Live Q&A Fed's Cutting Phase What Happens Next to Economy and Markets?

Hello everyone. Hello Henrik. Good to see you again. Good to see you. Good morning.

So the idea today is definitely going to be more on the liquidity side of the equation. Um and giving people a little bit more of an insight in how we're thinking about this last leg, right? Because I think there's a lot of misconceptions out there that we are projecting a more bearish um scenario. And I think it is not as simple as bearish or bullish. I think things come in phases and nothing goes up in a straight line like we always say. So I think it's important for us to focus a little bit more on that. And just to clarify some of the Twitter comments that I've been seeing as well, the Q&A session that we're going to do today and part of the webinar is going to be focused on the Fed's cutting phase. So basically focusing on what happens next um to the economy and the general markets.

Uh my name is Yan Alman and I'm joined by the famous um Hrik Zeber and we'll obviously be going through a lot of different topics like we always do. Uh but before we begin, I just wanted to note that this webinar does not constitute any financial advice specifically. Everything that we discuss are personal opinions on the topic at hand. Always conduct your own research and consult a professional before making any financial decision. Participation this is voluntary and the information provided is intended for educational and discussion purposes only.

So having said that, with no further ado, I would like to give you um or hand over the the reigns to you Henrik to maybe start and contextualize the topic that we want to discuss today. We have the Fed, we had FOMC um Pal coming out Wednesday and telling us that they were going to cut the Fed fund rate by 25 basis points. Seemed to have been one in the committee who wanted to do more, which I by the way thought would have been prudent at this point, but uh leave that aside for now. And uh well that it shows us that they now starting to to realize that first of all inflation is not such a big problem and they also focus more on the labor market. It seems like they are more concerned with that even though they did not paint a um black picture around that. It seems like he was saying you know like things like the the economy is strong and and other things like that. So they they don't seem to be in a hurry and they think to seem to be you know okay with the uh the development in the economy that they as they see it. uh which is quite surprising. I would I probably I would be a little more nervous if I look at the non-farm payrolls but they tried to explain that aside why uh yeah various stuff going on also with migration and so on so forth. I think that is a very yeah ah I don't know what to say but but but that's the situation.

So now obviously what happens next? Because are we then in the blowoff top? Are we not? Are we seeing you know there are so many people now starting to say oh now we have an you know 3 to 5 year bull market going on. We have the I don't know it's called the everything code or whatever it's called by some people also. I mean all these things and I think we just should you know nail that down and then understand that as you said it's not about being are you bearish now or you bullish now. I mean it's like you can be bullish short-term but still being bearish medium and long term and uh and it's like the you know again the Titanic hitting the iceberg it doesn't need that you know it's doesn't sink immediately things can you can see that there are structural damages that cannot be repaired and and that is going to you know bring the sip to to the bottom of the ocean and I think that is that moment has passed now and it seems like we are to me at least we now start to see that explosive development there was some one guy also were asking me but where's the blowoff top and then you just look at and just say try look at it since you know when I started using that phrase in 22 and to the point where we are now it's more you know you had a couple of you know dips uh and then you've been going straight up uh ever since that is the very definition of it that is what we have right here and uh and I think it's going to go much more crazy in the next few days and weeks here it doesn't mean that everything is fine uh it just means that rotation of capital also retail pouring in I think it's So very often we'll see that it will be retail. It'll be the the moms and the pops coming in and saying oh now we see if you know Meta or Google or whatever is going to be moving up fast and then they'll start you know putting their hard-earned uh savings into it only to understand that you know at some point that it's uh right into the top. So I think we are in the phase of that is actually looks very much like we are well well progressed on that and the Fed thinks that it's in you know there's no panic there now and and actually that's a we usually have the saying Goldilocks face and uh this is not the Goldilocks face in that sense it's in it is actually in Goldilocks phase in the in the sense that the Fed is not too panicky because if they had come out and say 50 it could have been a problem. So now they came out to a 25 basis point and people say oh they they kind of they have in control and and things are fine. So um so that's why I think you know you'll see that things can move up uh quite strongly here until the moment where it becomes apparent that things are not so great.

Absolutely. And I think for the sakes of this discussion as well we'll be touching upon two very specific things. On one side, it's the economy, the business cycle, how the the reality of the facts hit working Americans, working class um or middle class workers in in Europe, Asia, etc. And on the other side, it's this understanding of the liquidity cycle where, as we've said many times before, the crypto, the Bitcoin, crypto combination is the canary and the coal mine to future expectations of liquidity. So, it's super important to be able to balance those two concepts within a larger understanding of what a blowoff top looks like. What actually is driving that um and also what a a subsequent crash and correction um actually looks like and why and how that gets induced, right? And I think this is one of the the key things that we want to decipher and we want to present and I think we're in a unique position to be able to do this because of that variety and expertise. And I think in today's meeting or today's webinar, I will um present a couple of things as well using Hawkeye um to be able to explore more of the liquidity side of the equations, more the short-term things that are now crystallizing or kind of aligning to to to your Goldilocks point that are indicating more upside within the next six to eight weeks, right? And when we talk about upside, we're not talking about a rampant bull market for the next 24 months, right? We are I think we're both of the idea that um especially on a risk adjusted perspective we are getting to the point where taking chips off the table becomes a prudent thing to do.

Blowoff tops are obviously inherently difficult um to understand and to test. Nobody has ever been in a bull market and in a blowoff top face saying this looks like a blowoff top. It always looks different than when you look back on it with 2020 hindsight. the the famous last words was who was it that said that probably somebody here from the audience could help me but it was like we have reached a new uh plateau of of valuations I think was in 1929 and and it never is right so when things go up straight up like in an Eiffel Tower it always comes down on the on the other side so so I think it's it's more about being realistic on that and looking at some of the valuations and looking at some of the stocks I mean you know Nvidia is there Palanteer is there but also just the fact that um NASDAQ is top 20 21 22 times since 2009. I mean it's quite remarkable, right? So I think it's again people think you either have to be bearish or bullish right here. I mean that's not the uh that's not how we see it. So um so I think the the liquidity part is what can drive things for as long as there is a support in the business cycle. That's at least how I see it and uh and and the business cycle meaning the economy. But there there you know there are times where where the big things the big wheel is starting to move and that is when when the consumers are not you know are not following along and we may think that the financial world is so important and we may think there is something about stable coins or whatever it be that can bring in liquidity but by the end of the day it's about can Mrs. Johnson pay her bills and if she cannot then it's a problem because she represents 70 80% of the economy and the financial world might think that they are very important but they are not in when it comes to the business cycle.

Exactly. And I think this is why that differentiation I think fundamentally makes a lot of sense and is something that we should be um exploring further in today's webinar and obviously in future webinars as we make steps towards that final um kind of top right which again just for for our viewers we want to make clear that we're not in the business of predicting when that happens. We're in the business of being able to identify what key elements are going to start changing or going to start inflecting um into a direction where the likelihood of a top becomes more and more um likely. Okay. So, having said that, do we do you want to maybe start with some graphs? Do you have anything that you can show us?

