Henrik Zeberg joins to provide his insights on the market euphoria, inflation, and how to prepare your portfolio for the predicted downturn. During this episode, Wealthion host James Connor chats with Henrik Zeberg, renowned economist and creator of the Zeberg Report. During their discussion, Zeberg delivers a chilling forecast for the financial markets, predicting a severe recession worse than the Great Depression of 1929. He discusses how current economic trends and Federal Reserve policies could lead to a significant market crash, impacting investors worldwide. Plus, why he believes Bitcoin will outperform gold in the short term.
Henrik Zeberg 0:00 This is a slow moving, or this is a super tide turning and, and it's like, again, you know, how do you how do you go bankrupt? And how did you see the recession coming? It's like it'll first you know, first it was gradually and then it was all of a sudden. And that's the same thing. We're going to see what the recession I mean, it's going to be a slow moving turn, and then we're going to see all of a sudden, and then it's there. So the Fed will follow, they will start to see and I hope that they see unless as I said before, I think they are already very late. And I do not understand how they can even talk about a I mean, the soft landing narrative is so naive that it's unbelievable. James Connor 0:37 Hi, and welcome to wealthion I'm James Connor. And today my guest is Henrik Zeberg, of the Zeberg report, and Henrik has had some very controversial calls for 2024. And beyond, including a recession that will be worse that we have seen since 1929. Henrik, thank you very much for joining us today. How are things in Copenhagen? Henrik Zeberg 1:01 Thank you very much for having me on. And things are great here. The summer is coming. So we love it here. James Connor 1:07 And of course, the Euro Cup is going on in Germany, are you a big soccer fan, Henrik Zeberg 1:12 not a huge soccer fan, but I have to I have to follow it. Obviously the Danish team is also there. So so we will follow that and we try to show our colors. But the first game was not as good as we had hoped for. So this league Slovenian team actually played very well against us so and so we draw we drew against them. James Connor 1:27 I have to say I love the passion of the European soccer fans. And I'm not sure if you saw that video that went viral but of the Albanians, breaking the spaghetti in front of the Italian fans. Henrik Zeberg 1:38 I love it. I love it. Yeah, it's just that's the that's the way it's supposed to be right. So a lot of fun. And then you know, good spirits are. So that's great. James Connor 1:45 That's right, especially during these tough economic times, you got to find some humor. But anyhow, let's talk let's talk about the economy and and talk about the markets. And the last time you and I spoke, it was in June, the last time we spoke on wealthy on that is it was in January of this year. And at that time, the s&p was around 4800. And now it's at 5400. Your target at that time was 6100. And you said that was going to happen by June. But here we are in June now. It still is up 15% on the year. But let's just go through your thesis again, and where you stand on the s&p and and what your timeline is for meeting your targets. Henrik Zeberg 2:24 So nothing has changed in terms of the outlook. So things have been moving slower than I've expected that we still see the very clear uptrend. And actually, I think we see an acceleration in the in the equity markets at this point here. I did expect that a little sooner, because what would drive that acceleration is actually the anticipation of fifth getting back into the game. And and we you know, so far, the economy has been resilient ly strong, we've seen the labor market, the job numbers coming out eight, the most recent ones was was were really strong. Also, I think there were maybe a little too strong. And I also think that we're gonna see a revision on those. But we're still we have seen that it was it has been strong, the economy has been strong. And that is why we haven't seen of course, the Fed really needing to start softening their stance in terms of the of the economy. But but that is coming now when we start to see the European, the ECB has already cut their rates. First, we have seen and we have seen also the Bank of Canada do the same. So I think it's just a matter of time where we'll see the Fed. And next meeting is in July. And we also have been in September, I think, you know, one of these will be the time where they were the federal cut. James Connor 3:27 And why do you think the Fed is taking so long to cut especially with weakening the economy. And we when we look at the q1 GDP numbers, I believe the first number came in at 1.6%. And this is down from last year when it was growing at 3%. But it was revised down to 1.3%. And it does look like the economy is slowing. But why do you think the Fed is taking so long to make a decision here? Henrik Zeberg 3:50 Honestly, I think they're looking at the wrong numbers and they we know that they have an inflation as part of their mandate that they need to keep inflation low. But inflation is a lagging indicator on the lagging power meter on the economy. So it's like you know looking out the rear window when you're driving forward in your car so so you're looking out the window and then you will discover later what actually is that you go by when you drive forward so that is