URGENT Market Update — Raoul Pal & Julien Bittel

Refer YouTube video

https://www.youtube.com/watch?v=_7yuo6JRexY

They see things being positive once the US and China reach some form of agreement.

1. Peak Fear Environment

Raoul Pal and Julien Bittel launched this flash update to address the high level of panic in markets. They're seeing signs of peak fear, similar to past turning points, and want to help investors cut through the noise and understand what truly matters. The message: don’t get swept away by headlines—step back and look at the macro picture.

2. “Don’t [Mess] This Up” Rulebook

Raoul emphasizes timeless principles for navigating turbulent markets:

No leverage: Leverage magnifies losses, and in volatile conditions, it’s a recipe for disaster.

No FOMO: Don’t chase tops or sell bottoms—stay grounded in your strategy.

Know the risk curve: Assets further out on the risk spectrum (like meme coins or small-cap stocks) fall harder.

Protect your assets: Avoid scams or giving away control of your crypto via sketchy websites.

Zoom out: Market cycles include regular 35% pullbacks in crypto—expect it and use dips wisely.

3. Everything Code Framework

Their macro framework, called “The Everything Code,” ties together decades of research. At its core:

Demographics (aging populations) drive a need for more debt.

Debt replaces lost growth in productivity and population.

Governments increase debt to maintain GDP, which eventually forces them to manage this debt via liquidity injections and currency debasement.

4. Liquidity > Interest Rates

The Fed’s rate cuts get all the media attention, but Raoul explains they’re lagging indicators. The real driver of market moves is liquidity, including:

Fed liquidity (like repo and TGA use)

Global liquidity (including central banks and private banking sectors) Liquidity is essentially money creation to fund debt servicing. As liquidity expands, asset prices rise.

5. Financial Repression Is Back

We’re in a cycle similar to the post-WWII era, known as financial repression, where:

Governments suppress interest rates below nominal GDP growth.

This allows them to slowly inflate away debt burdens. We’re about two decades into this process, just like the 1950s, and markets (like the S&P 500) are behaving similarly to that historical period.

6. Seasonal Liquidity Cycle

Raoul explains that global debt refinancing follows a seasonal pattern:

Autumn (Q4) tends to be a period of rising liquidity as debt rolls over.

$10 trillion in debt is maturing this year, which will require a liquidity boost. Liquidity is injected via both central banks and private banks holding more government bonds—this fuels risk assets.

7. China is the Pivot Point

China is facing a debt deflation scenario and needs a weaker dollar to stimulate growth and service its large USD-denominated debt. Raoul expects a quiet geopolitical agreement—similar to the 2017 Shanghai Accord—to:

Allow China access to dollar liquidity (via Japan and the Eurodollar system),

Stimulate global trade and growth,

Avoid a direct yuan devaluation (which could spark instability).

8. Weakening Dollar is Bullish

A weaker US dollar is the key macro signal for:

Global debt servicing (especially for countries like China and emerging markets),

Increased global trade and liquidity,

Stimulus transmission through the Eurodollar system. Raoul and Julien expect USD weakness to be a tailwind for global markets, especially risk assets.

9. Ignore the Fed’s Cuts—Watch Financial Conditions

People obsess over when the Fed will cut, but markets move ahead of the Fed. What matters more:

Easing financial conditions (like lower bond yields, weaker dollar, lower commodity prices),

These have already started, setting up markets for a strong rebound before cuts are even announced.

10. Turning Point in Economic Data

Julien Bittel points out that:

The economic surprise index has bottomed in March (as they predicted months ago),

Financial conditions are easing fast,

Economic momentum should start improving in May. This creates a sweet spot: soft data justifies cuts, but actual economic conditions are turning up, which is bullish for risk assets like tech stocks and crypto.

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