Oh, something I can show you uh your beautiful uh graphs that you Oh, my my you might you mean my art? Um the art. Exactly. Let's look at something that is telling us that we actually do have time. So instead of just being so bearish all the time, then let's look at something that tells us well there is actually still uh some time because one of the things we would we would expect to see happen if when when things are starting to unfold uh is actually that the credit spreads. So it means that be credit spreads on you know bonds versus you know uh so private bonds or the company bonds versus the um the government bonds and so on so forth. But this this is one one thing that is important where we see that all of a sudden if you know for as long as these the spread goes down people are not you know fearing that they could lose their money on you know what is maybe a little more uh um risky uh investment and we can still see that that is actually still you know rather low here. I may have technical perspectives on this that we could see that this is actually maybe putting us in for something that could explode, you know, very very fast to the upside which could suggest a black swan event. And we saw some, you know, we we we we have a lot of things out there that can go wrong. We still have a Japanese situation, I think, but uh but but there can be things that can all of a sudden happen. It's not normally what happens, but it could, you know, suggest that that could be the situation this time. But this suggests at least for now that we have to say there is you know the waters is the waters is calm and there's no the sea is calm there's no uh big um storm right now here in the financial market. So that shows us also okay for now we can still be you know at

Could I just interject could I interject one thing just for the viewers that don't know what the what we mean by credit spread. So the credit spread, what we're specifically talking about here is the the extra money or the extra yield that investors demand by holding higher risk uh junk bonds, right? So basically corporate bonds versus the safer um higher grade government bonds. Okay, just to make that clear.

Yeah. Sorry. So when you have a widening when you have a widening spread, it means that there's something um some basically they're demanding more yield because they're seeing inherent risk, right? There is a so so you want spreads to be to be tight, right? where so when they move up when they start to move up like here or when we saw it into the to the.com also we see them move up here that actually tells us that you know things are starting to develop as you said there will people are expecting or or wanting some kind of risk premium on actually taking on these uh riskier bonds and uh and we see that is not the situation right now and that is one thing I have to say you for now we need to observe that and I will not call anything of any crash or top or anything like that unless we see something happening here it may happen really quickly and that can be due to the complacency I think we have in the market right now but that is one thing we should uh absolutely be looking at then we have uh let me see what else we got in terms of here yeah this one here and this is one that I think is is starting to show something that you know again all the funds telling well we have a 5year bull market ahead ahead of us remember when we get closer to a recession short-term yield starts to drop this is the oneyear yield we got right here and we've been bouncing off of this neckline for some time and now it seems like it starts to drop here. It may bounce back up again. I cannot say that you know it could do this but uh but it seems like this is dropping right now. We see the momentum of it and this is what is important. This is what I think some of the from the financial world do not really understand. That's why we need engineers also into the financial world that can tell us that momentum is important. Especially when you have a species like the the financial economy and the the global economy when there is a certain momentum to things. You don't just change it by the Fed sprinkling a little, you know, salt and pepper on top of it. It's really about the big machine and and we start to see the short-term yields dropping here. That is a warning sign and it's especially a warning sign if we can uh when we see that uh let me just put the on employment level in as well. uh new paying here and especially when we put the unemployment level in as well. We we can easily see what's going on then. I mean the the economy was weakening here and start and we saw that the unemployment level was starting to move up and yeah and even here it was actually started to weaken but anyway but we you get the picture here as well. It may not happened as fast this time as we've seen in previous times but we also have to remember that people actually got a lot of stimulus. Everybody got a stimulus check in in their hands after co. So they everybody was kind of you know bolstered up for the uh for for some kind of headwind but that savings is now has now gone. And now we're looking at the uh the the employers actually saying oh yeah do we actually need this amount of people in the uh in the workforce and that's the next one we can look at and say you know for as long as they keep people in and they don't fire people or hire lay them off. Well that's that then we can say that things are okay. But the problem is if they cannot find work for them, they will, you know, eventually start to lay people off. And if you look at the Europe capac capacity utilization here, you can see how we into the recessions. We've been down at, you know, when it starts to come down, they have to start cutting people and you get the recession. That's how it works. And we see now we at 778% capacity utilization. That is not high. That is not a time where people where the businesses should start to say, "Oh, we just need more people. Let's just hire some more in." In fact, they don't. And that is why we see also that the open jobs if you look at the Jaws and this is where we can so we look also the but that's why we see the open job openings here are actually dropping more and more and you can say yeah but we just down here you where we were in 2018. Yeah. Well that's that's correct but there's nothing telling us that this is stopping by now and and especially if there is an over capacity why would the businesses open more jobs up. So at the and at the same time we see that there is so much um you know um when it comes to the consumer that there is delinquencies are moving up slowly not everywhere but it's slowly moving up and the unemployment level is absolutely moving up.

So, and I think also as just getting back to it then so but but the the S&P you're telling us the the the real story. I don't just don't see that. I see it as the real the S&P is in a traditional bubble financial bubble based on AI and crypto talk and all of this. And if you go back and you look at all the you know the bubbles you had through time 1840 1920 and so on so forth you will see every time it was around a technology that was introduced. So when a technology comes out people think oh now we are you know it's the we were such a modern world and then you have that the disconnect between the financial market and the real market and the real market Mrs. Johnson there sitting there with her inflation that she's been seeing uh the level has come up that hasn't gone come moved down she hasn't lost her job just yet but she finds it diff more and more difficult to actually make ends meet and and that is the problem and that's the real world this is the financial world and these are the the ones talking about a two or three or five year bull market this is the real world and this is the real world so I think the Fed when they go in and they look at this they are actually they are I don't know it seems like they're not really understanding understanding the the what's going on because if we look at the at let me just see if I can remember I can talk and uh see yeah there we go um if we look at what the the we have here um looking at the Fed and they're doing their 25 basis point and talking about inflation that's another thing that that that is such a misconception inflation at 2.7% and talking about going up look at this guys this is this is going up this is the rise that people are talking But it's nothing. This was uncomfortably low for the We don't like inflation to be lower than 2% uh much lower than 2%. This was the level we actually also saw in September of 2008, sorry 7, 2007. And inflation moved up into the into the recession. Why? Because you see inflation is what is called a lacking indicator. And that is because there are purchases prices and then it is on it's on stock and then it goes through this the whole value chain or the whole supply chain. That's why inflation can take a little longer before it actually starts to to dip again. But the problem is now that the Fed is looking this ridiculously 2.7% and thinking that is a problem even though inflation was up at I think it was almost about 5% there was 5.6% into the financial crisis where inflation was not the issue. It's only because it comes it lacks it comes later. So the effect comes later. So if the Fed is too hawkish right now which they are by the way and also the same into the com here and they do not understand that this is about the consumer and the consumer confidence uh which is in the gutter at this point. I mean if we look at the consumer confidence here and unemployment well then you can see that when consumer confidence starts to drop well this is an inverter for the unemployment then unemployment rises. It's been that and it's the consumer that drives the economy up and down. And right now the the the Fed is un sorry my French here so freaking arrogant to talk about a great economy at a time when the consumer confidence here is at rock bottom. I'm not sure Mrs. Johnson is agreeing with him. And so this is as I see so the the 50 basis point excuse me but would have been prudent here because we all know that even though unemployment level is a little higher now than it was in 2007 September the Fed fund rate was also a bit higher but the development in non-farm payrolls here as well have been equally as bad. So and they were late in September 2007 why 25 basis point. So I think they're, you know, they they are really not on top of their game. That's my thesis anyway.

