 July 2019 @ 07:58
      Eurodollar futures don't move that much either. It would be essential to (be able to) buy calls on them. I wonder if calls on something similar (e.g. calls on bond futures, or calls on bond ETFs) can capture it.
  • XP
    X P.
    29 July 2019 @ 07:55
    Thank you Raoul!
  • JO
    Johnny O.
    29 July 2019 @ 05:04
    In addition to a frustrating lack of sustained tradable direction in many markets recently, I find a huge binary divergence in the research I digest. It's either up and away or time for a significant decline. The bull case consists of continuing market strength, plenty of room to go higher in bullish percent readings before looking strained, pre-election year historical strength, and recession indicators that haven't yet rolled over. The bear case includes weakening global trade, frightening levels of debts, overvalued companies, central banks needing to cut rates again, and some very smart people in this series looking under the hood.
  • JH
    Jesse H.
    29 July 2019 @ 01:12
    This also made me recall Mike Green’s absolutely brilliant interview years ago with Raoul (the great rotation?). In it, he talk ms about how when there is a selling cycle, as Kiril alluded to in his interview, there will be a reflexive selling process...which we have NEVER seen. In this process, there will be gaps down in prices due to this reflexivity and even very low to no-bid situations. This will cause nonlinear, highly discontinuous change in markets (ie. prices), which by definition, will spike volatility significantly. It will be further accentuated when you factor in Chris Cole’s comments on the implicit volatility selling (believe Chris said it was in the order of trillions) - this, combined with corporate debt, I believe, will be the large belly of the tsunami that KOs markets. Markets will necessarily be closed, confidence damaged significantly and PMs should do really well in this environment. Public trust, to Kiril’s point, is quickly lost and takes years to rebuild. This is the most important message of the entire series for me — what trust and liquidity giveth, distrust and illiquidity taketh away. Cheers, J.
    • JH
      Jesse H.
      29 July 2019 @ 01:15
      Sorry, that should read - “In it, he talks about...”
    • BM
      Bryan M.
      29 July 2019 @ 04:53
      Well said!
  • MF
    M F.
    29 July 2019 @ 04:52
    Great work, as ever Raoul. I do wonder, however, if the commonly cited observation that “the bond market gets the joke first” and thus screaming slowdown is as relevant now in a QE world (which is now a conventional tool of Central Banks). With 13 trillion usd in neg yielding paper, largely as a result of the QE tools, perhaps the price signal is not as relevant as before versus equities...thoughts?
  • Bm
    Ben m.
    29 July 2019 @ 03:28
    I'm wondering if someone can help me understand. Is the EURODOLLAR trade just as relevant for an Aussie like me, or only worth it for US investors? I'm struggling to understand this relationship well enough and how the EURODOLLAR trade actually plays out. Im assuming its something to do with the LIBOR rate dropping? How can us Aussies position ourselves for this event? Thanks! Ben
    • AS
      Ameet S.
      29 July 2019 @ 04:42
      100-eurodollar futures rate = expected Libor rate at expiry.
    • JA
      James A.
      29 July 2019 @ 04:43
      https://www.cmegroup.com/education/courses/introduction-to-eurodollars.html Good read to here to understand the product.
  • TS
    Tim S.
    28 July 2019 @ 18:42
    Excellent wrap-up. Would love to have an educational series on the bond market. As it stands now for me is just my childhood perception of US saving bonds.
    • MJ
      Mr J.
      29 July 2019 @ 04:26
      I would like to see a Eductional series about this subject too.
  • MJ
    Mr J.
    29 July 2019 @ 04:25
    Loved the videos and series... Interesting few months ahead
  • SV
    Steven V.
    29 July 2019 @ 01:51
    The data doesn't matter, the Fed does. When the Fed cuts rates they drain liquidity out of the economy. The Treasury bond market is about to break higher and the Fed will do it when they cut. If there's any doubt, the U.S. economy always recesses within 2 rate cuts after a tightening cycle. With the large banks and the "Smart Money" in bonds, all it will take is a big buyer, the Fed, to push yields down and trigger a massive flood of money out of stocks and into bonds. We'll be in a recession within 90 days of the first rate cut, especially when factoring the monetary lags.
  • SP
    Stephane P.
    29 July 2019 @ 01:48
    I love your videos and forecasts, simply amazing.....Do you think now that Centrals banks know negative interests work, they will go down to -5%, maybe lower, as it is the only way to deflate the $ 250 Trillions Debt bubble, over decades, by rolling the debt, in a deflationary environment, without default ? Steve in Philippines.
  • SS
    S S.
