Transcription
What's up everyone? I'm here with Henrik. I'm very excited for today's discussion because obviously there's been a lot of volatility in the crypto world as you know, but we're actually going to take a step back today and take more of a macro look at the market. Uh, he's an amazing macroeconomist. I've been following him for quite some time and I know you've got some uh big opinions on on where we're potentially headed for the market. So excited to unpack them today and and dive deep in into macro. Hopefully this discussion can help everyone prepare their portfolios and understand what's to come in the next six or 12 months and beyond.
>> Yes, thank you for having me on, Miles. Really a pleasure. I'm honored to be here.
>> So, Henrik, I'd love to just get you to set the scene. Like, where do you think overall we are in the business cycle? Obviously, you've been tweeting a lot about the fact that we could potentially be heading to the end of the business cycle, but I'd love to hear your perspective of uh where you think we currently sit now heading towards the end of 2025.
>> Yeah. So, so the thing is, and it's great that you're bringing this picture up here, so please keep it on there for a little while. You know, um, the way macro works is like a super tanker. So people think that, you know, if Trump comes out or says something or something happens with tariffs or whatever it is, then all of a sudden this super tanker is going to, you know, shift direction and we're going to go the other the other way. That's not how things work. It really takes a lot of momentum, a lot of force to ch to to shift the direction to turn the super tanker. But when it turns and when there's momentum to it, then you'll have to observe and see the direction we're heading. Are we going south? Are we going are we heading north? And these are the leading uh qu the leading um index that I have on my business cycles. The business cycles that I've created it consists of three layers which is the leading indicators, the coincident and the lagging. The leading are the ones that tells us where are we going. The coincident is what we feel right now. That is the employment and so on. And then we have the lagging which is, you know, unfortunately enough the inflation and yields and I want to get back to that but let's focus on the leadings because that the leading indicators the index here we have to understand it's not just one parameter or two parameters. People that focus on just one parameter and say this tells us where we're going, it's a little naive, right? Because we need to see obviously some things can happen to one parameter and you can see that shift. I have an index here of leading parameters and I have a model here which every time we have seen the crossover as you see here marked in yellow, which is when the red line crosses the horizontal line. What is that? That is the business cycle for the leading indicators which when you see it going up above the the horizontal line, then you have an economy that is that is strengthening and then it starts to roll over. It means that the economy is then kind of super tanker is starting to turn but we it takes a while, you know, it can take what is it 10 miles before it starts to turn and and then you start to see it heading downwards. The moment and this is why I for some time have said we're going to see something bad coming is because the moment you see it starting to crash lower, that is the moment you need to be be uh be be be observant. And if you look to it, if you go back to 2006, if you can point there, you can see the the crossover there. That crossover that was in November 2006. Now, let me just say first that actually every time tracking back because even though I'm I'm old, I'm 50, I I haven't been around since the 1950s, but the model has correctly predicted any recessions and only those recessions that we have had, not extra for the last 70 years going back to 1950. So, every time the red line crosses down, which we are going south, that means that things are going to happen. It doesn't mean it happens immediately. It just means that the rudder has been, you know, is all down now and it's all going that direction or in another metaphor we can put up is the Titanic has been sailing and it hits the iceberg. It's a no return. It's the point of no return. We are going south and there we are sinking. It doesn't mean that things are happening immediately because again, it's a big big economy. So things are happening slowly but it happens that it but the the thing is with this is that the damage has been done. So what we saw in November of 2006 was that we hit the iceberg there and things were starting to go south. Actually, some people had predicted that before. We know famously Michael Bur had been seeing looking to the to the housing market and said things are going to be bad and I'm going to short the [ __ ] out of it so to speak, right? And he did that a little premature because again, there there is the lag from we had the leading down to when it starts to happen in the economy and that is where he kind of missed out on things and he was too early. See the thing is now that we have an exactly the same kind of setup that we have all the simple these times, even corona was a setup where we could see that there was a a recession coming. It was not because of corona, it was actually already happening. That's for another day. But all the way back for 70 years, this has correctly been predicting recessions. Now, what we've seen is in November '24, we saw that crash through the line and I said I have said for some time, yes, we're going to get a recession, but not now. You'll see it every through going through my tweets, I said, "Not now. Not now, but it's going to come." Why do I say that? Because when the red line is pushing lower like what we've seen ever since 2023 and it hits the red the horizontal line, then it flattened out for a little while, but then it kicked on further, then we need to be careful. And that is what we we now have the situation where it crosses crashes lower. So, you can have a situation where the the we hit the iceberg, the music is still playing, we're still able to have some time to go to the bar, get a drink. People will even tell us, you know, there's nothing wrong. I mean, everything is fine. It's just an iceberg and this this ship is unsinkable. You know that everybody knows it's unsinkable. And then you'll actually see it starting to sink. So, this is the indicator we now have and you can actually see it's actually crashing lower now and a lot lower. And if you compare it to the blows that we had into the recessions going back in time here, >> every time we have the crossover, you have the red line is making that dip there. That's when you have a recession. So, in the bigger picture, you have an economy that is slowing. And this was actually also what I said in back in 20 in 2024. I said we will see some time now where we we are actually we will we will be heading higher. I couldn't say how long because nobody I you know I can I have the coincident indicators but at that point I couldn't say when things will start to cross over. I know what to look for and I know the levels that I'll be looking for. But now things are starting to unfold and we can see now that we have some of these things that are that are starting to unfold macro wise. What are those? Well, if we look at the coincident indicators, which we don't hear, but there's another tweet also where you actually see the full model. I've said all along also that we are going to see. Yeah, this is the this is how you can actually use it. But there are there are maybe another model also if you can see it further down. But anyway, this is actually how you can utilize it to to achieve some superior returns. But going back to the story, I said that we were going to see that the economy would show weakening uh and that when we saw the non-farm payrolls, which is the very economy where the labor market goes, that's where the economy goes. And I said earlier this year, I don't understand 144,000 they came out with non-farm payrolls and all the strength we saw in the labor market because my model was suggesting we're going to see weakness. And then came up August and we saw this massive revision in the non-farm payrolls going all the way back which actually suggests my model is correct. See now we haven't seen the non-farm payrolls for September and we are now 20th of October and we are way past that. We're still not there where my I have some imminent recession indicators which tells me now things are flashing. It's now that it's happening. So I'm still saying we are still in the time where the Titanic is maybe starting to take in order and the people on the third class down there they have got their feet wet at this point. The second class is starting to see what's going on and the first class is still thinking, oh, this is going to be fine because there's still music and we can have another, you know, dance and a drink at the bar. This is the situation we have right now, but the the Titanic is sinking and that is what we that is the situation right now. Will this happen, you know, just next week? No, it will not. And when will I call the recession? I I there's a difference between saying this is going to sh this ship is sinking and it actually happening when it starts to sink. But it's about understanding that that's the direction. And I think that's where people are saying you've been saying for a long time, correct, because we hit the iceberg in November 2006 and we saw that flash the crash since '23 on it. And just to remind people also when as in '22 when everybody was calling for a recession back then and we had the big decline, you can actually see in that chart also the before that I was my my leading indicators was way above that and there was no reason, no no way we would have a recession at that point. So so we are in a in a sinking ship, sinking economy. Doesn't mean the top is in and I don't think it is. I think actually we are in the final phase where there will be at least for the people on the first class, we're going to have much much higher levels coming in the crypto market.
