As we wrap up the year and celebrate the festive season, we wanted to share some of our favorite moments from one of your favorite Wealthion interviews from 2024: Henrik Zeberg with Anthony Scaramucci. Enjoy!
All the best for a happy, healthy, and prosperous New Year!
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Original interview, aired Dec 11, 2024: https://youtu.be/BIjBBomENxQ
Andrew Brill 0:00
Happy Holidays. From all of us here at wealthion. To all of you, I’m one of your hosts here at wealthion. Andrew brill, we took a look back at this year, and hope you enjoy these favorite guest moments from one of our best interviews of 2024
James Connor 0:18
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
Henrik Zeberg 0:30
that. Yeah, so my business cycle is based on three different indicators. There is the leading, the coincidence and the lagging indicators, the leading indicator. And these are all the, 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 a 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 starting 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 tweet, 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 will be 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 understand at this
James Connor 2:14
point. 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 2:51
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 they 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 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 and that you can have 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 and especially if you have a downward force and you’ve got all these things setting in motion, then the upward force on inflation can be setting in during 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 4:40
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, uh. 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 compare to other bubbles? And why do you think it just keeps going from one asset class to another?
Henrik Zeberg 5:40
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 Corona, 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 in 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 they 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 with bubble there. So we will see that, but it’s not going to be the 1000 or the hundreds of them that everybody seems to believe now. It’s going to be the normal cycle, as I see it. We’re going to have the bust. We’ll see a lot of these fail, and then we’ll see a few of them emerge. And there will be a real business case on those and and that’ll 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 8:58
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 9:12
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 9:35
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.
Unknown Speaker 9:42
Yeah, I saw that as well.
James Connor 9:44
Yeah. And Rick, 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 10:20
Oh, yeah, absolutely. 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, they were 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 microstate 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. And, you know, just like straight down to a certain point also. So it’s, it’s, you know what he’s doing here is a very dangerous game. And just about betting all, you know, a 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 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 12:11
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 right now, 320, $5 billion yeah,
Henrik Zeberg 12:29
I think, I think I, 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 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 because 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.
Andrew Brill 13:45
Thanks again for watching these favorite moments of 2024 and we hope we can continue to provide you with information that will help you invest wisely and be financially resilient. Wishing all of you a healthy, happy, safe and prosperous 2025.
