Former Goldman Sachs executive Raoul Pal says that crypto and technology stocks are about to take off on new rallies in the near future.
In a new ask-me-anything (AMA) session, the Real Vision founder says that all signals are strongly suggesting that central banks around the world will inevitably be forced to print money, consequently boosting risk assets, most of all the crypto and tech sectors.
“All of my forward looking indicators have been suggesting that liquidity is going to keep rising, and that it will drive crypto and tech more than anything else. And that’s basically been the story of the year so far. I think that that continues, and that’s confused a lot of people.
But one trade that’s confused me is the bond trade, and thats confused a lot of people. Bond yields should have fallen by now, and they still haven’t. But I think this is has to do with the debt ceiling issue, which is the other confusing thing.
The debt ceiling issue has some real risks around it, and we don’t really know how to price them. All we do know is people are pretty bearish around it, and I think that’s reasonable too, to have hedged around it, because we don’t know what can happen. But the chances are, that anything that causes a paralysis of financial markets will lead to… more stimulus to come.”
Pal says that indicators tied to the G5 nations’ central bank balance sheets are suggesting that a new wave of liquidity is approaching financial markets. The macro guru says that analysts bearish on risk assets because of uncertain economic conditions are missing the point, because even if the economy slows down much more, central banks will still likely expand the money supply, according to Pal.
“So yes we might have some stumbling blocks, yes we might have some hurdles, but liquidity going forwards, as the economy slows down, and the central banks start increasing their activity, that will drive asset prices higher.”