Yeah. I think there's a point to be made here on a a general fallacy that that exists in in markets and I think in general um kind of as as a life principle, right? That people tend to overestimate what you can do in one year. They tend to underestimate what they can do in 10. And I think this is as true for measuring effects, right? So we always have this discussion around AI tariffs, right? which I think are short-term deviations to a underlying structural phenomena that is going to happen no matter what. Right? And you can have an argument about tariffs and AI accelerating or exasperating a process that is already in place. Right? It's not like AI and tariffs are creating this out of nothing. I think the problems that we are seeing with unemployment, consumer confidence, there are things that happen over many many years, right? This is a problem that has been coming I think probably ever since 2018 and we just don't talk about 2018 as much anymore because of the fact that co happened and because of the fact that we've papered over massive cracks that are still very very much there right if you you can even go go the route of talking around the quality of jobs right which is obviously a much more subjective metric but it's not just about the number of jobs it's the quality of jobs right um and this is a a problem across Ross the board especially when you talk about the influence of AI right so yes AI is clearly a part or in part responsible for reduction in job openings because you can be more efficient with the same amount of resources but that is not the case with everything that is not the case in production that is not the case in high high-end um precision um types jobs where you know AI still is hallucinating creating deviations that have to be double checked and triple checked right so there this is not a general phenomenon I think will become more of of a a general phenomena over the coming years. But these these changes don't happen that fast, right? Especially not on a global level. I think it has to do with culture. If you compare, for instance, Italy and maybe the general kind of average European tendency to adopt technology versus the US, there's massive deviations there, right?

Yeah. Yeah. Absolutely. It takes time, but it also takes time, you know, for people. I mean, I'm 50 and I uh I can I you know, I can feel the the the pressure from young people coming in, understanding things much faster. I think I'm pretty okay with following up on it. I actually use AI on a daily basis and but but the um but I can understand other 50 years old, 55 year olds who have not been sitting in front of a computer and using you know technology on a daily basis like I have for the last many years. Y and then all of a sudden being met by the demands that hey oh by the way and you know just the whole digital age just using this you know the the the iPhone or the phone is is something that can be a step for a lot of people and um so that is also why I think there's a as you said there's a cultural thing but there will also be a disconnect simply to people that are a little older the older generations to actually adopt this uh this the World War II generation right yeah yeah and even I think we just look at the gener what am I X right is that of what I am I think I I don't know old that's all I know prehistoric prehistoric yeah yeah I remember the second world war and the first no so so I think it's a the technology adoption is not just something that comes it it requires real people also by and again it will not we also have to differentiate between something as you said before that can change that will completely change the world in 10 years completely change the world in 10 years and uh just think about it also with the internet I mean by at 2000 in year 2000 how many was active you know doing their uh you know whatever purchases uh clothes and whatever on the internet and then by then by two 2010 I think I did most of my mind by by 2010 at that point so things in 10 years can really really shift uh and I think we see the same with AI here it's going to g a leap in in in productivity the problem is and this is what people need to understand the promise and the outlook of technology is not a guarantee of returns. And you can just ask the investors of the 1920s bubble, the 1840s bubble, and the 2000 bubble about this because they thought that they couldn't invest into something and all this technology was just going to make, you know, things going keep going up and they learned it the hard way. And now we have a new generation and the um the oldies here can then sit and say, "Oh, we we've seen this before." And I I actually would encourage people to study uh the whole the whole sentiment around that and then think it's not like history does not repeat itself. It rhymes and this rhyme here is just so good that is you know so so clear.

Let me actually interject a question here because I think it's a question that came up um for those of you that sent us the questions before hunt before the webinar and it's a question that just came up through the the the feed as well. this question around silver and why silver isn't moving in the way that gold is. And I think I'll just maybe start with two topics that I think are are relevant to discuss. I think one is that we're dealing not only with a a decoupling between expectations on the asset side versus economic reality. But I think it also has a lot to do with the underlying trust that people have in the system and and the the specifics around the trust that has always been there. Especially my generation, I grew up I I was born in 91, right? So I grew up in a environment where the underlying understanding of using the dollar as a as a common common denominator for world trade has never been questioned. This is the first time in 20 odd years, right, where I've I've for the first time really have had to really think about this, right? So what is the dollar? How does the dollar fit into the trust in the western system, right? And I think the gold in a lot of ways is counterbalancing the lack of trust in the underlying dollar, right? And that's probably also the reason why gold um is deviating from all the other industrial commodities, right? Like things like silver, copper, which are a lot more linked to industrial demand, right? Even though there's less supply of silver, it's a lot more linked to that than it is an actual store value and actual monetary value when you actually start losing trust in the underlying system, right? Mhm. Um, and for those of you that actually want to dig deeper into this, read up on a thing called Gresian's law, which basically talks about how good money always crowds out bad money, and there's always one winner, basically, right? So, if you have the option between Bitcoin, Ethereum, or gold, and silver, you're always going to choose to save and hoard the more valuable thing, and you trade the less valuable thing. Um and I think in this specific case it's an extension of that in terms of how that also relates to industrial demand for these underlying underlying materials.

Agreed. I think we um if we look at it from again 40,000 ft here that it's um we we did see a significant bottom in 2020 and uh I think this was the I said it said it before also I think I actually thought I was one of the the inventors of that term but it I was not. um uh that we had what was the inverted fula moment um or the inverse fula moment and what do we mean about that? So Fuler was this uh central bank or the Fed chairman back in 1981 and he hiked rates to the degree that a recession you know he kind of you know introduced a recession just to bring down inflation and uh and he did that successfully and he broke the neck of inflation the inflation expectations especially and this is the word expectations because if people start to get it built into their backbone that inflation prices can actually move up that is actually what starts the cycle of moving that up and by 2020 when everybody was panicking into covid and we had a situation where people couldn't go to work because of you know the restrictions and then you ramp up demand I mean it's the first lesson you got in economic studies you know first you know supply and demand so you people go home why do I say all this because I think that was a shift I think this is a shift that will be looked upon like we do now in 1981 and thinking this was the shift when we get went from an deflationary period when inflation and people expecting oh there's no deflation start with the influ inflation and it just you know uh inflation pressures just kept uh pushing lower in also because of the global of globalization and so on so forth. Now we see a shift there globalization wise, supply chains are now changing again and we see then also expectation of prices actually being able to move up and we have been printing all this extreme amount of money that all of a sudden might start to circulate which means inflation can move up and this is the new the new world this is the new setup and I think that's going to change a lot for for a lot of people here so um I think that the framework there I mean it's simply not to underestimate the the importance of this moment and what we're starting to see doesn't mean things will just keep going up but I think that what we've seen with silver and gold as a metal is the expectation of that or actually that we are going to see now inflation moving higher and that's why also gold and commodities will move much higher and we have I mean the move of commodities out of that bottom in 2020 was actually I think the first leg in a massive commodity bull market we that doesn't mean that we go as we said again nothing moves in a straight line we go up and we come down quite strongly which may be in a deflationary phase. But if I'm right on the stimulus that the Fed or everybody knows that the Fed is going to come in if we if we get a bust, well then the the the the trigger of what could be an inflationary period or longer could be what the Fed is going to do next year. And I think maybe silver and gold have been front running all of this and starting to say oh we got inflation coming hence we need to be ready for it. And maybe people have been front running it a bit too much in the current environment. I think they are right, but they are early and I think that is the And people say, "Yeah, but Henrik, it's up at 3700. It's just going to keep going to the moon." Let's see. I think the dollar is going to go to 120 on the Dixie, and I think it's going to crush uh crush it quite hard and I think that will be the real buying moment. But yeah, it's uh it's probably a front running, I would call it, of of of a real development uh that is coming down the road.

