The Highest Quality Macro Trades and the Impending End of U.S. Outperformance

Published on
July 3rd, 2020
Duration
84 minutes

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The Highest Quality Macro Trades and the Impending End of U.S. Outperformance

The Interview ·
Featuring Ben Melkman

Published on: July 3rd, 2020 • Duration: 84 minutes

Ben Melkman, CEO and founder of Light Sky Macro, returns to discuss the biggest macro themes and trades on the horizon with Real Vision CEO and co-founder, Raoul Pal. In this wide-ranging discussion, they examine everything from COVID and the effects of its handling by the U.S. and Europe to the probability of fiscal union in Europe as well as the potential outcomes of the U.S. election. Melkman and Pal agree that the combination of unprecedented fiscal and monetary policy has to have unwanted consequences somewhere and that this likely will play out in FX markets. Conversely, Melkman pushes back on Raoul’s dollar shortage thesis, arguing that the dollar is in store for a rough 2020 and makes the case for the end of U.S. equity outperformance sooner rather than later. Filmed on Wednesday July 1, 2020.

Comments

Transcript

  • JH
    Justin H.
    25 August 2020 @ 18:30
    Any way to buy European real estate with a USD 30yr mortgage?
  • JH
    Justin H.
    25 August 2020 @ 18:26
    Can we have Ben on a more regular basis? This was compelling stuff.
  • MF
    M F.
    20 July 2020 @ 15:24
    This was tremendous at multiple levels. Having a non-consensus view is exceptionally welcome. Equally, having someone who actually invests--with institutional skin in the game--is 100x more valuable than other guests who don't or haven't risked capital for a living at an enterprise-level. And, having someone with a great track record is even more valuable. Talk is one thing, but the rubber meets the road when being able to profit from ideas, as Ben has done. Please, more successful practitioners. Well done Ben and RV!
  • BC
    Burton C.
    6 July 2020 @ 16:11
    A lot of ideas thrown against the wall, but if there was any actionable information it escaped me.
    • GC
      Gerard C.
      7 July 2020 @ 12:42
      You can lead a horse to water but you can't make it drink.
    • PE
      Paul E.
      16 July 2020 @ 19:09
      They both agreed on gold! That would be actionable.
  • SG
    Sashi G.
    12 July 2020 @ 12:43
    Pure gold. Love Ben's counter theses to Rahul's.
  • rs
    richard s.
    12 July 2020 @ 12:42
    Long EURO? European countries, HISTORICALLY, have been divided based on their own interests. This simple fact is not discussed here not to mention of Demographic trend. Just ask any businessmen the better place to start companies between US and EU... Also... would German bailout whenever shit happens down south? I doubt it.
  • js
    jeffrey s.
    9 July 2020 @ 06:21
    No offense taken. One question: is Raoul speaking figuratively when he says Yen at 200? My order triggered at 106.25.
    • JK
      John K.
      9 July 2020 @ 18:18
      No
  • js
    jeffrey s.
    9 July 2020 @ 06:21
    No offense taken. One question: is Raoul speaking figuratively when he says Yen at 200? My order triggered at 106.25.
  • SS
    Stephen S.
    8 July 2020 @ 13:32
    I’m American not offended by what he says. We have lots of issues right now. I’m investing elsewhere these days.
  • MS
    Marcus S.
    7 July 2020 @ 22:11
    Super interview and great to have 2 opposing views - it's what makes RV such a gem!
  • TG
    Terry G.
    5 July 2020 @ 02:07
    Raoul Pal, as always, goes on repeating his well-repeated arguments like a broken record to solicit views from others. Great views from Ben, nonetheless!
    • DG
      Daniel G.
      7 July 2020 @ 20:39
      Raoul talks to big thinkers who don't watch each interview. He is respected by them and it would do us a disservice if he wasn't open about his thoughts to his guests.
  • TK
    Tadej K.
    4 July 2020 @ 15:21
    A lot of you guys in this comment section are very thankful (ohhh, thank you for this wonderful interview, ohhhh, thank you to let me learn so much...) when it comes to listening to interviews on RV (especially when very charismatic Raoul is involved). Just as you would be listening to a poems of enthusiastic poets in a french cafe. I was (unfortunately) the same. I have enjoyed uncritical listening to the prophet and uncritical reading of the reports. And I've let occasional inconsistencies that I spotted just slip away, not allowing them to be a stain on my "pride of being RV member" and on my "conviction that Raoul would have our back, he would let us know if his conviction in his “high conviction” trade (long dollar to the moon and beyond) was undermined". Here is my story with possibly valuable takeaways for many of you: I was following development of coronavirus since the end of January and I have seen it as a potentially worldwide health and economic (thanks also to Raoul and RV) problem since than (listening to John Campbell has kept me very up to date with knowledge about virus - especially evidence of transmission from asymptomatic and pre-symptomatic patients was THE MOMENT for me). I have managed to come to the decision to buy a big piece (the bigest position of portfolio at the initiation) of deep otm puts on s&p with 2 months duration on February 17th (2 days before the peak), some USDCNH 3 month duration calls and HYG and LQD puts a week latter and wti crude put a day latter and june20 eurodollar calls. I have closed all those positions (except of CNH and eurodollar) with 10x return way before the bottom (I managed to perform some decent risk management back than (which is probably always easier when market goes your way)). Than I have started listening to Raoul's every word with much deeper faith (he is very charismatic and has nailed it until then, so why not, right, after all “it was probably the last great macro trade of our lifetimes” as we have heard many times). I have gone shorting s&p futures afterwards and have bought a lot of EURUSD puts and USDJPY and additional USDCNH calls (those options represented a third of my then quite large portfolio then). I have closed equity shorts in time. But I didn't closed any of fx options. Contrary, I have added. Because “the next big moves are going to happen in the fx market”. Well ok. Lets go. Than there came March 23 with unlimited qe and fiscal bomb. My accounts combined were worth 3x more that at the beginning and I wanted to go take profits and have some serious capital. But I have failed. Because there was still something bigger in front of us. "The dollar”. I focused entirely on the dollar trade. I have sold equities that were left in portfolios, added much more fx options, opend spot fx positions. And waited. I didn't have very good feeling, because unlimited qe and Trump’s huuuuuge fiscal stimulus we somehow intuitively dollar negative happenings. But Raoul and RV team (Roger, Ash) stayed on dollar to the moon line and I decided to wait and follow GBP and EUR to parity with USD, AUD to half of USD. Then the EU mutualised fiscal rescue package was announced and EUR (and everything conected) exploded higher in following days. But I still listened to Raoul’s USD optimism and haven’t blinked. But a few days later with spots trading 5% to 7% richer than when I shorted, and with quite some leverage involved I was forced to cover. In the meantime the 5 years rates trade also failed to be in the money – but it wasnt a realy big bet. A week latter new report from Raoul was out, with unchanged convictions. And I went long dollar again, just to be stoped out once more last week. And now I am down quite substantially for the year. I still have a lot of (currently not very valuable) options that will expire during the next 2 to 12 months – all long USD against EUR,JPY and CNH. If things go forward the way that mr Melkman predicts, I will lose everything I had in my trading portfolios. And that definitely is not something I thought possible in the middle of March when I was thinking about covering everything, but was mesmerised to continue to participate “in the last and probably the greastest macro trade of our lifetimes”. I should have known that Raoul as a world-renowned dollar bull (that brand is strong and no-doubt can generate decent return for him) is not gonna change his public position, practically no matter what happens. So all of you guys out there that can not be more happy to see an interview with 2 participants with completely opposing positions, just dont forget that there is no place for relativism and multiple truths when you have an open position. No matter how smart words are used or how convincing arguments both sides use. The truth, the PRICE, will be only one - and wont care for the smartness of the arguments that let you to the trade. And if you participate, if you are not right, you are wrong! You lose money. There is no medium to long term left for you when market has moved against you explosively and you had no stops, because someone was still “bullish dollar, very certain”. And you can not have it both ways. You can not like both arguments, you can like poems of 2 poets with different existential experiences, you can like 2 different entertainment shows, but you just can not like 2 contradicting arguments for the price movement of an asset you own! Because the truth, the price is and is gonna be only 1! You have to work out which is the right and which wrong one. If you cant you better move out of the asset! And some prophets can be wrong after they have been right, but can not afford to admit it. The followers have to recognise it themselves. So here I am, loaded with decaying options, married to swollen L in the P&L, hopping for Raoul to finally be right on the dollar - possibly this year before all those options expire - and scratching my head, asking myself how could have I developed such a deep faith in a man who's business obviously is being highly convincing about his world renowned "high conviction" trades. CAVEAT EMPTOR
    • DH
      David H.
