The Technicals of a Turning Cycle

Published on
October 28th, 2019
Duration
40 minutes

The Technicals of a Turning Cycle

The Expert View ·
Featuring Sven Henrich

Published on: October 28th, 2019 • Duration: 40 minutes

Are global equity markets approaching a critical threshold? Sven Henrich is the chief market strategist for NorthmanTrader - a firm that uses technical indicators to track global equity markets. Henrich argues that with or without complete central bank capitulation, markets are in for a year-end rally that will not be able to sustain or surpass its new highs. He compares the final months of 2019 to the final months of 2007, pointing out the critical divergence in the Fed’s ability to lower interest rates further - having less than half the wiggle room than the 500 basis points they had in 2007. Filmed on October 9, 2019 in London. For more of Henrich's research visit https://northmantrader.com

Comments

Transcript

  • PB
    P B.
    1 November 2019 @ 12:09
    What does he mean by "yearly 5 EMA" around 23:00? 5-day EMA on a yearly chart? That makes not much sense to me..
    • MH
      Mark H.
      1 November 2019 @ 21:23
      I think he just means a five period EMA on whatever timeframe you’re looking at - price will always revert to that five period EMA. I haven’t looked at it on a chart yet but that’s how I interpreted what he was saying. On a daily it’s a five day EMA, on a weekly, a five week EMA etc.
  • NI
    Nate I.
    31 October 2019 @ 04:10
    Tax dollars --> underfunded pensions --> pensions buy bonds --> bond issuers buyback stock --> stock holders sell shares and pay taxes. Wash, rinse, repeat for the past decade or more. Ballooning debt levels force central banks to suppress interest rates to keep the wheels on the bond market bus. Today, taxpayers are tapped out and servicing ballooning debt levels gets more challenging with each iteration through the loop, even with artificially low rates. In my opinion, the ability to continue with this loop is in the 8th or 9th inning. I'm not predicting a crash because maybe the next step is for central banks to buy stocks directly. Hard to say, but I don't see too many more cycles through the loop being possible as 0% is approaching (each cycle needs more tax dollars as pensions become less and less solvent with lower and lower yields on their bond holdings).
  • DV
    Dimitri V.
    30 October 2019 @ 19:42
    Good interview but 19 days lags in these markets are too long
  • RH
    Robert H.
    30 October 2019 @ 00:27
    Nicely done. Quite easy to see by the comments that volatility is not some viewers friend. Mr. Henrich here has narrowed down exactly what has happened since 2018 - volatility. I think it's wonderful. Knowing what to look for on a drop like May or August makes my happy wife a happy life for me. A crooked line is much longer than a straight one. Also, Henrich appears to call himself a technical trader but he pairs the charts with the human factor which is imperative. If anything, it narrows down the possibilities.
  • GT
    Greg T.
    29 October 2019 @ 20:07
    The oldest video I could find on him was September 2016. He was predicting a 25% then from S&P 2100. Needless to say, a really bad call. https://www.cnbc.com/2016/09/13/stocks-are-primed-to-drop-25-percent-before-the-year-is-out-northman-trader.html
    • CT
      Christopher T.
      30 October 2019 @ 02:27
      this guy has one of the worst track records
    • RK
      Robert K.
      30 October 2019 @ 14:53
      In headline driven and central bank manipulated bull markets all bulls are geniuses. Till the turkey meets Christmas.
  • BP
    Bryce P.
    29 October 2019 @ 19:09
    One of the best pieces RV has put out in awhile.
  • KA
    Kevin A.
    29 October 2019 @ 11:44
    Great interview. Although he is a technician, he can have a good conversation (well, with the bot in this case) about some of the fundamentals of the market. I do feel that he falls into the trap - probably unknowingly - of covering all of his bases in terms of what happens. He throws a lot of statements out there so that he is always going to be right on a market turn up or down. Market goes down, he called it. Market goes up, it is a temporary melt-up. A lot of strategists do that in my view.
  • SG
    Sven G.
    29 October 2019 @ 10:11
    My name is Sven, so I guess I'm a little biased... have to say that was some rock solid analysis! Thanks Sven
  • jc
    judith c.
    29 October 2019 @ 03:53
    I miss the good old days, when you actually had a real interviewer present on camera instead of "miss robot voice " and the sound of a dot matrix printer. Real vision needs more Ed Harrison and Justine Underhill types please.