what the what is happening to the to the fender that's why there'll be hopelessly late again this time around like I've been so many times before both in terms of when they need to cop and when they need to hike and so they are way past the time where we they should have started cutting things cutting rates. So we have unemployment moving up now, we have a most recent recent retail sales also seeming to be you know, showing a slowdown in the economy and so on. There are many many signals now. And in my models, they are way too late. So So I think they have been afraid of what they unleashed or what they think they unleashed in terms of the inflation the last time around but that's why they kind of sitting on their hands don't say oh, we definitely do not want to trigger inflation because that's going to hurt consumers but but the other thing is also a bad thing and that's that's what they that's what they are, you know up to doing right now honestly and And again, it will come no matter what. And the last face just getting back to your previous question also the last face of when the fifth, not when they cost, but actually the gnomon. Up to that first cup is where we normally see that the markets really take off. And that's why we've seen that take off. Now, my timeline has been shifted a smaller bit, and that is that I had to say, well, of course, when we got to was in March or April, I say, Well, you're not gonna get into cannot get reaches number five by June. But it seems like now the September timeline is more realistic in terms of terms of when you'll see the top in the stock market and in the crypto market and also, and then recession potentially setting in like in q4 of this year. James Connor 5:37 Henrik you made an interesting comment about the ECB and that they recently cut rates. And they did so with, with the inflation still relatively high. And they may mention that fact too. But I guess the threat they see is a weakening weakening economy and this is also hurting the consumer, do you see do you think the same thing is going to happen in the US, the Fed is going to wake up and say, Okay, we still have high inflation. It's not near our 2% Target, right. But we still see pain happening to the consumer. And therefore we got to start cutting rates. Henrik Zeberg 6:11 Absolutely, they have to, and I think the market yields are starting to pull them downwards also. So we have to understand also that the Fed often to follow the market deals so that we will see that two year yields will start to decline very faster as we start to get going as we get closer to the to the point where it's becoming very obvious to everybody that the economy is slowing, and the recession is ahead. So yes, I think that is happening. And if you look at it in the interest payments of for the consumers are just you know, skyrocketing and they have skyrocketed, they have been moving up faster than anything we've seen over the last 70 years, at least for as long as I have data, which means that we seeing the consumer first, it's simply I mean, it's very simple, you have to pay your interest rates is that because interest rates are so high, so you pay interest payments, then, and then you'll you know, you'll cut on your consumption. And when you cut on your consumption, then the businesses will have to, you know, employ as many people and then they will start cutting first they'll probably say you know some of the open positions off and then they'll try to see if they can, you know, make people work and then less than later the the initial claims will start to come up. And then you'll see it also in the non farm payrolls. So it's a, there's a sequence to it. But that sequence is working perfectly that we see it now with the demand, the as I said, the most retail, recent retail numbers doesn't look very good. And we see also that the unemployment is moving up, because the compasses are slowly slowly starting to take, you know, action on this. And it's not like you are just seeing that, you know, immediately. This is a slow moving, or this the supertanker turning and, and it's like, again, you know, how do you? How do you go bankrupt? And how did you see the recession coming? It's like it'll first you know, first it was gradually and then it was all of a sudden, and that's the same thing. We're going to see what the recession, I mean, it's going to be a slow moving turn, and then we're going to see all of a sudden, and then it's there. So the Fed will follow, they will start to see and I hope that they see unless as I said before, I think they are already very late. And I do not understand how they can even talk about a I mean, the soft landing narrative is so naive, that it's unbelievable. James Connor 8:07 And one of the things that I guess where I see a bit of a controversy with your call here is that if the economy is as weak as you think it is, why would the stock market continue to make new highs? Why do you see going up to 6100 to 6200? Henrik Zeberg 8:23 Well, because I mean, even even though people think that you know, the stock market leads actually if they do, if you actually do study this, you will actually see that what leads us the the business cycle, it's the leading indicators that leads, indicators, which are the for instance, also the job market and as we can see, we have, you know, the unemployment level starts to become has just have to come up. And that is normally where we see the top in the market