Global markets are on the brink, warns Henrik Zeberg, Head Macro Economist at Swissblock. With overvalued stocks, skyrocketing Bitcoin, and rising economic instability, the “Everything Bubble” is nearing its bursting point. In this insightful interview with James Connor, Henrik discusses key market risks, the looming threat of deflation, and how Federal Reserve policies could trigger stagflation by late 2025. Learn what these shifts mean for your investments and how to prepare for the challenges ahead.
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Henrik Zeberg 0:00
What I’m saying is that the economy is coming to, we arrive here now where the coyote is running over the cliff, and all of a sudden you will see that there’s no ground below, beneath us. And that is the problem when the economy comes to that that hold. And the the the whole stock market is so overvalued as it is right now, it’s completely, you know, insanely overvalued.
James Connor 0:22
Hi, and welcome to wealthion. I’m James Connor. Well, here we are in the last few weeks of the year, and one of the things I always like to do as we head into year end is create a financial plan for the upcoming year. And if you would like to create a financial plan or have a discussion with a financial advisor and talk about some financial goals, visit wealthion.com/free to speak with a financial advisor. Once again, That’s wealthion.com/free, to get more information.
James Connor 0:53
Henrik, thank you for joining us today. How are things in Copenhagen?
Henrik Zeberg 0:57
They are great. Christmas time is always a great time of year. So all good here.
James Connor 1:03
When we first spoke this year was early January. I can’t believe it was almost a year ago, but at that time, you were very bullish on the S P, and your target on the S P was 6000 and even in August, when the market got hit and lost 5% in a week, and everybody thought this was the beginning of the end, and you didn’t waiver. You still remain bullish. And you’re targeted at time, I think you took it up to 6100, to 6300, on the s, p, and at that point you said we would see a blow off top. And here we are with a few weeks to go in the year. And I want to get your assessment on where you think the markets are and and how do you think they’re going to shape up for 2025
Henrik Zeberg 1:43
Yeah. So we are, mean, we we still have some room to the upside. So we are around 6100 now, I think there is just a little bit upside still in the s, p. I think we are getting very close on the Dow Jones, and I would like to see, think that those two could actually top out together, but I think the NASDAQ may push a little further. So. So again, with everything here, I mean, I, you know, I don’t focus so much on when, but it’s more about, you know, which level we are talking about. And the 6100 to 6300 still stands, even though I could also see a really strong push into 6400 if that’s, you know, but that would be within the, you know, the the margins of errors, I would say so, so, but that’s, that’s where I stand. So we are, we are getting closer into it, the structure, into the that I look at for the s, p of 500 is is developing a little more upside, but we are getting very, very close. And I would just say that when you ask me about what I think markets we go, how they going to perform when we get into the next year? Well, I think, I think the fallout will, will start, probably begin in January. We may even see a top year in December already for the S, P and Dow Jones, the NASDAQ, Bitcoin may also push on for a little extra, as I said, but I think the fallout could already start to happen in January. So and then then it’s going to be, you know, a tough year. It’s not going to be straight down, and we will have major balances as well, but it’s going to be a very, very difficult
James Connor 3:03
year. And before we do a deep dive on where you think these specific markets are going, why don’t we first just touch on your analysis and how you in your approach, use a business cycle approach. Just tell us a little bit more about that. Yeah,
Henrik Zeberg 3:18
so my business cycle is based on on three different indicators. There is the leading, the coincidence, and the lagging indicators, the leading indicator. And these are all you know, data that we can get from from the Conference Board. You can get it from Fred, you know, there is just data you can get on online, actually. So it’s not something you know in the magic box, but it’s the way you also use these things, and how you understand that they are actually the sequence of things. And I think that is where many, a lot of people are. You know what inflation is that before you see the economy is, is developing in certain way, and so on. And this is actually the sequencing of it and the understanding of that, which is extremely important. So what I see is that we have had the leading indicators leading the economy into a slowdown. And we, I’ve been waiting for now to see that the coincident indicator, which is the real economy, which is the production level, it’s the NFP numbers, non farm payrolls and so on, actually started to show that weakness. And then you have the inflation, the rates, the yields, which is the lacking indicators for now, we’ve seen the leading indicators been declining for 24 months or so, and which is the equivalent of what we saw into the financial crisis. And we actually started to see that the lagging indicators in my model is starting to show a lot of weakness there, which is a little funny, because in that, you know, in the three and the time between there, we should actually have seen the coincident indicators, meaning the non farm payrolls that we had on Friday should start to deteriorate and the labor market, and I actually think that is happening underneath the hood. And if you really look, you know closely, you will actually see that the non farm payrolls that we’re getting out these days are just, I mean, I don’t trust them a lot. That’s just put like that. So So I think the economy is in a much worse place than than most people actually on the. Stand at this point. Yeah.
