Wealthion’s Andrew Brill welcomes Geo Chen to unpack why the current macro setup is very bullish for global markets, driven by the Fed’s rate cuts, positive U.S. economic data, and China’s aggressive stimulus efforts. The author of the Fidenza Macro Newsletter also shares his updated views on key asset classes like gold, oil, and bitcoin, and explains why European and cyclical equities may be set to outperform.
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Geo Chen 0:00
This is one of the most bullish backdrops that we’ve seen in a while, when the Fed has cut in the absence of a recession that has been very bullish for equities China, which has finally woken up and they’ve realized that the only way to support their economy is really to stimulate forcefully
Andrew Brill 0:25
as we turn the page on the third quarter and welcome in the last three months of 2024 where will the Fed go next with interest rates, and how will it affect the economy? I’m your host, Andrew brill, and we’ll answer those questions and a bunch more coming up right now.
Andrew Brill 0:45
I’d like to welcome Gio Chen to wealthionji, who is the author of fidenza macro on substack, which is a global macro view of the world. He’s a trader with over two decades of experience with Credit Suisse and Royal Bank of Scotland, now manages global macro strategy for his family office. And Gio is a philanthropist. Gio, welcome to wealthion. So glad to have you.
Geo Chen 1:06
Thanks. Great to be here.
Andrew Brill 1:09
So tell us a little bit about yourself. Since it’s your first time here on wealthion, how did you get started in the banking business? Yeah, so
Geo Chen 1:16
I’ve been a trader since the.com bubble, actually, so 25 years started trading during the.com bubble, managed to turn, you know, $5,000 into 800 and then after that, I still wasn’t the skirts, and I really want to get into trading. So I got a job in FX trading at the World Bank of Scotland. I was really inspired by, you know, books like written by Jack Schweiger, Market Wizards, and that’s where I started my career. So worked in London, New York, then moved to Singapore, where I was the desk desk head in FX at Credit Suisse. And about seven years ago, I decided to go out on my own and trade my own capital full time. So I’ve been an independent trader, Trader ever since.
Andrew Brill 2:14
And you’re a philanthropist. Tell us about rainforest trust. And I was fascinated by this, because I was looking at your sub stack and seeing the pictures of you out there, and my son spent some time in Uganda studying chimpanzees, but there’s always poachers and people trying to ruin the rainforest. So tell us a little bit about rainforest. Trust. Yeah,
Geo Chen 2:34
that’s great. So I’ve been really interested in in fighting deforestation for for almost 10 years. You know, I realized a while ago that deforestation is to cause a lot of world problems ranging from climate change to the loss of biodiversity and also it just ruins the lives of the people who live in and around the rainforest. So, you know, I had this idea like, what if you just bought a lot of rainforest to save it? So I googled, how do I save rainforest? And I came upon rainforest trust. So that started a journey of learning about conservation, of, you know, giving money to save rainforest, and it’s been a great ride, you know, I’ve expanded to nature conservation and in other areas, such as oceans, you know, and through my foundation, we also try to alleviate climate change climate refugees as well. So, you know, that was the start of my philanthropic journey, but trying to save rainforest remains at the heart of my philanthropic goals, and that’s why I was in Mozambique just a couple of weeks ago looking at one of our projects in gorgoso National Park, where rainforest trust helped to save 1000s and 1000s of acres there, and basically preserving, you know, the, you know, the territory of of all kinds of species, ranging from elephants, hippos, you know, all the beasts, just all kinds of wildlife there. It was amazing, very
Andrew Brill 4:17
cool. And it’s a it’s a lot of fun to see those wild animals, because it’s not something I’m here in New York City, so it’s not something we get to see unless we go to the zoo. So it’s, you know, to see them in their natural habitat has to be very, very cool.
Geo Chen 4:30
Yeah, it’s totally fascinating. A lot of
Andrew Brill 4:34
so now that we know how to save the rainforest, we just look up Geo and help, have him help us out how we saving the economy, and what’s your view on the present economy?