    28 July 2019 @ 11:08
    Raoul and Real Vision. Take a bow. The greatest series in Real Vision History. Loved every interview. A question to all regarding The Eurodollar trade. Are you guys using the December 2020 futures? or further out say December 2021? Finally, theres a lot of leverage in The Eurodollar trade which makes it a very attractive & rewarding trade if it pays off in your favour. What levels would you put in a stop loss and take the pain though? As leverage works both ways. It can destroy you if you wrong.
    • JH
      Jesse H.
      29 July 2019 @ 00:46
      I second this, Steven. And I would add, one of the most timely series as well. Within the next 12 months, if not 4, I expect there to be a significant unravelling in markets...lit by some spark we cannot by its very nature predict and then running into a gushing waterfall of hugely systemic effects which all CBs will be totally powerless to stop. Of course, I could certainly be wrong, but if I am, will be 12 months closer to something even scarier - a huge social revolution, potential MMT and eventual inflation via this “QE for the people” policy...followed by inevitably higher rates and gold prices. Found the interview with Kiril particularly prophetic in its overtones and insights - we are at breaking point. There is little doubt in my mind.
  • ST
    Steven T.
    28 July 2019 @ 19:32
    Raoul - How far into the curve do you think will go to 0 in the US?
  • BP
    Bob P.
    27 July 2019 @ 16:04
    I hope you will consider doing this every quarter or so, especially as we move into this critically important period. It was truly excellent and extremely helpful. Just a couple of points. I would have liked to have heard more guests respond directly to your "doom loop" issues and the doom loop formulation. Maybe also, bring in someone who really, at the core, disagrees. Maybe some sort of main stream CNBC person who really believes that everything is unicorns and rainbows given the gov stats. How would such a person respond to your views. I'd sure like to hear that. It seems like much hangs on the dollar, but even if it does go down (I'm not totally convinced its going up), all of these structural problems are still there and will come to a head sooner or a little later. The one thing that no one brought up is the geopolitical risk which could just derail the whole thing at any time. You need someone with a geopolitical orientation to speak to you thesis - just to round the whole thing off. Anyway, you keep doing this and I'll keep paying you money.
    • TO
      Tal O.
      27 July 2019 @ 18:01
      No CNBC guys please!
    • JG
      Judith G.
      28 July 2019 @ 19:27
      I found the conversation between Raul and Julian to be extremely helpful because both are reasonable scenarios. CNBC folks would probably just create disturbing dissonance for all of us rather than providing clarity.
  • AC
    Avi C.
    28 July 2019 @ 07:06
    Great great series. Really would love to hear what Hugh Hendry has to say about all of this.
    • AM
      Artur M.
      28 July 2019 @ 17:29
      I miss this guy as well
  • AC
    Avi C.
    28 July 2019 @ 09:13
    BTW and here is my two cents prediction. I know w everybody here is looking for the trade of the century...so why not... The trade of the century is going to be Cocoa... Belive the unbelievable...
    • AM
      Artur M.
      28 July 2019 @ 17:28
  • DS
    Darryl S.
    28 July 2019 @ 12:00
    Raoul is joining Brent Johnson with his theory on the USD. I believe the case is now sufficiently made. To what extent Trump has control through leaning on the Fed we have to remember that he only needs to prolong it for just over 12 months.
    • RP
      Raoul P. | Founder
      28 July 2019 @ 17:12
      I think it was my theory first ;-)
  • SS
    Stephen S.
    28 July 2019 @ 16:12
    Raoul, Let me add my voice to the chorus of praise. Wonderful job! I don't recall much comment on the muni market in the series. I am particularly interested in junk munis, which have much lower default rates historically than corporate bonds. Do you have a view on them, please? Thank you. SAS
    • RP
      Raoul P. | Founder
      28 July 2019 @ 17:11
      I don’t really follow them I’m afraid,
  • JL
    Jinny L.
    28 July 2019 @ 15:27
    Raoul has done an excellent job but most retail investors should be wary that he is a seasoned veteran and most retail investors don’t have the knowledge nor experience to be nimble and size positions accordingly with risk controls. Raoul has enough humility but always hear both sides of the narrative. Real vision has a tendency to have way more bears than bulls. As a current bear myself, bears are probably more talented and “smarter” but they often win less most of the times because as druckenmiller will attest to, being a bear is like going against the house -the odds are already against you. There are enough bullish data out there if you look hard enough just like bears do. I am scared as shit but technically, there is a good set up for 3500-3600 in the next 6-8 months especially when retail is generally pessimistic about markets. Anecdotally, There is no overall euphoria which would stop this grinding bull market. Bears will be right at some point in markets but think of how many times they have been wrong since 2009? If you are not sure then either stay out or be invested because it is REALLY hard making money as a bear - going short equities. Most of these newsletters cherry pick a few calls they got right in hindsight without disclosing they got more wrong than right. If they were really good then these newsletters wouldn’t be giving away their secrets for a few hundred or thousand dollars a year. They would be running their own money and using these strategies until it stopped working.