    • JS
      Johannes S.
      30 October 2019 @ 06:08
      I disagree. This format works very well for me. And I love that they added the voice, because in the past they would display the questions just as text and I would miss them when listening to the interviews with audio only. No need to change anything about this RV!
  • mp
    michael p.
    29 October 2019 @ 03:39
    The idea of RealVision is to to provide information that will help to yield positive investments to its subscribers. It should not be a forum for its own bearish viewpoints. It should know that sounding bearish as the Northman trade does sounds great but is not and has not not for a long time been beneficial to ones returns. He has been bearish albeit sounding very intelligent for a long while. In fact, if he invested his viewpoint, he might well be BK. Please stop with these individuals who have no track record. I would recommend that every person on your show start with performance and if they do not have one state that they do not actually run money. Let’s get real. Please stop with these intellectually smart bears or bulls that are on paper.
    • BF
      Bref F.
      29 October 2019 @ 05:28
      Completely agree, Skin in the Game as a pre-requisite.
    • GT
      Greg T.
      29 October 2019 @ 19:58
      Agree. The doom loop guy running this seems to mostly just be pushing his theories and ideas here, or others who share those opinions. This despite them being wrong for nearly a decade. Sure someday they will be correct, but missing an entire massive bull market in stocks has been extremely costly to them and their followers.
    • TE
      Thomas E.
      29 October 2019 @ 20:53
      Alot of guys have skin in the game but don't perform and have poor market analysis. I hear what you are saying. It's up to the user to listen to the interview and have "take-aways." The user then should do his/her own analysis and see if he or she agrees with view of the person being interviewed. Real Vision has hosted plenty of Bulls as well.
    • CT
      Christopher T.
      30 October 2019 @ 02:29
      couldn't agree more. tiresome
  • MF
    Mowgli F.
    29 October 2019 @ 02:06
    Pretty sure Sven Heinrich has been bearish for the past four years, pretty much a perma bear. Oh and the SPX just hit a new ATH.
    • WW
      William W.
      29 October 2019 @ 03:11
      Not true (other than than the ATH thing)...but do your own homework if you're that interested...it is possible to be a longer-term bear with episodes of shorter-term bullishness.
  • KA
    Kelly A.
    29 October 2019 @ 00:50
    Interesting about the Dec sell-off effect vis-a-vis Raoul's notes over the past couple years about boomers needing to pull money out in greater and greater quantity to meet retirement fund rules, starting at age 70.5. In other words: it seems that perhaps, if R is correct, that the Dec effect that Sven says is more rare, might have another year or two in it. ??? thoughts please!
    • RC
      Robert C.
      29 October 2019 @ 01:31
      The age 70.5 rule I believe can have an effect, but you can take the funds out anytime of the year. Basically you have to be able to pay your required minimum distribution. So like maybe 4/5% of your account every year. Also some legislation is being proposed to delay the rules to start at age 72.5. I see the baby boomer thing more as they can't afford big loses at this time of their retirement cycle.
    • RC
      Robert C.
      29 October 2019 @ 01:32
      Meant need to take your required minimum distribution and this is just out of your retirement accounts.
    • KA
      Kelly A.
      31 October 2019 @ 21:33
      Thank you Robert C. Much appreciated. I also saw in THINK TANK that another contributing factor to 2018 see off was also prompted, of course, by QT and related. That is not happening this year, so sell off this year is less likely --at least because of that. Nevertheless, corp stock buybacks are still key to S&P multiple expansion.
  • RC
    Robert C.
    29 October 2019 @ 00:47
    Really like Sven's work. I think he has been very on the mark the last few years. He asks the relevant questions if you ask me. How much more can central banks do? Rates are near rock bottom now.
  • JJ
    Jesse J.
    29 October 2019 @ 00:28