Geo Chen 4:44
Yeah, you know, on the present economy, I’m feeling pretty positive. I think that this is one of the most bullish backdrops that we’ve seen in a while. So you know what we have right now? Now is a fed that has pledged to cut as much as needed to support employment, that, in itself, is very bullish, and we’re not even in a recession. So whenever the Fed, you know, historically, when the Fed has cut in the absence of a recession, that has been very bullish for equities. And you know, we’re not really too worried about inflation. As you know, the inflation prints have been coming in pretty, pretty low, pretty tame. So that’s not really a concern for a fed. It’s not a roadblock for them to cut as deep as they want. Now, on the other side of the world we have China, which has finally woken up, and they’ve realized that the only way to to support their economy, to get the economy out of this, you know, huge balance sheet, recession, wealth recession, is really to stimulate forcefully. And, you know, they’ve been stimulating. And, you know, little bits and pieces in here and and trying to, you know, be, like, fiscally, you know, responsible. But that hasn’t really done the trick, because the real estate bubble that was building for decades has popped, and there’s, you know, like, trillions and tons of trillions of real estate and really bad loans on bank balance sheets. You know, the average Chinese consumer has most of his his wealth in real estate, and it’s illiquid, and it’s down a lot. So there’s gonna, it’s gonna require hundreds of billions, trillions of dollars of stimulus to to really get the Chinese economy going. So I think what the what they announced last week a combination of both very forceful monetary and fiscal measures, amounting to over 3% of GDP. I think you know that’s a start now, if they just do that and nothing else, then you know that would end in disappointment one or two quarters from now. But the tone from the announcements last week suggested that more it’s coming, and that, you know, they see an urgency in, you know, an urgent need to support the economy. So me, along with, you know, most other economists and retail and, I mean, everyone’s piling into Chinese equities right now. You know, it’s, I think it’s for good reason. I think the economy is likely to rebound from here, and it’s just a matter of how much and how long this rally is going to
Andrew Brill 7:50
last. Now they they’re facing almost the opposite problem of what we’re having here in the United States. Their real estate values are plummeting, while the real estate values here in the states are just ridiculously high and in essence, priced many, many people out of the market. Is it a population issue? Are there fewer people looking to purchase homes? So the prices are plummeting in China? Yeah,
Geo Chen 8:15
it’s, um, it’s an issue of oversupply. Um, you know what China did was they they provided liquidity to banks, and they provided subsidies to banks and told the banks and developers to just build, build, build. And the premise was that we have all these people in the countryside who are going to move to the cities, and that has happened. Most of the people who are ever going to move from the country side to the city already have. So, you know, developers just kept building, and at the end of the day, there just were not enough people to buy and live in those apartments. So you know, everything came crashing down a couple years ago, and it’s reverberated through the banks, which have all these loans where the value of the asset backing those loans is no longer you know what it was worth at the beginning, they’ve loaned to developers. Developers have a bunch of unsold homes, some of them are not even, you know, completed yet. So there are big holes everywhere in the balance sheets of of the real estate developers, in the balance sheets of banks and in the balance sheets of of the average consumer. So, you know, similar to long, lasting bubbles, like, for example, the this is compared to the bubble in Japan, which had a similar trajectory. You know, multi decade bubble in real estate, which eventually crashed. This is the depth and magnitude of this bubble is quite large, and therefore it’s going to take a lot of capital and and also time to to take the economy out of it.
Andrew Brill 10:16
So getting back to home, you had written that the 50 basis point. And there’s, there’s lots of, you know, debate over whether the 50 basis point cut was too big. Was it right on? You thought that there was a good thing explain to us why the 50 point cut was was dead on? Yeah.
