hi Julian and Raoul, if you want to be long 'real assets' like gold, any reason for you to not be long properties (real estate) and not say it? with interest rates going down it only looks that real estate may be a good place to invest (though yes prices are over stretched in most places globally). still falling rates means there is no catalyst to push real estate down, and people with cash will probably want to invest in real estate? i am based in Hong Kong. Thanks

Please forgive this ignorant question particularly in this crowd but why do rates go to zero if the dollar breaks 98 or shows strength. I have listened to this several times and cant make that final connection.

so no one knows ... yet ... what is going to happen ..... does that sound about right ?

I think when this is all said and done, all of Raoul, Julian, Luke Gromen, and Brent Johnson are right, maybe all within 6 months. Start by remembering the US is a ponzi scheme that requires asset prices to constantly go up (Julian w/o the obvious ponzi scheme part). The fed will cut in July because it has to (Gromen), but they won't cut enough and it's already too late (Raoul). The dollar rips upwards (Brent and Raoul), earnings are terrible for Q2 and Q3, risk assets get hammered (Raoul). At some point this year, the fed brings out a bazooka (QE4 / NIRP / something we don't even know about) - kills the dollar, reflates this thing for another couple of years (Julian / Gromen). Gold / Bitcoin rip (Everyone). Only thing that gets in the way of the reflation trade is some of these BBB's getting downgraded and initiating the doom loop (Raoul).

Julian if you look at eurodollar positioning or gold positioning alone they are extremely long becoming a dangerous consensus bet. With a contrarian mind set and with last week's nfp report wouldn't it be a smart risk/reward to fade what everyone is betting on right here right now and thats an uber dovish fed? If im reading this correctly it seems like everyone is so sure the fed is going to cut rates and eventually launch QE but I see alpha lurking in taking the opposite side that bet, which would be a more hawkish fed on the margin = lower gold= higher dollar and eventually lower equities. Under this scenario if it plays out could I then agree the fed will be more inclined to act, but given where markets are today its a huge leap to think they will cut 100bp without "something happening" Thoughts?

Guys where do you think the aud / usd goes from here?

Would you gents endorse the view from a recent RV talk that NLY is a good trade on the curve steepening you both expect? If not, can you offer better? Buying SHY without leverage does not offer retail investors much juice.

Julian and Raul, While everyone, all things being equal, likes it when you are on the same page; hearing your different perspectives argued in a friendly manner is extremely helpful for me to see signals going forward and put them in perspective of your contrasting views.

Bravo. day one subscriber here and A+ discussions. Carry on Gents!

Powell is going to have to channel Yellen ‘16 and include global macro malaise into his policy statements and cut accordingly. Everyone in central bank land (well almost everyone) wants a weaker dollar. This is out of step with recent US data and will be hard to explain, but I expect him to do it. Bigger picture, rate cuts without a weaker dollar will fail. Rate cuts AND a weaker will allow them to fail better. The dollar has been uncharacteristically strong during recent US economic outperformance, and this precludes another breakout rally IMO. Rates are only part of the equation. Deficits and debt ceiling dynamics are dollar negative given the assumption that the rate cutting cycle will fall short of current market expectations.

Personally I find it annoying when Raoul and Julian disagree. They're both way smarter than me, so if they can't decide who is right, how am I supposed to? I missed Raoul's early bond call because Julian was really not so sure - I actually made a comment here to that effect. If I had taken all of Raoul's trades, I would have paid my MI subscription for about 100 years by now.

Stocks are going to absolutely bloody shank lol...Enjoyed the debate

I think some people miss the point of these little discussions. My take is that this is an informal look at a conversation between Raoul and Julian. Kind of like we are a fly on the wall. I have no objections to how this is presented and consider myself fortunate to be able to view it in all of its' rawness. Keep cursing and keep interrupting each other. Carry on Gents, I love it.

Any more view on silver ? Do you think it will go up like gold, or is the price action more disconnected and catches up later. Do you think it could go to 50$ silver at 1900/2000$ gold Thanks for any guidance.

