I am sympathetic to your argument. But what if: 1. The Fed starts buying up the entire stock market, say 5% at a time? ETFs then individual shares? Wouldn't that eventually cause inflation? 2. The Trump Administration did more tax cuts, which brought the deficit to $2 trillion and then $3 trillion a year? 3. The Administration put a blanket 25% tariff on ALL Chinese imports? Methinks that there are no lengths that desperate politicians won't go to to increase their power and to avoid deflation.

1. Buying stocks is not inflationary. Japan has been doing this with no success. Buying stocks is a response to the failure of the inflation-generating mechanism. 2. Deficit financed tax cuts are not inflationary. 3. If you use the term "inflation" to cover *any* rise in price, then you can get inflation. If you use the original definition of inflation as a rise in prices due to an expansion of the money supply, then no. The power that be want to avoid deflation, but they don't realize they broke the inflation-generating mechanism in our economy. Hence why we will see near 0% 10-year Treasury yields and some form of helicopter money, which will only temporarily be inflationary.

@ Peter. If the fed do buy equities it wont cause inflation. Will cause stagflation and a zombie state. Just look at Japan for evidence. USA has a completely different mindset than Europe/Japan so the fed will never do this. Inflation need to come from people within the economy spending more, or from a collapse in confidence in the government which causes hyperinflation. Neither is happening now or within the next few years

Nick don't dispute your experience and judgement, but that positioning data does seem to be extreme given the last 25 years data. Do you not believe these extreme positions are very often indicative over overbought / oversold positions? Raoul and Julian put a lot of stock in these factors, presumably you also disagree with them on this topic?

Will, as I have commented before, the COT data is split out since 2009. Always remember that COT data relates to FUTURES POSITIONS ONLY. In futures, by definition, for every short position there is a long position. The only short position is in large leveraged funds. The other components are at record longs, as they must be, since for every short position there is an equal long position. Now 3 points: If I was running a huge risk parity book, when would I hedge a part of it? When I no longer thought that bond yields will continue to fall. But does that make me short bonds? No. It makes me flatter and overweight the equity part. If you look at a chart of SPX/TLT all will be clear to you. I might need to lift some hedges at some stage, but I am not necessarily short. And if I wanted to do a large carry trade using Euros given to me cheap by the ECB, when would I do it? Right now, when the spread between the yields is at its widest in decades. That is why the leveraged funds are short futures. Finally, has overall debt increased since 2009 or decreased? It has increased massively. So, someone owns it and someone needs to hedge it. It is perfectly normal that as bond issuance and holdings increase, so will the hedges against it. Do we know for certain which combination of these 3 is at play? No. Probably a bit of all 3 but mostly the third, in my opinion. Now, it is perfectly OK to say that people will lift hedges as inflation or growth moderate and they realize they need more long term bond exposure. What is nonsense is to say that the market will move in any direction because one segment of the market is hedged. Against cash positions we cannot know what they are.

Good. A definite candidate for an RV interview. Problem is, the ppl who best know their stuff are too busy, so at most they occasionally do tweets or posts.

Agreed with Nick. From a trade signal perspective, COT positioning is a very easy to digest, but superficial form of analysis especially when it comes to bonds. Its an easy narrative and "story" to assign to a trade. The fact that Raoul and Julian put so much stock into this narrative is a function of them needing to appeal to masses

I don't understand what you are saying. Leveraged bond positions in risk parity portfolios were not invented a few mths ago. And the fact they are worried about their long bond positions makes them less bullish which is the same damn thing as more bearish. And even Vs open interest the leveraged shorts are at extremes.

Well, Robert, in that case let me make it even more crystal clear. The whole concept of looking at COT is predicated upon being able to "squeeze" one side out of its position. No point in even looking at it else, would you agree? And certainly that seems to be the argument made in the video. Now, if I, as a fund manager, have decided (for whatever reason) to change my leveraged allocation inside a risk parity portfolio by underweighing bond duration from my previous allocation (whatever that might have been), I am NOT squeezable. The market can go to 130'00 or 110'00, it makes no difference to the position I want to have. The only thing that changes is my relative performance. Always bear in mind that if I have underweighted bonds and they go up in price, but the other side, equities, goes up MORE, I am actually right and making more money. That is why I said look at a chart of SPX/TLT. Same if I have a carry position. And same if I have a large cash position to hedge. In all 3 cases, the potential for squeezing these people out of positions, making them cover because they have reached some mythical "stop loss" level, without a fundamental driver, is non-existent. Now, the situation might be reversed if you look at the asset manager category within the COT. They have a benchmark to hit. If they were underweight, they are squeezable, because they will underperform the benchmark, which they have to hit. But they are at record longs. So, the better argument looking at COT could be that the squeezable side are the people who are long. But I not making that argument, because I don't know their cash weightings. I am just explaining that bond COT is nowhere near as simple as looking at Orange Juice COT. Far too many moving parts to make a persuasive argument that record short positions in one category is a clear sign of anything. And again, this does not make the trade suggestion any the less valid. What is not valid is saying that it will work simply because of the current COT.