James Connor 5:01
And to your point about the non firms, I mean, they might have been good for the month of November, but give it a month, and we’re going to see a major revision to the downside for sure, and that’s been the big theme this year. But let me ask you about these leading indicators, because you said they’ve been in decline now for quite a few months, but at the same time, we have the S, P and the Nasdaq making new highs every other day. How do you reconcile that?
Henrik Zeberg 5:25
Oh, that’s easy. I mean, it’s easy. It’s actually in the leading indicators. Is something that will go, you know, way before we start to see the decline in the in the stock market. So, so that is that was already in by the beginning of this year. So that is not what I’m looking for. The leading indicators telling us that the economy is in now, in that phase, there are four phases in the business cycle. We’ll make it take a little too far to go into details here, but they are telling us that things are deteriorating, that you have the yield inversion that we still see for for that we have the 10 year minus the two year which has uninverted Again, you have the 10 year minus the three months which is still inverted, which is a, you know, also a signal of the recession, you know, setting in, not in the too distant future. And but the thing is really about the coincident indicators, where, when do we start to see that slow down in the economy, in the in the in the production levels, in the in the and in the non farm payrolls, the labor market that we should see? And that’s actually back to it. Even though you said it, they were good. Actually, I think they were. They looked very suspicious, I would say. And I’m not wearing tinfoil happier. But if you look at the BLS, so the bureau that carries out these surveys, if you look at their own numbers, you can actually see that they have been, you know, we have seen a decline in the full time time jobs. So over the last year, of 1.3 million, the part time jobs have been going up by 500,000 so a net around 750,000 in negative over the last year. And even though, if you then look at the non farm payrolls, they tell us that we have been creating 2.7 million jobs, something is off. And I just have to say, at the same time, on Friday, we also saw that the the unemployment rate moved up one point, so to 4.2 and we also saw the we saw also that the participation, participation rate actually fell. So there’s certain things around these coincidence. Sorry about the non fine pay rule that doesn’t make it doesn’t add up at this point. And I think that is actually the thing people are looking at the numbers at face value and not understanding what is coming on, what is happening down beneath those Yes.
James Connor 7:31
And to your point about the unemployment numbers, it bottomed at 3.6% I believe, and the trend has been moving up, and the last number was 4.2% so it’s going to be interesting to see where the numbers go as we approach or into 2025 so you also touched on interest rates in in the 10 year, and that bottomed around 360 here in the last few months. And then we saw that move higher. And now I think it’s around 420 but it got up to like 444 50. What do you think that’s telling us?
Henrik Zeberg 8:02
Well, I think it’s like everything else. And when you look at markets, nothing moves in a straight line. And the, as I said, the deterioration in the lacking indicators that I have is actually part of the that’s the yield also included than that. And you will see that, you know, when you have a decline, and you’ve seen it, the yields declining since earlier this year. Then, of course, there will be bounces on that weight. So what I think we are actually at this point here, we are an very important inflection point where we have seen this small bounce now, and I’m starting to see that we can see that the that the yields are now starting to turn downwards again. And I actually think we’re going to see a decline from here, which then means that the next phase is setting in. And I compare that next phase we see here with what we saw also in October of 2007 where we actually saw that the yields were starting to decline again, rather strongly, because things were not not great back then, nobody understood that we were so close to a recession. We were two months away from the recession, and but yields were telling us that, and I think we’re going to see that for the next coming weeks and months. Here you’ll see yields coming down strongly, and that will be telling us that things are, you know, the the economy is starting to get deteriorate even worse, even more than we, you know, have seen over the last few months. And that’ll that is going to we’ll see that when we get into the early parts of 25
James Connor 9:20
so a big part of your thesis is deflation, and this is going to impact many asset classes, including the equity markets and Bitcoin, gold, oil, etc. Why don’t you take us through this thesis, thesis, and why you think deflation is going to set in? Well, first of all, when
Henrik Zeberg 9:36
