This is one of the best videos and I couldn't agree more with the premise. Strong dollar, rising rates, deflation. Just as a spike in FFR has preceded every recession of the last 70 years so it will again.

@Sundeep D... that's what's been happening for the last 18 months. Foreign central banks have been selling USTs in huge amounts in order to supply dollars to their banking sectors which are all short of dollars and can't source them from anywhere else. US TIC data supports this: http://ticdata.treasury.gov/Publish/mfh.txt

What about the potential USD supply that could come from selling of foreign ownership in UST's? I don't have the numbers but I would think foreign UST ownership (especially by EM governments) isn't small? Would appreciate any colour here...thanks

My sense from this and other interviews on RV is that Yellen has to go. Is it really true that dollar stress in China could be relieved in part by simply setting up a swap line. WTF hasn't the Fed done this? Besides moral suasion, what should they be doing to stem the rise in the dollar?

Wonder if the dollar strength is here to stay. Hawkish fed would bring the market down strengthen the dollar and cause more headaches to trump. All of his campaign promises will be down the drain then

Great interview! He is indeed very, very smart.

Great interview. Ned did a great job. Thanks guys

Agree that he is way too smart... never thought to monitor some of the risk factors he looks at

Great interview Paul!! Let's try to get Real Vision to interview Daniel Oliver of Myrmikan Capital who you turned me onto. Thanks for your insight Paul!

Way over my head. My takeaway was sounds like sh*t is f*ckd up. Where does one find the swap data?

@ Sam: you're absolutely right. Thanks.

Another great interview and timely. I can't help but feel addicted to the drama of a train crash in progress until I snap back and realize I am on the train too. Would rather brace for impact then be dismembered.

@Martin F. that BIS paper is on my reading list. As I understand it, Shin basically states that the widening of cross currency basis swap spreads violates covered interest parity. Refreshing that an economist with mainstream credentials finally pointed out that CIP doesn't hold in the real world where banks don't have unlimited balance sheet capacity and there is a dichotomy between onshore and offshore dollars. As far as the USD being a more appropriate risk indicator than VIX, I definitely agree. However, I don't think the standard DXY (or even a trade-weighted DXY) is necessarily appropriate either. Since its based on spot cross rates, and heavily weighted towards the EUR and JPY, dollar weakness as measured by the DXY could driven by JPY carry trades unwinding, which as Mr. Mylchreest points out are actually driven by a shortage of dollars. So "weak" DXY can often times signal "strong dollar." Early 2016 is a good recent example. I completely agree with Paul's notion that basis swap spreads and IR swap spreads are the best indicators to look at in terms of eurodollar funding stress.

So good! the latest round of interviews have tied in very well with each other. A pleasure to watch

Guys fantastic work, i've watched every video, i know weird right? prob. not the only dude here thats done that. Although the dollars continued surge seems inevitable going into 2017 might we have someone that isn't as bullish on the $ for an opposing view? I think Mark Yusko is someone who may have a good counterpoint to Raoul's thesis. Also, a swing back around to visit Ronald Stoeferle's inflation deflation thesis would be an eye opener now that Trumpnomics has arrived. Cheers to the team, and keep up the wonderful conversations!

Great interview. @George B.: couldn't agree more. See also Shin from the BIS, speech 11/15/16. USD now the risk indicator (not VIX anymore)

very informative thanks!

Huge props to RV for having Paul on... Eurodollar contraction underpins everything important in financial markets. Ironically, I think the regulations imposed on the banks to combat the leverage excesses of the last crisis (Basel III and 2a7 money market reform, most notably) will end up starving a market that's structurally short eurodollars, ultimately precipitating the next crash. Anyone interested in learning more, watch Jeff Snider's preso here and read his Alhambra blog. Grant or Raoul, please interview him!

Excellent interview. As I watch the US $ breakout I can only wonder what the ramifications are going to be. This interview is quite helpful in that regard. I don't know if Kyle Bass and Mark Hart have been "timed out" yet on their Yuan devaluation trade, but based on the charts in this video we seem to be approaching either the "one off" they are betting on, another August type chunky devalue or perhaps a pickup in the tempo of the weekly gradual devaluation drip we have been seeing.

https://www.scribd.com/document/331339791/EDLiq#fullscreen&from_embed

Thank you guys!

"...if you like..."

Great coverage of the eurodollar market.