Insider Talks – September 2019

Published on
September 7th, 2019
45 minutes

Insider Talks – September 2019

Featuring Raoul Pal, Julian Brigden

Published on: September 7th, 2019 • Duration: 45 minutes

Julian and Raoul discuss what it will take to avoid a looming recession and how the US-China trade war factors into the thesis. Julian discusses how long the trade war, rates, and the US dollar can prevaricate before pulling the broader economy into recession while Raoul discusses how his charts are pointing towards "true North" and an unprecedented move in the dollar. Filmed on September 5, 2019.


  • MS
    Mark S.
    10 September 2019 @ 18:14
    Julian in your public talk you said you had a steepener using ED. How do you construct that? thanks
    • JQ
      JACK Q.
      15 September 2019 @ 10:42
      I have edh1 vs edu2 steepener
  • ea
    edwin a.
    14 September 2019 @ 13:03
    I've been watching Mike Howell's pieces on Real Vision, and he seems focused much lest on interest rates, per se, and more on liquidity. Could the Fed, and Central Banks globally, avoid coming problems by focusing on quantitative easing, in addition to (or instead of) rate cuts? If they do this, is that a threat to the eurodollar trade thesis?
  • SS
    Stephen S.
    14 September 2019 @ 11:36
    Congratulations, Raoul. So something big is happening, but you offer no recommendations. That is disappointing. Do we sell long Treasuries and gold? It seems clear that equities will get hurt in a liquidity squeeze, but what about the supposed safe havens? I request that from now on, you guys start the conversation with recommendations, including tickers. Also, if you send out updates, please notify us somehow, by email or twitter, so we know to check the updates. Better communication would be much appreciated. Thank you.
  • RM
    R M.
    14 September 2019 @ 09:47
    Sept 14. We are getting huge moves in markets including destruction of trades you guys have talked about forever. It is time for a flash update for sure ASAP, right guys?
  • BM
    13 September 2019 @ 22:34
    Congratulations Raoul! New subscriber here with a couple thoughts after listening to your talk: 1) Raoul your comments about a coming liquidity squeeze have a lot in common with what Zoltan Poszar has been writing about (especially his Money Notes #23 and #24). I'll further add that my impression so far is that even though the net stable funding ratio isn't implemented yet, banks are already complying with the proposed rule. That's important because it treats excess reserves & repo-sourced assets differently than Treasuries, whereas in other Dodd Frank rules like the leverage ratio and LCR, both items are equally taxing to balance sheet equity or stable funding. 2) How do you both interpret the momentum/value rotation this past week--is it liquidity driven, is it a repeat of 2007, or is it investors rushing back to small-caps because they expect a Fed rate cutting cycle, and small-caps outperform large-caps by about 13% in the first 12 months of a rate-cutting cycle? Enjoying the conversation so far, cheers!
  • RK
    Robert K.
    13 September 2019 @ 13:05
    All the best Raul!
  • DB
    Doug B.
    13 September 2019 @ 02:15
    I can't take it anymore. I'm going to buy Raoul a decent sized monitor as a wedding present.
  • DD
    Derek D.
    12 September 2019 @ 05:40
    Now THAT is a hot take Raoul. And what if he announces tariffs on the EU this morning if Draghi goes ham? The Fed is the government controlling MP. Independence is just a pretense. They’ve been inflating since 1913.
    • DD
      Derek D.
      12 September 2019 @ 05:44
      I doubt this is what he’s doing, but if you’re right Rapul, maybe he really does want people like Judy Shelton to take control away from the Fed for the RIGHT reasons, and not the wrong ones.
  • JL
    J L.
    11 September 2019 @ 09:04
    expecting the fed to disappoint would you be putting a 2-10 steepener on now or publish it later? thanks
  • df
    diamantino f.
    10 September 2019 @ 19:05
    Congratulations Raoul , all the best :)
  • ML
    Min L.
    9 September 2019 @ 03:03
    Congrats Raoul! Any chance RV can add subtitles to Insider Talks as well? I am not a native English speaker and the sound quality is not so great either! Thank you!