we look at what the the Fed is doing right now, they are, they are, you know, we they, we expect them to cut by 25 basis points at this point, at a time where inflation is not a problem. I mean the the latest few numbers that we have had, and I think we have that this week as well, had been very, I mean, low. And if you compare it to just one month before we entered recession in 2001 and 2007 inflation numbers were way higher than that. And. So the Fed now is scared of what they unleashed, or what they think they unleashed when they came out with the, you know, the cuts, they thought that they could keep inflation rates at 2.5% that was what they said. And what happened was that they went to 9.1 so now they got scared and say, Oh, we, we, we, we, you know, we miss, you know, calculate this. But what they do now is that they’re actually, you know, doing the opposite. So now they have been way too hawkish at the time, where you can see that the that the economy is coming into a halt. And again, this is where, if you do not look under the hood with the numbers on the coincident indicators, and you look at it like what the Fed is doing, then you will be way late to the party which the Fed is has been all the time. So the deflationary part here is because the the slowdown the economy and the halt that we’re going to see the economy come to, I mean, we have to remind ourselves we only had a 12,000 you know, job numbers in in October. And then people said, yeah, it was because of the hurricane and so on. Well, people just have to explain me why we have seen the unemployment rates just keep going up. First of all, and we have two 4.2% and we saw 161,000 new people actually becoming unemployed. Extra new people unemployed in in November. So what I’m saying is that the economy is coming to, we arrive here now where the coyote is running over the cliff, and all of a sudden you will see that there’s no ground below, beneath us. And that is the problem when the economy comes to that that hold, and the the the whole stock market is so overvalued as it is right now. It’s completely, you know, insanely overvalued. You have, you know, the youth euphoria that I talked about a year ago. Also, it’s now slowly starting to about to develop. We have Bitcoin above 100,000 that people think it can go to a million and so on. I mean, these things are the, you know, the very definition of that bubble that we’re in right now, and especially also if you look at the valuation levels for the stock market. So at some point that will all come to, you know, actually, when the economy catches up with the stock market, or the reality comes to the stock market, we’ll see, okay, then things will start to decline. And I can just see that with these kinds of valuation levels, there will be a large gap, you know, down so they we’re going to see a large decline in the stock markets, and that will also set its trade you know, you’ll see that in the economy as well. I mean, right now, the US consumer and consumers around the world are not doing well. You see that in the delinquency rates that I spoke about, you know, previously also. And you see that we actually do not have an economy that is rather strong. Here you see it’s part time jobs people are taking up 123, jobs, you know, or two extra jobs sometimes to actually just cope. That is not the very definition of a strong economy. So you know this, and with the extreme valuation levels we have it also, you know, just look at in PE levels in, you know, historical basis, we are extremes here. And when that, you know, that’s an inflated alone here. So, so when that comes with that air comes out of that that is a deflationary force. That is not stagflation, that is deflation. That is price pressures on a lot of things, capacities have been built up over the last few years where that is not being utilized at this moment. You know, commercial real estate is, you know, in a complete, you know, state of denial at this point also. So you will see that these things here will actually come crushing down, and that will have in your price pressure. And that is, that is deflation. That is not stagflation. So, so as people start to say, so, when that starts to happen, we will see the Fed coming out again, blazing and, you know, trying to stop this, but first we’ll have to see that top. And right now, everybody seems to expect that this can just go on and on. And you know, I’ll be wrong.
James Connor 13:29
So in 2021 the Fed made a major policy error when they said inflation was transitory. And then by q1 of 2022 they realized they had a really, real problem on their hands when inflation ripped to 9% but you’re suggesting now the Fed is still way behind the curve, and they’re making another policy error by cutting interest rates too fast and too aggressively.
Henrik Zeberg 13:52
They they’re they’re not cutting them enough right now. The problem is that they’re not cutting it, that they the right now. The I mean when you are setting things in motion, and especially something like the economy, which is a super tanker, then there is a certain momentum behind it. And when that gets going in the first you’ll see that if you push in some, you know, in certain direction, you’ll see it start moving, but they keep pushing on it right now. And the economy is not in a stage where, you know, the fed fund rate should be at these levels that we have right now. Absolutely not. And that’s you see by, you see by, you know, the interest payments on people is just killing the consumer. So what they’re doing right now is that they are again, way behind the curve. They look at inflation rates, which are which are lacking, the indicators are the lacking indicator on the economy, and that means that they will be, you know, horribly wrong, just on the other side now. So their policy mistake this time will be to the other side. So as bad as they went to the inflation side, they will do probably now on the deflation side. So this, this, you know, this thing is going to come crumpling down and and they will come out again, and like a drunk driver, overreacting in one direction, and then over direct, you know, reacting in the other direction. And that’s what we see. This is the drunk driving of the Fed. And I think. Gets is terrible to look at, because they simply using the wrong indicators.
