Raoul - Unsure if this has been asked before, but in surely the point of a professional pension fund manager is to scale up the cap structure (i.e. reduce equity holdings and increase bond/cash allocations) gradually as an individual approaches retirement. By saying that pension funds are maxed out from an equity allocation perspective, are you taking the view that they haven't been doing this?

Raoul- Explain to me how Trump gets his massive tax plan and infrastructure plan without massively growing the debt and slashing rates. I think the plan would be a replay of 1987 in equities with the Feds hitting the button on another QE while politicians (wink wink) work together to pass a major tax overhaul bill. Lets not forget Mnuchin was just at Fort Knox and Trump hasn't revealed any real plans on his tax overhaul. What's that, a 3 month extension on the federal debt???? What a deal maker!!! PS the market isn't going to be buying the USD when they already know what the plan is.

Raoul - The US economy is currently transitioning away from the baby boomers to the millennials, such that the growth rate for the highest spending cohort (35-55 year olds) will be increasingly positive starting this year and through the next 5 years. How does that fact fit into your analysis? Doesn't that serve as a mitigant to the downside case you've laid out in this and prior reports?

Raoul - regarding your advice to not follow the crowd (sell what is popular etc), these days practically everywhere I look there is talk of the US equity markets being overpriced and ripe for a crash. Barron's even proclaimed this in a huge headline in a recent edition. So, if so many people think this, and I am only asking this slightly tongue in cheek, it is a serious question, does this then mean that the contrarian and safer view may be to stay invested ?

There is very little chance (I'd say no chance at all, but for an accuracy' sake...) that we'll have a bear market during the next recession. Quite the opposite it'll be the buying opportunity and the market will crash anybody who dare to short it, underestimating "whatever it takes" -tool is very expensive. There will be no crisis 2008 -style nor smaller neither bigger, no big bear market without a civil war or social disorder first and even then i'm not sure how "so called markets" will react. The will be flash-crashes or 5+% very sharp corrections here and there but it'll be next to impossible to make money on them. The next crisis will be very different it'll be huge but we gonna be very surprised how isolated "markets" will be at that time.

Excellent reports, thank you. R&J: Can a US recession in the next 1-3 years be mitigated by growth in Asia and Europe, both of which are doing well? What indicators can we use to watch for Asia (China/India) potential slowdowns? Repeating a question below, as long as EEM holds over 42, is there any reason currently to Asia? Thanks, enjoying Macro Insiders!

Hi Raoul, What's the median retirement savings held by Baby Boomers? I seem to remember ~20K (avg around ~150K BUT of course a heavy tail skews this metric). If this number is correct, do you think it's still enough to see impact driven by massive equity selling? I can picture the change in consumption patterns and the challenges the SS system faces, but I'm having a harder time trying to quantify the potential impact of equity selling. Would love your view on this. Thanks!

What I am wondering if problems are already known would there be any way it can be solved other than triggering recession? Aren't there any options? What are they? I love to understand the other side to fully know how to play this..

Raoul, I know you read no other research. But you are so bearish... The funny thing however is I agree with your view and have had a very similar view for several years. However, I read as much other research as I can, I want to know why other people have a different vision, how is it otherwise possible to find the mistakes in my own thinking is my reasoning for doing this. On your oil special for RealVision you interviewed a few different guests but they all had the same vision. Wouldn't it be more helpful to really try to understand why smart people like Russell Clark and Jawad Mian have a completely opposite view of the world as you (on growth, oil, the dollar,...)? You told in a previous Insider Talks that you are looking at why the commodity cycle might go on longer than expected. This would be very interesting research to read. Is it because the data from EM and Europe is so strong now, does Russell Clark has a point when he said people focus to much on the US and the world is shifting more to the east which may imply that your ism business cycle model becomes less relevant to monitor the world economy. I once heard you say somewhere that you have roundtable discussions at your home with prominent macro managers, so all in all you are probably aware of the opposite visions. It would just be very helpful if you try to explain where the reasonings behing them go wrong. Thank you very much. (of course you can't write everything in one piece, I'm just being impatient)

Julian, To clarify from the perspective of the retail investor, the best trade here is to short the VGK ETF (buy puts, perhaps looking around six months out - March 18?) to participate in the potential DAX fall? What target do you have in mind? Would you recommend entering the trade now, or rather waiting for the potential catalysts you mentioned, eg. spike in Bund yields above 0.6%? Also, regarding the gold trade, GDX, are you happy that overhead resistance has been cleared and it would now be a good time to enter the trade? Many thanks, Jason.

Raoul's list of "what is going to happen" reminds me of Nouriel Roubini's work in 2007-08. Seems surreal at first, but... NR's call was prescient --and i was lucky enough to hear his domino list of catastrophe while I was on a trip in Europe. USA media wasn't playing his song until it was too late to get out unscathed. I was lucky to hear and believe and started selling at every opportunity. NR hasn't made a great call since then [to my knowledge], though. I subscribed for awhile, but it was a waste. I should check again though to hear what he has to say. Vadim T, below, makes great points, however, about CB's having to ride to the rescue and buy equities. That also makes rationale sense to me, and i really don't want to heed Raoul when it comes to selling my house now ;-). But, although i agree with Vadim's insightful point, i fear that once the panic is on with the BBs, the panic is ON. That means CBs won't have much they can do because it could all happen so fast. Perplexing. I've never looked into reverse mortgages, but perhaps it is time to hang an expensive home with some financial institutions and let them worry about a housing collapse???? Raoul, thoughts? You're the one giving us nightmares... how about a little sleeping tonic!?

Julian, Given your view on rates I assume you would suggest selling things like TLT? Thank you.

Raoul, any update on thoughts re USD?

Raoul, I really like the line of thinking that you outlined in part 2 and have started thinking through the impact on multifamily realestate once the tide begins moving out. Would love for the group to check my logic but I'm thinking if BBs begin to sell retail houses in mass then this would put pressure on asset prices, leveraged commercial players would get squeezed again but rents could possibly rise due to demand vs inventory. This could push CAP rates higher and offer solid returns moving into the next cycle.

This is really great stuff. A pity that there is little to no public discussion about such a important topic for so many people. Thank you Raoul and Julian.

Julian, a question/comment. I'm a fellow Brit and your comment about low oil prices being stimulatory in Europe leaves me wondering; what is the mechanism for this? I suspect you are implying the oil price drop translates into much lower prices for petrol and therefore leaves more money in consumers pockets. However, the price at the pump in Europe/UK is primarily (80%ish) made up of taxes, so the 50% drop in oil prices mentioned (assuming passed on - which they often aren't in full) only translates into a roughly 10% drop in fuel prices. Ergo, perhaps the stimulatory effect is pretty limited. If you are talking about some other derivative impact then I apologise in advance and would love to hear what it is. Thanks.

Raoul, when you say boomers should sell their equities, do you mean just US equities or all equities ? Various discussions in Realvision in recent months have recommended investing outside of the US, in recovering economies (e.g. Greece), in cheap markets (e.g. Russia), in gold and miners, and so forth. Do you subscribe to this or are you saying to dispose of all equities, of all types, everywhere ?

Just listened Julian talking with Chris MacIntosh on his podcast. He made an interesting point in the end, that in collapse environment right stocks being store of value and medium of exchange. I'd like to see this subject expanded further.

Thanks for outlining your Thesis Julien. In Terms of a potential spasm in higher yield in core europe, do you think it makes sense to accumulate puts now or would you wait for clearer signs - like yield > 0.6? Thank you again!