Geo Chen 10:39
I think what Powell was going for was to go with the decision of least regret. So right now, the US economy is finally balanced. There’s not a lot of hiring, but not a lot of firing going on either. If he delivered a 25 basis point cut, only the market was expecting, you know, a little bit more than that. So the market would have been disappointed. Stocks would have sold off. And it really would have sent a message to the economy that, you know, the Fed is behind the curve, or it doesn’t have the economies back, and I think consumer sentiment would have continued to weaken, and, you know, resulting in the unemployment rate continuing to tick higher. So we did trigger the SOM rule, which, you know, was what the that rule is, is when the three month moving average of the unemployment rate goes up by half a percent from the cycles low, so that so when that happens, historically, the economy has gone into recession every single time in the past. So that, in itself, means that when unemployment starts to tick higher, there’s a lot of momentum behind that, and you need to, you know, stop that momentum with something forceful. So I think 50 basis point cut and the message that, you know, more cuts are in the way that that was forceful enough, but a 25 basis point cut wouldn’t have done it. I think it’s really important for the Fed to get its messaging right at the beginning of any cycle, whether it’s cutting or or hiking. So imagine if back in 2022 when inflation was ticking higher rates were at zero. If the Fed had had hiked by 50 basis points, instead of just 25 like that, would have sent a message that they were ready to fight inflation. And, you know, if they had just been ahead, ahead of the curve, a little bit more, then we might not have had to end up at four, 5.4% in Fed Funds. You know, maybe they wouldn’t have had to hike as much. So I think what we’re seeing today is the mirror image. Now, this time they’ve they’ve led with a 50 basis point cut. It’s more forceful. It means that they probably won’t have to cut as much down the road, because now the economy is going to be on better footing. I
Andrew Brill 13:21
want to touch on unemployment, because you made it a very interesting point that companies aren’t firing, but they’re not hiring either. So we’re in this place where companies are running, actually, earnings were pretty good, and we just ended another earnings season as we flipped the page to October and end the third quarter. But my question is, are we entering a different time where companies are going to run leaner, they’re going to have part time employees instead of full time employees so they don’t have to foot the bill for insurance and stuff like that. Health insurance? Are we? Are we in a changing time? I mean, covid had a lot of people working from home office space, especially here in New York City, a lot of it is empty, so there seems to be a changing of the time. Do we need to readjust some of our figures to get a better handle on what unemployment or employment is going to look like going forward, and now, with AI, some of those jobs are going to be replaced anyway. Yeah,
Geo Chen 14:27
it’s quite possible. And what you’re talking about, you know, corporations delivering, you know, similar, the same or better revenues on a leaner stat, employing fewer people, that’s actually good for for equities, you know it means productivity is going up, GDP per capita, so and and high product productivity tends to be very good for the market, whether it’s going to be good for. Or, you know, your average worker, like the truck driver, you know, delivery people, the people who might get displaced by AI, that’s a different story. But you know my expectation, like with every previous tech, you know, transition in technology, I think those jobs will get repurposed. People will will retrain. People will, you know, find other careers. So I’m not too worried about that. I do think that what happened during covid, where people, you know, they did reshuffle. They left the jobs that they didn’t like, and they moved to, you know, careers that that that they wanted. They they left cities or, you know, places where they were living to go closer to home. I think generally people, just, you know, sought what they were looking for in life, right? It was kind of like it shook things up. So people are happier and people are probably more productive now than before covid. So overall, I think the economy is in a better place. It’s in a more productive place, which overall is going to be good for, for equities.
Andrew Brill 16:19
This show is sponsored by BetterHelp. It’s finally happened, and was only four years in the making, the Fed has cut rates by 50 basis points. Yes, it was a little surprising, but maybe they see bumps in the economic road going forward, and maybe there are bumps in your personal economic road that are weighing on you, or maybe there are other things that are on your mind, keeping you from thinking about all the good things in your life. It happens to all of us. We walk around with the weight of the world on our shoulders. Look at others thinking their lives are perfect with no worries or cares in the world. Everyone has worries and things they think about all the time. You can’t let those things get in the way of the fun things you want to do and explore or the things you’re curious about and want to tackle. It’s why I speak to someone. It helps to ease some of the negative thoughts and gain a new perspective on some of the things that are floating around in my head. And believe me, there’s plenty if you need to talk to a professional or thinking about giving therapy a try, give better help a try. It’s easy, online, convenient and flexible. To fit your schedule, just fill out the questionnaire. Get matched to a licensed therapist anytime, rediscover your curiosity with better help. Visit betterhelp.com/wealthion. To get 10% off your first month. That’s better help, H, E, l, p.com/wealthion, so so they cut 50 basis points. But all along they’re saying, Oh, we want to get inflation down to 2% it’s not it. It’s not far, but it’s not close. I guess we’re just under 3% so Geo, what happens? And we’re in a situation now here in the United States, where there’s now a dock workers strike. They basically shut down the waterways from New York all the way to Texas. I think there’s somewhere around 12 or 14 ports. Is there a possibility of inflation ticking up, especially with all his merchandise sitting at the dock somewhere and not moving? Yeah.