James Connor 15:03
And one of the big unknowns about 2025 is that we have a new administration coming in, and there’s going to be a lot of changes, a lot of policy changes, deregulation taxes, reduction in taxes and increase in tariffs, and also changes to immigration. And we really don’t know the impact what, what all of these changes are going to do to the economy, but to me, a lot of them will be inflationary. Like, if you cut taxes, that’s going to be inflationary. People are going to spend more. If you impose tariffs, that’s going to result in higher inflation. Are you not concerned we might see a pickup in inflation in 2025
Henrik Zeberg 15:40
Yeah, sure, absolutely. But again, I think that’s what I talked about also on previous shows. I think there’s going to be a whipsaw. So I think that we, what we’re going to see is that the will, the deflationary forces that are in play right now, are in control, and that we can see, because people are not spending, you know, that, as they they should. And we see the, you know, the consumption simply not being there where it’s supposed to so we don’t, we don’t see a pickup in that like so inflation could become a problem. In order for inflation to become a problem, we need to see exactly that. We need to see exact spending. We need to see that the money starts to circling faster and faster. We don’t see that. And that’s why I say that the deflationary forces of the economy right now is in control. And I think the Fed is scared of some of these things here and what they’ve done least, and that’s why, if you look at the momentum charts for for inflation and for for also, yeah, for yields, also, then the the momentum is to the downside at this point. What you’re then talking about is things that will come through and will be happening at some point in 25 but that’s not creating inflation at this point. That will create the opposite again. But I and that you can have the, you know, the perfect cocktail there, because then you may also have the Fed coming out blazing, because they say, Oh, now they restart the inflation again in the face they will have to do something. And then you have all the things that can come out there from the from the administration as well. So, yeah, I do, and I do fear inflation, but, but not at this point. And again, it’s not just about one direction or the other. Actually, these things can turn pretty quickly, and especially if you have a downward force and you’ve got all these things setting in motion, then the upward force and inflation can be setting into in 25 late 25 I would think, and then into 26 and that would be the next problem, especially if the economy is still sluggish. And I think it will be, because then you’ll have the worst thing you can have a sluggish economy while inflation is picking up, which is stagflation. And that will be bad for a lot of people.
James Connor 17:30
I want to spend some time on stagflation, but before we do that, I want to ask you about this whole element of euphoria that you touched on. And I think one of the things that really shocks me about this market, or maybe in the last five years, is it’s just not one bubble, but it’s mini bubbles, right? It says it’s what John Maynard Keynes called animal spirits, and that’s what’s feeding everything, and I guess it has to do with cheap money also. But cryptocurrencies, right? There’s over 9000 different types of cryptocurrencies now, nfts, you may recall, I think it was in 2021 somebody paid $69 million for an NFT by an artist by the name of people. And then we had the metaverse, and that was another bubble. Now, nobody talks about nfts or the metaverse, and now, I guess the big bubble is anything and everything to do with AI, and the poster child for AI is Nvidia, and it’s up 180% on the year. But maybe you can just speak to these bubbles. And I know you’re a real student of the market, but how does this time we’re living through right now compared to other bubbles, and why do you think it just keeps going from one asset class to another?
Henrik Zeberg 18:37
So I don’t think there is we talk about many bubbles here. I think we’re talking about one big bubble that is just, you know, keep developing. And we haven’t really seen the popping of that. We’ve seen a decline in the markets, but it’s just been, if it was saved again, also even in Coronavirus, you know, and all the things we have seen over the last few years is just, you know, adding up to, to the big one that we have right now. So I think I talk about we what we have right now is the everything bubble. We have a bubble which includes, you know, you know, crypto and AI, and everything we have, because everything has been, you know, just been thrown money at it, and that’s what we see developing. So I don’t think it’s these are, you know, small, new things that are going it’s just part of the whole thing. And that comes back to the whole, you know, what is the, really, the driver of this, first of all, it’s the easy money, you know, environment we have for so many years, and it’s been changing over the last few years here. And I think that is what’s going to change a bit, do a big change down the road, but for the until you can say that the inflation started to move up, we will. We saw that money was just thrown at everything. And we had these new technologies coming out. We had AI, we had blockchain, we have all these things which are wonderful technologies, and they will change the world 100% they were going to change the world just like what we’ve seen so many times before, when the, you know, the railway came out, and we had the technology of the steam engine in the 1850s you had the automobile and so on in the 19 early 1900 and, you know. All these things, are things, technologies that comes up and what happens every time around that you can also go back and, you know, 100, 170 years to look around the railways, at the rail road and the steam engine, you have bubbles emerging from that. You have, you know, companies popping up and say, Oh, now this is going to be something fantastic. And everybody’s trying to figure out how it all suits, you know, fits in, and that’s, that’s what happens this time again. So you’re talking about those, you know, 1000s of cryptos there. I can tell you that I think 99% of those, and 99.9% of those are going to be worth it worthless within a few, a couple of years. And I’m even in some of these right now. So it’s the technology now beneath it’s the blockchain technology. It’s the AI, but it’s not the whole speculation around this right now. And that is where market is sometimes front running things and try, oh my god, this is fantastic. And they just throwing the money into it, which builds up the bubble that then bursts. We’ll see some, you know, big declines in the market. And we’ll see also a lot of failures in some of these, you know, you know, exaggerated to, you know, in terms of valuation the companies. And then we’ll see that the real ones will then emerge from this, the whole decline. So you will see that there will be another, you know, whatever it’s going to be is going to be Amazon, or whatever we saw after the 2000 also a bubble there. So we will see that, but it’s not going to be the 1000s or the hundreds of them that everybody seems to believe now. It’s going to be the normal cycle, as I see it. We have the bust, and we see a lot of these fail, and then we’ll see a few of them emerge. And there will be a real business at the case on those and and that will be due to the technology that is behind this, the technology that will drive but it’s it is not that will save the world. At this point, we will have the bust, and then the next, the fourth, you know, industrial revolution is going to be set in motion by some of these technologies. I’m quite certain of.