      4 July 2020 @ 17:39
      Im sympathetic, but i think you failed to appreciate we work in a world of PROBABILITIES. Both sudes have valid arguments, and both deserve some weighting. Probabilities and reflecting them in your weightings in light of time frames. You speak as though you “bet the ranch.” This is a long game. The best players always guard against the reality that they really dont know for sure.
    • CB
      Chris B.
      4 July 2020 @ 18:32
      You have pointed out several inconvenient truths. IMO trading macro is one of the hardest things one can attempt to do. Unless you have the time and the financial backing to let the trade play out you're dead. Because I am not smart enough to figure out how to untangle the hopelessly knotted ball of macro yarn, I am a technical trader focused on price action in the here and now. Lastly, be very careful about letting other's opinions become "sand in the gears" of your own trading process. It is hard to trade well when there are multiple voices whispering in your head. RV is financial - centric entertainment. Nothing wrong with that, but very hard to pull actionable trades ( at least for me ) from the diverse macro debates and opinions here
    • WC
      Wen C.
      4 July 2020 @ 18:48
      Tadej, I am sorry but Raoul clearly stated that the bull dollar would happen after a "certain period of time" within the "solvency crisis" of his framework. So it was clearly not going to happen before the summer ("hope" period of his framework). He repeatedly warned about the time frame uncertainities and also, warned that he might be totally wrong. :-) I still believe that the Milkshake scenario as descibed by Brent Johnson will play out and IMHO, it should start by end of the year as portfolio rebalancing and fund transfers require currencies like the euro and sterling to be converted to dollars. So yesterday, I bought dollars with a 7 months time frame and I am also be completely wrong too...
    • KW
      Krzysztof W.
      4 July 2020 @ 18:51
      Tadej, I think your post is very much needed. Thanks for that. You learned your lesson. Unfortunately it was a very pricey lesson. I have similar story. I was up like 140% (I have bought deep AOM calls on Vixy last November, alongside good and silver (PSLV, CEF), plus physical gold/silver and just few k USD in crypto). I started buying SPY puts, Uber puts and DHT calls). I went down from 140% to 70%. That's is not great but still not as costly as your experience. I have learned my lesson as well. When it goes down to investing you are responsible for your trades, noone else. I wish you will come back. As I mentioned at the begining - this post is very much needed to point the fact that we all need to do our due diligence, come up with investment philosophy AND sound risk management. Thanks again Tadej for sharing your story.
    • MP
      Mate P.
      4 July 2020 @ 18:58
      Tadej, thanks for openly telling your story, but I think your summary of lessons learned is wrong. Trading is not about being right all the time, you made it a black or white game for yourself because of position sizing. You basically went "Long-Raoul" with crazy leverage, there's no other way you would be deeply in red ytd after having those early 5-10x trades.
    • JN
      John N.
      4 July 2020 @ 21:53
      the part about you cant see both sides I think is the opposite of the right approach. it is the ability of thinking about different sides that allows to us see an edge in one direction. you shouldn't think you are right ever. you should think you are 60% convinced or 70% or something like that and that number needs to be flexible. your view needs to be grey so you can change position according what the markets are telling you and make appropriate decisions. I think that the time frame you are using seems to be shorter than the type of macro information being considered. my view is that the shorter the time frame the more important technical analysis is and the less important fundamentals are. fundamentals seem to only be useful over months to years. anything shorter than that is the realm of technical analysis. when using fundamental analysis the short term moves are opportunities to enter or exit but the time frames of the trades are about the coming months and years. when it comes to trading the only way to be successful is to have abilities to make quality decisions for your self. others peoples views are just information that you need to use and process for yourself. it is always the traders skills that will get reflected in the pl over a long period of time. no ones else's.
    • TK
      Tadej K.
      4 July 2020 @ 22:11
      Thank you for all replies and your empathy! Let me just answer to some of your points: @DavidH.: I understand probabilities. But being wrong for 3 months in a row because you are denying that CB and fiscal reaction has caught us (bears, deflationists) by surprise (especially EU mutualised fund, which lifted EUR) with the speed and size (and has changed the game we are playing) has nothing to do with probabilities but with intellectual fairness. And yes, I know my risk management was bad; and it was bad also because I developed faith in my positions not from the tape but from the Raoul who has claimed that nothing has changed even though that many things obviously have. Fortunately I have a decent source of income from my profession and I will recover one way or another; I just won't be rich as soon as it seemed in the middle of March : ) . @ChrisB: Yes, I agree with you. @WenC Look when the GBP, AUD and EUR shorts were initiated in Raoul's In Focus trade portfolio. Probably you dont open new positions if you expect for them to move against you for the next few months... I would say that right now we (the deflation prophet following crowd) are entering the hope phase - we are hoping that we will regain at least some of out bold deflation wagers. @KrzystzofW: Yes, i f*ck*d up. It was my mistake to take on to much risk and gain to much faith. I advise all the worshipers not to follow my steps. Because prophet wont cover your back. He cant change his views currently because they have become somewhat of his trademark. @MateP: Yes, I f*ck*d up. Sizing was the problem, yes. Whole risk management was disaster. But it was so, because I was chasing "the last great macro trade of our lifetimes". I went "long-Raoul" with leverage, exactly (while of course we all operate in fx land with leverage, I guess). Regarding losses: If you buy enough options with 2-12 months to expiration, and don't sell them on the inflection point when vol is high and price is right but wait for "the next dollar's move higher" and than next 3 months bring you spot moving agains you, and if you add on short spot trades because conviction is still high and prophet is still bullish dollar... there you are. PS: I still think Raoul is a great narrator, extremely charismatic guy (with a lot of spirit) and also a good macro observer who dares to go against the consensus but also has a spine to be with the consensus. It is on us (deflation prophet's followers) not to take him as a god but merely as a man and have tight stops on trades even when he doesn't recommend them. You can always reenter trade, without losing "the ranch" waiting.
    • JN
      John N.