>> That's the tricky part to navigate right? Like um, and I'm sure we'll get into it later like how to actually try and time these things and and structure your portfolio because often like that last period um is is the most euphoric period where the where the music's playing before before the lights turn off so to speak. So
>> that's um that's the tricky part. That is extremely tricky and especially because you know who likes to you know who likes the bearer of bad news? Nobody. I mean, nobody likes to see it. But again, that's also where you need to understand that in April when everybody was so bearish on things, it was again still clear from the what I look at macro wise that yes, we have a deteriorating economy, but it's not there yet. And I was calling for a massive rally coming out of this and a recovery that was, you know, and we'll get everybody bull bulled up. I think right now, as you look at it here with the Bitcoin, what you're seeing there right now is a correction before the final bust. Uh, sorry, the final rally, I should say. I don't know if you work with RSI. Have you have you tried to do that? You can try to pull that an RSI up here.
>> Yeah, we can get an RSI.
>> Stochastic or stochastic or just a
>> No, just just that one there. Relative strength. Just that one. Yeah.
>> Yeah.
>> And then you try to go on a weekly chart.
>> Yeah, we're on the weekly.
>> Oh, you're on weekly. Okay. Then you look at look at the look at this top here. Yeah, the divergence there. This divergence. Yeah, it don't need you don't know. People think that it has to be on a trend line there. It doesn't it doesn't need to be like that. It doesn't need to just it can just be that you have falling. It's not like a we have to understand technical analysis is not exact science. It's a kind of an art also and it's about understanding momentum. And again, momentum is back to the super tanker. So what we're looking at here is really that the we have slowing momentum into a rising top of Bitcoin. And I'm just saying when you look at that and if you go back to the top we had in '21 there and sorry '22, you can actually see that you had similar just on a shorter time basis. So if you look there, you'll actually see you also had a divergence there, but that was shorter from this point and down to that one. So you see you see you had that diver. Can you see it?
>> Yeah. From there and down there.
>> That tells us that it's an indication on a weekly basis that things are deteriorating and it's been doing that ever since the low that we had there in in I think it's March of '24. And yeah, there you have it for the uh back in '21, right? But if you look at '24 there, you can see it's actually since that top you had in '24, that is when the momentum, the strength of the move has actually been been waining or declining. So when people are telling me we are on the cusp of a massive move, then I'll say yes, but I'll say we are right we're doing that into a weakening structure and that is the problem for for this as I see it. And if you then go on an even longer basis and you look at the the the structure we have from 2017 through '21 up to now, then you'll actually see that you have an even bigger negative structure on this. So if you put the you can see that you have these these these tops there on the monthly basis and you see that we have an what is called an expanding diagonal in technical analysis. You will actually see that this is a massive topping pattern. And I think that this is the technical analysis that people, especially Bitcoin maximalists, do not like to look at and say, either I'm massively wrong and technical analysis here cannot be applied, or a massive top is coming. And I think if I have to look to my business cycle model and to the uh to this, then I say I at least now I have two indications that could give me the suggestion that maybe a massive top is coming to Bitcoin. So I think we're going to have one final rally based on the more substructure that we have and I think Bitcoin can reach 160, 180 on on before we we we get there. But be careful because it seems like and there is an end to it because of the bit business cycle, because of Bitcoin's own own structure, but also because of what we see in the dollar. The dollar is to starting to put in what I see as a massive bottom and that is not good news either for crypto. We can take a look at that as well.
>> Yeah.
>> If you look at that, what we had since '22, the top there,
>> the top you have right there. Yeah.
>> Yeah. Then you see it actually come down in like an A and then you have a B wave and it comes up into January this year and then I was predicting January when everybody was so bold up on the dollar that we would have a decline. Very often you'll see that the the length of what you had from the top of that so the top from '22 and down to what you had in '23. Yeah. Down to the bottom of that in '23 that you will actually see that that length is what you're going to be see repeated in what we're seeing right now. So I think we have one final push lower down to the 90s.
>> Exactly. Yes.
>> It was 294 days. Yeah.
>> Yeah. Yeah. But but
>> this one's also 294 days. Very similar.
>> Yeah. But it but it's about the it's more about the length of it. How how how long it's a declining. So the decline in terms of uh Yeah. So the price there and that is is down at 95, 96 or something like that. And that's where we also have seem to have a big bottom coming in.