Yes. And it has signs of of being a bubble for exactly that point, right? or it's it's driven by by a sort of mania as well that is I think in a in a big way driven by a distrust in the underlying um generally accepted system of the dollar. We've seen now I think with numbers that have come out of China. I read an article about two days ago that showed that the actual real demand on Chinese actual um gold exchanges 10 times higher than what was reported. Yeah. Right. So there's a frenzy there that is that is fueling this and I think Oh yeah in a big way um driven by um rationality. Right. You always have to remember that what is rational to the individual investor becomes irrational when you look at the collective. Right? If everybody like in co if if you go and buy you know for a pandemic right you go to the supermarket you buy water um toilet paper pasta whatever um that's a rational response right but if everybody does that all of a sudden you have massive shortages massive mayhem that kind of you know propagates through the supply system or the the supply chain and I think this is basically what we're we're on about with with gold and I think there's a clear delineation between how that has been driving Gold's price versus silver. I think silver has a lot of very different structure. Maybe you can talk about the underlying TA structure, Henrik, if you have the the graph.

Yeah, it looks different. It does look different. It does. It does. Very much different. I mean, that's no no doubt about that. Let me just see if I can find the S500 and the I'm actually looking at So, if you can just sing a little song while I'm finding it. Um, no. So, I think we we mentioned we talked about this the last time also. And and also to this point as you as you find the graph the there's a question about like what what is it that you hold in a recession. I mean, it really goes back to dollar being king, right? So, yeah, we're in a phase now where everybody is undermining the dollar, right? And that's again going to the the concept of everybody overestimates in one year, underestimates in 10. It takes a lot of time for people to wean themselves off of a well-accepted system that they've been that they've known for for 20, 30, 40, 50 years. Right? So we're talking specifically after 1990 which was really the let's say the Bretonwoods um the Plaza court sorry post plaza court right which is really what we're what we're specifically talking about post Breton Woods in the 1970s right so we're now basically questioning a system that has been there for the last 45 50 years okay yeah even more I'll say even longer second world war 1944 was the bread right and and then you had but you had the first blow and this is actually what we talk we can see here in the chart Um yeah, as you talked about we we we are seeing that um let me just explain first what we see here. We have the SDX uh so the S&P 500 versus gold here. So we actually take the dollar out of the equation here. And if you say you you want to be in either dollar sorry even uh stocks or you want to be in gold. Well in 1929 you had a bubble bursting and there was a you know um u distrust in the stock market and that's why gold actually you know had a good value there. If you look then to 1971, uh you had Nixon coming out and doing that Nixon chart disconnecting gold or the convertability of gold of dollar to gold. Um and that gave a shock and we actually saw gold actually reacting positively here and uh actually overperforming uh the stock market for you know amount of years there. Then we had it up to the dot top here and then again we had a you know question on the stock market here. We're so overvalued and we saw the decline there after that burst. Now um we actually I think the everything bubble as I call it is bursting here and I think we both have a a 1971 uh sit scenario and we have a 2000 and 1929 situation which were the stock market and the monetary system. So I think we are in a much stronger reason for holding gold here gold here at you know at the right point. I just want to say that a decline as you said because the moment we introduce the dollar to this system here in a world that is soaked in dollar debt soaked in dollar debt you're not you're not just going to get that out and oh we just went we just aband

Could I just interject just for the for the viewers that don't know what Bretton Woods is because I think this is super important for general um kind of I think economic literacy right it's super important to understand these cyclical um impositions and structural impositions that that come out of big events like World War II, etc. Um, basically the Breton Woods was a kind of a post World War II um conference that aimed at um global order and stability. Basically putting the dollar at the center where they basically pegged everything against the dollar and the dollar was in turn pegged to a to a gold standard. Okay? And that was basically undone in the 1970s by Nixon. So what the Nixon shock is basically this free floating dollar that was not pegged to the gold anymore to the gold standard. Okay? So this is the key kind of um the key point but even even that shift took a long time and we have to understand the what this reserve currency we had before that was the pound sterling and the situation actually deteriorated for the pound sterling from this first world war coming out of that the the Britain British Empire had gotten all you know gotten hit by by a lot there not just you know uh so but especially financially and um and that was really what started then to put the question marks to the to the to the to that uh currency or to that reserve currency and then as the second world war and the US could you know stand dominant after having 50% of the production of the world was in the US 50% of the gold reserves in the US so the US pretty much sat down and said well guys you know what uh the gold you know the the reserve currency of the world is the dollar and by the way we have all the gold here and we're going to back it by that and then the misuse of that dollar of of you know that the dominance over the years by with the Vietnam war and and also um everything we saw yeah with with deficits starting you know just simply led to the to the situation in 1971 which was a a shock to the world and I think that shock is about to get there again and I'm just you know also I don't know if it has to do with the Fed independency or whatever it's going to come out as in terms of the policy I don't want to dive into that but it it there is a seems like a shock is coming already first of all because of the stock market and second of all of the but it actually shows also here that you can be massively bullish gold which I am in the long time frame I think gold can be at $35,000 per per ounce in 10 years time. But I I um I just don't not don't not think I want to hold it here now, especially if I first of all if I introduce the um if I choose the dollar into it, but also if I just look at the gold versus Bitcoin for instance. And this is where I think Bitcoin even you know well not even Bitcoin probably looks like it has a much more upside to gold in the short time frame. And this is the difference between having a are you bearish or you bullish you know whatever asset is you know ask me about the timeline and the timeline for for this would be short-term bullish very bullish Bitcoin versus gold here but 10 years out very bullish um gold versus uh bitcoin and also gold versus the um S&P 500. So I think this is the important also about when people saying you oh you've been so bearish Henrik all along or you've been so bullish or whatever it is. I'm trying to you know tread that and saying trying to navigate people's understanding that you can be bullish short-term medium-term in a certain asset and then it shifts but but but the the movement is there and when you look at something like this for instance Bitcoin and gold here I mean this is a classic setup for something that is going to reach a top maybe somewhere up here and then you have a divergence on the strength of it which means that even though it's going up then the strength of that move is weakening So come here, I think we're going to see a large top in the ratio between Bitcoin versus gold, which means that I would at least say I will be I'm bullish Bitcoin versus gold now, but I'll be bearish Bitcoin versus gold at this point. And this is the shift. This is how we need to understand. And this is probably somewhere these mainstream economists who do not use technical analysis, they do not understand. But how can you be both? And what where will you know that the shift is? Well, this is what the technical structures are there for.

