Henrik Zeberg: Blow Off Top Underway – Real Economy Already Sinking

Summary

• Market Outlook: The guest forecasts a final blowoff top in equities before a sharp economic downturn, with recession indicators accelerating despite record stock indices.
• Tech Stocks: Short-term risk-on continues with potential for outsized gains in major tech names, but this euphoria is not reflective of underlying economic health.
• AI: Long-term transformative, yet in the near term it may reduce labor demand and will not offset cyclical weakness in 2026.
• US Dollar: Expects a powerful dollar surge (DXY potentially back to early-2000s highs), creating a global dollar squeeze and pressuring risk assets and growth.
• Precious Metals: Long-term bullish on gold and silver due to monetary debasement and eventual stagflation, but near-term bearish if the dollar spikes; prefers physical gold for multi-year holding.
• Fed Policy: Central bank easing into a slowdown risks reigniting inflation and producing stagflation, making this cycle potentially worse than 2008.
• Positioning: Ride the current sugar-high rally, then rotate to dollars (and possibly Treasuries) during the dollar regime, before re-entering precious metals and broader commodities later.

Transcript

I think we are in a twilight [music] zone because the people of the world would think if you were in the top 10% that well you know stock market is doing relatively well moving up quite strongly but it's really about the real engine. It's about of the of the economy and that is [music] the third class passengers on the Titanic and the secondass passengers and we're starting more and more to see that they have [music] problems and this is going to play into the economy. Henrik Zeberg, head macroeconomist at Swissblock [music] and author of The Monetary House of Cars: The Bust of the Everything Bubble Caused by central bank hubris. It is so wonderful to welcome you back to the show. Great to see you as always, Henrik. Really appreciate you taking the time. >> Thank you for having me on again. >> Well, we are loving this because we're having you on every quarter. So, um I'm thrilled to be doing this with you, Henrik, as always. And this audience loves hearing from you as well. So, now that we're into 2026, uh, we have to just get an update from you on the macro view for you today, where you see things headed. You're welcome to do a bit of a retro of 2025 if you'd like, but let's start there. Big picture, what are going to be the themes that you're watching as we head into the rest of 2026? So when we entered 25 uh we were of the opinion and the Fed was of the opinion that we had a strong economy and all through Q1 and into Q2 the Fed kept talking about how strong the economy was was the um the labor market was all that strong and then we had August and uh and then all of a sudden we had the revision in the in the job numbers. What people need to understand is that the real economy is not what all the financial analysts are talking about when it comes to the financial world. It's about job creation. It's about how much will the the the economy grow because it's about the normal American, the normal citizen of the world. Uh do you have a job or don't you have a job? And the fewer jobs that are created, the worse the uh economy is. And now actually today we saw just yet another very important number. it doesn't get you know flashed out there as much but that was the private uh job number uh creation for December >> and we had a number there of uh 41,000 which sounds you know what is that >> the the the situation is with that is that the private job creation is very important especially in a country like the US I mean you know you don't want to have too many public jobs and the job the private creation is where you see the the creation of wealth so when you have a number like 41,000. We have to consider what is what is that? And and you have a workforce right now that is 171 million people in that workforce. And if you look to the to history, you can actually see that 41,000 number is not really good. Actually, if you look at the 12-month moving average, it is now below what we have seen into every recession for the last 10 or 12 recessions, even though the economy is much bigger. So when we talk about where the economy is at, we can say there is a pretty easy way to look at it that is the job creation and especially the private job creation and that is right now declining. Nothing declines in a in a straight line. So it's not like you can say there was 100,000 then 50 and then a zero and then minus 50. It's always up and down a bit but that's why we look at the moving average and the moving average is now telling us that we are now in a situation where the economy is not in a outright recession but we are absolutely declining and declining fast and there are many indications of that and we can look to the consumers which I'm sure we also talked about 3 months ago and we can look to um yeah also consumption actually if you look to everything else outside the top 10%. If you look to the consumer at the um at the outside the top 10% which means 90% of the consumers in the US they are now worse off than they were into the financial crisis and even into the depression in 1929. So I think people have a very distorted view on what is going on at this point here because everybody looks to the to the AI development to the to the the the Mac 7s and uh and to the stock market and thinking everything is fine. everything is not fine and I think that you [clears throat] if you're outside the the top 10% in the US you would know what I talk about so and this is not just in the US this is as much in the Europe as well but we just get a lot of numbers from the US which are easier to follow uh so so that's the situation we are in a slowly sinking um economy ship which at some point is going to turn into an outright recession and this is at a point where the Fed really hasn't realized that this is going on and I keep focusing on inflation which is lagging the economy which means that when the ship goes down inflation comes down with it and we are now at 2.7% uh true inflation uh which does a really good job in understand trying to forecast inflation they are now seeing that inflation numbers are the CPI numbers are going to be below 2%. So I think we are in a um twilight zone because the uh people of the world would think if you were in the top 10% that well you know stock market is doing relatively well strong moving up quite strongly and you can see that the the crypto market hasn't been that good but still bitcoin is you know not crashing uh and uh and then you think everything is fine but it's really about the real engine it's about of the of the economy and that is the third class passengers on the Titanic. and the secondass passengers and we're starting more and more to see that they have problems and this is going to play into the economy. So I think we have a stalling ship or or stalling engine here and uh and I think it's going to show in a very close I mean we we are in the final phases of the of the blowoff top in the stock market. >> Mhm. And as you point out we're now in a situ situation where it's not an outright recession but you're seeing the economy declining is declining fast. And you have this metaphor that you've been talking about of the Titanic and the different phases. And I take it we've already we've already hit the iceberg, but the ship is still floating. People are still going to the bar and having a drink. >> Yeah. If you are if you are in the first class, you're still you know denying that this is happening and you will be talking about