      4 July 2020 @ 22:22
      one thing about that usd trade is that there actually has been great trades and may continue to be a good ones against certain em currencies. particularly countries with high usd debt and low reserves and no swap line. those have been some of the best trades and it may continue. as far as usd to eur or aud or any of the developed currencies you need to use technical analysis to get edge (unless you are one of the few that can make short term fundamental calls on currency pairs). blindly betting against the developed market currencies to usd is a real gamble and my guess is the wrong side. the whole usd squeeze doesnt really apply to the countries with swap lines anyway so the reason for that trade isnt even there.
    • AI
      Andras I.
      4 July 2020 @ 23:03
      Tadej, Sorry for your loss! It's more important you're open about this - especially with RV quickly growing in size and reaching people with less experience looking for hope. So I'm not lecturing you, just adding a few observations for other readers. Any time information is dispensed (financial, political or otherwise), I try to watch through a filter: Most independent advisors in the market have good intentions but they also have motivation and a whole boatload of psychological baggage and circumstance - admitted or not. Some observations: 1, RV is a media enterprise - a mix of finance and entertainment 2, From what I can see, RV is Raul's primary income source and after real estate, probably the largest investment (as intellectual property). 3, Whenever his portfolio allocation gets mentioned, it's emphasized it's only the liquid investments he's talking about. Which might be proportionally much-much smaller than a (possibly) overleveraged portfolio of time sensitive bets. 4, Also, I noticed he has a more than average risk averse personality. (All these can be lessons in themselves in diversification and due diligence.) Which means - he's: 1, Incentivised to have a strong, sticky view (and he did voice his concerns many times, especially when it comes to timing) 2, Incentivised to have a strong opposiing view to the other half of GMI (Julian is bearish on USD) so that RV can cater for both directions without leaning to a side and also look more serious as no one in their right mind would believe that macroeconomics can predict the world 3, Less affected of whatever the outcome is 4, Probably not betting on his strong dollar view to this extreme While I really appreciate all the research and intellectual stimulation RV provides, I would never bet the farm on a single call, especially as fundamental as this call. Feeling the wind direction (even if the feeling is just that it's turbulent) is ok with me, the rest should be position sizing and risk management. In fact, RV (mostly) emphasizes diversity of opinion*, risk management and probability of outcomes approach ("if we get half of it right, we did well") more than any other source you can access - as they don't have skin in their prediction as a single entity, they can offer a much broader spectrum of views (which I consider valuable) - they don't have to be right and RV can maintain a neutral view. *well, except when it comes to Bitcoin and a few months ago about recovery shapes :D
    • OH
      Oscar H.
      5 July 2020 @ 09:24
      I think your story is important Tadej as it shines a light on a worrying dynamic here. Whilst Raoul is careful to say that RV is separate from him with his GMI hat on, it is very clear that the RV community in general holds Raoul up to be a prophet of sorts. Whilst very articulate and charismatic, Raoul is also very adept at qualifying his forecasts so that it is hard to provide counterfactuals. e.g. the Unfolding was a prediction that things would go down, then up, then down. Whichever way things were going, he could tie it in to a phase of his framework. Plus all the qualifications regarding probability, timing etc. It's impossible to be wrong. I do think that Raoul is a good macro analyst and that he does technically speaking qualify his views and forecasts, but I also don't think it is an accident that he has become a trading pied piper for his own online community and I think that his bang the table conviction, communicated to a group of people that may not have the right amount of experience to trade their worldly wealth through options, may not be the most responsible course of action. Perhaps, conviction should be dialled down a little and some more clear disclaimers to help save people from themselves a bit more. We've all made trades that make us feel sick when we think about them and none of them are anyone else's fault but our own. I just think the current dynamic needs to be acknowledged and addressed otherwise it is likely to lead to many more stories like Tadej's. Remember, that one of the great investors of our time, Howard Marks, came on RV and got terrible reviews for not playing ball and throwing out a tonne of blase macro forecasts. Think about that for a second.
    • MT
      Mike T.
      5 July 2020 @ 09:36
      Tarek, it takes some guts to put out a post like yours, so deep respect for being able to do that. This for me this is what a forum post should look like as it encourages dialogue, personally I get irritated with one or two word comments e.g. 'great' 'thanks' 'wonderful' 'rubbish' etc when simply thumbs up or down is entirely sufficient if only wanting to express sentiment. BTW you seem to have been a regular user of debit (buyer) OTM Options. Regularly buying options is mathematically a sub-optimal way to use options and will lead to serious longer term underperformance. The balance of probabilities is overwhelmingly against buying OTM options, due simply the Option Market is set up and priced in favour of the Option seller.
    • MC
      Mario C.
      5 July 2020 @ 10:48
      Raoul is a (very good) Sales person at heart, not a trader (just check his professional background). He is more often wrong than right like most of us (just view all RV videos from inception), but when he is right, he is very good at marketing it! And as someone said above, he likely has most of his assets tied to Realvision ownership or real-estate than he has in his USD fx or US-Treasuries trades. I lost more (small) money following RV videos recommendation than I made (invest in Pakistan, invest in Oil Tankers,... LOL). Never forget that most of RV interviewees are not successful traders/investors, or just may be talking their books. Just take Raoul and RV for what it gives you: an often entertaining and smart source of financial information. But it should not prevail about your investment decisions and most importantly your risk management.
    • MT
      Mike T.
      5 July 2020 @ 14:55
      Tadej, please accept my apologies for mis-spelling your name in my previous response.
    • TK
      Tadej K.
      5 July 2020 @ 16:19
      @AndrasI: Great observations and analysis... would be useful to see something like this a few months before. It is always useful to ask yourself in which game the majority of narrator's skin actually is. @OscarH: Yes. Long story short: No stops, no specific timing, unchanged high conviction in "last great macro trade of our lifetime" even after market turns against you. --> After 3 months: you should have work more on your risk management, be more cautious :) @MarioC: Lucid observation. Good marketing got me onboard, boat has departed and I'm in the open sea. I have entered a hope phase - hoping that wind finally starts blowing in my direction. That Raoul will be finally right about the dollar before the end of year. That China devalues at least 10%, that European banks start sinking (some Wirecard style disintegration of DB,Commerz,Unicredit,BBVA,Santander,CreditAgricole) and European institutional money starts shifting Euros to $ and that BoJ stimulates so much that mr. Watanabe and his pension planer will be left with not enough JPY assets to hold and will be forced to shift to $. That way I will earn enough not only to recover losses, but to retire early and buy a house on, let me think... hmm... yes, on Spanish coast. At the age of 36. Than I would probably start writing premium investment letter... where I would glorify bold directional high conviction balls to the wall bets against market consensus :) Otherwise... with no lovin' in our souls and no money in our coats... we can't say we never tried.
    • TK
      Tadej K.
      5 July 2020 @ 16:37
      @MikeT: No problem about misspelled name - I probably misspell every third word + kudos to anyone who understands my english syntax :) . About buying options: Yes I know that constant long vol positioning can be a losing strategy. However if you look at Spitznagel's Universa's approach ( https://www.universa.net/riskmitigation.html ) it could also be a major inevitable part of superbly performing portfolio.
    • rj
      rodolfo j.