Absolutely. And I think this also goes back to the the general question of stimulus, right? I saw a couple of questions that also came through asking about, you know, does a stimulus kind of avert actual recession like how does that actually play into the equation? And I think there's basically two two sides to this, right? And I think it reason I'm mentioning is that I think it ties into the question of Bitcoin and gold and the trust in the system is that you always have different levels of trust and how people perceive value depending on if it's a positive or negative cycle, right? When everything when starts hitting the fan, everybody reverts back to the thing that they know and that is still the dollar. Like we have to understand this. Nobody's going to be running to the yuan or to the Russian ruble, right? And there's no question to the euro. Exactly. Even to the euro. Like the question is always it's always a relative question when people talk about they don't that they don't trust in the in the underlying dollar system. The the question is always okay so what is actually going to replace that? Is there a system in place today that actually is better on the on the on the fronts that are basically being questioned on the dollar side right and I think this is absolutely not the case. I don't think there is a system that is that is in place that is able to actually solve the issues that are that are being pegged on the dollar. Um and I think that again reverts back to the underlying question of okay what do people do when they are scared right when things

Are not clear, and I think that is the dollar at the end of the day, right? And stimulus on that front is never going to is never going to paper over the cracks. I think, um, what people misunderstand as well in the COVID crisis is that it wasn't a necessarily only a supply-side effect. We always have to remember, people talk about like the the checks that people received in their banks, that wasn't the thing that created inflation. What created inflation was, I think, a small or unknown thing because it was massive. So, it was, it's very interesting to see how misinformed some people are on this front.

There was a thing called the PPP loan. It was basically short-term loans that were given by the governments to people that had businesses. There were a lot of fraudulent businesses, and even if you look at, maybe you have the graph at hand. If you look at the number of businesses that were created during the COVID crisis, you'd be surprised at how big that number is. Okay. So, there's a lot of zombie companies out there that basically front-loaded all of that, um, stimulus. That stimulus went into the real economy because a lot of these fraudulent companies, um, basically the owners of these fraudulent companies took those loans to invest into the stock market, to buy cars, buy real estate, etc. And that's what actually created the actual inflation. So, it wasn't the fact that the Fed was in an easing cycle, um, in itself. It was the direct injection into the economy through these different mechanisms. Correct.

Um, okay. So, it, it, the underlying point to the question, the stimulus, it depends, a, what type of stimulus and where that stimulus is going. Yeah. But let's, uh, let's also focus on because that's one of the things I put a video up here the other day on Twitter, or an X, sorry. And we had these, uh, what I call the liquidists that seem to think that, you know, when this, the credit cycle starts to move up, then you'll have that the business cycle moves up. And then they come up with this chart here. That's something that's been posted also in Financial Times. This is a year old or something. And I think it's been moving up somewhere up here.

What people need to understand is that it's not liquidity that drives the business cycle. The business cycle actually drives liquidity also, because we as human beings are part of creating liquidity by taking on loans and so on and so forth that we create. I mean, if I have $1,000, uh, then I, you know, and I, uh, and I want to spend $2,000, then I go down and I borrow two, uh, $1,000 in the bank. I mean, all of a sudden there are $2,000 there, but actually there is only the one, the $1,000 there. So, it, it, we are part of that. And the more I want to spend, the more I want to, you know, take up loans, the more credit can also be there. So, it's actually not just the central bank. It's not like they come out and say, here is the M2, guys. The M2 is created by us. And if we start to get, oh, I don't want to take on an extra loan because I can see I might get fired, or at least I'm in risk of it, then liquidity may also decline. And this is what the, the Feds and Fed then tries to counter through all there. But they do not have like a switch where they can just put liquidity in and then it, everything will be fine, because it has to go through the banking system, and that's how it all works. And there is a lack to it.

So even when things are starting to move up, global liquidity, like we see here, starts to move up, and the Fed, central banks, and so on, they start to, to stimulate, it takes a while. And you can see it can go up strongly here into 2001, and the recession still started, still began. We had it here in 2007, even more. It, it bottomed out in 2005, actually, then up strongly here, and the recession began just, you know, close to 2008, which is here. And then you, you had also the same. And you correctly said before, Yan, it was a slowdown already from 2018 on on people. It was COVID was not just a something that fell out of the sky. It actually was very clear, and our business cycle indicator actually also gave that crossover before. And, and reverse repo, there was a reverse repo crisis in October 2018, where we were actually, I think, probably a hair, a, a, a hair away from actually going into a recession. Very, very little known. Yeah. Yeah. But we correct. That's very. Man, you're a macro guy as well. No.

So then, so, so the liquidity will not, I mean, this is not the magic thing that can just sprinkle over it. And again, as I said last time also, it's about our willingness as people to take on the debt, because if we spend, we don't spend the money we save on our. When the Fed now has cut by 25 basis points, which will mean like, try think about it, guys. How many of you have actually thought, okay, now the Fed cut by 25 basis points, you know what? I'm going to buy that new car now because now I can save money on it? That's not how it works. It works really, really slow. And that's why it, you know, it's like, uh, rearranging the deck chairs on the Titanic in a, in a, in a, in a setup where, you know, people find it difficult to put food on the table, and you also have customer sentiment down the gutter. So, it's like, I, I, you know, honestly, I think it's a little arrogant to sit there and think, you know, what I'm saying, we can just sprinkle a little over here and then it'll all be fine, and not looking at the real cracks in the economy.

Liquidity cannot solve a solvency problem, and it cannot counter the effects of a massive, gigantic bubble, which we have right now, bursting at some point. And when it does, a lot of money, real US dollars, are going to be soaked out, and that is going to create that, you know, effect we're talking about in a deflationary system. But as you can see, that can easily happen within this, even when this has been moving up quite a long. Liquidity can be stimulated for, for a year, two years, and so on. It doesn't prevent recessions. It never has, and it never will. Yeah, it obfuscates, right? It's kind of, um, the chart that you showed there is a, is from Crosser Capital, which I think they, they do make a lot of interesting points, especially on the long-term. I think on the long-term credit cycle, kind of to borrow some of the concepts that Ray Dalio proposed in his, um, one of his big theses, right? Uh, which is basically this interaction between long-term, short-term credit cycles with the actual business cycle, right? So, there is a, um, kind of a, a weighing function that basically dictates what actually becomes relevant on short-term versus long-term. And I think there's a lot of things that go into that, right? So, I think inherently macro is a complex system, right? So, it's never one thing and nothing else. It is always a kind of a, a, a delicate balance between different factors that kind of, kind of amalgamate into something that we basically define as the business cycle, right? It's kind of the, the average sentiment, the average way that people perceive the economy, right? If everybody is is getting laid off and has a negative perspective on the economy, of course businesses are going to feel that, right? They're going to see, you know, stock piles go up. They're going to see their investment, so their actual capex investments slow down because they have more, um, inventory than they, than they expect, right? Which then has an effect in how they reduce prices, which in turn becomes deflationary. So, there's a lot of different pressures that come from consumer expectations and how people, how businesses perceive that, right? And how they balance, um, market share versus growth, right? And, and I think we have to take all of these things into consideration. That's, I think, what we try to, what we're trying to kind of decode in, in these, in these webinar series.