Geo Chen 18:19
So in previous strikes, previous strikes have had a temporary effect on on inflation, particularly wages, and it’s rarely, you know, it really tends to last. So I don’t think that the strikes going on at the ports, the ports on the East Coast are really going to have a lasting impact on inflation and wage pressure. As for the Fed cutting by 50, when the Fed funds is not yet at 2% there are two things I have to say about that. But first of all, in previous fed cutting cycles, they’ve tended to in the past, they’ve started when inflation was actually a lot higher, because inflation tends to be a lagging indicator. And you know, in previous cutting cycles, the Fed felt a need to cut because they saw signs that that growth was slowing, and because inflation lags, you know, it was in the past, it’s been as high as, you know, three on a three handle, four handle. But as growth slowed down, inflation followed. So I’m so compared to previous cutting cycles, 2.7 in the PCE is actually pretty low. And you know, as for where the Fed wants inflation to be in the long run, I actually think that they don’t mind if inflation bottoms out around here, like they say that they’re in. For a 2% inflation target, but you know, if it starts to click, tick back up to three, I don’t think that’s really going to stop them from from cutting further, because, you know, inflation running at around three is actually the ideal scenario for both, really, for for the sustainability of of government debt, because it increases the denominator of the debt to GDP ratio. So in order to get their debt to GDP ratio lower, you actually want GDP to be inflating a little bit faster than normal. And you know, that’s the whole phenomenon of governments want, wanting to inflate away their debt. So I do think that we’re probably, you know, you know, gonna have inflation in the long run above 2% you know, in like, maybe two to two and a half to to three and a half percent range. And that’s going to be perfectly fine for the Fed. So
Andrew Brill 20:59
it’s unemployment that they’re really or employment, whichever way you want to look at it, it’s that. That’s what they’re really worried about, is getting people to work so that they can actually spend money again and keep the economy more
Geo Chen 21:11
That’s right. Yeah, they’re trying to keep the cycle going, keep the keep the music playing, you know? And and previous, previous instances when, when the Fed is has cut in the absence of a recession, what I would call a mid cycle cut. That’s been very bullish. We saw this happen in 1998 when the Fed cut by 75 basis points over one or two months, and this was during the LTCM crisis, and when Russia defaulted on the debt. So, you know, we saw what happened after 1998 we had a massive bull market that that ended up, you know, in the.com bubble in 2000
Andrew Brill 21:54
right? I guess the.com bubble helped that along to where the technology are. We in that same sort of bubble where AI is going to help this along and push, you know, push the bull market even further.
Geo Chen 22:07
Yeah, I don’t know if we’re going to see something like the tech bubble and and, you know, I don’t know if AI is going to be like the 2025 version of the 2000 tech bubble at the moment, I’m more bullish on, like, cyclical sectors of the economy, rather than, then, you know, AI names actually, you know, I think sectors like the small to mid caps are actually going to outperform For a while, just because those sectors have been beaten down and just been going nowhere for a long time. So then they’re also they’re also cheaper as well, and they contain a lot more interest rate sensitive sectors of the economy, like regional banks, housing, manufacturing. So I think those are more likely to inflect higher, whereas a lot of the growth in AI and mag seven has already, you know, been priced into a certain extent. I’m not saying that that mag seven or S P are going to sell off, but they might be in for a, you know, a bit of underperformance relative to the more cyclical, sensitive themes
Andrew Brill 23:22
you mentioned, the debt, and now with interest rates coming down, obviously, although I don’t know how, bond prices kind of popped up a little bit, now they’re coming down, it’s it’s been a little bit of an anomaly. But, you know, with the debt continuing to rise, and now with interest rates coming down, it’s going to be harder to service that debt. And that’s an inflationary problem, isn’t it? Um,
Geo Chen 23:48
yeah, it’s, you know, I think the debt is always going to be an issue, um, and the US government is still running a budget deficit, quite a large budget deficit, and it doesn’t seem like that’s going to change anytime soon. Whether Kamala wins or Trump wins, neither of them are that focused on reducing the budget deficit. So you know that’s going to support spending, that’s going to support the economy, but that’s also going to support inflation as well. So, and I think that means that yields in the long run are also going to be well supported. So I actually think that we might have seen the bottom in Treasury yields for for the cycle, at least I’m willing. You know that’s that’s how I’m positioned. And you know whether you’re talking about the two year Treasury yield or the 30 year, I think they’re they’re all going to bottom out from here.
Andrew Brill 24:55
They’re going to go lower. You
Geo Chen 24:56
think that the yields, the yields will bottom. Amount and the bond, yeah, the treasuries will will go lower. So
Andrew Brill 25:04
is, is the debt something we, you know, if they’re just going to continue to print money, so to speak, is the debt something we really have to worry about?