>> And if you go on to it. Yeah.
>> Sorry, man.
>> No, I was just going to say, what what do you think about the the debasement narrative though? Because that's clearly like a topic which is um which is, you know, very prevalent right now with, you know, gold absolutely skyrocketing. So, so the narrative is that, you know, the dollar will keep debasing and and this is going to pop up.
>> You know,
>> that's a nice narrative. It's an amazing narrative. But the problem with that is that there's a real world out there because the narrative is one thing and then we have all these people and of course there is a debasement going on, but the dollar is entangled in all sorts of debt around the world. So the if we're going to see a big bubble bursting like the NASDAQ right now and we have a market capitalization to GDP that is, you know, topping anything we've ever seen. If we have a bubble bursting that creates a suction where values will be drained and if values values uh values are drained, then you're going to see that a lot of people will be needing dollar to close out to when if if somebody goes bankrupt, if you're going to see people are losing, it needs to close some debt or margin calls, you don't pay that with gold, you don't pay it with Bitcoin, you pay it with uh with dollars. And this is why also the dollar is going to have a massive uh rally. So the the rally that I see and that is based on actually if you go all the way back to 2008, we have to remember for the ones but just try to be yeah, look at that for instance. Talk people have been talking about the debasement ever since 2008.
>> Where it started because that was the quantity easing. What has the dollar done since?
>> It's gotten stronger.
>> But I suppose not stronger against uh gold and equities and Bitcoin, that's the issue, right?
>> Yeah, yeah, you can say that. But but again, it's stronger against every currency in the world. The thing is that we have periods where the we will be you want to be long Bitcoin or you want to be long gold and you want to be long the dollar sometimes as well. And I'm not saying that this is going to end to to to to develop forever. But the problem is if you have a recession coming, which the business cycle is saying, and you potentially have a large uh top in in Bitcoin, and you potentially have a stronger dollar, then you kind of see the mixture of the the the the cocktail that we're getting into. And that is the pro that is the time where I think risk asset like Bitcoin is not going to like this. Gold will not like the deflationary phase because like what you saw there as well. If you look at this phase where the dollar went up in it uh in 2008, you will actually see that both gold and silver that phase, the first phase here, if you look in No. Okay.
>> Sorry.
>> Yeah. If you take that phase, yeah, exactly there from the bottom there and up to that point in the first, there was not a good time for gold and that was a very bad time for gold. So my thinking on gold is that gold has been extended due to the fact that people has been buying into the narrative of inflation. But right now, you don't have inflation in the system. And that's back to the business cycle model. You have a price level that has been raised, but you don't have inflation. And I think people are going to see the difference when you start to see the the bust is starting to develop. So
>> what about the stagflation narrative?
>> But you don't have stagflation at 2. But that mean there's no stagflation at 2.7, 2.77%. That is BS. Honestly, there's no stagflation. That is talk. Stagflation is when you have five, 6% in inflation and you can't bring it down. 2.7, that's not stagflation. You can see through time inflation has been going at 3, 3.5, 2.7, so on, and you have great times. the so the stagflationary narrative is is way past. And also if you look into 2008, you'll actually see inflation was up at 5.5%, even though uh employment was declining already. So people are talking like it's it's something new that we have 2.7% inflation. It's it's nothing. It's nothing compared to what you've seen earlier. So so the stagflation is is not for now. I think it's something that will come later. But I think the dollar with if you actually will want to see one thing, put try going on the dollar here on the daily chart and then do an RSI on that.
>> I'm trying to pull up the inflation data as well, but it's slow to load.
>> Yeah. Oh, good. Well, let's take the the the infl the the dollar here and they go on just do the most let's say the last four months here. Don't do don't more than that.
>> Okay.
>> And then pull it out a little.
>> Then you look at the try look at the RSI here. What do you see? If you go down there, look at the bottoms.
>> You see?
>> Yeah, the bottoms tend to lead to um to bounces in in the dollar.
>> It is called there is a there's a positive divergence going on since April on the dollar and it's actually now starting to move. So you see that the we are seeing Yeah. And even further back, if you go one further back, you have even a lower one there in April. Yep. There. So what you're seeing is that the momentum is starting to tell us that we have a shift coming. And when it goes on for so long, such a long time, it means that it's going to be a biggie. If you go further back, let's not do that now, but if you go further back, you'll see that one or two months has previously been what we have seen into the 2020 uh 22 rally. This one here is a biggie. So I think people need to watch the charts and then say stronger dollar seems to be in the seems to be coming. that seems to be in the chart because that's what we're telling. I think there's one more low though. Let's just put that in. And Bitcoin seems to suggest that it could come to a technical top and the business cycle telling us that we're coming over and we got euphoria. Nobody thinks that anything can fall and we got the large largest bubble in the world. If we take all this and summarize that, what are we then seeing? That's how I do my job. And I have, you know, 10, you know, hundreds more actually of of indicators of of what we're seeing. That's how I I look at things and then I say, okay, what is the most probable outcome of all of this? Stronger dollar, weaker Bitcoin, actually very potentially a large crash to Bitcoin, last crash in the market, and a recession. That seems to be what's what I think think is baked in. Now, you saw three or four of these indicators, but there are so many more. So, this is how
>> it also lines up with the 18 and 1/2 year real estate cycle. I don't know if you've paid much attention to this, but I've had Pazino a lot on the channel um to discuss this and and interestingly, this lines up with a end of 2026ish um peak happening in in real estate and then equities to follow potentially Bitcoin to >> lead. You never really know with these things, but Bitcoin will probably like sell off before um before other assets as as a leading indicator, I think. But um have you paid attention to this because this is also kind of lining up with your your thesis as well.