  • ME
    Michael E.
    28 July 2019 @ 15:23
    Raoul, Truly great 2 weeks in RV history.
  • OC
    Otto C.
    27 July 2019 @ 19:55
    Raoul, really enjoyed these series and I am disappointed that it is over....awesome job by everyone involved!!! I would be great to have someone explain in more detail how to put the Dollar/Euro trade. Thank you for Real Vision, I highly recommend RV to all my friends.
    • JS
      Johannes S.
      28 July 2019 @ 03:30
      I second the request for details on the Eurodollar calls. Since I don’t invest in things I don’t understand fully, where would I go to get a thorough understanding of this kind of trade?
    • MB
      Michael B.
      28 July 2019 @ 11:18
      Ditto, pls spoon feed the less informed. Perhaps suggest strikes if that’s the terminology and expiration ranges.
  • DV
    Donald V.
    28 July 2019 @ 09:35
    thanks Raoul for making this available at the amazing promo price!
  • NR
    Nelson R.
    27 July 2019 @ 19:48
    Find the most bullish people managing the most money globally (skin in the game only). Rank them, take the top 10 and put together a series called the bullish herd or something. Have them lay out their data driven case why people should be bullish here over two weeks just like you did with recession watch (it doesn’t matter if this is repulsive to you, or you think is wrong), then let your subscribers see both arguments and make up their own mind.
    • RP
      Raoul P. | Founder
      28 July 2019 @ 02:46
      We have done this in the past with the Running of the Bulls piece a while ago. RV is not my views so we'll take all views. The last two weeks were me, as GMI, and not me and Real Vision....
  • AS
    Alex S.
    28 July 2019 @ 02:45
    Don’t be a stranger Raoul. This was IT.
  • KJ
    Kelly J.
    27 July 2019 @ 20:15
    Fantastic series, Raoul - the discussion, variety of interviews, sectors covered, and angles on what's happening is super useful. Also, we're on the same page when you point out the cultural difference between the mindset of the bearish-leaning bond trader culture and then bullish-tending equity trader world. When I worked at Morgan Stanley, I got tight with the senior bond-focused broker in our branch. He and I watched the run-up from 2005 toward 2008 with jaws dropped, making some good trades and lightening way up on stocks by 2007, while most others were still in the go-go mindset. I insisted to my wife that we sell our house in 2006 as I'd been watching for an SF Bay Area real estate top to the housing bubble and decided the time had come. We rented 5 years and bought back in 2011. We just sold again on 9/20/2018- coincidentally the S&P top last fall. I've been making the bond trade since last summer and been doing great so far. If you hadn't seen it, I thought Randall Forsyth's column yesterday in Barrons warning that Trump may be determined and able to devalue the dollar was interesting and relevant to your recession/strong dollar thesis. It said that in order to get traction, a Trump Treasury policy of buying key FX currencies and selling the dollar would have to be coordinated with Fed cutting. I'm not sure whether that coordination can happen, and if it does, whether at this point, any impact Treasury has on the dollar would be enough to ease the potential squeeze and slowdown we're looking at. I'd be interested if you've heard talk of that, and if you have any thoughts on it. Thanks so much! Great work! Though I know it's a lot of work and craziness, I can tell how much fun you're having! A historic time, it seems.
    • RP
      Raoul P. | Founder
      28 July 2019 @ 02:45
      Thanks so much. I dont think the Fed will do anything about the dollar ....yet. Things need to get broken first.
  • DS
    David S.
    27 July 2019 @ 19:10
    My compliments to every person at RVTV for another extraordinary effort and result. This series is the best of the best; yet a stepping stone for even better. RVTV synergy comes from RVTV’s implementation of its mission, points of view by vetted guests and reactions in the comment section. The future is never known and often does not even rhyme. Like tacking into the wind, the more options you understand the faster you can react to the constant uncertainty markets. As a small investor RVTV is my window on the world. Thanks. DLS
    • DS
      David S.
      27 July 2019 @ 22:22
      Sorry, it S/B uncertainty in markets.
  • LH
    Leigh H.
    27 July 2019 @ 21:15
    A huge thank you for this series and all the effort that went into it.
  • PJ
    Peter J.
    27 July 2019 @ 20:16
    Great series
  • SK
    Sung K.
    27 July 2019 @ 18:07
    Thanks Raoul.... that was “super useful”.
  • RS
    Ranjit S.