also coming later on. So so the stock market right now will now be jubilant about the potential, you know that the Fed is going to be softening its stance, first of all, and then also the talk about the rate cuts. And that is what we see now we see that the expectation of liquidity is what drives the stock market at this point here. And yes, I do see also that Bitcoin and crypto these days are actually having some some tough days, but but I think that the NASDAQ and the s&p will lead into that final phase here. And also because I expected the dollar slowly starting to come down rather strongly now. Which means that this together with the rates and the expectation of the cuts from the Fed side, will create the perfect environment for for stocks to go up as investors do not think that the economy is going to fall into a recession because remember, it's only a minority right now the things that the fact that the recession was close, I mean, the the the sentiment is that we have a soft landing. James Connor 9:38 And I want to get your views on the level of speculation that we're seeing right now and how this feeds into your thesis because right now AI is a big driver of this market. And when you look at Nvidia, it's up 165% on the year which just is astounding, but I believe the market cap is just over $3 trillion 2 trillion of that has come here in the last six six months. And to put that into further perspective, that's the market cap of Nvidia is now greater than the Toronto Stock Exchange or the market cap in Canada. But, but do you think this level of speculation we're seeing right now, with AI and so many other elements of the market is this like the part of the final blow off that we're gonna see? Henrik Zeberg 10:20 if you remember what I've said earlier on, and what I've also stated in on my Twitter account, I said that already in October 22, I said, when we get to the final phase of this, this is when we will see euphoria, I didn't know at that point, it was going to be AI, I said, I think, you know, crypto would be a part of it, obviously, because you know, any narrative you can have, we will be tied up together with some kind of, you know, crypto coin or anything like that. But but that is what we are seeing right now, we are not in the final phase of this, we have not seen, we're not at the peak of level of this yet, we have seen that the initial the, you know, the first few phases of this, but there'll be much, much more. And that is when this last the next coming months here into the summer into the early autumn. People will will help when you're the more you write on Twitter, that recession is coming and the more you know, you know, not laughing out loud, so and whatever people do telling you that you're just an old man, you know, doesn't, you know, doesn't know about the new economy? Well, then you start to get the euphoria that we have heard a few times also, we saw in 2000, maybe 2000 to 2007. So, so yeah, it's starting. It's starting. And I'm not, you know, again, as I said, I had to move my my goalposts a little in terms of the timeline here, but the target still stands. And the end the end, what's developing the the sequence sequencing of things is 100%. What I've been laying out since October 22. So I'm just, you know, watching this and then expecting to see, you know, people that just getting more and more euphoric and just with just simply, yeah, just, you know, underlines that to me that this is really getting into a model. And we have, we have to remember, this is the largest bubble that we have had ever and we have a bubble, if you look at the market capitalization, two to GDP, well, it's it's at all time highs, and you know, where's the high just just in 2022, which was 21, when it was just a little higher, I think will surpass that within the next few months here. And and then we have also, if you look at the whole crypto market, I you know, even though I am massively long crypto right now, and Bitcoins, minors and so on. That is because I know it's a bubble and I want to write that bubble. But But that does not make it less of a bubble. I mean, you know, just the the various thinking that everybody has an idea that this particular coin is, you know, going to go to the moon and even the ones that I hold, I mean, thank you just hear people just getting euphoric. And well, it's great when you long it, but it's also about giving out in time, because because this is a bubble. And when the bubble burst, it's going to be back. That's what I said. So that's what I said also early on 1929, nothing as 2029. But since 1929, because the thing is, when we look at the charts here and the market valuations, if they have to come back to it's just thought of what would be normal, then this is going to be bigger declines in the in the stock market than we have seen in during the financial crisis or anything like that. And I also foresee a new financial crisis and the banking crisis in the pension fund crisis. And that is going to be you know, so much more severe than we have seen at least before the financial crisis, but this time, you know, there are more elements to it. So yes, I stick my my cold, when we reach to the 61 6200 target on the s&p, well, then I think it's time to get some chips off the table. James Connor 13:21 Okay, I do want to ask you about the banking crisis that you're seeing. But before we do that, I want to ask you about Bitcoin. And it's right now it's stuck in