>> Yeah, I know. I know there's some kind of cyclicality to that as well and that that that aligns, you know, with with what I'm saying. I would not change my view on it because to me it's really about the the business side. But the thing is my business cycles, the leading indicators are very much dependent on what we see in the lab in the housing market. So so the housing market actually leads what you see into the real economy. So yeah, it it absolutely plays out. And I also see a massive bust in the in the housing market. No doubt about that. I think it's going to come up a little quicker this time though, but because we don't have as much of speculation in it, but we do see that the housing affordability is in the is in the gutter right now in the US. And that means that people and the if you look at the existing homes sold, you'll see that that's down at levels we haven't seen for years and years when the US population was much smaller than it is today. Which means that people are not selling their homes because they can't afford to get into a new home. So god forbid that they start to lose their jobs if a bubble burst, then what what will happen? So I think people are not really paying attention. There's a famous line in in the big short saying people are not looking. And I I think this is a, you know, a famously one cyclicality are great, but you can look to the actual things that are happening and those things are happening behind the curtain right now for some people and people tend to look to and become so euphoric about what we have seen with Bitcoin because it's up since, you know, whatever and thinking then it just can go on. I think we need to change the mindset on that and understand that there is a risk to everything and Bitcoin is not a solution to something like this. This will actually be a a risk asset in that in that in that sense.
>> There were literally images uh it's a low quality image but of people lining up. You probably saw this in outside like gold stores. There's been so many images. I'll I'll try and get some better ones. You know, hundreds of Australians lining up and in Asia it's become something as well. So that's a bit of a
>> bit of a signal, isn't it? As to where we're at and in in the gold cycle at least, but that's probably indicative of of the overall of the overall cycle.
>> But you and I also know that when gold does come in something like what we're seeing here, we're probably going to see Bitcoin catching up with it. And I think you're going to see that shift now. So, if I had to choose between Bitcoin and gold right in this moment for the next, let's say, month or two, I probably stick with the with Bitcoin. And uh and I think
>> I did a tweet on this like 3 days ago. I said, "If you're in gold, pivot to Bitcoin." So far, that's been a nice trade, but I think it'll continue. I actually want to ask you about this like we've seen pretty much the whole year. This is my chart year to date. Um, Bitcoin has been correlated with the S&P. If you want the exact correlation coefficient, it's around 0.5 to 6 right now and its correlation to gold is only 0.15. So clearly like being treated as a risk asset. Do you think that changes uh any anytime in the future for Bitcoin or you think it'll continue to just follow this uh this trend of basically being a levered tech stock essentially?
>> I I think it's a levered tech stock. That's it.
>> Yeah.
>> And I think it's going it's going to act like that. And that's also why
>> you think there can be a catch up.
>> I think there's a catch up. I I don't think we I mean I'm not not we're not done yet. I'm I'm massively long also not not Bitcoin actually Ethereum right now and Ethereum uh, you know, treasury companies because I think they are going to catch up now to to this and Ethereum is going to outperform Bitcoin for the next phase. So so I think we are we're we're not at the the final station here yet. But I just want to, you know, caution that people are thinking that this can just continue and it's going to be a solution. And you just said very well. It's a levered tech stock. That's how it acts. It doesn't act like gold at all. So the so it acts like S&P on the NASDAQ and even more more so like with the NASDAQ actually, if you look that that correlation and that's why that's what we should be waiting for. Not not expecting it all of a sudden to change nature. I mean, a turtle will always be a turtle will not become a rabbit all of a sudden, even though people tend to think that's going to happen. It's not going to be safe haven. It's going to be a risk asset and there is a technology behind it which is fantastic and it's going to change the world, but it's not going to to do well in a world where the dollar is going to go to let's say 123 on the Dixie as I I could see it do that that and or in a recession, it's not going to do well. And that's why I'm saying if you are if you've done well with Bitcoin, crypto and so on so far, expect this to be the one final rally and even you'll see probably that Bitcoin tops out before you see the rest of the crypto do that because that's what we saw as usual.
>> Exactly. So I think I think we can see that as well this time and there'll be a disconnect there for a little while. But but I I just want people to be aware and awake uh to to not think that and and fall into this narrative that is just so I don't know what to call it right now. It's just reaching stupidity honestly talking about 1.5 million when you know you have a a negative structure on the weekly on the daily on the monthly in terms of RSI in terms for Bitcoin and then you say I just I I don't want to look at that. I mean I want just go with go with the narrative because Henrik, you don't understand Bitcoin. Well, let's see about it.
>> I'm interested how you view playing this this period. So, you said you're massively like long on on Bitcoin, Ethereum. Um, I think that does make sense for this final leg, but how do you balance obviously timing things and and also being, you know, prepared because um if if you go all risk on now, for example, and then the correction happens a little bit sooner, then then you could be left like um in a very awkward position. or if you you know if you don't maximize this period and not have enough exposure then you know markets can shoot up another 30% whilst you're sidelined and then when the correction does come you're going to feel a lot of FOMO right and you're probably going to buy the dip and then end up holding down and down and down and then panic sell. That's a typical like behavior investor that that that FOMOs into the market later. So I'm I'm just wondering how do you play that, you know, balancing act between making money but making sure that you secure it so that you're you know well prepared to capitalize on on what could be a nasty recession as you pointed out because I don't disagree with with what you're saying actually. Um, it it's it sounds sensationalist if you take the headline, but then when you actually look deeper, it's it's pretty in line with I think what
>> um what the data is showing. But yeah.