that this ship is unsinkable and uh and you know the the engineers have made sure that they can't go under and uh meanwhile you'll see that the people on third class are actually you know already in the water and that is the situation we're at right now and uh we it's it's it's actually very it's common to see when we go into recession that there will be a period where people just dis dismiss the whole idea of that we are in in an economy that is sinking and and actually every time. I don't know why it is but it's it's so clear. Um I don't know if I can share any any slides here with you and >> Yeah, go for it. You can Yeah, screen share. >> Let's try screen share here once and see what we have. This is the ADP that I just talked about the private non-farm. And um as I said, we we we when we have these rollovers, it's not things are not happening all of a sudden as some people might think and we have a something that is, you know, coming as a black swan and then you get a recession. the economy is stalling at some point because the consumer is getting more and more squeezed from high inflation, high interest rates and so on and then s surely but you know safely it's sinking and at some point the job creation here the ADP numbers but the non-farm payrolls looks exactly the same um are just coming down to a level where it's simply not enough to create growth in the economy and I don't know but you know people can take a look for themselves and this is just updated with the new number for from today uh 54 on average number now uh private job creation in 171 million labor force uh here it was 76,000 the the the the month we went into the recession in 2007 so I I think it's it's pretty clear that there is a a slow slowing of the economy and uh and inflation which the Fed is looking at is also coming down and uh so to me it's it's rather interesting that we once want more We'll have to see that a lot of people will be dismissing this idea with all sorts of narratives of you know one liquidity two you have certain technologies and so on. Meanwhile you actually see the ship is just going under. >> Mhm. You and I have talked about this illusion of stability and the disconnect from the markets and like even as we're recording today, Henrik, I know the markets have not even opened yet, but stock stock futures like the S&P, the Dow, they are rallying to fresh highs. A lot of folks are even talking about that we could see Dow 50,000 soon. Um, I've seen a lot of people talking about that on X. So >> what do you think explains the disconnect in the markets? Because that's where people are going to say in the comment section, look at the markets. Look at the markets. So >> but they but but but people actually should look at the markets and that is the problem. They don't they have this notion, they have this theory that the markets will discount everything and make sure that you don't have a recession. But but guess what? Why was it then that the NASDAQ was so high and right into the top in 2001? Why did we why didn't the market tell us that we were in a recession at that point? Actually, what they need to look to is the unemployment level. It's the number of people being unemployed. And and again, I can show you another chart just showing that, you know, the the same kind of uh situation that um that people just, you know, they look at the at the stock market and believe that that is the the whole truth. But the thing is we we just have to look to the unemployment level and and as part of you know ratios and save what is it that we are heading into and then the stock market may you know go crazy right into the top as we know it did NASDAQ did in 2001. Did that prevent a recession? It did not. Did we see that the NICK was correctly predicting uh that things were going to explode higher in 1989 when it made a crazy move into the highs? It did not. So the stock market is not a good way of looking at where the direction of things are. And and actually in the just to um to show this picture that I just showed you here was really just to show you that when you have look at the the again the unemployment level as part of the population size and you can see certain levels for the for the when the US when the recession sets in well we are already heading into those levels and so people need to understand that the stock market doesn't predict what is going on in the in the economy and and as long as they will believe that I can't convince them. I mean it's uh that's that's not for me to do. uh what I'll just say is that you need to look to the real economy and the real economy is slowing and that is the and that's the problem. So and if if people really did the the job they will actually see every time that you have a rounding bottom as I just showed here on the chart in the economy then the stock market comes with a top a little later but it tops out eventually and then the recession sets in. So we are not >> it's lagging as well just like how inflation is also lagging. It's it's it's lacking not to the same degree as inflation is lacking because inflation is has the whole supply chain it needs to go through. That's why inflation is very very lacking. So the stock market is to a certain degree lacking. But what the stock market is um you know prone to is to to follow the the the uh euphoria of of people and people have this notion that if there's just enough liquidity coming in everything will be fine and that is what they buy into. So again this time we see that people are thinking yeah but the Fed is going to um just you know print money and make sure that everything is fine. Guess what they have done that before and if you look at again if you do the do the work you will see that every time we we get closer to a recession the Fed starts to cut and when the Fed starts to cut that is actually the sign that things are about to get uh to get ugly. So there I I don't understand why why we actually this is just a thing you can that that people could sit down and um and and look at and then it'll be very very clear to everybody. >> Is this also part of your Zeberg um business cycle model too because I know you you wrote extensively about the model and that it's pretty much pointed out every recession that we've seen. I think you went back like 80 years even. Yeah, it goes back at least uh we could just take a look at it what it what it shows and um what it what it does is that it really just uh gauges all the fundamentals uh we have in the economy and from a leading perspective from a and a coincident and then the lacking I haven't brought the lacking in here but what you see is really that the leading indicators which are very often related to things that are very rate interest rate sensitive so the housing market and so on when they start to cross over that's the moment when you start to say okay things are now slowing that's why in November 24 I said okay thing the thing first of all things were coming down very very fast here and that kind of took me by surprise also how fast it went it came down then it bounced off for a little while but it's the moment when it really crossed through that was November 24 and this move here and then people will say yeah but we haven't seen it yet you know this is exactly what we have seen every time going back to the 1950s you'll see that every time we get a leading crossover here sometimes will elapse and then you're going to see the crossover of what is called the coincident and the coincident indicators are really the real economy that is GDP numbers that is the non-farm payrolls that is what I just showed here also with the ADP numbers >> they are coming down and they