Geo Chen 25:14
You know, this is, I think, sometimes, but I don’t think it’s going to be, I don’t think this is all going to come down to a singular moment where, like, you know, there’s a debt crisis, where there’s a complete collapse in the faith of, you know, treasuries and the US dollar. I think it’s just going to result in moments like we had maybe last, you know, last September and October, when the market was freaking out a little bit about the supply of treasuries, of term premium. And, you know, 30 year yields went up to, like, five and a half percent. And, you know, the Fed, I mean, the Treasury had to to do some, you know, tweaking of its issuance, issuing more on the short end T bills. And in order to support the long end, you know, they’re going to have to do more gymnastics in order to keep the yield from getting out of control. So I think we’re going to see a little bit more of that going forward, but it’s going to come in fits and starts, like right now, I don’t think that the market is going to be too much, too worried about, about the debt. I think there are plenty of of, you know, there’s plenty of demand for, for US Treasuries, but, but I do think that the market, you know, upgrading its its prospects for the, you know, growth of US economy. I do think that yields are too low because, you know, right now, for example, we have the curve pressing in the Fed funds rate going down to about 3% by middle of of next year. That’s a lot of cuts. And it also means that, you know, the Fed is going to have to deliver like, one or 250 basis point cuts between now and, you know, q1 and I don’t really think the data is going to support that. I think the data is going to start turning higher and improving from from this month onwards. So, you know, I think maybe we’ll end up landing at three and a half percent in Fed Funds, give or take. And that means that, you know, yields at every point in the curve are too low at the moment. So
Andrew Brill 27:38
with bond prices going down and bottoming out. As you say, we have a sister company, hard assets Alliance, who deals in precious metals. What are your thoughts on on gold and precious metals at this point?
Geo Chen 27:50
Yep, um, you know, I’ve, I’ve been a long time bull on on gold, and I think, you know, it’s, it’s a vital part of every like, long term portfolio. However, I recently have been reducing my allocation to gold. And, you know, tactically, I prefer to trade gold from the short side. And you know, I know that this might disappoint some gold bugs out there. I know a lot of people who are, you know, usually bullish gold, but the reason is that if we if the market is pricing the Fed cutting down to 3% by middle of next year, but we only get to three and a half, then you know that should be bearish for gold, because it means that right now, the what we’ve seen is like peak dovishness for the Fed, or the price of money is really the cheapest, and it’s only going to get more expensive from here. So if the two year Treasury sells off from here, if, for example, the the, you know, so for futures, sell off from here. That’s, that’s actually negative for gold. So from, from a you know, liquidity standpoint, I think, you know, we, we’ve probably seen, seen the highs and treasuries, and therefore are likely to have seen, you know, the highs in gold, also from a price and positioning perspective. You know, it’s just, if you look at a daily chart, weekly chart, it’s just very overbought, and positioning also reflects this. Positioning is really, you know, the highest has been in a while. You know, maybe since 2020 21 it’s definitely towards the high end of the of the historical range. And whenever it gets to position, gets this long gold, that tends to lead to a bit of a correction. And. In a sideways period. So, you know, I think that people have flocked to gold for safety and protection for monetary inflation. But you know, if we see the big cyclical upturn that I’m expecting, then there’s going to be a pretty significant rotation out of out of safety, into riskier assets, riskier stocks. And one example would be, you know, a reverse So one example would be the fact that a lot of people in China have resorted to buying gold, really, as as a store of wealth, because, you know, once they lost real estate as as a way to store wealth, and they lost faith in in equities as a as a place to invest, they started by gold. Now that the China economy and markets coming back, you know, they might choose to sell their gold and get back into Chinese equities. So
Andrew Brill 31:02
I want to ask you about commodities also, because they’ve been suppressed for quite some time. And oil is now down right around 70 bucks, $71 a barrel, which is, I guess, normal, but also kind of low, considering what’s going on in the Middle East, what’s going on with Russia and Ukraine, which is now in has taken on a ridiculous length of time, but with the uneasiness in the Middle East, you think oil would go higher, but commodities have been suppressed, and now with the Chinese economy that they’re trying to pump that up, you would think that commodities would be a good place to park some money at this point. Yeah,