>> Yeah. No, so so what we we do at Swiss is that we uh we we we we understand the setup. First of all, we have a we have the macro outlook that I I deliver and then we have the the setup also when it comes to to crypto and we have a an algo uh model which is telling us simply uh when to get in and out and this is actually one a model that has been outperforming Bitcoin. So just you know go figure it actually makes sure that it doesn't go in immediately when Bitcoin bottoms out, but it comes in slowly and then it actually takes you out, you know, around the top and that is actually quite quite amazing. So when that one goes out and it actually comes out really quick, that's the moment I start to pay attention and we we call it the the this our Hawkeye uh framework which is quite astonishing actually. We've also talked about some of our um we have some talks with Jan and Willie Wu and myself where we where we show this and so this will give us an indication of when we are when we're getting out. Uh so we have we have that and then we have the onchain liquidity and all the analysis of Willie Woo also who uh who has been amazing on that. So we triangulated with the the Elliot wave the macro review that I'm looking at and my my the levels. Then we have Willie Woo's understanding of liquidity on and also our the framework's understanding of liquidity and what is an ability to take us out. We feel kind of comfortable that we can, you know, get ourselves out because the model has been getting us out every time we have had a top in the in Bitcoin actually, not at the top, but actually outperforming Bitcoin quite uh quite by a lot actually, and that's that's quite astonishing. So I'm I'm uh waiting for the for the for the signals there uh to to uh for now uh getting long and be you know, as I said before, and then, you know, staying with the trend until we we we see those signals and then we will we will try to get out. So so that's how we we want to play it.
>> So so the way that I think about playing it and I want you to maybe give your feedback on on my strategy. It's pretty much towards the end of a cycle, you want to progressively dial down the stakes but you want to up the risk. So, what I mean by that is I'll I'm actually not as exposed in terms of like, you know, net exposure to the market as I was. Um, but I am a little bit more down the risk curve. And I think, you know, your version of that might be Ethereum and and and ETH treasuries versus Bitcoin and equities. And my version of that might be even more, you know, DGEN because I have an edge in the in the altcoin market. Um, but the way I view it is like I would prefer to like continue to like stable up or have more more cash progressively because I don't think I mean maybe I need to check out your indicators, but I don't think I can time the market. So, I'm I'm trying to like, you know, progressively ladder out. So, go 20% of cash and 30 40 50 almost like every few months over the next year whilst being more aggressive with my moves. Like that's pretty much the way I would.
>> I think that's very prudent. It sounds like a good strategy and and and of course knowing that uh when and it's, you know, that when we get to end end of things, you know, nobody can time the market exactly, not even our model, but but of of course it's it's about starting to to be uh yeah, the risk management part becomes more and more important as we get closer to the top, right? So I think
>> there's also this FOMO though like you you know you have this FOMO like you know should I swing trade my entire portfolio for this final bit, but then but then you know you get into risky territory if if something breaks a little bit early because that can happen even though I think we're looking at like maybe mid next mid to late next year. You never know. It could be Q1. So, and then you're in a weird position.
>> Correct. But but again, I mean, we would love to actually to introduce you and your your your followers also to to the uh to our models there and to how we we do it. Uh and you can have a we'll have a peek into that. Uh we maybe should do that in another show at some point time actually to take you through that and uh together with I'm actually not again, as I'm I'm the macroeconomist here, so I'm not the one actually having all the expertise knowledge there, but maybe having a session with you and uh and and Willie Wu and especially also with Jan who can take you through what what it is that we do in terms of getting people and yeah, getting our clients out as well uh because there are things that will start to happen and that that the algo and the and our framework will pick up on and then you'll get out. You never time it exactly on the top, but you'll get out and within you a time frame where people say, "Oh, now it's fantastic and we we think we can go higher and euphoria is out there and the FOMO and then the model is actually saying, "Oh, guys, you know, get out here." Uh, so so let's let's let's have a, you know, another session if you want to where we can go into that. But I think the the risk management side of you that you do and that's probably what most people should listen to exactly what you say that, you know, you can move a little further out on the risk curve, but you need you need also to do it with maybe a little less stake and understand that there is a final there's an end to it. And I think I'm happy to hear that you also, you know, you do do that because it sounds like that you also see that this is not just going to continue and you're not just buying into this that it'll go to infinity or something like that. I want to ask you about the the recession like how big do you think this one's going to be in in terms of like length and um tenacity? There is different faces to it as I see. First of all, we have the largest bubble we have ever seen. I think people trying to, you know, say we don't I don't know how they can say, look at that and say, yeah, but this time I'm different. Because if you look at the market capitalization to GDP and you put on top of that the crypto market, then you are at 250 or something like percent in market stabilization to GDP. In 2000, the.com was at 136%. We are getting closer to double that that bubble and we laughed at that in the aftermath of it and saying, how did we not see it? Now we're getting double that. Nobody likes to hear that, but it's actually just a fact that we are in a massive uh bubble that we have valuations that are through the roof and people are trying to kind of, you know, shove it away. Yeah, there we go. And even also if you look at the standard deviations to the uh to the to the exponential mean, you'll see that we are above two and standard deviation, which is higher than we have seen it ever. We are think two and a half standard deviations and that is only if you take in the stock market. If you put the crypto market on top of it and it work and it is like a risk thing, >> you even more than that. You earn three standard deviations. It's absolutely insane.
>> So if we don't see this this as a as a um we don't understand that this is a a bubble, then well I mean it is as obvious so that a blind man can see it with a white cane, right? Uh and and we just need to treat it like that. and and instead of you know, you know, being careful into that kind of top, we don't we don't want people to FOMO and thinking, okay, if I don't I mean now it's going to infinity because that is what the big guys are telling on me on CNBC. I don't think that's the case. So uh so I think it's about um yeah, being prudent, being, you know, doing risk management here at which at the understanding that this is late. How bad can it be? That was actually a question. Well, when the largest bubble is going to burst, we can just look at what happened in previous times. And if you also at the same time is going to have a housing bubble, which we have, if you look at the yellow P8, then you'll actually look at that we are in we we have a 2000 situation on steroids meeting a 2007 situation with a housing bubble at the same time. And and and furthermore, you have more public debt, government debt than we had in 2008. Which and on top of that, we actually looking and that is where if you look at the inflation rate and and and in in yields, you'll actually see that we moved into an inflationary scenario. So you have the largest bubble meeting the largest uh real estate bubble as well, plus you are you're looking into a recession which because of the size of debt and so on, probably can be much much worse than we we saw earlier.