this tight range 65,000 to $70,000. And the last time we spoke, I think you said your target was around $115,000. Is that still your target? Henrik Zeberg 13:41 I think I've already maybe two out of the 10,000. But around those numbers, it's more about, you know, the direction has been clear. And and I still say 110,000, I think I have I use different techniques. And I think it's around as could be from 100, room five to 112,000. So that's why I'm saying 110,000 each year. James Connor 13:55 I'm not a Bitcoin expert, but a lot of people seem to be puzzled with this lack of movement. Right now we're stuck in this very tight range. And a lot of people are saying that has to do with the halving process. Do you have any thoughts on that, or Henrik Zeberg 14:09 I don't do my analysis on halving so I mean, this is something that people have brought into the economic framework and understanding what I look at is that you have an economy where you have risk on faces, and you have risk off faces. And we're currently in a risk off phase where you have the when the economy is slowing, and the Fed is pushing, you know, liquidity will start to push liquidity into it, we start to see that from other central banks, that will create a euphoric phase until the recession starts. This is a normal business cycle in those terms. And what we see then right now is in my in my books, just a correction in the market before the actually the most euphoric state of bitcoins rally and also in all coins. So I see there's a lot of indications that we're seeing a bottom here within the one of these days here and the and also that I think that Dixie is going to come down which is actually what I think has been keeping it on check here so so I don't think the having Got everything else more people trying to put into it, it has much to do with what we're seeing we're seeing and the business cycle development that will bring Bitcoin much higher into the final face with with liquidity coming in. James Connor 15:10 Okay, so let's talk about this banking crisis. And you also made mention of the fact that you think we're going to have some sort of pension fund crisis. But why don't you provide some more detail on that? What exactly do you see unfolding? Henrik Zeberg 15:23 there are different kinds of prices, there's not just one type of price that people have to understand that you can have a you can have deflationary prices. And you can also have a flight prices where inflation can become a problem. And what we actually had when when inflation went up, was not really a crisis, because the economy was still expanding, but you have inflation coming up into from 21 into 22. And the reason I was not paying, you know, even though it went down a lot the market, I have to give it that obviously, but it was because the the business cycle was still strong at that time. But what we see now, and what I'm expecting ahead is that the business cycle has rolled over in my, in my metrics, or in my, in my model. And we're just starting to see that into the labor market. And the first part of that crisis will be a deflationary bust, which will be like what we saw during the tooth estimates. So what we saw there will be, again, what we see here, and the Fed and every central banker of the world will no of course jump on this, they will not do it immediately, we also have to think that they are still scared of what they unleashed the last time. So if the market comes down a little, and they will probably just cut rates and the rates are rather high now. So they will cut rates, but they will not come flooding the market with what is needed. And again, they are late they are looking at the rearview mirror in terms of you know where we're going. So, so there needs to be something deflation needs to stare them in the in the eyes before they actually start to move. But the moment they do that, I think the difference this time around from what we saw in 2008 is that you will not see people will not jump on the new money that they will get on get or get there that they will you know, if you start to see that your mortgage loans are not you know, it's just as expensive any longer because the rates are coming down on your credit card debt is not so expensive to hope. You're not going to say well, let's spend another $1,000 here, or let's buy a new house or Let's buy a new car or something, which is what you need. Or in order for QE or monetary stimulus to actually work if you don't if you don't do that if the people or the consumers just say, well, let's stick to this money, let's see, because actually, we had inflation just just a little while ago. And also the interest rates were high. And we were struggling a bit there, which they are right now. Well, if you have that kind of behavior, then you will not see that QE is going to create the the bounce, or QE or whatever they want to introduce in terms of monetary stimulus that they would be expecting. And that would end up happening in 2008. I think this time around, that's a different scenario we have we owe the different, you know, setup we have, because people are simply a little scared there. So what will happen in my, what I see ahead of us is that yes, the Fed will react, but it's not a and also we'll see the market reacting on the Fed coming in. So we'll have a bounce in the market at that point. So remember, that's often the first serious decline that I see. And then after the the top in this year, well, then