Geo Chen 31:44
yeah, there. There’s a bit of a, you know, there are conflicting narratives going on in oil right now. So as you mentioned, China stimulus should be bullish for for oil and and conflict in the Middle East normally should be bush for oil as well, although, you know when, when Israel did their ground invasion of Gaza that didn’t, you know, any, any rallies in oil end up getting sold. So I think that the market is now kind of, you know, feeling or trading more immune to what’s going on in the conflict between Israel and its neighbors. So on the bearish side, the main, the main narrative, is that Saudis want to increase supply. They’re tired of their OPEC partners constantly cheating on them. You know, the Saudi Saudis have been trying to manage their OPEC partners to cut production, and what’s happened is that the Saudis end up cutting but their partners keep producing and cheating above the quotas. So now I think the Saudis are, are getting pissed off and, and they’re gonna, you know, teach a lesson to their partners and, and they’re just gonna go ahead and, you know, and and pump as much as they want. So, you know, previously, when the Saudis have done this, this, it resulted in in a pretty sharp drop in oil, because the market was, was afraid of a price war. So it’s a, it’s quite a powerful bearish narrative, which is, which is countering the bullish narrative out of China. And I don’t know at the moment which one is going to prevail. I was, I was long oil, and just, you know, exited my position. And I do think that positioning is is quite short, quite bearish. So I think at some point, you know, it, a rally will materialize just based on China stimulus and positioning alone. But it, you know, it might take some time. So I
Andrew Brill 34:02
want to ask you about China again. And I know that they rely on exports a lot for their economy to run, but there people aren’t buying Chinese goods the way they used to. At least their exports have been down a little bit. Do you see that turning around? Obviously, the dock workers strike here in the US doesn’t help that. But do you see that turning around as the they pump more money into the Chinese economy?
Geo Chen 34:30
Yeah. So you know, China stimulating its own economy isn’t going to convince the rest of the world to buy its goods. Unfortunately, it’ll convince their own people to buy their goods, which is actually good for the Chinese economy. Because, you know, really, they they need to shift from being export led to being led by domestic consumption. So, you know, I do think that if the rest of the world recovers like i. Think it will, you know, the US, if the US economy starts to recover from here, if Europe starts to recover from here, that will result in a little bit more purchasing of Chinese exports. But it’s not going to be, you know, a game changer. The game changer is really, is really going to come from, from broader consumption by its own people. Does
Andrew Brill 35:27
that help the US dollar at all that China is exporting less? Hmm,
Geo Chen 35:34
yeah, that’s, that’s a good question.
Andrew Brill 35:39
We’re not doing our dollar any favors with our interest rates, I’m looking for ways to help us out here.
Geo Chen 35:48
Yeah, you know what really drives the dollar is US growth relative to the rest of the world, and there’s this thing called the dollar smile, which is that, you know, smile shaped like this. So at the two edges of the smile, that’s when the dollar is the strongest. On one edge of the smile, that’s, that’s when, you know, the rest of the world, like China, or, you know, Europe, is is doing very poorly relative to the US. On the other side of the smile you have, you know, flight to safety, grab for dollar equity. So the dollar tends to do very well. In the middle of this amount is when the entire world is reframing, the entire world is growing, and us is kind of middle of the pack. So China stimulating its economy, that’s going to move, you know, global economy towards the middle of this mile, which is going to be negative for the dollar. And we’re seeing this, you know, we’re seeing the dollar weekend against a lot of Asian currencies, like, for example, dollar Singh, which, you know, I live in Singapore, and it’s been trading between 130 to 136 for, God knows how, long, like, ages. And suddenly it’s trading down to 128 you know, so that’s a sign. So the dollar is weakening, and I think it’s going to keep weakening, if China managed, manages to keep its, you know, stimulus going.
Andrew Brill 37:32
So you had mentioned Bitcoin in one of your or cryptocurrency in one of your articles. Can that change the way the economy works? What’s your view on Bitcoin, and are you bullish or bearish on Bitcoin? Where is bitcoin and cryptocurrency going?
