Raoul gave much food for thought in a detailed and far reaching presentation which contrasted his narrative, a slow decline in growth and deflation, with the prevailing market narrative, a slow return to growth and inflation. In setting the scene Raoul observed that the slowdown in the business cycle together with the trade war and oil shock were enough to guarantee a recession. The addition of COVID - a black swan event, means we are witnessing the biggest economic event of our lifetime. Raoul calls it the “everything crisis” and highlighted its three phases; The Liquidation - all assets collapsed in March and volatility spiked. The Hope - where we are now (though soon to end) as central banks expanded balance sheets, and finally, The Insolvency. Economies will not function at full potential as a significant proportion of people will not return to normal patterns of behaviour. Unemployment will be structurally high and consumption structurally weak, at a time when debt issues are greater than they were in 2008. Real rates are also higher than they were then - a central banks nightmare scenario. Raoul sees a 70% probability of debt deflation. Corporate borrowing is at an all-time high due to non-productive use of debt to buyback shares. $4tn is rated BBB and at risk of downgrade as growth, revenue and cashflow decline. Foreign borrowing of dollars is another problem, particularly for EM as the dollar strengthens (again non consensus) and commodities decline. The Fed’s newly opened swap lines do not extend to all central banks, and besides the banks are hoarding, as seen from the velocity of money declining - a feature of a debt laden economy. Raoul highlighted the terrifying dynamic of a higher dollar leading to lower inflation, leading to lower growth, which in turn leads to lower inflation. In this environment he is a buyer of the Dollar, Gold and Bitcoin and a seller of EM currencies, the Euro and the Yen. There is one last trade in bonds (5-year yields) before negative rates and yield curve management mark the end of trading opportunities in bonds for good.