I think they're going to unleash a sort of stagflation, and we were not far away from that, and 21 to 22, if you saw that we were actually seeing, you know, inflation was high. And if If unemployment had been starting to come up at that point, and we have been at a different point in the business cycle, which we are now well, then I don't think you will, then we will have had another outcome. So, the thing is that this time around, when they do this about jumping in and P will be waiting a bit, then the unemployment rates will not decline again. And you will see actually that this money will become will be in the banks. And they will start to you know, circulate the financial industry, which means that you could see a another speculative bubble arise. So this is a little further out. But what I'm seeing in short, is a deflationary bust fit comes in, and then we unleash a stagflation or period. And that's deflationary period is going to be the worst part because this is where the Fed has very limited tool or any other, you know, central banks or anything, any administration. Because if you pour more money on it, or more stimulus on it, you'll just get worse. And if you if you don't, you know, then you have the negative spiral. So it needs to work itself out. But there needs to be some structural changes to it. It's deflationary situation, if I'm right on that. Well, and you actually saw it in doing SSA and 21 to 22, you saw pension funds actually having large, large losses, because inflation was moving up, a bonds did not do well. And you also the equity markets not doing well. So we were solicited was in the bear market below 20% down. That is not a good situation for support for a lot of pension funds, because they will have to be either in bonds or in stocks. And this time is going to be bigger. So I think there's going to be I think there's going to be a lot of losses there. And actually, it's also part of the contractive way thinking so that into the final phase of the interactive winter, that you also have pension fund crisis, and that is what I see. I can see the drawings of that already. So I feel that part of the of the crisis, I have to say I don't think I'd be ready for it. But it's, I think from a societal standpoint, it's it's not going to be a pleasant time. James Connor 19:51 So let me just summarize a lot of the points you just made. So right now you think the economy is weakening a lot faster than the Fed. It believes And therefore the Fed is way behind the curve, and they're not going to start cutting until it's too late. So the economy's weakening right now, consumers are going to start feeling pain and consumers make up the largest part of the economy about 70% of the GDP in the US, and they're going to stop spending. And so it's just going to be a downward spiral. And with that pullback in the economy, then we're going to see a pullback in the stock market. And pretty well, any in every other asset class, is that correct? Henrik Zeberg 20:29 That's correct. And again, all that you just said, meets the largest asset bubble in the world ever has ever seen. And the crypto market, which is you know, just pure speculation, and private equity markets, where every private equity fund in the world has been trying to find deals somewhere over the last few years and have been investing in let's say, a lot of questionable unicorns or whatever. So you're good to go trying to find the unicorn, right, so the search in search of yield. So all these thoughts are a lot of thought as well. So the EPP probably be not having the kind of value of the kind of work that these pension funds are. So there'll be a lot of areas where we'll see that expectations of what we have in terms of valuable tools simply be will simply disappear. James Connor 21:09 And I want to get your views now on the federal debt levels, because I'm reading quite a bit about this, right. So the the federal debt is, is around $35 trillion. Now it's growing by $1 trillion, every 100 days, and the level of interest to feed this debt, it's approximately $1 trillion. So it's going to be a trillion dollars this year in 2024, it's going to be the single largest budget or aspect of the budget, it's even greater now than defense, which I believe is around 750 to $800 billion. But what does this do? And and I'm surprised like, given these high interest rates, and the cost of interest, why the Fed is taking such a long time to cut rates, because when they go to renew or refinance this debt, they're not going to be doing it at 25 or 50. basis points like they were in the past. Now, it's going to be at three 4%. Maybe higher. Henrik Zeberg 22:05 Yeah. So I think the Fed will will first and foremost actually, you know, just maybe be focusing on on the consumer and on the economy and make sure that you do not have a, you know, inflation is not running too hot doors, and also that it's not wanting too low, and also the the second mandate that they have, and in terms of the unemployment rate, so I think that's what they focus on. But you have a point. Absolutely. I mean, the the US debt is a problem, it is a problem. And it's a debt is not just a problem in the US and the US. Debt, it's also the private debt among amongst a lot of people. And I think that is what we started to feel. Now. That's also why when interest rates are coming up, we are actually quite vulnerable, almost all of us, I mean, there are other countries in the world