James Connor 21:55
I touched on nfts, but I don’t know if you saw that. Recently there was a cryptocurrency investor. His name’s Justin Sun. He paid $6 million for a pizza bar, which was essentially a banana duct tape to the wall. Did you see that?
Henrik Zeberg 22:09
Yeah, I rest my case. I mean, this is this is the craziness, this is the stupidity that we see in every cycle, and every time we are told that this time is different. And no, no, no. And you don’t understand Henrik, and I know this, this is the thing. So yes, I did see that. And again, it’s just like another tick in the in the box saying, Okay, we got this kind of stupidity. Obviously, we’re getting closer to it. So yeah, but
James Connor 22:32
was he? What was even better is that he called the press release, I guess just to probably did it for publicity, and then he actually ate the banana. Yeah, I
Henrik Zeberg 22:40
saw that. Yeah, alright.
James Connor 22:42
So let’s talk about Bitcoin now and once again. When you’ve been bullish on Bitcoin all year, you said your your target was $115,000
Henrik Zeberg 22:53
115, and even in August, 23 up to 123, I said, elsewhere, yeah, okay. And
James Connor 23:00
I was gonna say even in August, when we hit that pullback in the markets Bitcoin, I think it was around $55,000 once again, you were still bullish. You didn’t waiver. So just take us through this synopsis or your thesis on Bitcoin. Where you think it’s going? You said, where’s it going now? 115
Henrik Zeberg 23:18
223,000 that’s around that area. I think we got to top out and and I think actually we’re starting to see some of that weakness in the mind, in the in Bitcoin right now. But I know that’s not what people think, but we are actually starting to see some of that now. And I yeah, my thesis on it is really, yeah, go on. Sorry. I was
James Connor 23:35
just going to say we got up to 100,000 or just over, but you think it’s still going to make one final push up.
Henrik Zeberg 23:42
Oh yeah. So again, I work with with technical structures and, and it was Irish, actually also expecting something of a consolidation around the this level that we’re at, just where we saw this this past, I think it was around 95,000 98,000 and, but, but now we should see it pushing up into the final and it’ll be a more volatile ride from here. So we’re not going to see a straight line. It’s not going to be like what we have seen for the last couple of months here. It’s going to be a more volatile right, but this trend will be up, and it will last, let’s say, for next this month, next month here, maybe a month and a half, and that’ll be it. And then I think we were at the very end of it,
James Connor 24:22
Henrik, we can’t discuss Bitcoin without talking about Michael Saylor and MicroStrategy. MicroStrategy was up 500% on the year. I wish I was long, but I’m not, and now it’s up, I think just over 400% it’s pulled back quite a bit. And because he’s raising money, and I don’t know if you’re hurt, but Michael Saylor has implemented this 2121 plan. He wants to raise $21 billion in cash, $21 billion in debt, and he’s going to put the proceeds into Bitcoin. And I’m not even sure how much he spent thus far. But do you see this as another sign?