    • MD
      Michael D.
      10 September 2019 @ 18:08
      And transcripts would be appreciated
  • JG
    Jake G.
    10 September 2019 @ 17:14
    Bring Remi Tetot on here as your special guest! Or Mike Green (:
  • IH
    Iain H.
    10 September 2019 @ 11:22
    Congratulations on your wedding Raoul. Thanks for the enlightening update from you both.
  • TF
    Teng F.
    10 September 2019 @ 08:07
    Congratulations on your pending matrimony, Raoul. 恭喜恭喜。
  • BH
    Blake H.
    10 September 2019 @ 04:27
    With ford being downgraded to juck, did we think part of the doom loop will being?
  • ag
    anthony g.
    9 September 2019 @ 19:33
    So .... given all of this conversation ..... do I sell my long USD Bonds .... or not ?
    • YO
      Yoshitaka O.
      10 September 2019 @ 02:54
      This is also an important concern of mine. Currently I am running a leveraged risk parity strategy with a massive allocation to 30 year treasuries... Thinking of whether to reduce my exposure via lower leverage and pursuing alternative methods to express a lower rates view ie. long eurodollar calls, short KBE etc
  • LJ
    Lucille J.
    9 September 2019 @ 21:25
    Is this capitalism or a ponzi scheme
  • AM
    Artur M.
    9 September 2019 @ 18:44
    Congratulations Raul, have a wonderful wedding and honeymoon
  • RM
    R M.
    9 September 2019 @ 14:47
    Gents: It was you guys, I believe, who taught me that the primary reason the world did not enter recession in 2015-16 was the Chinese flooding their markets with liquidity, which provided stimulus to the world. If so, shouldn't China's actions in world markets today be a big part of your move ahead formula now? For instance, we hear on RV that the Chinese are turning inwards to develop their internal consumer markets over exports, that they are buying less iron, that they are buying oil in their own currency, that they are cracking down hard on capital controls, etc. So my question: Isn't this still a big dynamic, maybe a primary one? What are the ramifications? Kind Regards, always enjoy your chats. Enjoy the wedding....bring in Mike Green next month please!
    • AM
      Artur M.
      9 September 2019 @ 16:16
      All of this is noise. China is starved on USD, it's why they are lowering RRR for 7th time this year Artur @ar2go2
  • GW
    Geoff W.
    9 September 2019 @ 06:13
    Congratulations, have a great wedding
  • PM
    Philip M.
    9 September 2019 @ 05:08
    Congratulations Raoul!
  • pd
    preston d.
    9 September 2019 @ 01:53
    Best wishes to you, Raoul! My top choices for your stand in: Mark Dow, Tony Greer, Mike Green, Hugh Hendry, Kiril Sokoloff, Stanley Druckenmiller, Mark Hart, Grant Williams, Larry McDonald, Ed Harrison, Russell Clark, Josh Wolfe, Kyle Bass.
  • BH
    Boris H.
    8 September 2019 @ 19:56
    Congrats on the wedding Raoul! Fantastic debate as always. Maybe Mike Green as co-host for next time?
  • TM
    The-First-James M.
    8 September 2019 @ 11:31
    Raoul. Congratulations, and if I may say so, you have made a fantastic job of keeping your personal life separate to Realvision. That came completely out the blue! ;) Any chance of Russel Clarke of Horseman as your replacement next month?
  • JH
    Jonathon H.
    8 September 2019 @ 11:10
    Hi Raoul and Julian, if there is a potential offshore eurodollar squeeze could that adversely affect LIBOR and the Eurodollar trade? Not sure about the plumbing here but could be an issue? Thanks as always
  • DB
    Daniel B.
    8 September 2019 @ 10:16
    Enjoy the wedding Raoul. Congrats
  • SS
    Shanthi S.
    8 September 2019 @ 07:07
    Thank you both and congrats on the wedding Raoul!
  • SB
    Stephen B.
    7 September 2019 @ 22:32
    Roaul's (Machiavellian) thought had occurred to me also. Is Trump's actual agenda to set up the FED for reform in his second term? This view might also be consistent with a view that the exorbitant privilege has become the exorbitant burden and that he wants to bring manufacturing back to the US. He is said to have installed a portrait of Andrew Jackson in the oval office, after all. I don't think the evidence is there yet but am looking out for clues.