and also have a lot of debt, and will also start to feel that. So I think the US, again, will be the cleanest sheet also still, even though we have this huge debt, but there will be other countries in the world that cannot, that do not have these, the reserve currency. And that will be much worse off in this in this situation. So I think that will also be a part of it. And especially if I'm writing to stagflation, or period, that is actually where I think it's going to be felt really, you know, really badly. Also, because you're starting to see interest rates coming up. And the debt levels are just high, you know, then you will actually be suffering a lot, also from a private and from a corporate and from a national perspective as well. So the US debt level is a problem. But I don't think it's the biggest problem in the world, I think there will be a lot of countries around the world, which cannot print their own money. Also within the EU, still, we still have Greece, we still have some of the Southern European countries that we think we saved, but actually their debt levels now are higher than what we have at the point where we saved them. The only thing we tried we did for them was they actually we tried to or we lowered the interest rates on on the debt level. So that was why we in brackets save them. If they have to stop paying, you know, high interest rates on these debt levels, then then you know, they will be worse off than the US. But it is a problem with the US it's absolutely a problem. Because sometime down the road, I don't think it'll be writing right now. But it will become you know, a problem that people start asking, though, is the use apps able to pay off this debt? I don't think it ever will. But but you know, there'll be some vigilantes out there, they'll think, okay, maybe we could speculate against this. So don't think that will be the big driver of this now, as I said, but I think there'll be a debt problem around the world. James Connor 24:14 So you have said that this pullback that we're going to see in the financial markets will be the worst that we've seen since 1929. And I believe back in 1929, the Dow pulled back somewhere around 80%. Do you see that same sort of pullback this time in the financial markets? Henrik Zeberg 24:34 I mean, I do. I mean, and that's well, that's why I'm saying this also, it's not just you know, pick out of nowhere. I mean, I've worked with structures I work with, with with bottles that shows me that the kind of structure that we see in terms of how the market has been rallying is indicating that if we drop we could actually drop two levels since we haven't seen since we haven't seen since it doesn't it's not that long ago, but the 2020 bottom of the width of Corona could be one place that we could Got them out, I think it actually goes nowhere, I think it could be all the way back to 2016. With those levels, and if you take a look at some of the monitors how fast they've been going up, compared to where we are, and how much that would be in terms of the decline, we are close to that number. So when I say that it may sound like, wow, that's ridiculous. But actually, what is ridiculous is the pace of which markets have been going up over the last few years. It's not the the decline here, it's more that the the very, you know, people have had the feeling that they've had wells, but actually, it's been mostly due to money printing, and if that's now coming home to roost, and I think it's a, it's going to be a problem for a lot of people and, you know, we'll simply see that our, the value of our portfolios will be coming down strongly. So the models that I work with, tell us 2016 could be a bottom, and that will be in some markets, it will be more than that in I think there are some small caps, it could be way more than that, that will be in the banking index, it will be also was an 80% decline in some of the in the banking index, which will indicate a big banking crisis as well, many indications of that. And that's why I've said it also all along, it's not just a guess it's like, well, actually, the charts are showing me that these would structurally be the levels that we could fold. And we could drop to, if we get that recession, and the witness seems to be in the making. James Connor 26:13 So given this economic backdrop that you foresee, how are you what are you suggesting to investors, in terms of how they position themselves? Henrik Zeberg 26:24 Well, first of all, I, you know, there may be a lot of fatal different variations of an investor here, but but I would say, you know, right now, I, you know, it's, if you like it, you should be positive, you know, should dance while the music is playing and dance would mean that the stock market still going up, I would not be too much in foreign markets. At this point, I actually think that the Nikkei, potentially has topped I think I called it when a few weeks ago, a month ago, I saw that the nifty was also weakening, and I think there's a new top to it now. But it's also I think that will also come down I think we have a top also in, in coming in DAX, I think we have around 19,800 to 20,000, I think the DAX will. So a lot of the foreign markets are seeming to to to top out soon. Whereas I think there's more upside in the US. And that's quite normal, because you normally see that you have a rotation from foreign markets into the US markets in the final phase of a, of a of the business cycle. So I