Henrik Zeberg 24:57
Oh, yeah, absolutely. Yeah. And him, you know, appearing on TV and talking about on media, talking about how we should, US should sell all its gold and buy bitcoin. I mean complete craziness. I mean stupidity, honestly. And so just to be frank here, obviously, this is, again, one of the I actually had these very high targets on my on my own MicroStrategy. I could see it also. And I actually think there is, I haven’t studied it, just for the last couple of weeks here, so I could see there could be another high on it, because I think there is that we’re going to follow Bitcoin. So I think with this, bitcoin does not follow found its top yet. And I think there is a significant upside still on Bitcoin well. So I think microstatically, can move even higher here. But it’s again, I have to say. And you know, we can be on here again in a year’s time. I think when we sit here again next year, Christmas, New Christmas tree, MicroStrategy will have crest, you know, tremendously. I know, you know, just like straight down to a certain point also. So it’s, it’s, you know what, what he’s doing here is a very dangerous game. And just about betting, all, you know, your whole, you know, existence, on a on a crypto, on Bitcoin, and just saying, you know, it’s just going to go up all the time. It’s yielding zero. And if we get a deflationary bust that I’m talking about, and we get a stagflation as well, you know, Bitcoin is not going to do very well. So I think it’s a very dangerous game that he’s playing. And yeah, it will work sometimes, and then we know he’ll be a villain for certain, for third, certain amount of years. But I just think this time around, if we get the lows that I can see in Bitcoin coming in after this, this top here, then it’s not going to go well, well for for MicroStrategy. But hey, he’s up a lot of percentages at this point. But we have seen this before. We see how things go straight up, and then the in the Eiffel Tower, it normally comes straight down again. I think that’s going to be the case here as
James Connor 26:48
well. So it’s interesting to see Michael Saylor going all like risk on in a big way, and he’s going all in on Bitcoin. And then Warren Buffett, he’s at the other end of the spectrum, and he’s raising cash. He’s sitting on a record level of cash rate now, $325 billion yeah,
Henrik Zeberg 27:07
I think, I think if I have to choose between the two, I know, I’ll put my money on that. And I think it’s, you know, it’s again, in a crazy world, the crazy person will seem normal and but the problem is, we are in a crazy world right now, so the crazy people are the ones that will seem normal because they do the crazy stuff. Fact is, in the real world that we will get back to it when we see the bust also, you know, the way of running a business, like what Warren Buffett does. And obviously he’s been proving, who am I to actually, even just, you know, talk about that he is he, as I see, this is the way to do things. And at this point here, when you have crazy valuations, you want to raise your cat, you want to raise cash, you want to make sure that you are ready for the next decline. You get ready for that your credit lines and so on. And then the, you know, let the crazy people talk about, you know, buying bitcoins and selling gold and and doing, you know, and buying bananas from his tape duct tape to the walls. I mean, these are the kind of things we see in the crazy worlds. And again, I said, the crazy people will seem normal for a certain amount of time, until the point where, where the shit hits the fan. But that’s not a popular thing to talk about. So when you I talk about this with people, don’t say, Yes, you don’t understand it. You don’t understand AI, you don’t understand crypto so, so that’s why this time you’ll be different. This time is different, and let’s see.
James Connor 28:23
So let’s talk about gold now. And you’ve made some good calls on the s, p, the NASDAQ and Bitcoin, but you’ve been negative on gold in the short term, and it’s up 30% on the year. Take us through your thesis on gold why you’ve been negative so
Henrik Zeberg 28:37
so I yeah, you can say, you know, being early or too early is also being wrong. So I’ll have to own that. But I think what I was expecting at that point is actually what we have seen silver been doing, and platinum been doing, and miners been doing the gold miners, they have not to renew all time. They have not gone to all new all time highs. And that was what I saw. That was what was in my thinking here. Because the thing is that in a deflationary environment, which I think we can be heading into, you do not want to own gold, because that will be the moment where all the things are starting to come crashing down. And there will be, you know, margin calls. There will be, you know, businesses going bankrupt and so on so forth. And there will be a lot of debt that needs to be paid, and that debt is in dollars, and that means that the dollar is going to go very, a lot higher. And I’m not talking again, and I just want to be very certain that we it’s not from right here, because I think that the Dixie, the dollar is going to decline somewhat here, down to 9798 on the Dixie, on the Dixie. But after that, I think we can see 122 into, you know, later of 25 on the Dixie, which will be a massive rise in the dollar towards all currencies around the world. And that will happen in a deflationary environment. You do not want to own precious metals in that environment. And that’s what I’m saying, that I think you can see gold, actually, I said after been wrong on the on that saying, okay, I can see now we can see maybe 2800, or. Something like that. But, and we are up around that level that I can see maybe a new high. But I think gold is going to come down, and I think it’s going to come down by 40, 50% as a minimum, into this deflationary bust. We’ve seen it before. Every time we get a recession, you’ll see those kind of crashes in the market, on the gold market, and you saw it also in silver. And again, you need silver, platinum, gold miners and gold to move up together, and actually you need silver to be the one that’s taking the lead, because if you don’t, then it’s not really a gold mark, gold bull market. So I will actually argue even people say, but it’s up 30% it’s this is not the real thing. What we’re seeing here is actually a correction in that move. And that’s why, in my model world, I would be right. But you know, it’s tough to explain that to people. So yeah, I have to own that. It seems like I was wrong on that, but let’s see if we don’t get a big correction into a deflationary bus that I think it happened, you know, starting soon. I said, very soon. What’s
James Connor 30:53
your ultimate target on gold,
Henrik Zeberg 30:57
to the upside or downside? For the downside to the downside, I think we can hit around 1300 1300 50, or something like that, 1370 or something like that. To the downside, it’ll be a rather big decline. And that’s what you see. That’s what you see into these busts where cash is everything, where dollar is moving up strongly. And if the Dixie really goes to one to 20 222 then you you’ll see gold suffering a lot. So, so let’s see about that. And again, you know, when the talk comes, people will not be in doubt. There will be a lot of declines there. And that normally happens into that very illiquid phase of the deflation. You saw that in March of 2008 until September, October, 2008 because there was simply nothing, you know, people starting, you’re starting to see the bad things unfolding. You have to Bear Sterns in March of 2008 and that’s where liquidity becomes scarce. There you do not want to be long gold. So that’s what I see. And people don’t like me for it. It’s fine. I still have to call what I see in this, in the models. But when we turn from that back at that point, when the Fed comes in, lacing, you know, liquidity, pumping liquidity into the market, I’m quite certain we’re going to see gold, you know, embark on that real bull market that everybody has been expecting, and that real bull market will take us much further, much higher.