Um, maybe on the point of liquidity, because I'm seeing a lot of questions coming through, um, that deal also with crypto and general liquidity. Do we want to maybe shift? Sure. For a couple minutes into, into that front. Absolutely. Let me just open up more to do with the short term, short term, and know what can we expect now? Because I think in the bigger picture, nothing has changed with the 25 basis point cut. We, we still seeing, we're going that direction. But, uh, liquidity-wise, and this is where our framework will help us a lot, is telling us that we still have a great market in front of us. So, even though the Titanic is right there on the iceberg, but let's, this is what makes, I think, Hendrick's analysis together with, um, with, with our analysis as well, in terms so kind of what you would look at as kind of a liquidity analysis, um, of, of crypto, very relevant, right? And that's a very, a misunderstood component of looking at macro liquidity, right? So, it's not like we look at crypto and say, "Oh, crypto is going to go up or down." We always want to weigh that versus the liquidity expectations within the general global macroeconomic system, right? That's why we, we use the word, um, canary in the coal mine, because it really is a, the most sensitive thing to future expectations of liquidity.

Now, what does that mean in the general sense? So, we're seeing, for instance, a lot of, um, things being said. There's like, you know, the extremely bearish factions on Twitter that are driven more, let's say, by the the Dr. Profit, these types of very renowned, and I think people that are, you know, very educated and very good at what they do, but that sometimes misunderstand the effects that take hold, and they kind of become dominant in the end of these macro cycles because of the fact that things become irrational. If you look at them purely from a TA structural perspective, they don't make any sense unless you actually allow for the understanding of what a blow-off top can actually look like when liquidity conditions are ripe and actually driving the behavior, right? So, on that front, I wanted to start with the three graphs that we presented as well. And it's back to the old saying, you can, the markets can stay rational longer than you can stay solvent. And that is actually it. And, and Mike Bur is the, Michael Bur was the perfect example in the financial crisis. He was right. Bought very early. And, but, but that's where liquidity can help for a long time. Exactly.

And I wanted to maybe start with with this graph here. So, I'm, I'm sorry, I'm still having issues with my x-axis, but what we're looking at here is basically beginning of last year up until today, right? So, this is basically up until September 16th. So, it's roughly about the same liquidity, especially money inflows and outflows, they don't change on the flip of a dime. Um, I, I will interject one thing because there was a question, uh, that came through Twitter, and I think I just saw it as well on the, on the chat, um, with people asking for why some of our Twitter posts are deviating from, uh, Bitcoin Vector Light and some of our Bitcoin Vector Liquidity analysis. And there's basically one key reason for that. So, what you're looking at here, and what Willie Woo does extremely well, I think he's a, he's world-class at at this analysis, is measuring the amount of actual dollars entering the system. And what we basically do is that we take that over a prolonged period of time and we normalize those flows, because I don't just care about the absolute number of dollars coming in, but I care about the absolute number that comes in versus the actual price, right? Because it, it takes more energy to move Bitcoin now by 1% than it did 10 or 15 months back. Does that make sense? So, there's, there's always a relative marginal rate of increase that matters, not only the absolute rate. Okay? So, what we're looking at here is the actual dollar amount that is coming in, and we normalize that towards an index.

What you see when we talk about the fundamental side of the equation, so network growth, liquidity within the Bitcoin fundamental index, what we're doing there is that we're measuring the activity that happens within the ecosystem. That takes into account as well the money flowing in, but also the amount of interactions that are happening within the ecosystem, right? So, is it, is it very, is it very prosperous, or a lot of people interacting with each other, or is that, is that interaction going down? And this is important because it gives us an understanding on the actual velocity of money within the system, right? So, it's not worth anything to anyone if everybody is rich, but nobody's is interacting with each other, right? For an economy to flourish, and Henrik is probably at the forefront of being able to explain this at, at, on a minute level. For an economy to be able to propagate and become fl, like to actually flourish and be robust and to grow, you need interactions. You need people to exchange, right? If you look at the fundamental building block of an economy is the inter, it's the exchange of goods, right? That's at, at, at the minute level, the case. And when you start adding all of these different exchanges together, that's how you get the overall economy, right? It's a concept that I think was explained super well by Ray Dalio in his, um, I don't forget what the name of the, of the video was that he posted online, but if you, if you type Ray Dalio, economic system, you, you will find it. Super nice explanation for those of you that want to dig a little bit deeper. But the point being that these are two different things. So, we could actually maybe change the name slightly and talk, we can call it, um, liquidity interactions, or, um, I can maybe, if you have any proposals, please write them into the chat, but they are basically measuring different things.

So, what we're looking at here is the amount of capital coming into the system, and you see very clearly that on Bitcoin's side, this has been fundamentally different than what we saw in November and February of last year. February and November of last year, Bitcoin was the gateway to crypto. You could not, um, basically invest into crypto if you were not going through Bitcoin, right? Especially on institutional level, you have, you had very liquid ETFs and all the different on-ramps and off-ramps were very liquid and had a lot of volume on Bitcoin and Bitcoin-pecked instruments. That is not the case anymore, especially since the the narrative started shifting on the traditional finance side of the equation started shifting towards Ethereum. And that is significant for, for two specific reasons. One, it has changed the dynamic and the importance of the Bitcoin ecosystem as a liquidity mechanism for the rest of the, um, crypto economy. And two, it has created a bifurcation where all of a sudden the marginal dollar that was going to Bitcoin started to move into Ethereum and Solana. And to the same point that I made before, where a, a percentage move of Bitcoin at $60,000 takes less energy than a percentage move in Bitcoin today, the same is true for Ethereum and Solana, right? So, if you were looking at, let's say, an average median rate of entry of a couple of billion dollars a week, right, into Bitcoin, physical actual dollars coming into Bitcoin, if all of a sudden you're deviating 20, 30, 40% of that into Ethereum and Solana, that are significantly lower in terms of the marginal rate of change in terms of the price, that can have disproportionate effects. And that's actually one of the reasons both Henrik and myself believe that we're going to see much more upside in Ethereum and Solana because of the fact that it takes a lot less energy to move those ecosystems, right? Um, and you see it very clearly here. So, here we're looking at, um, Solana, right? And you see that we've had a massive spike in dollars entering the Solana ecosystem, um, especially towards the the end of July. So, most of August, we've started to see that massive increase, and it's now stabilized. So, as long as that stabilizes up and doesn't drop down significantly, it tells us that the actual move that is happening is being supported by fundamentals. Okay, fundamentals specifically in dollar-denominated flow terms.

Same thing for, um, Ethereum. For those of you that asked in the previous discussions that we've had, like how long can that go on for? It can go on for a very long time. If you look at some of the historical inflow patterns in Bitcoin, it can go on for three, four, five months in certain cases. It can be very, very prolonged and, and, and persistent. Okay. So, I think this is super important. On a separate note as well, um, when we start looking at how this actually affects the the underlying crypto economy, I wanted to quickly touch upon two things on Hawkeye as well. So, for those of you that don't know, Hawkeye is our platform that unifies together, um, the fundamentals and on-chain analytics, liquidity flow analysis, and systematic price, um, analysis. So, we're a, a, a, a systematic trading, um, fund that basically has multiple different types of strategies and we have specialized in understanding, um, basically trend and momentum, right? And understanding how trend and volatility together indicate when true momentum is actually there, right? When you're not just dealing with a market that is just volatile, but is actually underpinned by actual real demand and real, real capital flows on a fundamental level.

