Sven Henrich – Northman Trader, market strategist and commentator
Global economies are becoming increasingly nationalized – bond markets are no longer free market
Each boom and bust cycle is getting more volatile
Threw $12T into system – greatest (short lived) party on the planet
No consequences when Central bankers (CB) is wrong
Also created great wealth inequality
Last year Fed still buying mortgage securities – which leads to higher house prices when people are struggling to buy homes!
Some CB have already admitted that QE exacerbates asset bubbles, and they all watch stock markets closely
Great reported corporate earnings last year, but no connection to organic economy
We forget that Powell has a large equity portfolio too and he’s hurt when market drops
Goldman has 5 rate hikes priced in for this year
Initially planned to raise rates in 2023, 2024 – complete flip flop
Speeches keep setting wrong expectations
Consumer confidence = very low, technically at recessionary levels
Massive disconnect with stock markets
CB has to be super careful not to burst asset bubble that they themselves created
Fed has 12 tightening cycles since 1950s – and stocks have risen in 11 of them!
Politicians must solve inflation by summer – otherwise will lose midterm elections
Looks like a big manipulative operation
You’re joking if you think Fed will aggressively hike into an economy that is slowing in an election year
What we’re seeing right now – the markets’ correction – is healthy
When CB is in control, volatility dies – they kill price discovery – but now volatility is higher, and for traders it’s fabulous
Sven’s own wife has been a long-term bitcoin bull
Saylor helped to orange pill him recently
New young industry w/ growing pains and excessive speculation
Reminds him of 2000 tech bubble – it didn’t crash right away, wide ranges up and down for many months before finally falling apart
Need more regulatory clarity
If CB throw excess liquidity into system, everything becomes correlated
Right now everyone is still long stocks like Fab 5 (Netflix, FB) – haven’t seen protracted bear market in stocks for long time
If stocks struggle for 1-2 years, and inflation structurally higher, you gotta find an alternative
Bitcoin still correlated, but there will be a shift
“Each death is a tragedy, a million deaths is a statistic” – Stalin
If raise rates 1%, US interest payments > military budget (!)
Reason the rates cannot rise too much is because the system starts to shut down – and the ceiling drops lower and lower every time
If rates today were anywhere close to 2007 level, the entire system would collapse
Each cycle can do less and less – CB losing efficacy of their tools
ECB last rate hike was 11 years ago – haven’t been able to raise rates once
What ammunition do you have for the next crisis?
Now massive bubble + slowing growth + high inflation
Scott: If someone hands you $5M today, where do you put it?
Sven decided to start allocating into bitcoin this year – technical view – has specific allocation in mind where if goes to zero, he can survive
Bitcoin as protection + major upside play
History doesn’t repeat but it rhymes
Risks of cross leverage in system leading to liquidity crisis and blowout moves down
Bitcoin could go down to $7K
But with 10-20 year view, it’s like buying Apple in 2010 or 2001
Liked bitcoin dip to $32, 33K – wants to aggressively accumulate more
Gonna be a long-term hold
Expects his own conversion will happen to others too – thinks it’s a sizable bear market in Bitcoin, but has long term view
Two key issues for bitcoin this year
1. Regulatory guidelines – eg, Russia
2. Asset bubble in stocks