are crossing and when and and getting into the recessionary territory but we still need a little more to go we are more or less where we were in September of of 2007 at this point we have a touchdown on the coincident and the moment it crosses that's really when we say okay that is the models uh prediction of a recession start here. It was in um it was in November of 2019 and the recession began in in February 2020 into the financial crisis. It was November 2007 and the recession started in December 2007. So it's not far off and and that's the moment and then there are more to that then it's not just about this one thing. Then I have a whole range of what I call imminent recession indicators. One of the one of them is very easy to spot. That's the if you look at the uh some of the yield spreads, you're starting to see those spiking steepling as we only saw into September or and October of 2007. So, we can just put it all together and say like now we're economic detectives here and say so we observe all these things like what we saw into the financial crisis, what we saw into 2001, what we saw into all the recessions and this time it's going to be different. I just have to say I I I that's not how I rationalize. I will say, you know, inductive thinking would make you think. I see these things. This is what I've seen before. We getting closer to the moment where we actually see, you know, a potential recession because this and that. Um but but to to to rule it out at this point here is is just, you know, um I don't know how you do that. You would be a very poor real detective if you're, you know, seeing all the pieces of evidence right in front of you and you'd say, "Oh, probably it was the wife who did it, not the butler." And and I think that that's what we are that's what we're getting to. So >> that you have a rising stock market is not the same as you're going to see the economy doing well and uh and the economy will by the end of the day determine the direction of the economy uh sorry of the of the stock market. The stock market can spike into it. It'll be like a fantastic move and people will will you know cheer and think that they are invincible right into the top and then it will be all oh but why didn't we see it coming? As I say, if you don't see this coming, you don't, you know, economics and macro is not your thing. >> This episode is brought to you by Van X rare earth and strategic metals ETF, ticker symbol REMX. Rareears are the hidden backbone of modern technology and defense, powering everything from smartphones and electric vehicles to fighter jets and wind [music] turbines. Van Ec recognized this early, launching the rare earth and strategic metals ETF, ticker symbol REMX, 15 years ago, well before supply chain security became a global priority. Today, China dominates the production and refining capacity of rare earths, creating real challenges for global supply chain security as these materials are essential for technological innovation, clean energy, and national security. That's why countries all around the world are racing to build their own supply chains and reduce reliance on China. As this global shift continues, investment in the rare earth ecosystem is growing rapidly from mining to advanced manufacturing. Investors can gain access to this powerful trend through REMX. Visit van.com/remx Julia to learn more. I know you and I have talked about like how the macro is really starting to matter, but I want to just revisit something you said. Um being that kind of detective and looking for these signs, the yield spreads, >> the bond market then um it's sniffing something out. Elaborate a bit more of like what you're seeing there. What's um concerning there? >> Yeah, sure. So, so what you see is that you have the again we need to start with inflation and yields rates. they are lacking the economy which means that they start to drop once the economy really rolls over which is a big problem because the Fed is following inflation as a guiding indicator which is you know bad it's like looking out the rear window and driving forwards. Uh but anyway uh so so if you look at that you will see that in the beginning when the things are starting to deteriorate you will have that the short-term yield starts to drop and the shorter and you know the one month if you look at that that actually had a quite nasty drop in December just like what you saw also into 2007 and then you'll see that the one-year yield is then we talk about the US government bond yields here then are starting to show okay some weakness and they are just teethering there right to to actually drop and then it's about the 2ear yield and that's really the big one. When that starts to drop, that's when you need to say, "Okay, now things are when you have the next acceleration." And and what you see simply is just that the yield curves kind of, you know, the the long duration yields uh bonds, the yields on those, they they stay a little high because they, you know, kind of are reflecting the economic cycle that they were just been passed. Whereas the short end is starting to tell us what is coming ahead. And that's why you have the spreading. That's why you see that there is a steepening of a yield spread of the 10-year minus the 3 months for instance. And if we if you just take a look at that and say okay what is it really that we see when it comes to the to the yield spread here uh the 10 year minus the 3 months and you see people were talking about it when it actually when it was inverting. The problem is the recession doesn't set in when it inverts. That's that's where the damage is being done. That's the Titanic hits the iceberg moment. But that's the moment we need to understand that then when it starts to move the opposite direction, that is when we should see and when it's steepening again and the short-term yield starts to come down faster than the 10-year, well, that's when you have the problem. So, you had it here, you had it here, you have it here, and so on and so forth. And you can see we're just having that spike again. And then people are concluding and saying, "Yeah, yeah, but this time it's going to be different." Well, we just have the largest yield inversion we have ever seen. So I don't think it's going to Yeah, I think it can be different, but I think it's going to be different in a in a in a in a yeah negative way. So uh so I don't think it's um I don't think the indications are there for things are actually to to be great. I think they are there for for things to be really bad and uh the bond market is now slowly starting to tell us this also that the short end the yields there are starting to drop. we see the steepening and that is again another indicator of you know bad things coming not here yet and there are still indicators telling us that we're not here for instance credit spreads meaning you know how much stress is there in the in the financial market how worried are investors that you know for for any um any any investments they do uh or any bonds that they buy into which are not government bonds and uh and what you can see there is that there is no stress on that point just yet. So again, it's the same thing with the Titanic. It hits the iceberg. It doesn't sink in middle. It's not like it hit it and just went down. There is a certain period where people will be in doubt whether it sinks or not. And I'm just saying that that we are we we know it will, but it's just a matter of how long it's going to take. And uh it's taken 3 months more now, but we also see that the deterioration over those last three months has come in terms of the steepening of the yield spread and also of