>> If if it breaks that bad, what do you even want to be in? Like because
>> if it breaks that bad, we know the US is going to, you know, step on the gas in terms of printing money, that's going to, you know,
>> potentially help markets, but but there'll be this debasement narrative. So like at that when it really breaks, like do do you want to be in Bitcoin? Like is that Bitcoin's time to shine as a as a safe haven when things really break? That could be like the first big test that >> Bitcoin like, you know, where where do people go? I guess like do they run to gold? Do they you say gold's going to come down. So where do you run? You know, you can't run into the dollar because it devalues. You can't run into Bitcoin because it crashes. You can't run into gold because it's
>> not I'm not I'm not sure about this with with with the dollar because it's being devalued. I think again, we have to understand that in a situation where the dollar can actually be be the only thing that you can remove into and especially if it's putting in a big bottom here, you know,
>> for the short term. I agree. Yeah. I'm not talking like in the middle of a recession, you know,
>> if if you're looking at it the moment when the Fed comes in with the big bazookas because they will
>> I think that they will try to to to pump the market back up again. But you're what I said before that we are in a new situation where inflation has now come back into the back back the spines of people. It means that 10 years ago people didn't imagine inflation. I mean inflation was such such a low so low and in 2008 they could print, you know, these massive amount of money and nothing happened. What happened in 2020 actually shifted the expectation around inflation where people all of a sudden thought, oh, you can actually have inflation because they had they they went out and they stimulated into what was a supply crisis where supply went down because people couldn't go to work and demand, they just upped the demand by, you know, stimulating fiscally and also on a monetary way, which means that all of a sudden we saw inflation.
There's no way we wouldn't get inflation, and they didn't see that. The Fed, so the Fed is going to come in. But the thing is, this time around, we have to think like Mrs. Johnson. I mean, I live here in Denmark, and, uh, if, if, if you know, where people will be looking at, okay, I can save maybe, you know, a hundred bucks a month for my mortgage loan or whatever it is. But if she doesn't take that money, Mrs. Johnson, or Mrs. Jensen in Denmark, uh, and spend that, well, then the QE is not going to help the real economy.
And this is where that there is a schism, a difference between the financial world and the real world. And you can look at that already. If you look at the, not the market, the, the job openings, it's plummeting. If you look at the market doing like that, normally they follow. So the thing is, there is a difference between the financial world and the real world. And the real world is down to what will Mrs. Johnson do? In the moment she saves 100 bucks, if she starts, doesn't go out and spend that thought, that those money, then, but she says, you know what, I've seen inflation, I've seen, um, uh, price, I've seen, sorry, I've seen yields rise or rates rise, and my, my mortgage loan is up to here. Um, and I've seen my neighbor or my husband losing his job. Is she going to spend that money? Is she going to sit on it and say, you know what, I'm going to save this for for a rainy day? If she does the latter, and that's, that is actually what we have seen more and more of, that you then you get a limited effect on the real economy from monetary stimulus.
This is actually back to Keynes' own thinking. He was asked also in the theory of this and that, so what is going to happen the moment where you simulated the [ __ ] out of things and you have the, you know, perfect valuations and nothing happens because people start to save it. Well, in the long run, we're all dead. That was his answer. We are actually getting closer to the point where people may say, you know what, I'm not going to spend this money. And then you actually see that the monetary stimulus is becoming impotent. It's not going to work. And this is the, this is the horror or the nightmare for the Fed, because then their tools will not work. What it will do is it will create something in a financial market for a little while, but eventually, you cannot have the financial market and the economy, the real economy, going in in opposite directions. It doesn't work. One of them will pull the other one down. And I can tell you, I see that the financial market will be pulled down by the, uh, by the real economy.
So the financial market may react to what the Fed is going to do, because they are, they are going to come out. And this is the, this is the narrative now. Everybody says, yeah, Henrik, but you don't understand that the Fed is going to come in. I can tell you, honestly, I can tell you, I understand that, but I fear that moment, because that moment could be when they start, they actually triggered what you talked about earlier, stagflation. That is the moment when the real economy does not react to stimulus, but the financial market starts to see the money circling around, and you'll see that moving into commodities and the likes. And that is the moment you don't want to be in, because then you'll see your groceries are going to increase in price, but you lose your job, and that, and your 401 or whatever it's called in the US is going to to decrease to to much lower levels or half in size. So we, we, we are at a damn if you do and damned if you don't for the Fed, size for the Fed at that point. But I think that is coming. That is the problem right now. That is that we have no more free lunches. People think, try imagine, Miles, if it was so simple that we could just dribble or sprinkle money on every problem we have in the economy. Wouldn't you think that the last 400 years we would have seen them do this before? And actually, every time that they have done it before, and when they did, you got inflation. And that's what also happened into the, you know, into the French Revolution. Actually, that was what they did. They printed what was called assignat or something like that at that time, and you got inflation, and then the people rose up. So if they do this this time, I think there's going to change, and that's why it'll be a horror. It will be a nightmare for them. It is not so simple. If you ask your grandparents, my grandparents back in the day, say in the 60s, why didn't you just sprinkle money, liquidity, every time you have a problem in the economy, throw money at it? It's that simple. It's called Modern Monetary Theory. It's something we're going to give, you know, a, um, Nobel's prize for in the future to somebody who's called Beni. Um, but, but anyway, why didn't you do that? Um, you know what they would say to you? Don't understand, Miles and Henrik, that if we do that, we get inflation. So this is the problem right now. People live in a world where we think inflation cannot soar up. We've seen a little of it, but they will, they can just print, print money on it. What if they, if that actually leads to an in a sustained, uh, path of higher inflation? I think that's what you're seeing. That is also what Jeff Gundlach is talking about, that bonds are going to not perform well in the long time frame here. I see the same. I think we're going to see higher inflation over the next coming years. And if they do like that, the Fed, they're going to trigger something that is worse, actually, which is stagflation.