      5 July 2020 @ 18:33
      I empathize with you man. It is terrible to have a losing trade/business/investment decision after having drunk the kool aid of whatever your mind is interested at the time (i drank the real estate boom 2005-2008 with not so terrible consequences). I'm a huge fan of RV, and been in Macro Insiders since the beginning, and honestly, I've only used the information for directional moves, not trades; and with their respective time frames. So no, I don't have enough knowledge and capabilities to trade in options, and to really feel the rush or despair of gaining or losing multiples of what I've speculated. My opinion on what has worked for me: 1) differentiate between investment and speculation, their according probabilities, and your willingness to lose it all. Bunch of strategies out there, i just prefer barbell-ing due to its simplicity. 2) Dont keep all your eggs in a single basket, also means to redistribute after one basket is overflowing... It is hard to do if you're a trader (as I've learned from RV most traders keep on their winners and dump their losers), but I still believe that to make money and to keep money is a whole different game. 3) You can follow only the most knowledgeable people, pay them thousands or even millions, to get their insights and be part of whatever it is... But the only one to truly hold accountable in the end, is yourself. In no means this comment is to "punish" yourself... It is to remember that all decisions you make, you got to live with them for the rest of your life. I've been long gold, usd and land for a while now. Still buying with those as im in an emerging market. Give yourself a pat on the back man, and learn the lesson life has given you... As we are still alive, and its all that matters. Saludos!
    • MD
      Matt D.
      6 July 2020 @ 04:56
      I have listened to commentary from Raoul over the past months and as a good trader he is still being consistent in his position. He obviously has less certainty (even thinking out loud why his dollar thesis hasn't come about) due the luxury of hindsight (all comments here have) yet there is still a lot to evolve in a complex interacting system (the global macro). I don't believe he is trying to be controversial just to promote RV. If someone is just a dud, people will stop listening. So there is good reason for him to be correct. And often. Yet it is not that simple. THEN there is the unknown - the ability of people listening to be competent traders. RV is not able to make someone a good trader, irrespective of their advice and it's accuracy. Sorry but to someone who trades, reading your long piece speaks loudly in a manner that is not really sympathetic. Wanting to retire at age 36 on the Spanish coast ? To me, it can be almost as negative to state a trade in public than it is to lose money from trading. The psychology. I am not a Raoul cheerleader, just believe from a traders point of view one would be less critical of RV and his commentary. Not to say it is perfect - he welcomes debate and criticism, which is why there have been many guests on here who don't agree with him. For all we know, he is underwater too with his long dollar position. I'm not sure of his trading experience in a hedge fund but hedge is the operative word don't forget. Dave Portnoy would be an interesting person to consider too in the context of this whole discussion. For another day.
    • HR
      Humberto R.
      6 July 2020 @ 16:54
      I look for triangulation on macro trades before I start building a position. i.e. other opinions outside of RV. As others have stated, position sizing is a big part of doing this like the pros. Just take that as a lesson. One can point to Raoul's dollar bull thesis as not having played out, but as others have suggested, as Raoul himself has, it still has time to play out. I would remind you and others that share your recently articulated view, that GOLD has been a Raoul favorite macro trade and that has outperformed nearly all other assets since Oct 2018. If you incrementally built a position in gold over the last 3 years you would be well ahead of many, including the "pros", with the side benefit of being able to sleep at night. That has been and will continue to be the big trade.
    • SN
      SAT N.
      6 July 2020 @ 18:09
      Thanks for sharing, Tadej. I remember in one of Raoul's flash updates in March, he stressed that trades going forward are not going to be as easy as the past clear cut bond trade. But these warnings can easily be lost, as he is very good at articulating his strong views. Suggestion for RV Pro model: it would be very helpful if trade recommendations are accompanied by time horizons they are expected to play out. Timeframe is hard to predict -- but if this the case, they one can simply provide broad time horizons (1 day - 2+ years). Providing explicitly timeframes would help recommenders too -- they won't be judged too prematurely if the trade doesn't go well in the short term. Raoul's trade might still work out well in the second half of 2020, but that might be too late for many, as Tadej's story illustrates.
    • AA
      Alberto A.
      6 July 2020 @ 20:38
      Thanks for sharing. I also read your responses to the replied messages and agree with you. Very humble. You broke some of the cardinal sins of trading and you know it. A great trader will make these type of mistakes. I'm in the same boat but remember that great traders admit that to be successful there will be a lot of pain along the way. I have a lot of scars in my back!! If you listen to Raoul carefully, he is invested in his personal account in gold, bitcoin, and cash. So the rest is just a small portion of his trading portfolio. So it seems he is not putting a lot of skin in the game. He said this not me relating to his asset allocation. So it is a different perspective and that is the reason why he will never admit it and change his view. I think. Also, his macro framework and thinking is done through a lot of subjective experience, macro world puzzling, and trying to tie it up together. At the end, is just a framework with a respectable OPINION. I wonder why Grant Williams left RV and it might has to do with the way they both view at the investing world in a totally different way. Good luck out there and stay small...is a marathon...
    • TR
      Thomas R.
      6 July 2020 @ 22:31
      TK: Thanks for sharing. For me, RV serves a purpose of filtering out the charlatans of this industry. RV's in depth interviews with Lakshman Achuthan of ECRI, Balaji S. Srinivasan, George Concalves, & Richard Werner allowed us all to advance to the front of the line. Hearing their views and perspectives has impacted my trading, not with single ideas like "long DYX", but by expanding my risk considerations, like eliminating undefined risk positions for wider defined risk trades. With VOL so high, I'm taking in higher than average premium without exposing myself to undefined risk. In this bizarre market, I contend that undefined risk is Russian roulette. But you are correct, there is a clear level of sophistication in Raoul's style. He's widely adept in selling an idea, which was no doubt perfected over time soliciting hundreds of millions in client capital assets. But as brilliant and seasoned as Raoul or many of these guest seem, their theories, projections, hypothesis, can never predict the actual Market reactions. I suffered a similar harrowing spiral following the convictions of Hugh Hendry's "F" the Fed crusade from '09-'14. Everything Hugh espoused was undeniably logical and righteous, but we were dead wrong when it came to the markets' reaction. (BTW: I've never met HH personally or professionally.) You'll find a way to bounce back no matter how destructive it's been in your portfolio. With 25 years in this industry I can confirm what SR. said in the Mark Richie I v. II interview ..."successful traders learn how to lose"... Good luck! Manage risk! TR
    • IF
      Ian F.
      7 July 2020 @ 18:02
      Here's a tip... anyone who self-identifies as a macro manager will never recommend equities under any circumstance even when equities are the superior trade to express their view. If you are a dollar bull it is inconceivable to not also be an equity bull... where do you think that foreign capital is going to park, esp with rates at zero? IMO - Egos get involved as macro believes they are the smartest investors (not just Raoul BTW)... equities = layman's investment. Why would bonds be the best trade since Volker when the SPY chart has also be up and to the right...?
  • IF
    Ian F.
    7 July 2020 @ 17:51
    Why would Norway sell USD assets when it can fund at zero? It has no choice but to hold USD assets. Fed - An issuer of a currency doesn't need to fund itself via reserves held as deposit. There is no possibility of insolvency.
  • AR
    Andrew R.
    7 July 2020 @ 02:46
    Best interview I have seen yet. Mainly because as a layman I was able to understand practically the human behaviors that made up the difference of opinion. Especially on the Norway and USD topic. Amazing back and fourth. Please more contrary discussions as they are such an amazing learning opportunity
    • IW
      Ian W.
      7 July 2020 @ 06:08
      Yes! Fantastic hearing a two sided discussion here. Amazing interview.
  • TG
    Thomas G.