What does that actually mean? What I, what I mentioned before? So, touching again, making the differentiation between capital moving into the system, right, which would be the equivalent of an investment, right? And Henrik has touched upon the point of differentiating investment from actual economic activity, right? Just because a company invests money into something does not mean that you're going to generate a marginal increase in the productivity of something, right? It increases the chances significantly, but it doesn't guarantee it. And I think this touches upon again another analogy that we made with AI, where we are, what we're seeing today is not the economic or the productivity effects of AI, but we're seeing the net effects on investments in spending that allow, um, AI to be proliferated within the economy, right? So, those are two different things. We're going to start seeing the effects of that for sure down the line. And I think it's going to generate massive, um, growth potential and cost reduction potential down the line. But that is not what we're seeing today. What we're seeing today is the the financial system adjusting to future expectations of massive capex investments on, on that, on that environment. Um, and it's basically when you talk about liquidity and economic activity. So, the index that I just showed before versus fundamentals, right, which is what you're looking at here. So, more specifically, if you look at it on a yearly basis, the network growth and the liquidity, it's basically those two different things. What you're measuring with a Bitcoin fundamental index, the network growth and liquidity in a fundamental perspective, is the, you're really measuring the velocity of money and the impact that that has on the economy. So, how productive is the, is the Bitcoin ecosystem with the amount of capital that is in the system? Are we efficient? Is that money being moved around from basically sellers to buyers in an effective way? Who's actually, where is that, where is that flow going? Is that flow going towards selling? Is that flow going towards reinvestment? Right? Is being used to actually, um, as a collateral to be able to create more credit, right? As one example, right? There's like many, many different ways, especially now that utility starts becoming more and more predominant when it comes to to the discussion around Bitcoin, right? I, I myself, for instance, um, in our company, we use Bitcoin as collateral for loans, right? Which is very interesting, something that did not happen, um, before 2014. That is now something that is more and more becoming the norm. Um, and you can see here that we basically have a very similar type of situation that we had in, um, basically the beginning or the later parts of November, December of last year, and more specifically similar to what we saw in, in February, right? And if you look at the aggregated version, so the actual economic strength, we're at a very elevated space that was very different than what we saw, for instance, back in, in January, right? So, a lot of people are comparing what we're seeing now with December and January on the Bitcoin front and saying that this is the top from a fundamentals perspective, that is not being supported because in, you see it here, we had a massive drop off. I mean, this here is unprecedented how big that drop off was between basically late December into, uh, the beginning phases of January, and then you had a massive collapse, um, into beginning of February, right? So, over a month, you basically had a, a halving of the economic activity to kind of give an analogy, right, which is significant. We are not seeing that today. Okay.

And when it comes to the actual strength of the market, there's another very important thing to consider. Bitcoin is not driving the behavior. We need a strong and stable Bitcoin, like we keep saying, because that is important to sustain the the foundations of of capital rotation and investments. But since, um, roughly, let me see here, since, let's say, the beginning of July, it's been an Ethereum and now over the last couple weeks, a Solana driven narrative. That's where the strength is. The capital is literally rotating into that direction. We're seeing direct money flowing into that, and also capital rotating from Bitcoin into Ethereum and Solana. That's not being reflected in the price because in that redistribution, prices tend to drop, right? Because people sell, and you're not getting the buy effect directly, right? Sometimes people sell in Bitcoin, they go into cash, and then maybe a couple of days later, they buy Ethereum, right? So, it's not an instantaneous transaction. And I think that's throwing a lot of people off because they're seeing the sell side on Bitcoin, but not an immediate buy side somewhere else. Does that make sense? So, these things are delayed, delayed in time.

So, what you're saying is the rotation is going on. We can visibly see that the rotation is going on, which is a psychological, you know, natural thing. We see into the, the final phase of a, of a bull run, both for Bitcoin and, and crypto in general. Absolutely. If that is a final phase or not, I, I cannot say that with, with guarantee, right? It could be that it actually goes on for longer than, than even, even this current setup is telling us, right? It could be. And, and I'll tell you why. For instance, we've never seen a situation where the rotation from Bitcoin, so from the actual low that we had on April 7th, right? Which is the actual low because we can track that with our aggregated impulse. What's the aggregated impulse? It tells you when, um, the top 350 assets are capitulating, right? And bottoming phases is a, is usually marked by a massive capitulation. A, we're not seeing that. And B, and the reason for it is that the market is not driven by Bitcoin. There's more of a, a, um, kind of a plethora of different things that are now branching out and that have independent strength. So, their strength is not due to Bitcoin, but they have idiosyncratic strength within their own ecosystems because they're being, um, basically supported by incoming capital flows, but we're also seeing the rotation, right? And we've never seen a rotation that has been this strong for this long. I cannot remember the last time. I think actually maybe in 2021, we had something similar to this. Yeah, that would make sense because we also had a top there in '21, right? So, yeah. But even, even if you look at '21, right, we never had an Ethereum-dominated environment that has been this, that has lasted for this long. Yes. And that, that is important because that's pent-up energy. That's energy. Yeah. Sure. It's, it's pushing to the next level. And, Yeah. Exactly. Right.

And guys, I just want to say here, uh, you know, this is one of the reasons also why I'm with Swiss Block. So, you know, this is, you know, top of the state-of-the-art in terms of how we look at liquidity. I can tell you, I mean, that's this is quite amazing what our people have been developing here. Absolutely. And this is only the tip of the iceberg. I mean, our research, like what you're seeing here, is the state-of-the-art that we had back in, um, I would say, probably late '22, but it's something that has been very robust and persistent, right? It gives us a very good kind of North Star, similar to your business cycle analysis, that is just extremely good at at pinpointing when there's those inflection points, right? So, that's really what we care about here. Yeah.

And just, just to, just, just for, I think we, we probably getting to the end of it also here, but I think there's two things. Oh, maybe jump in. Could you just show the success of the algo trend, actually, just to show how, how successful it actually been in getting us in and out and actually outperforming Bitcoin on the long time frame, which is quite, you know, impressive, right? So, maybe just show that, just for people to understand the framework also. Yes, exactly. And I have one more point I want to make because there's, I'm just so, I think we, the one point I want to make by the end of this also to to show one more chart is why are we not in a 1998 scenario? Because that's what some people think we are. We have two, three years more of a rally. I want to show that the last point, but maybe if you could show that, because I think the algo trend of the success of the framework is is quite, uh, amazing. Yes, absolutely. Yeah.

Let me show you why, guys. I don't think we are in a, uh, two 1998 situation. This is the, the, the business cycle model that I, uh, that I've developed, and which shows that when people talk about 1998 and the rate cuts we had there. Well, that was at a different, completely different time in terms of the business cycle. Got it running now. Sorry. Just got it running. So, I'll show it right after. Okay. 1996 is here. 2000 is here. This is the leading indicator. The moment we are starting to say things are happening. We have the, the structural damage to the hole is when we see the crossover between the red line and the horizontal line. So, 1998 is somewhere here. And a coincident wise, it was something like here. I can't even show you the chart here. I mean, it's, it's simply, you know, chopped off here by the top. There's no comparison to where we are now, where the indic, the, the leading indicators is actually already below zero, which is telling us that the recession is going to come. It's been correct 70 years back in time, every time. No false signals ever. And we're getting closer here. We are not in 1998. This is where business cycles are important. That's why when people come and say, "Oh, we have a rate cut here. We have a bubble." That's 1998, because that was the time the Fed started to cut. That was because the Fed was actually cutting before, before we actually started to see a real slowdown. This time, the economy is far more ahead, you know, deteriorated than we were back then. So, we are not in 1998, as according to the business cycle. And if you look at the, if you look at the yield curves as well, we're nowhere near that. So, just be careful when you read on on X there. Um, we're not in 1998. So, Yan, you got it. Yeah.