    Okay let's get into this! First off thought the interview was really good. While I didn't agree with all of Mr. Henrich's points he makes some very convincing arguments. I loved the VIX analysis, I think there is some good money to be made there in the short term. I enjoyed the technical analysis covering Debt to GDP (144%/137/144/146%) and now we're back at 144% and going higher! That's a very convincing argument for me because I think a lot of traders probably pay attention to that statistic. As to how long the FED can keep this up. We'll I'm thinking until about 2025-6. That's not an exact date though and let me explain a bit. It seems the markets reset about every 25-30ish years. 1944 Bretton Woods to 1971 gold standard removal. 1971 to 2001 WTC collapse and movement to extreme deficit spending. 2008 collapse but kicked up due to QE so we're really on in about 19ish years. We've still got rates to hit 0%, MMT to go through (I think it's coming regardless of being good or not and it's going to be a political battle), and helicopter money to distribute. We seem to be in the midst of a cycle that is much longer and totally separate than any other (which is why it's "undiscovered"). Will the system fail? Yep. I think it's a much longer way off than most others though. We have lots more bad monetary policy to get through (several mini crashes), political unrest to really get going (it's still mostly peaceful atm), this trade war is really just getting going and only stalled a bit due to the coming election. Even though we're slowing down we still haven't stopped growing. It's like putting on the breaks to make a turn but you're not exactly sure where the turn is. You keep breaking anddddd "nope, next one".... "nope, next one". The positive of all this system of things is that Mr. Henrich analysis of volatility I think is spot on. If you like volatility, I think that's gonna be an annual opportunity to make some money. The realistic side of me is sad we're heading down this road and I wish I could correct it. I can only watch, read, listen, learn, and bet. Finally also, TYVM for putting in the charts on the transcripts. I know whomever did that put in extra work and I appreciate your dedication!!!!
    • KA
      Kelly A.
      29 October 2019 @ 00:43
      Jesse J. Thank you for your thoughts. Very enjoyable.
    • JJ
      Jesse J.
      29 October 2019 @ 00:48
      Thanks Kelly.
    • WB
      William B.
      29 October 2019 @ 01:42
      Jesse J. Your comments are very insightful. The interview was great. I am shorting the S&P, so if the whole thing crashes, I will make money. On the other hand, I have 3 children who will feel economic pain. Like any good parent, I would rather feel pain than have my children feel pain.
  • GS
    George S.
    29 October 2019 @ 00:01
    There is a group of macro analysts on twitter, Sven is one, who offer a lot of charts, opinions, but at the end of the day their ability to predict is 50/50 at best.
  • SU
    Shakeel U.
    28 October 2019 @ 23:13
    Brilliant 10/10 and I'm glad it wasn't another video about Bitcoin 😀
  • LG
    LUDMILA G.
    28 October 2019 @ 22:47
    Loved the interview. & Thank you for the charts in the transcript!!!
  • RK
    Roger K.
    28 October 2019 @ 21:11
    This is the rational bit! But but " the market can stay irrational longer than you can stay solvent". What if FED decided to buy all the risk assets in perpetuity?
    • CB
      Clifford B.
      28 October 2019 @ 23:04
      keep printing.
  • SM
    Sebastian M.
    28 October 2019 @ 19:38
    My man Svenrich
  • TR
    Thomas R.
    28 October 2019 @ 19:09
    My hero!
  • CL
    Chris L.
    28 October 2019 @ 19:02
    same ol Sven. nothing changes. heard this before
    • EF
      Eric F.
      28 October 2019 @ 22:20
      Disagree Chris. I’ve seen / read Sven bullish & bearish. It’s a bit flippant to say otherwise. I think we could see a further melt up, but if you’re bullish in this environment of QE, rate cuts & repo issues then I think you’re missing the massively conflicting signals being sent out. I also think what could / should have been run of the mill corrections could be blown up into a depression or revolution. We’re already seeing signs globally of the latter.
  • CB
    Clifford B.
    28 October 2019 @ 15:15
    Very Insightful talk. Interesting that Sven mentions Germany, baby boomers/aging populations/decreasing work force. Germany is welcoming refugees while many others are closing borders. Time will tell how each country fares.
  • JQ
    JACK Q.
    28 October 2019 @ 14:57
    Just hit that new high
  • JH
    Jesse H.
    28 October 2019 @ 12:39
    Great interview / presentation. Thank you, Sven!
  • PU
    Peter U.
    28 October 2019 @ 09:58
    Sven has emerged as a great strategists and chartists. Great command of the macro and the markets. I got to know him about 10 years ago. Quality guy all around.
  • SR
    Steve R.
    28 October 2019 @ 06:57
    Just love his summary at the end - absolutely nailed it in my opinion!