Good discussion. I have no problem with Raoul and Julian disagreeing as I think it just shows the polarization that currently exists on where markets, the dollar, bonds are heading. However at some point I am hoping they will be aligned on clear profit making opportunities. Like the new positions tracking!

Glad to see/hear the format updates regarding trades/positions. Very helpful. Thanks!

Awesome talk guys. While I see Raoul's thinking laid out in his note a week back, would love to hear/read more about Julian's base case of long end treasuries eventually getting to 4%.

Julian - You expressed concern on the rates cuts in July on the amount of the cuts. How did the July 5 Jobs report affect your view on the Fed Cuts in July?

I think the content is interesting but could be significantly improved by: a) No swearing during these presentations - it's just unprofessional. Tell us what you think using more than 4 letter words b) Julian mustn't keep interrupting Raoul, and possibly needs to think more deeply about what he is going to say prior to the start of filming, and to state his views more clearly and succinctly, with a clear end point, to avoid meandering too much.

Great job, gents! This was one of your best talks. The comparison of your positions will be very helpful. A summary of what you both agree on in macro themes would be useful. Thank you both.

Maybe I am stupid compared to most of your followers, but if rates are going to zero, why are you out of TLT? Is that a short term call to take profits and look for better entry point or am I just totally confused? Love your work. Also, love the updated procedure to let us know what the recommendations are for buy/sell in much closer to real time.

Raoul, your theme that every baby boomer here in the US will not own growth stocks seems logical, but with no yields in the bond markets, and many don't have enough to retire on, wouldn't you think it's plausible that they allocate some to growth stocks? I through this out there, every baby boomer I know my 2 sisters included and my 3 70 to 80-year-old golf partners love the QQQ, in fact, I would say they are downright addicted to it. The crazy thing is when I talk about bonds they just roll their eyes at me and laugh. In fact one of my golf partners owns the TQQQ, he said it's 10% of his portfolio. I know this is a small sample size but people tend to do what has worked in the recent past and the last ten years this has worked, so I suspect it won't die very easy.

4 percent interest on 23 trillion =920b dollar of interest expense the but you are still going to grow GDP-Really

I think what a lot of this comes down to is a world awash in debt. There are two ways to deal with this; something akin to fiscal dominance à la Japan, or somehow inflation returns or is engineered and nominal rates can come up as real rates stay depressed. In either scenario savers eat shit, so I’m very uncomfortable owning longer dated issues and have almost entirely removed bonds in favor of gold and miners. Gold to me seems to be the best trade in the world going forward as it benefits in nearly all foreseeable situations barring the fed being able to normalize real rates and roll off the balance sheet, which I fundamentally believe they can’t. No one has the stomach for economic pain at preset and policymakers are hyper aware of the rise of populism since 2009, meaning another global economic crisis that leads to high unemployment will not be allowed. It isn’t some conspiracy theory, central banks globally have shown they will work in concert to maintain financial asset price stability. Unconventional monetary policy changed everything and if one controls the money supply and can buy up assets on the open market it seems quite obvious that one can control the price of assets in nominal terms. Please don’t misconstrue that to be me agreeing with the policies, it’s more of an observation about the reality we live in. Silver prices are also depressed, as Julian said, but it’s a much more high risk high reward trade. Gold will benefit whether the economy tanks and the last bastion of risk-free yield goes negative, or if inflation rears its head and the Fed’s hand is forced. Silver only outperforms in the latter case (I’m still heavily long PAAS). Either way you won’t see 2018 style hikes until the Fed sees persistent inflation above the 2% target, and even then I think you’ll see policy switch to symmetric targeting before rates head higher. On another note I’m on the fence about growth going forward given current valuations yet what Julian says fundamentally makes sense. If there’s little aggregate economic growth and a company can essentially borrow cheaply at the expense of savers to fund secular growth, they’ll likely outperform the broad market. The problem is, and I hate to use this phrase, a lot of the growth (in the US) seems to be priced in, and ALL of the money has appears to have fled value for growth and momentum. Take a look at Japan to see how painful these low rates have been for value. Some of these deep value funds like IVAL have more than 50% of their assets in Japan because these companies appear to be so cheap, and they very well may be. In the US value has underperformed growth by a staggering amount, and last the P/E differential between them was approaching 8 on a ttm basis. At the same time they appear fully valued on an absolute basis relative to historical standards. I’d argue a good trade going forward may be going long value companies (especially international) that carry significant debt on the balance sheet and are trading at low EV/EBIT multiples with strong cash flow. If inflation rears its head and the fed raises rates, value will almost assuredly outperform growth, and the companies with significant debt will benefit from inflation. If economic data remains weak or there is the hint of a crisis, central banks will pull out all the stops. Rates will plummet, balance sheet expansion will resume, and borrowers will be subsidizing the leverage used to throw off this immense cash flow to the equity portion of the capital structure. Unlike indebted growth equities, indebted value equities can manage the debt service and quickly reduce debt using the strong cash flow if needed. As a retail investor I’d much rather own the 4.5x EV/EBIT Japanese small cap value stock with high debt and low liquidity than the large cap growth stocks in the US that every institution on earth is piling into. Value has been run into the ground, how much more money is still left to flow into growth? Just my 2c

