The Last Great Rally Before The Crash w/ Henrik Zeberg

**Henrik Zeberg** (0:00)
I don't think that the NASDAQ has topped here. I mean, I think we will see some volatility, and I actually expect some kind of volatility, because when we get closer to our top, it doesn't go like all bull days and bull weeks up, and then it just drops all of a sudden, that was it. It always gets more and more choppy into the top. And I think that kind of volatility is what you see when the bears and bulls start to fight it out up towards the top. And at some point, the bears are going to win.

**John Gill** (0:22)
The war in Iran has kicked back up, the markets are getting choppy. Is a blow off top coming soon, or are we headed for a crash? And how will we know? Hello and welcome to Milk Road Macro, the podcast that knows that I could reuse old jokes in these intros, but I keep making up new ones anyway. I'm your host, John Gill, and today is Wednesday, June 9th, and today we are joined by Henrik Zeberg. Henrik is a macro economist renowned for his expertise on business cycles. He currently serves as the head macro economist at Swiss Block, and he recently published a book called The Monetary House of Cards, The Bus of the Everything Bubble caused by Central Bank Hubris. As you can imagine, I am always very excited to talk to Henrik. This is going to be a really great episode today. So if that sounds good to you, make sure you like and subscribe, share this episode with somebody who's going to enjoy it. Also, as a reminder, the market is going kind of nuts right now. Our analysts have been making a lot of trades. We had over 20 trades made by the Milk Road Pro analysts this week.
Some of them are buying the dip. Some of them are waiting to see how things play out. But for $1, you can see everything that they're doing, all the trades they're making. If you join Milk Road Pro today, you will get seven days in there, you can cancel anytime. Come join Milk Road Pro and see what we're up to. Today's episode is brought to you by CAPE, the Privacy First Mobile Carrier, Nexo, Earn Interest Borrow and Trade Crypto, and Kalshi, where your takes finally pay out. And without further ado, we're gonna get some takes from Henrik Zeberg. Welcome to Milk Road Macro. Henrik, how are you?

**Henrik Zeberg** (1:41)
Thank you so much. Great.

**John Gill** (1:43)
Henrik, I thought a good place to start would be to just revisit the framework that you've been calling for for a long time, which is sort of this, I think you call it like this, three phases of a bear dinner, which is the first is a blow off top, and then a crash led by technology stocks, and then moving into a period of stagflation. I wonder if you could just start us out with a high level summary of this outlook here, and just give our audience an overview of the framework you're taking to this macro landscape that we're in.

**Henrik Zeberg** (2:11)
When it comes to the blow off top, I think that is materializing since we spoke the last time.
You don't need to look far in the stock market and in the markets around the world also to see that that's been materializing. We looked at, look to the Cospi index, look to the semiconductors, look to everywhere you go, you'll see that there are these crazy moves. And that was exactly what I was expecting.
And then people say, yeah, it does not blow off top because it's not come to my particular asset or Bitcoin in particular. And I think that is a, I mean, I think we will see that as well also for crypto because these are just the most risky assets they're going to be the last in the queue, so to speak. And this is really where the animal spirit kicks in when you have that kind of move. So that we don't need a lot for rotation to come out of semiconductors or the cost be or any indices around the world before we could see the move into other, into assets like crypto assets in the US. And I think that is, that's the next phase of it. So the blow off top is developing and it's like it or not, something that has been taking since 22, actually. If you look at the market since then, that is really when they start to go nuts after the, so we had the initial spike out of the Corona situation. Then when inflation, the first part of inflation was over, we then saw that move up in the risk assets and they just keep pushing and pushing. And for longer than I expected, I give it that, but I've never called the top at any point since 22 So we are, we're still there and, but we're getting closer. We're definitely getting closer. I'm actually saying that we are at a point now where the, I think there are markets in the, in Asia that have topped already risk assets and risk indices. And I think we will see that rotation now into the US. So we are, you know, we do ask about the framework, but this is more the outlook in terms of the, about that three dish kind of course that I was laying out. And so we are in that, you know, you can call it that appetizer we're in right now. And then we will see the, the main course, the real story unfold when this, this starts to collapse because this is, I mean, people can talk as much as they want about this is not being a bubble. This is a bubble. And this is as big as it gets so far. I mean, we haven't seen anything bigger than this ever. And when people say, yeah, but there is earnings this time, but you can look to all sorts of metrics, and you'll see that this is a bubble, and it's the biggest we have seen ever. Bigger than 1929, it's bigger than 2007, and it's definitely also bigger than the biggest one we've seen, which was 2000 And people just have to relate to that. And if we, when they do that, then we'll also see that what we should expect is that it was going to burst. When it bursts, you're going to see something that is different from what you saw in 2000, because in 2000, you only had a tech bubble. This time, you have a tech bubble where the housing market is also affected, and the consumer is affected, which it wasn't. The consumer wasn't really affected in 2001