It's, it's so, it, it's so fascinating. We could speak for hours because then, you know, I'm thinking while you're speaking about the implications of AI and this whole, um, narrative of like, and this may end up being the case, like the US just decides, you know, our national debt's too high. We kind of, we need to outrun things here. So let's just pump as much as we can into the tech sector to try and like achieve enough of an efficiency or productivity increase that we can like offset what's happening. So, it's, it's going to be fascinating because that will come time of a lot of job displacement.
But, but yeah, you said that exactly. But that requires still, it requires by the end of the day, it requires demand from the consumer. And then we say, yeah, but we're going to make sure we're going to invest into the AI sector. What is that going to do in the first place? Efficiency comes through cutting jobs. So that's not going to create a lot of demand from the, the consumers.
It's going to create some larger profits in the, in the, in the, in the economy, in the with the, um, uh, with the companies. Yeah. But it takes a little while. And before you actually start to get these people over here, by the way, which a lot of them are my age and haven't been working with AI. I, I, you know, I manage. But there will be a lot of people that are my age or older that will be completely sidelined from that. And that's actually what you already see. If you look to the structural unemployment in the US, it's going up. The number of people that are unemployed for longer is going up. That is because some people are simply saying, oh, you know what, this is too difficult. So there is no silver bullet to this. We're just going to pump something into a certain sector and it's all going to be fine because by the end of the day, you need the consumer to be fine. And the consumer is up to here with debt, and the yields are up to here, the rates are up to here. And we're looking into a situation, and that's why you see the consumer sentiment is so low as it is. It's really low. And Powell was asked about that. Why is it so low? Something about tariffs and blah, blah, blah. No, it's because people can't afford to pay their bills. And the number of people actually paying, you know, having two or three jobs are actually just going higher and higher. And it's higher than going into the into the financial crisis. Why? Because people need to make ends meet. So there is no silver bullet to it. And that's the problem about this. This is that we have tried with monetary stimulus. And Ludik has said this very clearly. You can create something that looks like wealth. It's a perception of wealth for a certain amount of, and you'll see a lot of distortion of capital moving into certain markets, into certain areas, and people will feel good for a certain amount of time, and then it will not feel so good.
Lead to the collapse of the US dollar. Sorry to cut you off.
No, it's fine. Too much, man. So,
Is this the collapse? It sounds like that's how that's how it collapses over multi-decades. Of course. Yeah. But I mean, it's not the collapse of the US dollar as for now, because for now, you're going to see that everything is so entangled in the US dollar that it will require the dollar. And they will see that the dollar actually rises. And the only thing that the Fed can do, and again, they'll be damned if they do and damned if they don't, they need to step in and do something about the the rising dollar, if I get it right. And and that is what is going to create that whole situation. So, yeah, it's going to create inflation, which is going to be felt bad. And that is going to require down the road a monetary reset, which is all I'm talking about. That is the further down the road. And that will not happen into a stronger dollar. That will happen into when the Fed comes out and fires the big bazookas and inflation starts to move up again. Then the rest of the world is not going to say, hey, dear US, why are you pushing this inflation on us? Because we can see everything is just rising. And then you're going to see that we'll need a monetary reset. So I think a monetary reset will be, you know, the outcome of this down the road, not right now, because they'll go to come out with the the the the the QE guns first and see if that can work. Will the dollar collapse on this? Well, as I said, I think the, you're going to see somewhat of a a reset at some point. And I think, you know, that there will be more of a Western world versus the BRICS or something like that. And we'll see in the Western world whether, because the holders of the reserve currency are always going to to to uh prevail and be the strongest. And that that is just it. I mean, there's a reason why the US can have 50% fiscal deficit. If we had that in Denmark, inflation will be sky-high. You can have that in the US and inflation is at low levels because you have the the strength of the US dollar. If you did not, that would be a completely different matter. And that is also why I'm saying to people who wants Bitcoin to come in and take over. I'll say you do not want that. You actually sitting on one of the most the strongest pillars of building, you know, society, building your your that is the strong, the the reserve currency status. And you're saying you want to shift that with something you don't control. Why would you do that?
I'm, I'm just, I'm interested how you are planning on playing this because obviously, um, you, you, you know, you spoke about how you're going to ride this next wave of of risk. Clearly, you'll go out of that risk back into dollars. Are you just swing trading this? Like, are you, are you denominating your net worth in US dollars longer term? Because I know a lot of people that, you know, they'll denominate their their worth in gold or Bitcoin or, you know, a harder asset than than money, I guess, is the narrative. Like, how are you, how are you framing this if, if that question makes sense? Because over like a 10 to 20 year period, if your goal is to like swing trade throughout recessions, um, you know, out into a recession, out of a recession, then you have to denominate your money in some currency. So, are you, are you thinking with the mindset of like, I want to accumulate more Bitcoin? I want more gold? You know, you know, how are you going to, how you going to play that like 10 to 20 year wealth trade?