    7 July 2020 @ 01:58
    Hey Real Vision, this was a great interview. It would be great to have Ben come back and discuss emerging markets. I am from Brazil and know that he put on a trade regarding the brazilian real devaluation and banked massively on that trade, it would be great to understand his rationale behind that trade as well as his view of emerging markets post-covid. Thanks
  • CC
    Charles C.
    6 July 2020 @ 22:52
    Fantastic. Two very smart guys
  • TG
    Todd G.
    6 July 2020 @ 10:52
    Great interview, clearly a brilliant guy. Anyone notice that he sounds like Arthur.
  • DO
    DIOGO O.
    6 July 2020 @ 10:40
    Ben Melkman should come back to talk ONLY about E.M.s! LOL....AWESOME INTERVIEW
  • DM
    Daniel M.
    6 July 2020 @ 03:33
    This guy is a gem. He should be a recurring interview.
    • DO
      DIOGO O.
      6 July 2020 @ 10:00
      Absolutely, amazing thoughts!
  • JH
    Joel H.
    6 July 2020 @ 03:23
    awesome interview ... its really a pleasure to watch someone whos thought so deeply about every detail of the macro. thanks of the the content.
  • JL
    James L.
    4 July 2020 @ 01:55
    Ben is a Big thinker! I enjoyed your exchange on the USD. I really like his idea to go long the Krone against others.
    • MD
      Mike D.
      5 July 2020 @ 23:23
      For a currency FX newbie, is there a straightforward way to be long Krone (or advice on how to learn how to do this?)
  • GP
    Geoff P.
    3 July 2020 @ 11:31
    Just remember, an options trade at 10 to 1 is only 10 to 1 if it hits on the first try. On the second try that same 10 to 1 trade is now 4.5 to 1. A proper risk / reward structure is probability times magnitude, not just magnitude. On the third try, assuming you can still find a 10 to 1 trade it's now below 3 to 1. On the 5th try it's almost even money.
    • RP
      Raoul P. | Founder
      3 July 2020 @ 13:45
      100%. timing makes options tricky
    • AC
      Aaruran C.
      3 July 2020 @ 15:59
      this definitely is more of a problem about managing decay than the position itself i think. You can equally express the same viewpoint by getting short optionality that goes to 0 if your thesis works out i.e. you collect the premium, While you're only going to get that unbounded convexity to the upside from calls, a blend of put spreads and calls where you dynamically manage the theta effectively can give you that 10-bagger profile without so much bleeding.
    • MD
      Matt D.
      3 July 2020 @ 22:42
      Hi Geoff, Good point. May I ask if you are differentiating between the trade and the "investment" or overall outcome. If I understand you, you are saying that the first trade (10:1 leverage) may expire worthless, so you lose the initial margin (lets say $1). Then you try again, with the same margin, same leverage - this trade overall (or "investment) would be risking $2 to only make $9 all up, or your 4.5:1. For a third attempt - $3:$7 and then as you say the fifth attempt even money. Appreciate your comment pointing this out. Cheers.
    • MD
      Matt D.
      3 July 2020 @ 22:49
      Nuts - $3 : $8 sorry. Just like with Twitter - random errors just seem to creep into every comment.
    • MD
      Matt D.
      5 July 2020 @ 22:04
      Excellent - two down thumbs meaning? My question in not allowed or how I've interpreted Geoff is incorrect. Curious?
  • CJ
    Christopher J.
    5 July 2020 @ 17:38
    summary from very much a retail investor - gold, emerging market equities and NOK:other european us currencies
  • IS
    Ionel S.
    5 July 2020 @ 12:58
    Ok so here we are : EURUSD at 1.60 is the biggest nonsense ever! This guy didn’t know that low rates and a strong currency is what happen in Japan after 1990! Where is japan now!? For some one bullish Europe this is not a bullish scenario at all! This is deflation and no growth and this is a very risky scenario for the euro! This is the end game for euro zone!!! For the survival of the euro and the euro zone, a weak currency that spurs growth is vital! The consensus belief that a strong euro is bullish Europe is dead wrong!!!
    • IS
      Ionel S.
      5 July 2020 @ 13:03
      Europe is very hétérogène: the south has ton of debts and needs lower rates, the north has lower debt but weak domestic demand and exports a lot so they need a weak currency. Put higher rates and a strong euro in the system! This blows up like TNT!
  • JD
    Jesse D.
    5 July 2020 @ 12:26
    Greats stuff, thank you both!
  • lf
    liam f.
    5 July 2020 @ 07:00
    Quality guest who pushes Raoul on his views. I think the overall back and forth is great. Back to watch for a 2nd time.
  • DB
    Daniel B.
    5 July 2020 @ 06:02
    Onshoring / regionalisation inflation will largely be offset by automation IMO. I'm bullish for future productivity.
  • PJ
    Peter J.
    4 July 2020 @ 13:03
    This is one of the best interviews / discussions on RVTV to date and I’ve watched a lot of them
    • JN
      John N.
      5 July 2020 @ 02:42
      yeah I agree. I have had the same view as ben about the the eur/usd for a while and raoul having the opposite view with such high conviction makes me second guess it. this conversation made that view much clearer because I got to see the two views side by side and decide which view has the edge. I think converstation will give me the conviction to really pull off the short usd trade that I think is setting up right now.
  • GB
    Griffin B.
    5 July 2020 @ 01:40
    Great talk, thanks guys.
  • GB
    Griffin B.
    5 July 2020 @ 00:39
    Or they could write up gold on the asset side of their BS...could also have impact of sparking some inflation
  • JN
    John N.
    5 July 2020 @ 00:01
    the usd near term bull or bear disagreement came down to this: will the holders of usd assets sell their assets when the dollar has moves up? this is a question of the outlook these countries have on the usd. then they talked about this obvious collapse in the dollar in the future. this I think is the answer to that question. the countries holding the usd likely see that same thing coming so when there is strength in the usd they get a chance to unwind there overweight position in usd for a gain. not sure why Raoul thinks that the central banks of the world dont see the same thing everyone else sees. the usd is in trouble longer term everyone can see it. so if there is more global usd assets than usd debt (world is net long usd... brilliant way to put it) why wouldnt that global position shift. it isnt going to shift from increased debt but it can from decreased usd asset holdings. just look at the charts, there is a clear bearish dollar signal. the answer to this debate boils down to global confidence in the dollar longer term. the world I am living in has a very bearish view of the dollar longer term so therefore it is also flat to negative short term.
  • JN
    John N.
    4 July 2020 @ 23:21
    that nok information was great. I wish I had of known that when the oil price was over sold. could have made a beautiful trade on what was mentioned plus the over sold oil. but still great to know. also the fact that the treasury has all that money set aside is very important for the usd going forward. dxy has been weak even though the treasury has been holding back all of that liquidity what is going to happen when they put it into the system which is most definitely going to happen before the election. the fed is not likely to stop their accommodation. so there will be a double increase in liquidity. seems to be shaping up for the dollar bear scenerio. only thing that would change that is some sort of liquidity shock. I think Ben has the right side here. a short usdnok trade and then just bail if there is some type of global shock to the system or a negative to the price in oil.
  • DG
    Dave G.