Geo Chen 37:50
Yeah, yeah. So Bitcoin has been interesting because, you know, we had a huge run up at the beginning of the year, and then it’s just been sideways since, since March. It’s supposed to be a risky asset, but it’s really, it really hasn’t cut pace with, you know, with US equities at all. So the question is, like, what’s it gonna do from here? I do think that the backdrop for Bitcoin looks a lot better today than it than it did, you know, let’s say a month ago or a few months ago, and for a few reasons. So the first one is that we have the Fed finally cutting and and so that tends to be, you know, pretty good for risk assets. So risk appetite is going to be, you know, global risk appetite is going to support Bitcoin. And we also have the lifting of a lot of the supply that was, that was keeping Bitcoin down. So, you know, previously we had Mt Gox distributions, you know, a few billion there. German government, US government, was also selling this Bitcoin. So there was a lot of supply of keeping Bitcoin capped. But I think Bitcoin has absorbed all that, and now there’s really a lot less supply that’s going to keep Bitcoin down in this, you know, 5070, range. So I do think that it’s only a matter of time until it breaks higher. We also have a lot less supply forming coming from the grayscale ETF as well. So ETF lows are improving. They’re almost at all time highs in terms of total Bitcoin, ETF, Aum, we also have FTX distributions coming. So that’s going to be a lot of that’s going to be like a big multi billion liquidity injection into crypto. So that would be supportive, too. So I think, you know, if these factors can, can, can help Bitcoin get above the year’s high. You know. Above 72 73k then we’re going to start another, you know, bull market rally in Bitcoin and and that should also lift, you know, the rest of the crypto market, as well as for whether Bitcoin will really change the economy. You know, I don’t really think it’s going to change the economy anytime soon. It’s, it’s a store of it’s, it’s a store of wealth asset, you know, it’s kind of like, to what extent has gold really changed the economy? I’m not sure. I do think that blockchain and stable coins, you know, are more likely to change the economy and the in the financial plumbing, but, but, but Bitcoin, I think, is really just going to be a store football asset.
Andrew Brill 40:51
So with everything going on the economy, you run a family office, where we, where we, I know you were very bullish on Chinese equities. So that’s one place we can be looking to park our money to make some money. Where else? Where else are you looking to make more money? Yeah,
Geo Chen 41:12
so yes, Chinese equities, although they have run up a lot, and I am long term bullish, but short term waiting for debt to buy a little bit of short term exuberance there. I think that one place where, you know, people aren’t quite looking yet is in European equities. So you’re the European economy tends to be caught in the middle between the US and China. So, you know when the US is growing but China is not then, then Europe kind of underperforms the US. And you know when China is growing but the US is not, you know, same, same thing. Rarely do we ever see both the US and China inflecting higher at the same time. So I think that’s going to drag the European economy higher. European equities, like the Euro stocks, are quite cheap in comparison to, let’s say, you know, the S, p5, 100, 500 or the NASDAQ. And you know, I think that it will play some some catch up higher. So European equities, they tend to go sideways for a few months and then suddenly rally by 20 30% and then go sideways. So I think we’re on the brink of of another 20% rally. And, you know, for me, like I trade futures, I trade I take positions on, on leverage with, you know, like a stop and limited downside. So I kind of like this, because I think there’s some catching up to do, and from a leveraged futures position, I think it’ll be a strong it’ll deliver like a pretty strong shock ratio. Great.
Andrew Brill 43:07
Well, Geo, thank you both so much for joining me. I really appreciate it. I know you’re in Singapore. It’s getting late there, so I’m gonna let you wind down your day. But I really want to thank you for joining me. Where can we find you. I know you have a sub stack. Forenza,
Geo Chen 43:24
right? Fidenza, yeah. Fidenza,
Andrew Brill 43:27
macro, where else are you? On Twitter? Any social media where we can find you?
Geo Chen 43:32
I am on Twitter, but to get my latest and best insights, that’s really all on my substack. So fidenza.substack.com, I post once or twice a week, so all my best stuff is on there. Excellent
Andrew Brill 43:48
Geo. Thank you so much for joining me. I really, really appreciate it. Yeah, thank
Geo Chen 43:52
you. Thanks for having me. Really enjoyed it.
Andrew Brill 43:55
Thanks so much for watching our discussion here on wealthion with geo Chen. It was a pleasure having him, and hopefully he’ll be back soon. If you need help being financially resilient, please head over to wealthion.com/free for a free no obligation, financial review. And of course, if you could like and subscribe to the channel, we would greatly appreciate it. Don’t forget to turn on notifications. So you know when we post new videos on the wealthion channel, and please do the social media thing with us all. The links are below in the description. And if you like this content and are looking for more ways to achieve long term wealth, watch this video next. Thanks again for watching until next time. Stay informed. Be empowered and may your investments flourish. You