think that's what we see now. And that's also why we could see year rotation from more safe assets or the Apple kind of, of the NASDAQ, or sorry, the fang stocks, I would say, into some of the more speculative bonds into the final phase. So that's one thing, but that's just play for the next you know, until q3 At some point. After that, well, there is a safe play, there is an aggressive play, if you want you think that the market can drop, you know, significantly, you can short the market, if you think it's more about taking your money out and just staying in cash, that could absolutely also be a good a good way to do it. And there could be you know, also being long the dollar at that point. Now, I have to say, again, this is about where your timing, I think $1 will drop from now until until let's say September. But after that, I think that could be a good play also being long the dollar. So there'll be different plays that when we get to that top, which will be the first part of the crisis, and then there'll be something different when we get to the later stages of it. So first would be normal, you know, risk off TLT is it could be cash, it could be shorting the market, if you're into that. And it could be sort of that that kind of setup but depending on risk profile, depending on the on the on the investor. James Connor 28:21 And I want to get your views on gold now because the last time we spoke, I believe gold was around 2000 bucks an ounce now it's somewhere between 2300 to 2400 an ounce in this environment that you see the do you think gold will perform? Well, especially when you're talking about stagflation? Would gold not do well in that sort of environment? Henrik Zeberg 28:41 It will do fantastic. Yes, but not in deflation. And I think gold is the outlier. If you compare gold to palladium, palladium polar, to platinum to silver, to gold miners, I mean, Gold is the only one that has been making a new all time high in the cycle here. The rest of them have not. And I think what we're seeing is the speculation on gold is actually what has been driving it higher. So and now everybody's speculating that okay, then the rest of the pack will follow. I think it's, it's the other way around, I still say, in a sec in a deflation, I would not be holding gold. And that's what I've said all along, has moved higher. Yes, it has. And I give it I give it that but but it's not the same as saying it's a fantastic asset to haul into deflation, because people just need to think that Well, if the dollar starts to rise very strongly into deflation, because of and you have debt that needs to be paid off and this is what you see when when they have credit crunches which I think will have this time around again why would you want to hold gold and they will be sold off to provide liquidity. But again, when the Fed moves in and you as you also rightly said in circulation or environment Yes, then you will be holding gold but but then you will have you know gold could drop to again I could I could still see 1250 on gold. So I I'm just saying Why hold it from 2300 or whatever it is now two to 1200 1400 whatever it's going to drop to and in order to Well, then you can get in. But that will be rather a backdrop and there'll be so many other things that you should be holding in that period in a deflationary period. So people had the notion that or that the idea that you need to hold gold into a crisis, well, actually, the reason you hold gold is because if you want liquidity, you can get liquidity from gold. And that is my goal is a is a safe havens, obviously. But it's, it's just there a different crisis in inflation, stagflation 100%, I expect gold to go up much, much faster. I mean, even the rally in gold over the last couple of years has been, you know, muted. I mean, nothing compared to what we're gonna see. I mean, when we start to see that real face that real bull market unfold, well, then it's going to be much faster. But that requires a rather big pullback first, as I see it. James Connor 30:43 And so I just want to clarify something you so if gold's trading around 2300 to 2400, where do you see it going on the upside before it collapses? Henrik Zeberg 30:53 So I've said all along, I could see it, I mean, potentially, it could have topped already, and I think there's some some weakness in it. Right now, I've said that I could also see it, because I still expect the dollar to come down. And even though there's not 100 cent correlation built in vertical inverse correlation between gold and, and dollar, I could still see of course, at a weakening dollar, which support gold. So said I could see 220 700 and still coming down quite significantly. But I would not betting a ticket again, also, gold usually sniffs up the environment off what is coming a little before. So I think you could see that gold could could also drop from here. So I would not, again, I think it's the most speculative play happening to hold gold at this point. And then holding risky assets because risk assets right now with liquidity coming in. Fantastic. But gold, we'll start to see that the deflation environment, maybe just around the corner, and then you can see something quite different develop. And I think also if you look at the at the if you look at the Bitcoin gold ratio, I think Bitcoin will outperform gold. And I can't remember what the ratio I'm expecting. But it's, it's a lot that we can see Bitcoin. So power, outperforming gold over