    4 July 2020 @ 13:29
    I have to say this was a great exchange but it left me with a ton of questions. 1. Wouldn't the dems want to tank the market going into the election? a) give them a lower equity base to build from b) cause Trump to possible pullout of the election or if he does go forward remove the stock market credit argument. That being said Ben indicates that the treasury has all this money to spend, so will they spend it and in what ways with what effects? 2. Covid second wave causing more massive economic disruption in the USA which will effect all of the world going forward. How can a wave of liquidity stop a solvency issue from lack of real demand, pushing on a string scenario? Does the deep state want Trump in or Biden or do they even care? The Fed is acting like they want Trump back in or is it they know doing nothing the whole house of cards implodes on itself? Going forward I cannot see how inflation doesn't end the Fed with higher interest rates. So many questions lol.
    • M
      Matthew .
      4 July 2020 @ 21:16
      1. Yes, I think the dems would prefer the stock market tank (or at least not rally) into November. However, Dems have to weigh their desire for that outcome against their will to A) support workers without B) unjustly enriching corporations. It's too late to strike a balance between A&B because corps have already benefitted significantly from policy actions (Fed bond buying, tax cuts, selective PPP and bailouts). Dems may extract token concessions from corporate interests when the next stimulus bill passes... but R's and D's MUST both be on the side of the worker. And this means more stimulus. More on this in a second. Meanwhile, Ben makes a very important point about income in the US. Pre-COVID, the average income per household was around $66k per year... $26k per individual. At present, unemployed are collecting $3-400 per week plus an additional $600 per week = say $4k per month, or $48k per year.... WOW. The median worker is 2x better off than they were in February 2020. $600 per week is supposed to expire in July (according to the interview), but if you look at 2008 the Government extended unemployment benefits to 73 WEEKS!! So these super-sized benefits may go on for another YEAR... and almost certainly through November. Look at Charles Scwhwab, Robinhood, Interactive Broker account openings... people are dumping this excess income into the stock market, into their homes, etc, etc. Also, Ben's discussion about the Treasury General Account balance of $1.6T was staggering. I've never looked at the chart, but here it is.... https://fred.stlouisfed.org/series/WTREGEN. The Treasury has an extra $1.6T to spend which equates to what could potentially be $5,000 per person in the US. If you believe Mnuchin wants to act in the best political interests of the administration, then expect that $5k in additional stimulus to rain down before November. 2. Who do the shutdowns hurt? Mainstreet. Not corps or Wall Street. Take a look at Bill Ackman's interview with David Rubenstein for a succinct breakdown of why the shutdowns cause the stock market to go up....I completely share his view. If main street was represented by an index, it would be down 70, 80%. But while main street closes, huge corporations pick up the lost business (Amazon, FedEx, Home Depot, McDonalds.... I'm using hackneyed examples but the list goes on). Corporations (in the S&P) are benefitting in the LONG RUN. Corps. may have a quarter or two of disrupted business, but their position is strengthening long term. Stock price = discount of future cash flows. Most of the value of a stock is derived from the terminal / out years. 1 year of disruption with enhanced profitability years 2 - infinity means net/net, value goes up. Layer that in with declining interest rates (lower discount rate)... and value goes up even more. So ya, imho... combination of extra liquidity, workers being better off than they were pre virus, and companies improved prospects becoming increasingly reflected in the markets means even a second wave won't stop the recovery trade.... As for inflation.... if you find any inflation in Japan or Europe, which are 10-20 years ahead of us in terms of rates and stimulus... let me know. haha ¯\_(ツ)_/¯ Thanks for reading...
  • DG
    Daniel G.
    4 July 2020 @ 21:12
    Brilliant conversation. It was like looking chess played at championship level. Thank you RV!
  • HR
    Humberto R.
    4 July 2020 @ 19:22
    What a wonderful interview! Where else would I, a simple guy raising a family learning to trade/invest a little better with each passing day, be able to listen to two giants go back and forth discussing macro AND practical trades to take advantage of their views? Just amazing.
  • AT
    ALAN T.
    4 July 2020 @ 18:22
    fucking awesome.
  • CR
    Craig R.
    3 July 2020 @ 18:43
    Does anyone have a link for the issuance projections Ben talks about?
    • AG
      Amol G.
      4 July 2020 @ 16:23
      https://www.treasury.gov/resource-center/data-chart-center/quarterly-refunding/Documents/auctions.pdf I think he was talking about this..
  • DS
    David S.
    3 July 2020 @ 20:07
    I'll add to Craig's question below.... Does anyone have a link for the issuance projections Ben talks about?
    • AG
      Amol G.
      4 July 2020 @ 16:22
      https://www.treasury.gov/resource-center/data-chart-center/quarterly-refunding/Documents/auctions.pdf Wonder if this was what he was talking about
  • GM
    Guillermo M.
    4 July 2020 @ 15:01
    Fantastic interview! Please bring Ben back to discuss EM and commodities.
  • MJ
    Marc J.
    4 July 2020 @ 13:47
    Brilliant.
  • IP
    IDA P.
    4 July 2020 @ 12:39
    What we need is data in a graphic form that puts together Fed purchases and treasury issuance, I'm pretty sure looking at the St Louis fed data (FRED site) that FED purchases are down since a month ago, and issuance is up, so there is a bump in liquidity, but I'm not sure, if someone has a link to the weekly issuance I think we would all appreciate
  • NB
    Nick B.
    4 July 2020 @ 12:26
    Subscribers definitely need to hear is views on EM please. Perhaps a 30mins slot on its own? Thank you for everything you do RV.
  • IP
    IDA P.
    4 July 2020 @ 12:19
    I love this guy literally , I'm in love, I watched the interview twice....
  • IP
    IDA P.
    4 July 2020 @ 12:00
    so really the FED has drawn out liquidity from the market, so why does it go up thanks to "FED liquidity"? Seems like it is the belief that there will be FED liquidity soon
  • JC
    John C.
    4 July 2020 @ 06:53
    Awesome conversation -- riveting! Re COVID, few points 1) US testing massively now ,~600,000 / day (vs France c. 20,00000 per day from what I read) 2) virus has mutated into a less virulent strain + 3) cases tend to be younger due to protests and youth going to bars / clubs 4) thus, deaths continue to drop 5) US shutting things back down a bit and more people wearing masks in social proximity to others. So need to wait and see if we get a death rate spike in the next 5-7 days which will be key.
    • DS
      David S.
      4 July 2020 @ 09:17
      Dr. Gotten believes already over 100,000 per day with better testing The only game in town is herd immunity without vaccine. This means over 70% need to be infected. The big caveat is how long immunity will last. Still unknown. DLS
  • EO
    Elena O.
    4 July 2020 @ 08:19
    Norwegian scenario played out with Australia - AUD - this time as people were allowed to draw upon Superannuation funds during the crisis.
  • EO
    Elena O.
    4 July 2020 @ 06:15
    What about SGD and SG reserves? Both Temasek and GIC own a lot of foreign assets too.
  • JA
    Jonathan A.
    4 July 2020 @ 05:50
    Scenario for DEFLATION is Biden winning + GOP keeping Senate & probably winning the House. Low voter turnout will benefit Biden, but it will be because older GOP voters are pissed at Trump, but they still vote GOP for other seats. Then McConnell forces through austerity at the Federal level, broke Democratic states like NJ / CA / IL / maybe NY all really get hit very hard with contracting economies. Scenario for INFLATION is Trump winning & Dems probably winning Senate & House. Even if GOP holds Senate, Trump will be far more likely to work with populists on the Democrat side, he won't be hesitant to spend for healthcare / infrastructure / tax incentives to relocate supply chain jobs domestically. GOP too will be under tremendous pressure to spend if we're in a depression. Schumer probably will be a lot more willing to work with Trump to accelerate spending programs if he's Senate leader because AOC might primary him in 2022.