the um the job creation. I want to talk about central banks, specifically the Fed. Um, just looking at even the subtitle of your book, the bust of the everything bubble caused by central bank hubris. So, it makes me wonder, Henrik, like how much central banks, but really like say Fed policy, we'll keep it US-centric, impacts these booms and busts and also just the dependency that markets have on the Fed. And I guess I I'll frame it up as like let's get more of your big picture of the Fed and maybe even your outlook for the Fed too because uh you know >> getting a new Fed share soon. So yeah, let's start there. Big picture. How are you thinking about the Fed in 2026? >> So first of all, we have we have established this uh this understanding that the Fed can save us from everything. I was talking to a very prominent person yesterday actually here also. He said, "Yeah, but the Fed is just going to do what they always do. they, you know, they'll just, you know, print. And I was like, wow, if that's really the understanding that you have with people this high up as this particular person is. Um, you know, that's just, you know, dangerous. And I'm actually happy that I could, you know, also hand him my book and say it's actually this kind of hubris that is going to bring it all crashing down because we if it was that easy, you know, why would we ever have had a recession in the past? Why would we ever have had any kind of market crash? You know, I can tell you that we will not be the first human beings. till the first generations that have ever thought of you know actually printing money to to save ourselves from a crash or for a from a recession. The problem is there is such a nasty thing coming up which is called inflation. And at some for a long time it may seem like it's not going to come up even though the Fed is just pumping money out there. But when it does it's really going to get ugly. And the reason is that when inflation comes up all the stimulus that you want to give is actually just making it more ugly because then inflation just goes up even more and crushing the consumer even more. And this is the the the whole um teaching uh understanding knowledge that has just gone that we just lost because if you told this to our grandparents and say hey why didn't you just into the 60s and the 70s when you had some nasty recessions why didn't you just print money we have this extreme fantastic thing called QE and new monetary theory or whatever they call it and uh you just you print money you just you know squeeze the yields and then all everything will be fine guess what because it brings in auto inflation And they are actually seeing that right now in in Japan. They're starting to see that, hey, we we're not stimulating right now, but we get inflation going up. What can we do about it? Oh, we need to hike rates, but what happens if we high rates into a to something where things are standing still? You don't want to do that. So, it's damn if you do and damn if you don't at the point when we get there. We're not entirely at the Japanese situation just yet, but the Fed is getting into a corner here where they have done all of this. They have exploited the free lunch through from 2008 and onwards and everything we have seen ever since have so to speak been exploiting that you know the free lunch was really big in 2008 because they could do it and wow it was just you know the wealth effect came out but slowly we're now starting to see that inflation is turning and I think the 2020 situation actually changed that in a very drastic way where inflation all of a sudden rose up to 9.1% as the m at the peak and people thinking hey we can actually have inflation and the price levels have just you know risen by by 20% since 2020 and people have not seen that in the real wages sorry in the wage levels as well. So the problem is if if the Fed is going to do what they are expected to do if we have a crash then they're going to create something that is worse. And I think the Fed is absolutely going to do what they expected to do which will be to come in at the moment when deflation which is what I talk about first when you see the price price levels inflation is going down when you see um when you see stocks starting to decline and all of these things that the Fed doesn't like they will come in. they will do it and they will come in with a lot to stop it. But the problem is there's no such thing as a free lunch. And that is now that has now been accumulating accumulating in the way that if they do it, they will maybe for a short while bounce the markets at least, but they cannot convince Mrs. Johnson, Mrs. Jensen here in Denmark to spend the money that she saves on her mortgage loan. And that's the problem. It's about psychology. So I think the Fed here is is going to do what they always do. That's they they have no reason to change. I mean they they have seen as a success. I think they're it's terrible and that's why I wrote the book also to actually point out this is not going to be about what Trump is doing or anybody else around the world. This is really about the central banks who have become these at least perception wise demigods in terms of what they can do and omnipotent gods that can you know change the direction of the economy just with a little you know sprinkle of liquidity and I I really really see that the the endgame of that is going to be really bad and I think you know gold and silver um are starting to show some of these signs and I think that when we have the final uh run here higher it's going to be some of that we can Maybe not in the first phase after that but in the second phase if a stackflation is going to come out from this which I think it will then it's going to be bad. So the Fed the more the you can say the more doubbish he comes in now you know can can potentially become the new Fed chair that comes in I think it's the first of is the 1 of April 1 of May but that's around that time frame um will you know potentially be something that at least the markets will think can be uh short-term u positive bullish but um I fear that it's actually going to be the thing that breaks the camel's back uh in terms inflation coming back again. >> Oh, fascinating. Okay. So, in your thesis then it's going to be that central bank hubris like they'll see the deflation, declining stock prices, they'll intervene. That'll just create even more rampant inflation, a stagflationary environment, which is historically the worst for pretty much all asset classes. >> Um, so it's going to be will it be the Fed that knocks down the house of cards then? Yeah, it is actually because the you know you build this up this the reason or the the the analogy here is that you're building this kind of house of cards with all these money that you keep piling on top of it and what you realize is that it's actually and this is the whole ludici thinking also that you know you create an understanding of wealth you you are suppressing yields you are you know putting money out there which where the you know the the valuations just goes up but the problem is if this is not something that is sustainable because if you when inflation comes back in and you know the valuation levels have to be realized in a new inflationary world where inflation rates are not you know 0% or 1% or 2% but three or four or 5%. Well then the valuation comes down and that's the crumpling of that glass the the the breaking of that glass house. So the the the the actions from the Fed they have they have created it right now. They are carefully trying to put you know another um you know top to that to that glass house but the um card house but