I think it's all about ratios all the time. So you can look at a ratio where you have like a, like a, a triangle. So you have gold, you have gold here, or precious metal and commodities. I'll put that up here. And then you'll have like over here, you'll have risk assets. And I'll put Bitcoin, I'll put NASDAQ and so on in here. And then I'll put the dollar out here as it's as a single, because that's what we. And and then it's about playing this at the right, you know, at the right time. The dollar will also be together with the bond market, also with with bonds down here. So it's about understanding macro-wise where you are. And in the the phase where you see a deflationary bust, you want to be down here in the dollar, in the dollar strong, because that's where the dollar is going to strengthen. That's what we saw into 2008, also March to September, October, uh, in 2008, um, into a deflationary bust. Then you want to circle out to what the Fed is, you know, trying to to create, which is inflation. And then you'll want to circle up to this to the precious metals. I know everybody thinks that's now. I don't think it is. I think it's going to come down quite strongly. But then you're gonna
Gold can go much higher when that happens. Like, so it might dip, dip down now and then and then go to like,
Extreme levels. I mean, I, I also, if you look at the, and then you, you can look at the, the ratios. So if you look at the ratios between. Yeah. So I think you, you're going to see people don't like this, but this is an Eiffel Tower kind of thing. And you actually seem like you can have a bottom that can, a, a decline that can go a lot lower than people think. Uh, and then you will probably say that down there at some point, the Fed is going to come in, and then you want to shift into gold. So I think gold has had its shiny day, like it had into the 2007 also and and eight, even. And then you'll see that decline of 30, 40, 50%. Which people think is unthinkable, but I think that's what you can see, especially if the dollars comes up. But then you want to shift into it. If you want to shift into that, and then you'll have to see when is it that you want to go back from the, uh, so you go from into the dollar first, then you go to the, uh, to the, uh, to the gold, and then at some point, risk assets will then become interesting again. And we'll have to see where Bitcoin is at at that point. Is Bitcoin at, you know, I don't know, 20,000? Well, great. People think I'm crazy just by saying 20, but I could see a scenario where it's much lower than 20,000. And that is the the situation that I think people don't really
So you're not holding any long-term Bitcoin then? Because if you believe it's going 20,000, you wouldn't want to hold anything in in long-term storage.
Absolutely not. Absolutely not. And we have seen it four times before. We have seen 75% crashes. And if you look at
Don't you think the institutional, cuz I'm someone that does hold Bitcoin long-term. So we, we differ on this opinion a little bit. Like, don't you think the the institutional, um, demand is will prop up the market a lot more than we had during prior bare markets? Like the fact that you have, you know, BlackRock and all these big institutions like heavily, you know, vested and they've pitched these these assets to their clients. So, like, don't you feel like it might be a little bit more protected? I also think there'll be a big bare market, but 20K seems low to me.
I, I, I'll, I'll even, I'll say if we don't get below 20K, I'll owe you whatever you want to drink at, you know, when we meet one day, hopefully. Uh, and and a, and a big dinner. Uh, you're going to see more less less than 20K.
I'll need a bigger, I'll need to eat my sorrows away.
Yeah, at that point.
Yeah, but if I haven't sold.
Think about, think about it. Think about what, what Bitcoin, how it's going to like at 120 in in in Dixie, if we're going to see that. It's not going to like it at all. It's not going to like a recession.
Yeah.
We always hear this about the institutional buying. We also heard that in the.com. We we saw the institution going in and telling and talking about these fantastic.com companies, only to see them going bankrupt within 9 to six, 12 months after. So the institutions by themselves do not know. The institutions are now coming in. They are almost late in this to this party here, right? They're late. I mean, you've been early. You've been good. You did it well. You were one of the early spotters there. And you know, the Jan, the CEO of our in our company, he was early to 2016, I think he got in. I mean, so some of the. But it's always nice to write what I think is a, a bubble. But people say, "Yeah, but you can't have that because it has a limited supply." There's one thing that is not limited around this that is whatever buys Bitcoin. Bitcoin is not the dollar. It's actually the the tether and so on so forth. And we see that these these can be, uh, like this, these can be printed, minted. We don't see, we don't have any official overseeing of all of these things. So even though Bitcoin can be, you see there's a scarcity to it. And you know, that was the same thing you said about the the the ground or the the land underneath Tokyo back in the 1989. Everything said, hey, but there's only so much land and you can never, you know, you can never have more than that. That's why prices will need to go up and up. And then you have the largest top ever, uh, that that's taking a long time. So the scarcity thing is not, cannot save this. And what would it mean? What would then mean that 2 million? I asked in in another show, I said, what at what point would you consider Bitcoin to be in a bubble? And then it was one somebody said to me, yeah, 1.6, 6 million maybe per per per Bitcoin. It's like, okay, where does that number come from? Yeah. Because then it equalizes gold. It's like, okay. So that's, that's a pretty big, big, uh, you know, kind of, uh, assumption to say that everybody will adopt it like that and it's going to be. And then I just want to say also, if you look at the chart technically, on the chart that we looked at before with the negative divergence there, going back then, it normally, if you look at that technical divergence there, you will see that actually the wave that goes up to the peak there where that starts is often where it actually goes back to when the whole thing unfolds. And that is technically just telling us that we're going to go below 20,000. So I would not be holding Bitcoin into a massive risk-off situation. I think it's very risky to hold anything risk asset. And if you look at the four declines we had in over the years where it dropped more than 70, 73, 75%. NASDAQ dropped by 20%, 18%. NAS and Bitcoin dropped by this. Why would I think we have the largest bubble in the world, a NASDAQ, which we can look at, market capitalization, AI, and so on, and think that Bitcoin is going to perform well if the NASDAQ is going to crash? It does not make sense. So, I think people need to to step away from the emotion, think about how have previous bubbles been looking like, and then say, "Hey, I got a great vehicle. I got a great ride, but the narrative does not make sense if you look at it."
I could ask you many follow-up questions, but we're, we're a tad under an hour, so I think it's, I think it's a good place to stop. But super interesting.
Super interesting. We'll need to do something else. If people let us know what what you thought of, um, Henrik, if you haven't seen his content before, in the in the comments, and if if people like it, we should do a follow-up. Maybe then we can, you know, have have more indicators and actually show people the systems a bit more if people would like that, let us know.
Yeah, the frame, we would be love to to showing the the framework to all your followers in terms of, you know, how it has been performing and how it, what it is that we look for. We have done that previously also and, uh, and that it gives us an idea of at least when to get out. And, uh, we'll, we'll be happy to share that with you, your your crowd, Miles.
Well, amazing. Well, thanks very much, Henrik. Lots to, uh, lots to chew on for the viewers and, um, yeah, I'm sure we'll see you again.