So, there's another point for those of you that are still, um, not 100% sure why Willy's, um, macro liquidity analysis deviates. Remember that Willy is very focused on the Bitcoin side of the equation. So, like I showed before, Bitcoin is clearly deteriorating versus other assets, right? And that is usually very indicative of the end, right? Because you need, you need a strong Bitcoin. That doesn't mean that the flows don't come. I think they will, because of the way that the macro environment and M2 and all these things are are propagating. But they basically tell us that the rotation is happening, and that's usually a telltale sign of the end. And for those of you that actually ask, like, what does that mean in terms of the end? Is it tomorrow? In a week? I think it's a couple, couple of months. So, we're really looking at Q4 as probably the likely moment that that happens, maybe towards the mid-part of November. Could also be end of October. That's the sort of range that we're that we're discussing. Now, remember that we're not dealing with absolutes, right? We're always dealing with probabilities, and we're going to be tracking these, these structural, um, pieces to our, to our puzzle as we move forward. So, we're going to be able to, um, give you that, that perspective, especially in our vector series, um, basically Bitcoin Vector, um, and Altcoin Vector, especially the advance, where we also have some of our alerts that actually give people an update on where things are propagating to. And you're, you're definitely going to know when in those, in those channels, when we get closer to that event, or where we are going to start de-risking on, on a, on a more fundamental level. But for now, we are still in an upcycle. And upcycles, they don't last for six months, right? So, we're talking about probably a two-step cycle, right, Hendrickk? Where we now recover, have a correction, and then probably move stronger into the end of October, kind of beginning FA parts of November. That's what my base case would be right now, given the liquidity and all these things that we discussed.

Um, so, to give a quick sneak peek into what that actually looks like. So, what I'm going to show you right now is a, um, cash and Bitcoin strategy that we use that underpins is one of the major pillars of the, um, basically the Hawkeye framework, and as an extension, the Bitcoin and the Altcoin vectors. Okay. So, how we make relative decisions on, do we have a strong momentum environment or an actual weak momentum environment? For those of you that are a little bit more embedded with how we do things, what we call strategic and tactical environments. Strategic environments, very strong momentum, things are going very, very strong, a lot of capital moving in. Tactical, indecisive environments, range-bound, that's when market makers, right, kind of when market makers spoof the the books, or they kind of push price up and down, that's a tactical type of environment. So, what I'm going to be showing you here is how we identify that, and what that actually looks like in terms of performance, right? So, if you can see my screen here, so this is basically the strategy versus a, so what you're looking at here is Bitcoin price, which is gray. We have, um, the blue curve, which is our actual Bitcoin cash and exposure, right? So, you're only buying Bitcoin or going to cash. You're doing one of two things. No leverage, no anything. And you're comparing that against a weighted index, which is the the green line, okay? Weighted index of different alts that you could potentially buy. And you can see that what basically makes this strategy massively outperformance to other types of strategies that exist is that it is able to identify when Bitcoin is in that turning point, right? When, when the momentum is really going out the window, and the risk-reward in the system starts becoming problematic, right? Where every dollar that you put in gives you less than a dollar when you take it out, right? Which is not a good investment, um, proposition. And when you do that consistently over time, you tend to outperform the actual underlying, uh, underlying strategy. Okay? And this is basically what you're seeing here. Um, and I think the percentage returns. So, So, Bitcoin has generated 515% since '21. No, that's the weighted, that's the weighted index. So, Bitcoin has generated since, since the the beginning of '21, when Bitcoin was at $35,000, it has done roughly a, a 4x, right? It's like a, a 370%, or sorry, 200 something percent, like a 3x. Um, what you're looking at here on the right side, sorry, I forgot to explain this. This is a log chart, right? So, what you're seeing on the right side is the multiple for every dollar that you would have put in in the first day of '21. And if you would have sold now, you would have done a 21.4x with the strategy. You would have done a 6x with the index. And you would have done a 3.7x if you just held Bitcoin. Yeah. And this, guys, by the way, is something that I mean, we get, you know, on a daily basis. We simply get the update. It tells us, you know, how much to be allocated in, in, you know, one, one or the other. Uh, so this is a massively, you know, uh, this is just a fantastic tool. Um, just to let you know. All right.

Yeah, I think we are over time. Um, and, uh, but it was great to talk. You're a busy man, so I always enjoy to have our chats. So, um, thank you. Absolutely. Thanks a lot for taking the time. And for those of you that are not following Henrik, obviously follow him on Twitter. Actually, for those, maybe we can mention, can we mention, um, the, the Sweden? Oh, yeah, tomorrow. I think this is this is massive. So, yeah, I am, I have a TEDx talk tomorrow. So, I'm, uh, I'm actually, uh, you know, I was memorizing it while I, when I went to bed yesterday, the talk. So, um, I have to to go through there and I'm going to talk, and my, my, my opening statement will be, Bitcoin is like a venereal disease. Not my words, not my words. It's the words of Charlie Munger, but I'm starting there. Okay. Interesting. All right. So, so you're, you're, for those of you that are interested in that talk, I'm definitely going to be looking forward to it. There's not going to be a live version, right? So, this is going to be a, a, a recording and then, Yeah, it'll be a recording. I don't know. It's, Yeah, I think there's this I need to stay within 18 minutes. So, I think there's going to be a YouTube, uh, video on that that will come out and, uh, Yeah. Okay. We're going to be sending that to our, to our, to our followers, right? Whenever. And hopefully also, Yeah, absolutely. And also the book coming out. So, the, uh, the, what, what we call the monetary house of cards, the bust of the everything bubble caused by central bank hubris, is, I think it's, uh, yeah, our designers are just on it right now, and we will, uh, yeah, will come out soon. And, uh, this is where you can actually, you know, see a lot of the things that we talk about here also, why and the whole background of things, uh, why, yeah, why we also see these bubbles again and again, and why the hubris is driving the central banks from actually. There's a chapter calling, become becoming demigods, and I think that's what we've seen over the last 25 years of central banking being the most boring thing in the world, and now everybody's sitting there watching it on a on Wednesday nights, right? So, um, so I hope you will, yeah, so we'll send, but I'll also be out, come, you know, to come up on our website, and you'll be able to purchase an online version and also a physical hardback at some point. Yeah.

As a last point, it's funny that you said that I'm the busy one. So, you've written a book and you're doing a TEDx and I don't know, God knows how many other big interviews that you have, um, so it seems like you're the busy one, not. Uh, yeah. Yeah. But I don't have people administration on. That's it. Yeah, you got it. Fair point. Sounds good. Thanks a lot, Henry. And thank, thank you guys for joining. And, yeah, we'll, we'll update you guys when the next webinar is going to be. Probably early, early days of October. Yes. Thanks. TS.