  • DS
    David S.
    4 July 2020 @ 01:00
    I am planning on gold in $US terms to go up with inflation and deflation as discussed. The third possibility is the US has nominal inflation and/or deflation for a long time. This is like Japan's attenuated government induced GDP except in the US we have massive corporate and private debt. Slow growth and mild inflation/deflation may go on ad nauseam with infrastructure and the Fed trying to offset deflation. The velocity of money will continue to decline as profitable invest will continue to be a problem to find. I will keep my gold, but an equity position in the new economy stocks with profits and cash flow may outperform gold. Net, net it may take a while for the major deflation and then inflation to be triggered. Just an idea. DLS
    • AI
      Andras I.
      4 July 2020 @ 02:57
      (I don't want to say this, but...) Bitcoin. Losing faith in the system, growing acceptance, its increasing value as collateral/value store in the crypto world, further decrease of supply (if we're talking about your point of a decade of sideways movement) are possible drivers that differentiate it from gold...and it's more cointegrated with the equity market, so you get some movement at least if equities outperform. Small allocation on top of larger gold holding - a yield enhanced bond replacement with no cap. Stagflation is around the corner - maybe not visible in CPI yet but in commodities
    • DS
      David S.
      4 July 2020 @ 05:22
      Andras I. - Thanks for the comment.. It may just be slow growth and a little inflation/deflation. My first guess is in line with Mr. Pal. We will just have to see as time goes on. DLS
  • GP
    Gregory P.
    4 July 2020 @ 04:07
    Love this guy. Looks like Captain Jack Sparrow with the Incredible market wits needed navigate very uncertain waters. Very intelligent and deep thinker. A high quality and valuable interview. Keep it coming.
  • RA
    Rick A.
    3 July 2020 @ 21:12
    Certainly one of the best interviews yet. It is great to see two experts with differing perspectives be able to communicate respectfully and informatively in a way that respects both their own views AND those of RV viewers.
    • BG
      Brian G.
      4 July 2020 @ 03:35
      well said!
  • MC
    Mark C.
    4 July 2020 @ 02:11
    What happens if nothing changes much between EUR,$, and Yen and we go on for years more? Thanks...and please have him back soon. Like in 3 or 4 months. Want to see the update and finish the convo.
  • AB
    Alastair B.
    3 July 2020 @ 14:53
    Thanks for this Ben, Raoul. The Bullish Euro thesis was fascinating. I made a note to wait a year and come back to this.
    • jR
      james R.
      4 July 2020 @ 01:14
      Yep, I think this interview is yet another example of wishful thinking Euro’s planning for (read hoping for) the US’s demise? Good Luck Tuco
  • BA
    Bruce A.
    4 July 2020 @ 00:30
    Gold is global purchasing power. Amen.
  • SJ
    Sean J.
    3 July 2020 @ 22:59
    Fascinating & stimulative exchange. All that was missing were high ball glasses of Kentucky Bourbon. Stand by....🥃chin chin🥃
  • SS
    S S.
    3 July 2020 @ 17:30
    Buy Gold, Bitcoin. 400 SPY calls and Eurodollar options. Sleep like a baby every night whilst the Dollar Bulls/Bears sweat, toss and turn, cry for mommy when things don't go their way.
    • JM
      Jake M.
      3 July 2020 @ 19:46
      400 spy on what expiry?
    • GF
      Gordon F.
      3 July 2020 @ 22:57
      Jake, re the SPY calls, I would guess December expiry, as the liquidity deluge would be released to influence the election in November, and most of the effects should be felt by December. Maybe January just in case.
  • DR
    Derrick R.
    3 July 2020 @ 22:47
    Wow. Exceptional exchange of macro analyses..
  • SN
    SAT N.
    3 July 2020 @ 20:59
    Felt like the conversation was abruptly cut short. I'm sure both Ben and Raoul would have wanted to talk about EM, and the audience would have liked to hear it too. This is where RV could take a leaf out of Joe Rogan's formula. Let the conversation flow and come to its natural conclusion.
    • SN
      SAT N.
      3 July 2020 @ 21:04
      I am sure a lot of man-hours goes into bringing two people together, and producing the interview. Reserving a few extra minutes in the schedule can be so much more beneficial to everyone. Just a thought. That said, really well done interview. Top notch.
  • SN
    SAT N.
    3 July 2020 @ 17:12
    I understand Democrats like to spend. But, this is election year. They must surely realize that another stimulus is going to help Trump win. What are the odds that they will get another stimulus through the Congress before the election? Won't they want the market to tank and blame that on Trump? One possibility is Democrats may ask for things to be in the stimulus that are too hard for Republicans to approve -- green new deal, cuts to military, etc. Thereby creating a logjam.
    • DS
      David S.
      3 July 2020 @ 18:37
      Both parties love to spend or reduce taxes, same effect on government revenues. DLS
    • JA
      John A.
      3 July 2020 @ 20:55
      Yea, I think this idea that everyone is going to fall in line politically, especially if Trump wins, is really not discounting the fact that the politics right now may be set up in a way that it is beneficial to let the house of cards collapse while Trump is holding the bag. Just look at how much the Republicans weaponized the Obama administration over their spending - even though it was a problem that dated back to the Bush presidency. I think people are counting too much on people doing the right thing and not trying to utilize this crisis to their advantage.
  • MS
    Matthew S.
    3 July 2020 @ 20:47
    Good chat. Raoul dropped an F-bomb. Maybe it IS time to go long the $USD...
  • ND
    Nitul D.
    3 July 2020 @ 20:20
    On the net international investment position held by non-US entities, there are a couple of issues I see 1. The net assets bought by non-US entities are marked to market right, in a global flight to safety, these assets will get marked down especially the risky tranche of assets get hit drastically. 2. The classification of assets will be important - what's liquid (like treasury bills) vs. illiquid (private equity, HY credit, etc) . Not all of those assets would be in liquid/cash like instruments.
  • DS
    David S.
    3 July 2020 @ 20:04
    Fascinating macro discussion. Loved the end talking about the political implications of the USD and EURO and not just economics. Ty Raoul and Ben!
  • JH
    John H.
    3 July 2020 @ 19:31
    Interviews w/ Ben is why I subscribe. Excellent.
  • OA
    Olivier A.
    3 July 2020 @ 19:23
    Absolutely brilliant. Fantastic interview.
  • jg
    jesse g.
    3 July 2020 @ 19:14
    Really incredible! thank you, Raoul and Ben!
  • DS
    David S.
    3 July 2020 @ 18:46
    As mentioned in other RVTV presentations, a zero-coupon bond and cash is a distinction without a difference. There is a major difference in Japan and the US, however. The corporations and citizens of Japan have solid balance sheets. Cancelling the Japanese government's loans on the BOJ balance sheet might work as a clearing process. In the US with the government, corporations and citizens only having debt, the compensating balances are a real problem. Either way it is just a shell game between CBs and governments. DLS
  • CR
    Colt R.
    3 July 2020 @ 18:43
    Wow! This content is absolutely fantastic. Love the different view points being explained!
  • tW
    tgwtom W.
    3 July 2020 @ 18:38
    What a beautiful high level discussion.
  • NA
    N A.
