Sven Henrich on the Fed’s debt trap and why it’s causing more harm than good


The age of the new day trader has come about at an uncertain time for the world and the markets, meaning downturns and upturns are fleeting. Sven Henrich, founder of NorthmanTrader, is an expert at reading the macro signs of the market. On this week’s episode of The Scoop, he cautioned against continued interventions by the Federal Reserve that have kept the new generation of traders from a prolonged bear market.

“Everybody is trained to just not expect anything bad to last because we have the wonderful Fed fairies preventing any damage from happening,” he said. “That’s not how the world has worked for the last 500,000 years. Sometimes bad things happen, and that’s the fantasy that we keep playing in this game of debt and intervention, thinking that it’s all consequence free.”

Henrich’s firm provides macro views and technical analysis to its subscribers, and on Twitter, he’s been highly critical of the Fed’s actions in recent weeks. He’s been raising the alarm of coming consequences due to what he sees as the central bank’s refusal to take on any pain. On this week’s episode, he broke down macro events in the time surrounding the COVID-19 pandemic, touching on:

  • Why continued market interventions could create stresses that investors might be overlooking in a strong tech market narrative
  • What the growing divergence between gold and tech stocks means for economic growth
  • Where to allocate capital as governments debase currencies and real interest rates drop
  • Why bitcoin isn’t a hedge against the monetary side when you look at its price action
  • Why the next two months are critical for the strength of the dollar

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Sven Henrich on the Fed’s debt trap and why it’s causing more harm than good written by Aislinn Keely @ August 14, 2020 Aislinn Keely

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