Henrik Zeberg: The Deflationary Crash is Nearly Here
Tom welcomes Macroeconomist Henrik Zeberg back to the show. Henrik is seeing a blow-off top coming which will unfold over mid-summer. This will be followed by a deflationary bust which will take everything down. We’re going to see devastating stagflation coming later. Trades are based on human emotion, and the algos also look for these patterns.
Henrik discusses where we are at based on Elliot Wave theory. It’s indicating a mega deflationary bust coming soon. The Fed will accelerate the bust because they will hike rates too quickly. The inflationary spike we have had will reverse.
Kondratieff winters normally come with conflict and Henrik shares a cycle chart that demonstrates this phase. Winters are normally deflationary and come with periods of high unemployment, pension problems, currency death, and trade wars. Many of these effects are still coming. The world is trying to squeeze the last bit of growth out of the economic system.
Henrik explains where he thinks the dollar will head from here and why the long-term trend will continue to be lower. We could reach the 116 area, and then we will see the decline. Nothing moves in a straight line.
He believes we are in a correction phase of the bull marketm and this gives room for a blow-off and crash later this year. We need five waves and he can only count four on the current charts. Volatility has been declining which indicates we are not yet in a crash. He shows the evidence for why we are not yet in a crash. Market liquidity will be vital for a blow-off top, and China has recently begun stimulus. It will be risk-on driven, and we could see one further run in stocks and crypto.
Henrik discusses what assets he considers safe in the coming correction. The Fed will intervene once again, and they will attempt to pump up the bubbles again. That’s when he will be long gold and silver miners. In the meantime, he expects a significant correction in gold.
Lastly, he discusses Russia and its effects on the dollar and why the world needs a new currency system, perhaps based on blockchain.
Time Stamp References:
0:00 – Introduction
0:36 – Markets Overview
4:40 – Algos & H.F. Trading
11:16 – Kondratieff Winter
18:26 – The Dollar
23:34 – Blow-Off Top Hypothesis
25:02 – Correction Evidence
31:00 – Inflation & Consumption
35:50 – Blow Off Drivers
38:33 – Safe Havens & Gold
47:32 – Energy & Deflation
50:12 – Dollar & Russia
55:28 – Wrap Up
Talking Points From This Episode
- His thesis for a blow-off top and why so far we are in correction not a crash.
- Kondratieff Winter Cycle and Elliot Wave theory.
- His picks for safe-haven assets in the coming bust.
Henrik Zeberg is a Macroeconomist (M.Sc. Econ) from the University of Copenhagen. He is a Business Cycles student, Elliott Wave practitioner, and Chartist. You can find out more about his newsletter on his Website.