So I still think bond yields come lower over time. I don't see anything that can change the demographic trend for us to generate realistic, meaningful inflation over an extended period of time which is what you would need to change the bond market from being a bull market to a bear market you would have to see a change in spending patterns and demographics amongst people and I just don't see that even if you bring jobs back because your penalizing companies from going abroad, yes you might see some wage inflation, does that wage inflation go through to end products inflation? Less likely with so many people trying to retire, an aging population those things tend not to filter through.

And we've also-- you know you've got to imagine that if they start to bring companies back and labour is expensive then the likelihood of a robotized labour force increases dramatically and that itself is deflationary.

So I don't think this is meaningful. I can be wrong. Soon we’ll know, around these levels go a bit higher and something has changed, It's possible, it's not my best case.

Erik: And you said that there is of course a possibility as there always is that we might be wrong. A couple of people, Bill Gross has said two spot sixty is the magic line in the sand, Jeff Gundlach said 300, even 3% is the magic line.

Do you think there's a magic line number after which you would throw in the towel and say OK my view has to change because the tape is telling me something other than what I expected?

Raoul: So I'm looking as we speak at the ten year bond yield chart by Bloomberg going back from 1985. If you join all the peaks you get a trade line that would suggest 3%, if you use more recent peaks which is going back from 2009 we broke some of those. If you use your pencil slightly differently, let me say as we speak I could it real-time, we’re probably about 3.20%.

So it's kind of around those levels and that's all I'm doing, is say listen there's a very very well established trend, does that stop the market? Most likely, if it goes beyond that, then most likely something has potentially changed.

Now that doesn't necessarily mean we'll have a bear market forever, what it could mean is we trade sideways. I mean that's another thing markets hate thinking that, they will go from well it's going from deflation to hyperinflation and that really the fact that maybe bonds yields just trade in a 1 to 3% range over the next twenty years. It's possible.

Erik: We also talked back in September about the business cycle. You observed at that point that it was already the third longest business cycle in history that was as of September and you predicted that it would eventually lead to a follow on recession. You also observed that the two term incumbent president’s cycle – that is situations like this where a two term incumbent president is replaced by the other party – there has been a 100% chance of recession within 12 months after that.

Now back and then when we had that conversation Raoul most of the smartest guys in the room whether it be Ray Dalio or Stan Druckenmiller or Carl Icahn they were all bearish just like you and I were but these guys have all turned fantastically bullish in the wake of the Trump presidency.