    • SS
      Shanthi S.
      8 September 2019 @ 07:07
      Sounds like a great prelude to MMT.
  • JK
    Jim K.
    8 September 2019 @ 01:46
    As always guys great stuff. A few comments/ questions: First and most importantly Raoul congrats on your wedding and all the best! My other points relate to the 1) business cycle and 2) Brexit as it relates to the U.K.; Julian, I have great respect for your analysis, but you sound like a central banker in that the business cycle is an unnatural and bad thing. Recessions, while painful and systemically problematic given current valuations and debt levels, are healthy in the long run as they expose and expunge the excesses from the prior cycle ( although in this cycle did not allow the creative destruction that needs to occur to to occur due to policy maker actions and as such we are in an even more precarious situation) and I believe that when you mess with Mother Nature she eventually gets her revenge (Market crashes after excess liquidity driven Asset Bubbles). Secondly, I will defer to you but it seems to me again while the financial markets may not like it ( for a day or two) Brexit is the best thing that can happen for British economy as it will free the British people from the subordination of British Judicial Sovereignty to the European Court of Justice (Socialist) and give the U.K. the opportunity to attract FDI wherein they potentially become the technological hub of Europe as the EU socialist chains are unshackled.. What am I missing here? Thanks guys!
  • GP
    Geoff P.
    7 September 2019 @ 17:56
    Congrats on the wedding!
  • GP
    Geoff P.
    7 September 2019 @ 17:51
    Absolutely fantastic conversation. Thanks. Really good point about cutting the cost of funds but those cuts paling into comparison to the cost of the good. Question on the >100k European bank deposit, bund loop; At what point is gold a better bet than a negative yielding bund in an effort to try and escape being "short the bank put"? Gold is in some respects its own negative yielding security (if you assume insurance/storage cost on physical or carry on paper), but it seems like it's fast becoming competition for negative yielding bonds for non-CB funds. It seems like the first one out the door on negative rates (given the massive duration risk) wins. Also, I wrote a comment on counter party risk under your meeting of the minds article that plays into this somewhat. Is this something you guys are concerned about given the doom loop scenario? One more. I'm unsure about the 600B treasury bond sale being the same liquidity drain as the open market operations by the Fed. If you could bare with me for a second as I think this out; the Fed mechanism of removing reserves from the banks (selling to the banks the bonds they bought and literally destroying the "funds" they receive) reduces the bank's ability to sell reserves to the other banks needing to boost their reserves to meet reserve requirements due to presumably make new loans (the Fed funds market). Lending is constrained (assuming demand for loans is robust) by capital requirements, which the Fed cannot alleviate (open market operations do not create or destroy capital), and reserve requirements (the Fed lives here). The big money center banks are sitting on massive reserves due to QE, but they are not very active in the Fed funds market because the Fed pays interest on excess reserves, IOERs. If the banks buy these bonds from the treasury it doesn't affect the lending mechanism because they didn't deplete capital ratios (affecting their capital requirements because treasuries are top grade capital) and they didn't reduce reserves because only the Fed can destroy reserves. So I'm trying to figure out how this differs from any other treasury sale. I'm thinking it has to do with the proceeds from the sale going into a black hole (the piggy bank) vs the economy via fiscal spending or vs repaying an investor on a refi. Does this matter as much as messing with the lending distribution channel? Thanks for all the great thoughts.
  • KA
    Kelly A.
    7 September 2019 @ 16:08
    Amazing. Hang to every word. Great stuff. thank you, gentlemen.