You guys did great job on the Fed dynamic....beyond the Fed....key question I know a lot of us would like answered. Do you two think that the US and China are still cooperating to keep the cycle alive or has this become something of a stand-off between the US and China to see who is more afraid of a real recession? The answer to that seems to be important and I'm not hearing it discussed many places. I mean, if the US has a lot of ammo to fight a cyle in the US (debatable but seems to be consensus) and China has a lot of ammo IF the US eases to cover it on capital flight pressure...then there is little chance we are getting a global meltdown...and so we will get a recovery whenever the trade war truce happens or when either side simply blinks and makes concessions independent of a comprehensive deal? how does that logic sound?

Would it be fair to say that SHy is probably the best bet right now given everything else is up in the air right now? Everything except short rates coming down aggressively in the next 12 months or so? Scenario (a) even if the Fed cuts by 25bps there's likely to be a major tantrum in the equity market which will force the Fed's hand to cut more aggressively thereafter? Scenario (b) the economic data is weak enough for the Fed to cut more aggressively starting later this month - notwithstanding the strong Jobs number out today? So either way the Fed cuts on the short side whether the curve steepens (or not) or whether the DXY breaks through 98 or weakens from here? Would love to hear your thoughts - Raoul and Julian? Thank you

I think you two are beggining to confuse yourselves!

This was so so good!!! Thank you both very much for the in depth tug-of-war. So much to chew on and mull over. Love the idea of the trades being clearly laid out in In Focus too! Awesome! Thank you.

Based on the Money Multiplier, the Fed does have some ammunition, but they will blow through it quickly. Long-term Treasury yields are headed to zero. C&I lending is about to contract on a 3-month basis, so demand is falling. Deficits are increasing, leading to more government borrowing, and lower yields. Demographically demand is falling, along with yields. Commercial banks are buying billions of government bonds. The only reason people think yields are headed higher is the monetary lags haven't kicked in to fully reflect the Fed's tightening cycle. It's more obvious overseas, but American investors are going to be shocked. Treasuries are going to new all-time highs first.

this video reminded me of the thriller in Manila. Two guys battling it out going toe to toe with each other. Although I came away with no idea as to who was correct it was great to hear the banter back and forth. I am hopeful by the end of the summer some conclusions will surface.

This was a REALLY good one as we got to hear both of your expanded longer term views and probabilities! From the git go we have been prepped as to Julian’s more tactical moves as compared to Raoul’s longer term ones. IMO, what makes MI so very useful is the interplay between two positions (which may overlap or may diverge) in real time from two well credentialed sources. For me, if I were only to listen to either of you I would come away with THAT viewpoint (and that person’s probabilities). It is so much more valuable for me to hear the debate in real time so that I can form my own opinion with regard to the nuances that appear in your discussions.

Great conversation, so much value in the discussion. Am now going to watch it again so I make sure I take it all in

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