the the the the uh the effect and the consequence of that their their actions is going to be that they will um create more inflation and more inflation is going to make valuations crumble and more if valuations crumble that is the actual the glass house. So, so I think it's it's actually quite clear what's what's going on and uh it it can it can go on for quite quite some time. We've seen it's 18 years this year since 2008. Um that could be the anniversary 18 year anniversary and I think that could be the where it starts to become clear that this is not uh at least that's what I hope that there's no such a magic thing that just drink sprinkling liquidity on things and then you'll just make it grow forever. >> Yeah. Um, and you were talking about how gold and silver are starting to show some of the signs of this endgame. I guess I want to get more of your view on the precious metals, gold and silver, and maybe can you clarify them cuz I think I know sometimes on X people kind of come at you over gold or silver and I don't know, sometimes people pull me into it and I don't know what they're talking about. So, can we just get maybe clarification on your views on the precious metals because I think you're long-term bullish, but maybe you had talked about a pullback. Let's just start there. Yeah, sure. So, again, this is where people need to understand that we were we are in different regimes all the time. So, the economy is in can be in at least you just in the business cycle in four different regimes. Uh over the long period there can be different kinds of regimes. In certain regimes, it'll be good to hold cash. certain regimes it will be good to hold gold and silver and certain regimes it will be good to hold something else Bitcoin and so on and it's not always good to hold the same thing all the time so it's really about navigating those different regimes what I'm saying is that there's going to be a very swift regime shift here right now we are in a blowoff top people may not realize it but we they can just look at the I just did the one-year candles on the on the S&P 500 and if you look for the last since 2020 we have had these 15 16% years which is unprecedented especially when you have it like five six years in a row. So we are in an in in an inflated environment uh where you know the risk on is still going on. We are not at the end of that yet as I see I think with the S&P can go up 18 20% from here. 8,200ish is is easily possible now on the S&P in a situation where this is going on normally you'll see gold doing well. But in a situation like where things are starting to crumble, there's a need for one thing and that is real liquidity. That is the dollar. The dollar is the denominated uh denominated debt in the world in dollars is is you know the 67% or something like that. Which means that if the things are starting to crumble, people will need dollars to close their debt to you know for bankruptcy is there something like that. It will be the the demand for dollars. And there is this thing about the dollar when it strengthens you will actually see that it create creates even more demand for it. So it's a self-propelling kind of um yeah strangling you can say with the dollar when it starts to to strengthen right now people say yeah but it's not it's down as 90 what I don't know what it's down at 98 97 something like that today. No, but if you look to it, you can actually see there are some strengthening signs. If the dollar is going to strengthen as much as I believe, which is up to around 120 on the Dixie, 123, the level we saw in 2002, 2001, you're going to see that precious metals and a lot of things are going to get crushed. That is not the thinking right now. And uh often I mean if the the majority of people were right, you would see that you know everybody will be millionaires and billionaires. But the thing is people are very often only getting the trend the moment it actually starts to move. I did not see and that's what people are chasing before. I did not see gold doing this kind of rise that we have seen here or silver for that matter. But that's not the same as saying that process that [clears throat] that move that I'm suggesting that could come in the Dixie and in the gold and silver is not going to take place. We haven't seen a deflationary bust just yet. If it comes like I'm suggesting, you're going to see that it can be quite bad because a bubble this size we have right now, but then if that deflates, you're going to see a massive um need for for liquidity. It's not common common thinking and that's why, you know, people will be jumping into it right in you know into the into the top and uh and then you'll see the opposite is happening sometimes at least. So I think you're going to see a decline as the Dixie goes up very strongly in not in the first part of 26, last part of 26 and when we see that uh gold and silver are going to tumble but long-term extremely bullish because this whole money printing show we've seen over 18 years is going to come out through gold, silver, precious metals but also in commodities around the world. >> Mhm. That's so interesting. Okay. So, if you see um you'll see that decline if the Dixie goes up because people need liquidity. They're probably going to freak out. It's probably goes back again to the psychology. But then at the same time, you're long-term bullish on gold and silver. So, do you trade it or do you just kind of own it and hold it as more of that insurance policy? Like, how do you think about it in the context of a portfolio? >> I have gold. I don't hold silver actually, but I hold gold. Uh [clears throat] some physical gold. I don't have any paper gold or anything like that at this point. Uh and I always have had gold or for as long as I've been investing. Uh but uh I would think that if people were just to say I I want to buy something today and I want to hold on for the next 5 years, I would choose gold. I would not choose Bitcoin. I would not choose the S&P. And that is very clear. If you look at some of the ratios, I would choose gold, you know, flat out. No, no, no question asked. um if you're looking into what I would do with gold in in a shorter time frame and I think you know into that Dixie spike which I think is you know if you if you if you don't buy into the premise of a recession coming which is based on the macro science well then you can disregard this and say well there's no recession then there should be no read for the dollar to rise and uh so so then you can disregard it but if you think it's correct that a recession is coming then you will also notice that actually into something recessions like what I'm suggesting we could see here dollar is always coming up and it does that not because it's the cleanest shirt but because it's a the most used shirt so to speak. It's the one that everybody holds and if the things are coming crumbling down you would need dollars. So it's actually about the the success the prior success of the dollar that is you know going to create that kind of spike because there will be a massive demand for it. By the way that's also technically what the long-term charts are suggesting. So if that happens well then gold and silver will be coming down and that's why I wouldn't be buying gold at this point. Uh I would have loved to have holded you know earlier on more of it than I have but you know I think there's going to be a good time frame for it to buy it at a later time. At this point here I I will say you know the riskon environment is still going. Uh there are massive moves coming in some of the tech stocks still as I see it uh into this very top. So again it's about the