"Zero History Whatsoever" Of Current Stock Valuation Levels Sustaining | Sven Henrich

**Sven Henrich** (0:00)
Ultimately, there is no zero history whatsoever that valuations of this level, concentration in few stocks of this magnitude is sustainable. We have, we're in uncharted territory here.

**Adam Taggart** (0:26)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. When Sven Henrich of northandtrader.com was last on this program in November, he gave the advice, remain bullish, but be careful. Well, that proved pretty prescient, because since then, the S&P has increased slightly, but it's mostly trended sideways. Now, here at the start of 2025, what does this technical analysis tell us to expect next? And did the shock to investors delivered by China's surprise release of the DeepSeek AI model recently change his outlook at all? To find out, we'll now hear from the man himself. Sven, thanks so much for joining us today.

**Sven Henrich** (1:02)
Thanks for having me, Adam.

**Adam Taggart** (1:03)
Always a pleasure. Sven, it is always a pleasure to interview you. Before we jump in here, I just have to thank you for agreeing, actually, right as we were turning on the microphone here, confirming that you will be one of the featured faculty members in the upcoming Thoughtful Money Spring Online Conference on Saturday, March 15th. I think this is going to be your first time at one of our conference suspends. So glad we're finally able to make that happen. So we'll get an update from you right now and sort of what you're thinking here right at the start of the year. Obviously, in two months, it's going to be a whole different game board. Very, very excited to get your participation then. So anyways, thank you so much.

**Sven Henrich** (1:43)
Well, it's the first time someone's having me at a conference. Typically, they kick me out, so that's nice.

**Adam Taggart** (1:48)
I doubt that. I doubt that. Well, folks, look, if you're interested in attending the conference and certainly interested in seeing Sven's update there, run, don't walk. Get your ticket now over at thoughtfulmoney.com/conference.
And the reason why you want to run is because we're still offering tickets at the early bird price discount. That's the lowest price we're going to offer for the conference. I want to make sure everybody gets the chance to get that. And a reminder, if you're a premium subscriber to our sub stack, you'll get an additional $50 off of that with the code that you've already been emailed. All right, Sven. So lots to talk about. A number of specific questions for you. I know you've got a lot of great charts you want to get to. Very quickly, though, just to kick this off, I got to ask you the normal starting question I ask at the beginning of all these interviews. What's your current assessment of the global economy and financial markets?

**Sven Henrich** (2:38)
Well, Adam, you asked this question as if these two things were at all related.
I mean, I'm being half facetious here. I mean, if you look at, for example, Germany, Germany has had two years of negative GDP growth, and they just came out and reduced their forecast for 2025 from, I believe, 0.6% to 0.1%. And what's the reality? German DAX, new all-time highs. It just keeps screaming higher. We see the same thing in the UK, with the FTSE. You know, there's hardly any growth there either, and yet, asset prices keep levitating. And it goes back to basically, you know, a theme that you and I have talked about in terms of how liquidity is dominating everything, and it keeps levitating asset prices. And when it comes to the US economy and financial markets, we kind of see a self-fulfilling loop taking place in the background. And that is, for the last two years, we've had three major tranches of liquidity supporting markets. One, of course, we talked about before, is this massive US deficit that was running again last year to the tune of $2 trillion. And now we're hitting the debt ceiling, and we can talk about the implications of that a little bit. But the fact is, they're just running exorbitant deficits, and you have a new team now in charge. And keep in mind, last time, they also ran big deficits, and so we'll see what actually comes about. There's obviously some lack of visibility between more tax cuts and, on the one hand, on the other hand, some sort of efficiency in government spending that's been promised, all to be determined. The other piece, of course, is the ongoing buyback scheme by corporates, which was tremendous in the last two years, and according to Goldman Sachs, is also going to be fairly sizable, another trillion dollars this year, so that's another liquidity backstop. So unless you stop seeing big deficits and no buybacks, you still got two tranches of liquidity supporting it all. And then the third one, curiously enough, is this whole reverse repo facility, which has been in play for also over two years, basically October 22 was when it kind of basically peaked, $2.4 trillion, and that one precipitously is declining and is looking close to being juiced out. And I think this one is really important, and we can talk about this more in terms of our potential stepping stone or banana peel to keep an eye out for this year, because once a facility runs out, one source of the three tranches of liquidity is running out. And to me, that's tremendously important because again, these were all in conjunction massively important in the last two years. And when you go from $2.4 trillion to roughly $100 billion now, you had $2.3 trillion in liquidity boosts coming in. And when that boost is gone, what happens next? So that's kind of a question part. But because of all this, friends and foes, the reality is that while corporate earnings have improved, if you look at gap earnings and so forth, they're not actually tremendously over where they were in 22 on the gap basis. The key driver in asset prices as a result of this liquidity has been multiple expansion.