Julian & Raoul....Thanks for this timely pointed update to the current outlook. I also think the Fed will “cave” and stop any form of QT. Question where to hide if inflation does indeed kick up. What are your current outlook on Gold/Silver & also their associated mining stocks or ETFs. Also if ETFs do have potential future problems could that carry into the GDX, GDXJs, etc of the gold/silver miner ETFs ? Thank you in advance ....

Julian & Raoul once again great analysis and clarity, thank you! For us 60 and over investors what are or thoughts on how to invest our fix income portion of our portfolio's which for most of us is over 50% of our portfolio's?

Raoul What your sense of the timing of the HYG demise, imminent? 3 months? > 6months?

This is more a technical question, so anyone can please help. I was looking at Raoul Corporate Debt to GDP % graph but when I go to St Louis Fed site I can't seem to rebuild the same graph as he did. Anyone has an idea how to get that graph?

Another question, can retail investors buy High Yield CDS? Or is it only available to Institution investors. Thanks.

Thank you Gents! Raoul I want to short HYG ETF now. But it seems it's highly correlated with S&P500. Then again it seems S&P500 is highly dependent on FED's actions. This makes me indecisive. What is the best course of action ?

It seems like Raoul puts very little effort into providing timely material for macro insiders? Material consistently over a month old by the time it appears. Maybe the view doesn't change but seems incredibly lazy for the fee for this service.

question to Raoul on the exact size of the BBB market; the chart on p12 would suggest that the total market size is c$5TN of which BBB is probably around $2.5TN. But then the text underneath suggests that BBB is $5TN. so a 20% cut would imply $500m of BBB to junk, still big vs the overall size of the JB market but maybe with less of a negative impact as suggested?

Julian, your reference to 2016 is noted as central banks coordinated and were able to stop a recession from coming, but it came at a huge price as China launched a record setting stimulus package. I bring this up because your bullish scenario for equities would mean that we would have to see some level/size of easing comparable/if not bigger to 2016 in order to stop economic gravity this time. Is that a real probable outcome Im doing some assuming here but Id guess that the odds of China launching another stimulus of that size along with the rest of the world launching a big enough stimulus package to once again arrest the business cycle just seems unlikely, especially with economic data ebbing but still far away from getting numbers in the basement. I contemplate a scenario where central banks do eventually throw in the towel and try to save markets but I have to wonder if it'll be enough and a possible outcome to it just being shrugged off? Its impossible to know obviously but maybe, just maybe, we've entered a window where we could actually fade the fed and group think for that matter as most believe the fed can save us at any given time.

I understand the concerns about corporate debt, but given that equity is junior to the debt, why not simply buy equity puts? Shorting HYG with a significantly negative carry doesn't make sense to me when if your thesis is right (i.e. HYG sells off), the equity decline will be a multiple of that. Also, a lot of approximations. As Matthias B. mentioned in a comment below, the size of US BBBs seems to be c. $2.5T not $5T. 20% of that would be $500M, which would certainly put a lot of pressure on the HY market, and cause a re-pricing down. And where does the $2T figure for junk bonds, loans and CLOs held in mutual funds with daily liquidity come from? I don't know as well about HY, but less than 20% of the leveraged loan market is in retail mutual funds (and not all open-ended; that includes closed-ended funds as well). A significant portion is held by institutional investors, whether directly or through CLOs. These funds don't have daily liquidity, and institutional money tends to be much stickier anyway.

This is written post Fed full throated “uncle” to the market on Wednesday. Roaul has already tweeted he thinks it is too late in the cycle and will not save it. My question to Raoul and Julian is how do we know if this view is wrong? Do we wait for a postitive cross of the 20 week over the 50 (that would be a pretty late signal). What do we look to step back in long? I basically agree with the slowdown coming view but always want to challenge the view. Thanks!

Brilliant! I would act according to Julian's roadmap. Long 2 and 5 year bonds in anticipation of easing. At first sign of easing and infrastructure stimulus, play 5-30 steepening. With the breakdown of Chimerica, it is impossible to have the close coordination of the central banks and governments before 2017. But due to economic and political reality, zero coordination as of now is not sustainable. China credit cycle has turned up after stopping squeezing shadow banking. Doing that and fighting trade war at the same time, a time coincident with a few anniversaries, will be mission impossible. US credit cycle should turn up soon for similar reasons: recession is looming and election is coming. Ditto for Europe: recession, election and yellow vest.

Actually it would be useful if Raoul or Julien put up a flash update after every FOMC meeting.

Hi Raoul, Julian Do you have an signed view of the USD post FOMC? I seem to pick from Raoul a strong USD and from Julian a weak USD. Appreciate clarity pls from both. Regards Vivek

ISM PMI knocked in strong incl new orders. Also UMCSI came in better than the preliminary number from earlier in january. Would be appreciated with an update on the situation as these are vital numbers for the future of markets,

Hi Raoul, Julian A feedback for both - and I mean this in a constructive sense. There has to be some mechanism to have a bit of a dialogue with you - be it responses to comments we post or otherwise. Else i feel it dilutes the proposition; can you advise if this may be possible. You could consider limiting the comments from yourselves to our queries to say a week after the publication? Regards Vivek

Hi All - looking for some help here. How does one get long into Eurodollars 2020/2021 that Raoul has mentioned owning? Do retail platforms allow this? Appreciate any insights from any that may have gone down this path. Regards Vivek

Hi, overall great product/research. Some feedback - it would be useful to put up a flash update after FOMC and other regime changing events

Rauol states: "However, currently the junk bond market is only around $1.2trillion. Adding another $ 1trillion would probably need to wipe out 25% to 50% of the value of the mark-to-market value of all the junk bonds to make room for the new junk..." Can someone help me understand why classifying BBB debt as junk necessarily results in debt that was already rated as junk being reduced in value?

HY bonds are having a great run this week. I agree with the cyclical thesis, but the timing in this piece (vague as it is) is off. Flows and improvements to financial conditions are providing a last gasp, and it might be longer than expected, i.e. until end Q1, with a lot of chop.