Is the US Equity Bullrun Over? With Lyn Alden

 
 

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“The challenge that central banks face around the world is death by ice or fire; do you want things to unravel in a deflationary collapse, or do you want to keep stoking the fire of inflation… in history, the vast majority of fiat currency regimes die by fire, not by ice - when push comes to shove, they print.”
— Lyn Alden

SHOW DESCRIPTION

Location: Remote
Date: Wednesday 26th January
Company: lynalden.com
Role: Macroeconomist

January 2022 has been tough for Bitcoiners, a lacklustre end to 2021 has been followed by a drawdown. However, the stagnation of Bitcoin’s price has mirrored wider macroeconomic issues as both bond and equity markets react to inflationary pressures. This has resulted in a flurry of criticisms that Bitcoin is not the inflationary hedge it has been purported to be.

Yet, the economic rationale that drove Satoshi’s development of Bitcoin is manifest. Decades of relaxed monetary policy, an era of cheap money, has resulted in significant excess capital being generated. A lot of this has been ploughed into US equities. Lyn Alden’s latest newsletter likens the stock market performance over the last 40 years to a sponge soaking up water.

Well, that sponge seems to be saturated. The US equities now represent over 61% of the market capitalization of all global stocks. At the same time, inflationary pressures are forcing the hands of governments around to world to raise interest rates. Fears of stagflation abound. The sponge is about to get wrung out.

Economic history shows these are the periods when hard money becomes dominant. That’s why hodlers continue to hodl.

In this interview, I talk to macroeconomist and investment strategist Lyn Alden. We discuss the signals pointing to the end of the equities supercycle, the risks of energy prices continuing to drive inflation, the IMF and El Salvador, central banks being at an impasse, and Bitcoin’s next play.

TIMESTAMPS

00:03:53: Introductions
00:04:29: A turbulent start to the year
00:05:12: The Capital Sponge
00:08:48: Dutch disease
00:13:48: The size of the US stock market
00:18:07: Risks of record high asset allocations
00:22:00: Cheap credit and asset monetisation
00:24:23: Global interest rate rises and peak inflation
00:27:39: Rising energy prices
00:34:00: Pressure on governments and social unrest
00:36:44: COVID hangover
00:39:40: Trade deficits
00:45:41: El Salvador
00:55:40: Risks of another great depression
00:58:04: Bitcoin correlation to the equity markets
01:03:36: Final comments

 

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SHOW NOTES

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Mentioned in the interview:

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