the next, let's say three months? James Connor 31:57 Well, it certainly has outperformed in the last few years. And I guess that's why they call it new gold or digital gold. But you raised a good point of both the move in gold, and we're not seeing a corresponding move in the gold equities. Right. And a lot of them are trading significantly below their NAVs Henrik Zeberg 32:14 I mean, that's, that's been my point all along, for me, has been to look into exactly that, that gold mining competence, I think there'll be a commodity play to that that will come around at the time and again, asking me where to invest. When the deflationary phase is over which it will, when the Fed comes in with everything it got got the guns blazing, I think we will see a bottom in commodities, and we'll see that in gold and silver, and that will be the time for it. Because that will be the time as I said the speculation or developing content can can begin. And you will also not see a competition from all sorts of risk assets and so on even though you know, and I think crypto will be way, way, way underwater at that point. So I think gold will really shine at that point. And that and gold, silver and gold miners and so on. But it's again, it's about the timing, which phase comes first. And I don't see how gold will dwell into a deflationary face. And yes, you were pointing at the gold miners GDX and so on are you know, I have no nowhere near where they were in 2011. And and gold has been has been higher. So who's leading what and is the gold that is leading everybody else? Or is it everybody else that is staying sane, and gold is the outlier? I say it's the latter. James Connor 33:17 I want to get your thoughts now. And what's going to happen if we look at 12 months. So if we're talking again in June of 2025, and I know you don't have a crystal ball. But do you think the markets are going to be a lot lower this time next year? Henrik Zeberg 33:30 Yes, would be the answer. But again, that I have to think about also the timeline for from Nazianzus. Obviously the top so yes, but the expectation is that we see up top and around 60 162 under the s&p, and then there'll be we go down as fast as we have been coming up. So often, you see that the spike up is also the, you know, clients in kind of that slope. So I think maybe we could be around these levels here. We could be just a little bit lower than where we are here. But but some something along those lines. Yes. James Connor 33:59 And so you don't paint a very positive picture. But if there was one risk to your whole thesis about the economy falling apart, what would it be? Henrik Zeberg 34:08 Well, I, again, this is where this is what people you know, what they asked me all the time and say, Well, what is it? How can you see that your thesis is, is validated? And I'll say, Well, you know, you don't pay something like this, I'm just one market, it's not a line in the sand. It's a thorough understanding of you know, how the business cycle works of how the leading the coincident and lagging indicators work, we have a crossover in the leading indicators that leads to a crossover and a decline in the coincident indicators, and that is what we're in the process of seeing. So I would say that if we wanted to, to to cushion that or something like that, well the Fed should change direction immediately. And they should start thinking of know how they can fight inflation. And honestly, when you see some of the fifth speakers coming out and saying yeah, we expect the you know, the inflation to be around 3% Two and a half percent or whatever it is that they say And, and you know, until next year or something like that they really don't get it, they do not see the slowdown of the economy. And that is, you know, honestly a little scary. So I, you know, I can't see how what will invalidate this at this point here we are seeing the normal business cycle unfold and and we are seeing the euphoria into the final phase. And also we have to look to integrate it. Every time the Fed cuts rates, you have a market shock within one to two months after that. And that's also probably what we're gonna see this time around. James Connor 35:33 Well, Henrik, that was a very fascinating discussion. I always enjoy talking to you. And if somebody would like to learn more about you and your various services, where can they go? Henrik Zeberg 35:43 So I think it's the most easiest to send it to go to my my Twitter page at Henrik Zeberg, and well, there will be links also to other places where you can find me. James Connor 35:51 Once again, Henrik. Thank you. Henrik Zeberg 35:53 Thank you very much for having me on. James Connor 35:55 Well, I hope you enjoyed that discussion with Henrik Zeberg. Even though you may or may not agree with what he said he still makes for a very interesting conversation. During times of economic uncertainty like we're going through right now the one asset that can bring stability to your portfolio is gold. And if you would like to learn more about gold and how it can benefit your portfolio, visit our sister company hard assets alliance.com. Hard assets Alliance is a trusted platform that's being used by over 100,000 institutional and retail clients to buy and sell gold bullion and also coins. Once again, that's hard assets alliance.com There's a link below in the show notes. Once again, I want to thank you very much for being with us today and I look forward to seeing you again soon.