    27 July 2019 @ 17:49
    Thx Raoul. Great job. As a feedback, maybe would have been great to include a few sections on credit market. Credit markets have seen the highest growth and are the biggest link between real economy and financial assets. A true breakdown of cycle will probably require choking of credit channels. In some regards, the credit market today is much different with proliferation of large asset managers and central bank directly operating in credit channels. There is still a question whether this cycle breaks down OR resolves through long period of muddling and stagnation. Huge growth in private credit markets suggests a breakdown risk whereas central banks directly operating in credit channels point towards a muddled long term stagnation.
  • AP
    A P.
    27 July 2019 @ 14:46
    This series was grandiose Raoul. Clearly showed how doing one’s research should be done, including how to confront your ideas with others. Quick Q. to conclude: * ‘Doom Loop Trade’ —> Why not shorting HYG outright if you think it has already peaked vs Jan'2020 puts? Or why not using an earlier expiry date? * What would make you change your view? Thank again, and long live RV.
    • AM
      Artur M.
      27 July 2019 @ 16:47
      Eric from Macro Voices sees this trade as his trade of the decade, short HYG. However I disagree, shorting HYG is more expensive compared to being long Eurodollars as well as you have high risk of unconventional intervention in this market as it's so crucial to stability of financial markets and it is easy understood by everybody. Some were suggesting a spread trade between US Treasuries and HYG. But this is low conviction trade for me as it will be and probably already been target of intervention. You should be able to see trace of it in charts when you compare with other assets. You could get short ban or redemption stop beside outright buying by supporting PPT.
  • PD
    Peter D.
    27 July 2019 @ 16:01
    Great series. But about 5 minutes after watching the last show, I re-watched Martin Armstrong's presentation on RV from a couple of years back. He was bang-on on every count. It would be nice to hear from him again. Questionable government data, overt and covert Fed manipulations and opaque markets (e.g incomprehensible eurodollar/derivatives) mean that today's economy can't be properly assessed by relying solely on the "in-the box" folk. To get a complete picture you need to include the Alt guys too. Other than that, great effort, particularly the Sokoloff bit, which was one of the best RV has done.
  • AA
    Alberto A.
    27 July 2019 @ 13:25
    Great series and always awesome to listen to your insightful and provoking thoughts. Pre-crisis and crisis period is when all the big investors have made their fortune and RV / Raoul are really democratizing the high level knowledge for the individual investor to actively participate in this exciting times! Thanks again
  • MP
    Matthew P.
    27 July 2019 @ 05:26
    Love listening to you talk raoul! Beautiful mind and presentation thanks!
    • lD
      lance D.
      27 July 2019 @ 13:24
      hahaha ...I Know MAKES ya sick dunnit
  • lD
    lance D.
    27 July 2019 @ 13:22
    food for thought
  • cd
    chris d.
    27 July 2019 @ 13:11
    These recession watch videos have been great, and Kyril is such high value as indeed are you!
  • AG
    Angus G.
    27 July 2019 @ 13:01
    Absolutely fantastic stuff! Thanks Raoul
  • BH
    Boris H.
    27 July 2019 @ 10:21
    Great series Raoul! Really good work. @ all European investors - can you please recommend a broker which offers options on the Eurodollar futures? Thanks a lot!
    • RP
      Raoul P. | Founder
      27 July 2019 @ 11:38
      IG, IB and Saxo
  • JH
    Jesse H.
    27 July 2019 @ 10:34
    Thank you very much, Raoul and RV team. Great job on this series - my favourite this year, hands down. Was surprised with your conclusions in that the series and especially the last, outstanding interview with Kiril seemed to convey a clear message on how things are turning...and that it’s actually already happening. The loss of confidence, which crucially underpins larger market moves, is hard to restore - and once that turns with a larger change of narrative (think Ben Hunt), it is hard to put the “genie back in the bottle.” Could be wrong, of course, but I firmly believe we are already seeing this in the market’s response to the latest earnings reports of larger companies. And as Raoul said, “you can just feel it...”. Yep - feels VERY different from late 2015 / early 2016, and remember that we don’t have an incredibly strong China to compensate for Western weakness anymore. The US, as the sector-specific and other interviews revealed, is not as strong as the official (misleading) data suggests.
  • Br
    Bj r.
    27 July 2019 @ 09:11
    Very valuable content this week, thank you RV!
  • TW
    Thorne W.
    27 July 2019 @ 08:20
    Wow. An absolutely outstanding synopsis Raoul. Thank you!
  • TB
    Thibault B.
    27 July 2019 @ 07:53
    Well done!! Some of the best interviews on RV in these two weeks.
  • yc
    yu c.
    27 July 2019 @ 05:55
    Wow. Can’t thank you enough Raoul. Waited eagerly for and watched every single episode of the series.
  • WM
    William M.
    27 July 2019 @ 05:51
    A great two weeks...thank you for the outstanding recession watch pieces.