    3 July 2020 @ 17:35
    Brillant, throughly enjoyed the different views, and we definetely in for a very interesting time into US elections
  • MD
    Matthew D.
    3 July 2020 @ 17:23
    Wow! Please make Ben a regular contributor as that was a real powerhouse of a conversation. I now need to go away and have a think about all of that. Brilliant.
  • WA
    Wissam A.
    3 July 2020 @ 08:16
    This was quite a stimulating discussion from both of you. The question I have can all these governments implement their fiscal policies without a vaccine? I am not seeing a discussion on how governments can revive economies without a vaccine. How can they implement all these infrastructure projects if workers are still required to implement social distancing and the wearing of a mask? I can't imagine how workers can build a bridge or layout 5G networks without being close together not to mention wearing that mask for 8 hours can be quite suffocating. I haven't seen any discussion from any macro player how governments can restore economies without a vaccine. The way I see it no vaccine no recovery. I don't see how these tech companies can survive when there are industries who require employers to work outside or serve people getting laid off. Amazon is not on an island by itself. Raoul, perhaps you can interview a macro thinker on how this plays out without a vaccine. I think there is a wrong assumption in my opinion that a vaccine is coming. Am I missing something here about the necessity of a vaccine and the implementation of fiscal policy and economic well being?
    • CB
      Clifford B.
      3 July 2020 @ 17:04
      Valid queries. At the end of it all life does go on so the main discussion is how long will it take for this to be accepted? A vaccine could be available tomorrow or not at all. I'd venture to say there may be a split. The younger population goes on with a fk it mentality and the older heads continue quarantine as long as they can stomach it. Economically with bond yields where they are, equities seem to be where it's at despite how illogical it may seem from an earnings and employment standpoint. Don't see anyone but EM being able to "grow." Never forget the market will stay irrational longer than you can stay solvent.
  • PU
    Peter U.
    3 July 2020 @ 16:36
    we should bring Ben back soon to discuss emerging markets!
  • PU
    Peter U.
    3 July 2020 @ 16:35
    excellent!
  • ly
    lena y.
    3 July 2020 @ 15:04
    Only Real Vision provides such deep debates of issues! Brilliant! Such brilliant! Challenge us to sort out our own belief!
  • EL
    EDWARD L.
    3 July 2020 @ 13:38
    Please get Ben on to cover emerging markets soon. Great video
    • AB
      Alastair B.
      3 July 2020 @ 14:44
      Seconded
  • ES
    Edward S.
    3 July 2020 @ 14:40
    Raoul, has this chat changed your mind on the dollar outlook? Still think there will be the spike in dollar strength before it bombs? Interested to hear your thoughts.
  • PJ
    Peter J.
    3 July 2020 @ 14:25
    Brilliant!!!! Love a good intellectual debate with apposing views......this would be a great regular monthly discussion as time reveals the outcome.
  • PV
    Peter V.
    3 July 2020 @ 10:51
    A lot of opinion and very little data to back it.
    • PU
      Peter U.
      3 July 2020 @ 13:53
      Plenty of data to back up the opinions. Clearly you are new to this.
  • YD
    Yusuf D.
    3 July 2020 @ 13:48
    Amazing interview. Really enjoyed the arguments for and against the dollar in the short term. Thank Raoul and Ben !!!!! Please get Ben back soon !!!!!
  • YD
    Yusuf D.
    3 July 2020 @ 13:48
    Amazing interview. Really enjoyed the arguments for and against the dollar in the short term. Thank Raoul and Ben !!!!! Please get Ben back soon !!!!!
  • JV
    Jan V.
    3 July 2020 @ 13:32
    Concerning the debt jubilee. He argues central banks can't have negative equity because they would be insolvent. Steve keen argues it does't matter because central banks can print money. So basically they can't be insolvent. The latter would still lead to a currency crisis imo.
  • AV
    Alexander V.
    3 July 2020 @ 12:10
    Melkman is brilliant.
  • SW
    Scott W.
    3 July 2020 @ 12:04
    Always interesting to hear folks say there was austerity in the last decade. European governments talked about it but never really got ratios lower. The US household sector deleveraged ever so slightly but was still virtually at all time highs and the US government debt doubled from 10 to 20T. Total debt is at all time highs in the developed world which is why growth, inflation, and interest rates are at all time lows. McKinsey's 2010 study on overindebted economies concludes that austerity is the only way out but nobody is willing to do that so we're likely to get T.S. Eliot's prediction, "The world ends with a whimper, not a bang"
  • AB
    Ameet B.
    3 July 2020 @ 11:11
    Just excellent.
  • MC
    Michael C.
    3 July 2020 @ 10:44
    Thats the most compelling argument on the USD bear case I have heard so far. It ended way too early. More please! So the elephent in the room over the next 3 months is the $1.6trn in the TGA. Trumps slush fund to trash the USD, jack up domestic inflation and equity prices and boost nominal gdp in the lead up to the election. Nice ! But because there is no growth a weak USD produces stagflation in the US. The American people see their cost of living spike. They become even more angry. Meanwhile, the weak USD creates disinflation and deeper recession in countries that run trade surpluses since they lack the boost to their terms of trade to offset the weaker USD (ie local currency strength). This provokes a policy response from the likes of the RBA, BoJ and ECB. Then we are back where we started but everyone is just more angry. Europe runs a trade and current account surplus. Does Europe want a much stronger Euro? Do they still run a surplus at 1.50? Are they politically equiped to handle a very strong Euro? Lets not forget what a gift it would be to the Chinese when Trump trashes the USD. CNY would go back under 7. They would love that. This is a strategy of shrinking into greatness.
  • GP
    Geoff P.
    3 July 2020 @ 10:44
    I'm curious why you think the Fed would continue to pay interest on excess reserves if real rates go positive (ie inflation at 3.5 and FF at 5 in your example). They only need to ask the treasury for a trillion every year if they continue to pay IOER. Stop paying IOER and let the FF market be reborn.
  • DF
    David F.
    3 July 2020 @ 10:42
    Brilliant, pertinent discussion. Magic
  • GP
    Geoff P.
    3 July 2020 @ 10:41
    And another name for a zero coupon perpetual is currency. That converts QE to true money printing.
  • GL
    G L.
    3 July 2020 @ 09:45
    Good to have a slightly different take on the inflation debate - thanks for the insight. Great interview.
  • Jv
    Jasper v.
    3 July 2020 @ 09:41
    Ben Melkman should have a discussion with Jeff Booth
  • IP
    IDA P.
    3 July 2020 @ 09:22
    This was really excellent! thank you!!
  • Dv
    Daniel v.
    3 July 2020 @ 08:48
    I loved this interview. Great views on markets, FX, bonds. And his Euro thesis sounds possible. I'm quite convinced the USD will go lower in the long term. The question is now, will it spike one more time before we go down (Raoul's thesis). So in the meantime, I think I will let others fight that battle and keep my money in Gold, miners and BTC.
  • MD
    Matt D.
    3 July 2020 @ 07:35
    Thanks Raoul and Ben. A good discussion in a clear manner. The Krone point and Raoul's comment about Japanese repatriation was interesting and new, and the options to get some leverage for negative rates. Only 10-times leverage? A bit to think about - I would wonder if there must be something that is "the strongest" factor - politics, demographics, solvency, debt ?? The digital space wasn't even (well the Chinese digital currency by Raoul) considered just to add another unknown into the mix. Enjoyed listening and learning. Thanks.