James Connor 32:07
Yes, one of the things I’m always confounded with when it comes to gold is central banks have been major buyers here in the last few years. I believe they’re buying 25% of global production, which is a huge move. So I’m kind of wondering if that’s what’s driving the price of gold up, and that’s not really the real price. It’s like an artificial price and and that’s why the a lot of the equities are not participating. There’s a few name gold names, or a few gold producers that are, but there’s a lot of them. Newmont comes to mind. It’s flat on the year, the world’s largest gold producer, Barrick, second largest gold producer. It’s down on the year. So maybe Newmont and Barrick are representing the real gold price, which is significantly lower than where it is right now. And
Henrik Zeberg 32:51
that’s actually been my point. And the same goes with silver. So what I think we’ve seen actually that it’s not a bubble in gold. It’s not that I’m saying gold is in a bubble. I’m just saying it’s bubbling. I mean, it’s like people are expecting inflation to come, and you need to buy gold when there’s inflation, and central banks are getting ready for this big reset, or whatever. They also can see, because they can also understand that you cannot go on with this crazy monetary policy, so they start to buy that also. That’s why you can see the gold bubbling. But it does not mean that gold will have to take the big move up, and you will actually start to see that it can be sold off in a situation where people needs liquidity, and that means that maybe it’s not the physical price of gold. So if you go buy physical gold, they may not be able to buy that, you know, but there’ll be the futures price that we can see on the on the exchanges will, you know, likely drop a lot. So I think what we’re seeing here is kind of a front running or a bubbling of gold here, and that’s been driving it up to the highest we have seen. But it’s not really the big bull by a gold bull market. The real gold bull market comes the next time, and it’ll probably be be sent off by a stagflationary development, development in the economy, as the Fed comes back in and think they can just, you know, restart the economy by just pushing a lot of money or printing money and then starting it by monetary policies again. And I think they’ll be very mistaken on that. So in that situation, I think gold can do fantastically well together with silver and miners. And at that point, I think also the miners and silver will, you know, outperform gold. So I think actually that the fact that gold has been outperforming these is not a good sign for those who want to be gold bulls.
James Connor 34:23
Yeah, you mentioned the strength of the US dollar, and it’s killing me. The FX right now is killing me. My Canadian dollar does not go very far in the US or Europe or anything for that matter, but it’s like at a buck 40 right now. And if I’m using my credit card, it’s probably $1.45 so that means I’m paying a 40% or 45% premium on whatever I buy in the US.
Henrik Zeberg 34:48
Yeah, yeah. But I think it’s, I think it’s going to get much worse here. I mean, I think that the dollar will, again, you know, start to rally a lot. And I think what we’ve seen here is, is simply the road caused by the rotation. Of investors from around the world, stepping out of markets like the Nikkei, the nifty and even also in Europe, and thinking the US is the strong place. That’s where you need to have your money. So they’ve been pushing the money into that. And I think that’s what we’ve seen. That’s why we’re seeing this move up. Doesn’t mean that everything, again, as I said, Nothing moves in a straight line. And also the sticks is not going to move in a straight line. And I think we would have another low on that before we start to see the real rally. But the real rally is going to be very, very strong. And I think it will not last for long, but it will be enough. Be the thing that actually causes the Fed to come in, because, as the most dead in the world is actually denominated in in US dollars, this is something that is hurting the the world economy. And I think that’s what we that, that’s, that’s what we can see into to the early part of 25
James Connor 35:46
so let’s summarize a lot of the points you just made. Okay, so first of all, going into year end in early 2025 you’re looking for what you call a blow off top. You expect the s, p to go to 6100, to 6300, do I have those numbers, right? Yeah.