regimes. It's about we are in a blowoff regime. we in the sugar high that I call it now because it's just going to go straight up and then after that I think if I'm smart enough to get out of the top you know we will uh we will get into something where there is a dollar regime and the dollar regime is it's not either gold silver or bitcoin there will be a situation also where dollar actually will be the only thing so the dollar regime is something that will last for in 2008 it lasted from March until um September I think October of 2008 6 9 months uh something this time as well but in that period you don't want to hold gold silver you don't want to hold S&P you want to hold the dollar you want to hold something that is exposed to to that maybe uh treasuries where you have inflation and yields coming down and then you have also the the uh the exposure to the dollar in that way. So that is a shorter time frame. So people need really need when they ask me what is it you want to invest into and is it just to buy and hold or is it to say the next three months, the next 12 months or you know the next 24 months and and there are differences there because the environment can shift very quickly. We know that when you have a top and it starts to decline well then there is a new regime and that's where you need to hold something different. >> This is so fascinating. I'm really enjoying this conversation because I feel like I'm learning a lot at the same time. A really basic probably dumb question, but the Dixie going up, that's just not a good sign then. >> No, no, it's not. It's I mean, the strong Dixie is not is not a good sign. Uh you can have it as especially if you have it in a deteriorating economy. So, so when you look at two things and you look at my business cycle model and you look at the the job creation and you can follow along and say, and I'm not talking about you, but I'm talking about the people that might not, you know, might not see what I'm talking about here. you know, as long as they can see that well, there is a slowdown. We we we can we can argue about it, but you know, the 12-month average is not lying. Uh so, so there is a slowdown. If it that actually slows even more here, you will see that there is potentially recession and into a recession. If the dollar goes up, that is not a good thing because if the dollar goes up, everybody who hold dollar debt and a lot of people without knowing it are, you know, indirectly exposed to to dollar debt. Um so long story but but that's because the euro dollar system and so on but but anyway if the dollar goes up then we will feel the pressure from that. So a lot of emerging market countries and so on will feel a pressure of having these uh large debt levels in in in dollars and that will then put further pressure downward pressure on on growth and the economy. So you don't want a strong dollar. We we want a not a weakening dollar because that gives us too much inflation. We want a stable dollar. But that's why the the strong rise that I see is um as I said, it's not mainstream or or for that matter Wall Street kind of thinking as I see it. But I think it it's going to happen. And uh and if that happens, we will >> it's going to be bad for the world. It's going to be bad for growth. And that's also why the Fed comes in and try to crush it. They did that in 2008 also when they when the dollar started to rise from March of 2008 until October. It went up 25% in those six months. People don't realize and understand that and remember that. But from March of 2008 until September, October, it went up 25%. That's a lot. I mean, think about if you have a mortgage loan and all of a sudden you owe 25% extra on that. What are you going to do about your, you know, consumption? You will actually say, I got to cut down a bit here because this is actually just piling up on me. That is the way the rest of the world who hold dollar debt is going to feel it. That's the why you're going to see growth getting crushed if the dollar strengthens. So we want really a dollar that is stable goes sideways almost. That would be fantastic. But the problem is when it starts to rise, it is a self-propelling strangling of the rest of the world. That's so important to understand too like the implications because I think sometimes here in the US we don't always think about I'm sure some of the investors who watch the show they definitely know and they're probably like well that's a dumb question Julia but we don't always think about these knock-on effects or implications of what it could mean globally. Um yeah [clears throat] I'll have to revisit the Euro dollar um system as well because I do understand like that's really important. We've had some guests who've done some episodes on it. Um yeah. Okay. investor question for you because right now the regime is still risk. We're going to see, you know, tech stocks continue to just surge higher. Um, but it's that blowoff sugar high as you put it, but you mentioned like being smart enough to get out at the top. I do want to ask you about that as an investor. Like are you are you still just like riding this for now? Like what are you doing? Yeah, but the situation is that when you have a uh these these blowoff tops and I I you know people said you know you said it for such a long time and I actually thank people says that you said that says that because correct since 2022 when we came out of what technically looks to be the wave four bottom and if you look at those monthly candle ever since then they just been straight up uh and that is the very definition of a blowoff top that is where there's no looking back you just go up then you had a small dip and then you had the April of last year 25 dip But after that that actually turned almost to be a you know bullish candle also it just gone straight up. This is the blowoff top and if you're sitting you know that there is a blowoff top you can you can see it. You can see the sentiment is moving. You can see the technical setup and so on. You don't want to stand outside it because you know there is something that is you know FOMO is one thing but there is also that you know the fear of missing out. Uh yeah, so the FOMO is is a big thing which is the fear of missing out and uh and that is you know going to drive you crazy if you sit month on month and seeing things going straight up. So I have people that we also are clients and they say well but why don't we just step away and I you know said because you know even though you have a slowing of the economy it seems like the markets can be going on for quite some time here and you don't want to if you are sitting in that for 6 months you will have to say at some point well Henry you must be wrong. So I'd rather tell you that you know the situation is as it as it is. The economy is not supporting this move we have here at all but it doesn't mean that it's going to roll over and the indications are and that's where we look into a certain set of indications. One of them is that you know for first of all look to look to the some of the the important economies in the world which is for instance the Singaporean economy. The Singaporean economy is like very very fragile when it comes to trade. So [clears throat] if trade collapses in the world, you'll see that the single point economy is getting hit. Normally if you get close to a recession, you'll see trade going down and that's where the single point economy and the and the stock market there will start to take a hit. That's one of them. Small open economies even like the Danish as well will start to show we are just heavily influenced by some big manufactical companies. Um but small