Henrik Zeberg 36:00
And I, as I said, I think I’m gonna move back and forth on the email there. I think that, you know, it doesn’t even need to be into January. I mean, the the s, p here, could reach this levels here, also in December, and even in the, I mean, I think there’s going to be a Santa Claus Rally. But, you know, be careful after that. That’s my, that’s my take on that.
James Connor 36:17
And then with Bitcoin, once again, you’re looking for another blow off top. It’s currently around 100,000 you still see that going up to 115 to 120,000
Henrik Zeberg 36:28
23,000 around that. Yeah, there are two fit levels that I’m working with it. So it can be anywhere there in between, depending on so 115, 123,000, maybe topping out a little later than the s, p, but, but approximately at the same time, but the NASDAQ has succeeded.
James Connor 36:42
And then as we head into 2025 you’re expecting the US economy to slow down, and it’s going to happen rather rapidly. You think the response from the Fed is going to be too little, too late, and we’re going to head into a period of which you’re calling stagflation, which is a slowdown in the economy, but at the same time inflationary prices. Yeah, so
Henrik Zeberg 37:04
first the deflationary face, and I think it’s important to say, because a lot of people think, why don’t we just get stagflation immediately? But I think the bust that we’re going to see, and the ferocity of that, the speed of that, is what is going to bring the Fed in again. Because right now, the Fed is fearful. I mean, they are fearful of cutting interest rates. And I think, you know, when they when they start to see what can uphold in 2025 it will be much more than just a, you know, cuts in the interest rate. What will be needed is much more than that. And the when they come in, you know, full force again, what I mean there is like what they did in the Coronavirus, or also in 2008 October, that’s what I’m talking about. That’s the kind of, you know, big move, and that is where the whole game changer is going to set in. And we see gold bottoming out, and we can see, you know, all of these things happening. So, so the stagflationary period is not right here. It’s not, it’s not the first thing we’re going to see, we’re going to see inflation coming down, yields coming down strongly. And then when we see the unfolding of that deflationary phase of the Fed’s reaction to it, I think that’s what’s going to offset these deflationary period.
James Connor 38:06
And Henrik, if there was one risk to your analysis or your thesis, what would it be? So let’s just assume we’re talking again in June of 2025 and the S, P is, I’m going to say 6500 what would be that one risk, one thing that you’re missing?
Henrik Zeberg 38:23
Well, it’s always interesting to hear that, you know, you of course, we can see these things happening. You know, these are the markets. But again, I lack to see the I mean, we need, we need to see that the real economy is then starting to work. I mean, again, I saw the NFP number. So sorry on Friday, excuse me. But when I look at the when I look at the unemployment rate, when I look at the people getting unemployed, they’re becoming unemployed, it’s moving up. When I look at the continuing claims, it’s moving up. When I look at the rest of the world, when I look at China, when I look at Germany, when I look at France, where they have problems so so bad that the governments are, you know, now, you know, problems they have. They have the elections also coming up because of, you know, some of the things that we’ve had in terms of problems. Well, you will see, you know, it’s difficult for me to sit and say, oh, so the stock market in the US will just continue to 6500 if it is, then there’s quite a lot I don’t get. And then it’s because the real economy is not, is not. You know, we will see that the bubble then can go on to 60 foot, but, but then we’re not going to see 6500 we if we talk in June and they we haven’t seen the decline, then we talk 7500 I mean, then we are way above this, and the crazy world can just continue for some time. But I simply do not see that there’s too many things that are still starting to break the the technical structure of the SMP tells me we are very close to a top and the same goes for the for the Dow Jones, so I just don’t see that. I think we are in the crazy world right now.
James Connor 39:52
You are so right. Henrik, it is a crazy world that we’re living through right now. And I want to thank you very much for spending time with us today that. Was a great discussion. If somebody would like to learn more about you and your services or follow you online. Where can they go? So
Henrik Zeberg 40:06
the best thing to do is to go to Twitter x, it’s called these days, obviously, and and follow me on at Henrik Seaberg. And there will be some links to two works I do, to work I do elsewhere. I work with Swiss block and the head macro economist there, and you know there’ll be links to also some of the services that I perform together with them.
James Connor 40:24
Henrik, once again, thank you and Happy Holidays.
Henrik Zeberg 40:27
Thank you and happy holidays to you also.
James Connor 40:30
Well, I hope you enjoyed that discussion with Henrik zieberg. He’s expecting a very volatile 2025 and if you would like to have a conversation with a vetted financial advisor to discuss how to best navigate these markets, visit wealthion.com/free once again, That’s wealthion.com/free to find out more information. If you have any suggestions on who else you would like to see on our channel, let us know in the show notes below. Once again, I want to thank you for spending time with us today, and I look forward to seeing you again soon.