open economies in in general will also start to show this weakness. So you we if you look to those and you'll say okay if they go higher and this was one of my arguments actually back in in uh March of last year when people were saying oh but we have a remember in April everybody was talking about we had a recession and I said no we don't we not in a recession here we don't we don't have a big market crash here we have a correction and it's going to come up strongly why because the NASDAQ topped in October of 2024 and we saw that the Singapore index actually kept climbing until March of 25. You don't see that kind of um divergence between such an important index like the Singapore and then you see the NASDAQ topping out four, five, six months before. That's not how the world work the world works and that's where people don't do this this uh calibration between what we see in the different that's where my model is taking everything in. So you you will have to see it across the world. So watch out for what you see in in in certain economy, certain areas of the world. And right now it seems like, you know, in China you could see a huge spike. In India, it seems like it can spike up quite a lot. Emerging market seems like it can spike up quite a lot. I don't want to sit out and sit just look and say, I'm just an angry old man looking at this market and saying it's going to drop. I you know, you can be right, but you but for you can be but but still be wrong for a very long time. Remember Michael Bur? He was right eventually, but he was wrong for a very long time. And and I think that is the the the the very uh difference here is that I'm saying I this is going to be worse than 2008 7 to 8 >> in terms of the recession. But I'm not just going to sit there and be angry and saying and call the markets crazy while they just keep rising because that's where the technical analysis can help me and say Henrik this is going to go up much further than you like but um but it's going to top but uh but you know why not why not take a piece of that pie of that sugar high. >> Yeah. I mean, it's a good point. Henrik, you just said worse in 2008. Do you think worse? Well, we're not old or anything. I was going to say in our lifetimes, but yeah, I guess in our lifetimes, but like contextualize it a bit um for the audience like how concerned you are for the next one. >> Yeah, but I'm I'm I'm very concerned actually for many reasons. And I I again I just don't want to sit here and then be uh the gloom and doom, but I'm I'm concerned for the f for the following reasons. Uh first of all when we went into 2007 to9 recession the Fed actually had this option of printing money pushing money into the system creating the wealth effect as it's called and actually gets things things going again. You had a bubble in the stock market not so big but you had small bubble you had a bubble in the in the in the real estate market. This time around [clears throat] we have a bubble in the stock market which is much much bigger probably like two and a half times uh the size of 100 of in um 2007 and approaching the double the size of 2001 if you look to to market capitalization to GDP um that is one thing another thing is as I said the Fed has exhausted already this about printing money so now it's down to the situation with the consumer And guess what? There's the next factor which worries me which is inflation. Because people react very differently when you have non-inflation and if you have a high inflation going into 2008, people hadn't seen inflation for the last 20 years or at least many years, 15 years at least inflation was coming down. Now people are seeing inflation going up which means that they're going to react differently to monetary stimulus. So they're going to say am I going to spend this money? I'm going to, you know, hold on to it. If they understand inflation is a thing which come back into the backbone, they're probably going to hold on to it, which means that stimulus is going to be more important impotent or impotent. They they you can't use it as much. It doesn't give the effect. And that's the problem with with that part. The part is also that right now you have a um debt to GDP in the US at 120 25%. Back in 2008 it was 60%. The rest of the world is the same. The the the consumers are the same. So we have taken uh all the we we've done all the measures we could from which was the easy to do kind of measures into 2007 to9 to try to stop that back stop that and remember that was pretty bad still and this time around you have a bigger bubble you have a bubble also in the in the housing market because you can see that on the affordability people can't afford their homes you have consumers that are more depressed than going into the recessions uh both as I said in 2007 and 1929 9 and then we we're not even seeing unemployment going up for real yet. Just you wait until it gets to seven or eight or 9%. So if all of these things are developing, and I unfortunately think they will, it's not going to be easy this time around. It's not just about the Fed going to print because if they do, they can make it worse. They will, and that's why they're going to make it worse also, as I as I as I said. So I unfortunately see that the cocktail here has just gotten more toxic with the different components that I just talked about here in 2008. It was manageable, bad, but manageable. This time the things that we're going to do to try to save the world again is going to make it worse. And on top of that, and this is probably the worst thing as I see it, is that you have now the the consumer that is so underwater first of all, affordability is in the gutter. uh the top the 90% as I said of the con of the consumers in the US are really bad off at this point um at a point where if I get it right you're going to see all of a sudden their pension funds are going to drop you're going to see that they lose their job and you're going to see inflation coming in because you have a stackflationary development what is that going to do to people in terms of who are they going to elect what are they going to do in a situation where they are already depressed So you didn't have that in 2008. So the the situation is we did what they always do. We pour money on it and we hope it will get better and we hope for the Keynesian stimulus effect multiply effect to start working. And what we got was that we went to the end of the curve which canes himself also refused to answer. When you have actually Mr. Kanes stimulated you you the heck out of everything and inflation is at zero and and yields are at zero. what's going to happen then if you get a recession and he said then but you know what in the long term we're all dead that was his answer and that is actually the situation you see now in yeah we're all dead he mean he meant that it's not going to happen >> someone else's problem yeah >> somebody's else's problem it's not going to happen but guess what that's happening in Japan right now >> and so we coming to the end and I think that is what the theory books also of the future should be looking at and say hey we actually got a situation here which was the theoretical thing that could happen and then we disregard it and now we actually seeing that developing if I get it right. >> So that's why there are a lot of reasons why this can get much much worse. There's no easy way out this time unfortunately and I I think that that will then trigger >> societal effects uh geopolitical things as well and so on so forth and that's why I think it goes even you know it it could become really bad and I don't want to sound gloom and doomy I think you know >> yeah well okay it could go really bad that's a dark picture you paint but let me ask you this all right some positive here it's a house of cards is built on sand. You have this scenario play out, this kind of dark, awful scenario play out. Is there a moment though where you could see a reset? Could we get back to something like sound money again? If it's going to be that if I don't know or do you think we I don't know. Do you think we is there some light at the end of the tunnel here that >> I would love to say yes and we could just do it like overnight and then everything would be fine. >> It's got to be ugly, right? Yeah. The thing is you can see now that the system cannot exist without the balance sheet going up of the Federal Reserve right that you can take a look right now and every time they try and do for some time you'll see actually it just you know it goes it just takes a little while and then you'll see that things are starting to stall and they would have to start you know repurchasing treasuries or whatever they say and they will call it something new and then but the situation is that if you got back to sound money you would actually have to promise that that does not happen that you cannot see that the the balance sheet just keeps is going up and they will print more which is what they do. Um and that has a deflationary element to it itself. So if we did that then you're going to do it and that's why Ludik Misa says there's no way out of a credit um the boom brought about by a credit expansion other than if you choose it yourself or the market is going to create and which is the worst thing and that is the situation we're in now. So if they're going to do let's say tomorrow say okay we're going to tie it up to something which is fixed uh and we're not we we will not increase that you know what will happen the stock market will start to decline >> because if they don't keep pumping money into the system you're going to see that this actually stops and that's the problem that's hugely deflationary. >> So they can't just do that. they will they will do it but it will be at a time where they get forced to it and the stock market has already already declined a lot. So there's no easy fix to it. It's really at the situation of the Titanic. You out there in the middle of the Atlantic you have hit the iceberg. There is a big gapping hole in this in the in the hole and you you say yeah but you know can we just you know make it easy just pump the water out do something you know easy. No we have to face this. This is bad. >> Yeah. Um, as we round out this conversation, start to close here for 2026, you're a bit of a detective. What is that under the radar trend that you think might have the biggest macroeconomic impact in 2026? >> I I still think there will be the realization of uh how bad the consumer the the the situation for the consumer. Um I think that will be the when it's being realized that that is actually the real engine of the of the economy. I know people will say but Henriken why don't you talk about AI? AI is going to um change the world in a complete and fantastic and dramatic way and it's probably the one of the largest technology leaps we have ever seen. Uh and I say probably because we have seen quite big leaps in in in the in the past but it's not going to help us in the short term. Think about it. If you have AI, you are going to hire two people in, you know, in in in 2020 when you had a business. Today, you probably say, but hey, maybe I can do it just with one person. If that person actually utilizes AIS in certain way, what does that do on an aggregated level? That reduces the number of people that you need. So AI is not going to to help us create wealth now and here in a short time frame. In the longer time frame, businesses will grow up and will become more profitable and will then have the demand for new kinds of people. So in a 10, 15, 20 years period, it's going to change everything. But in a 1 2 3 years period, there's simply not the time to get that done. And AI will actually have a counter effect on the situation. So that's just to, you know, come up with the the obvious answer. People would say but he needs to talk about AI. That's that's AI. AI is fantastic development for the humankind. But for the uh 2026 you know human beings in on the earth here is we are going to be it's going to be something that is um actually uh countering the what we need at this point and that is people getting a job and and stay staying with that job. So I think the realization of the importance of the consumer in 26 and how that is actually dragging the economy down is going to be the most important and then I think the Fed by the end of 26 are going to come in again uh in a massive manner which will create an idea or thinking perception that they have now saved the day and the economy is going to boom from here again. >> Henrik before I let you go um let's leave the audience with some parting thoughts. anything that you would like them to think about. Um, and also let them know where they can find you and support your work. I'm going to link your TED talk that you gave recently in the show notes for folks. Um, because I think you're going to cover some of these themes and various bubbles in it, I imagine. Uh, maybe you could tell them a bit about it, but anything that you'd like to leave them to think about. Um, anything that you where they can go find and support more of your work. The floor is all yours. >> Thank you. Well, um, yeah, obviously you can find me on X at Henrik Seberg. You can find me on Substack as well. I also the same at Henrik Seabour. Uh, I've, uh, I'm in various interviews as well and also you, as you said, the TED the TED talk. I try to engage as much as I can with with people, but I obviously I get a lot of, you know, uh, people uh, contacting me, but um, if there is something interesting, something that can challenge my my views, then I'm I'm always already always interested. That's what I try to say. Um yeah I I I think people should should think instead of just following because if you look to the very many bubbles we have seen over the the last many years when people just follow that is when you actually you know you you fall into something bad and and when you if you don't understand it yourself maybe it's because there's not really something behind it. So look at the look at the facts look at some of the few charts I just you know gave you here today and say to yourself what does that indicate is does that indicate we're going inflation is sorry in employment is going up or down and what would that normally mean and uh what in in that scenario what would uh what would then happen so I I I really would like people just to think instead of just trying to I I see so often that people just referring to somebody else who said something instead of just trying to you know put put two and two together and say, "Well, we actually did see this before and and this came out of it." So, think and and do this and do the work. Study uh because uh strong stock market doesn't mean that you have a strong economy and the economy will pull the stock market down. >> Do your own research. Do your own research. Yes. Exactly. >> Yes. Henrik Zeberg, head macroeconomist at Swiss Block, author of the Monetary House of Cards. I really appreciate you. I appreciate you taking the time to join us every quarter, helping us all learn and get better, and just being so generous with your time and all of your knowledge. Really appreciate you, and I am wishing you a happy and prosperous new year. Thanks again, Henrik, and I'll see you next quarter. Thank you, Judah.