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

Episode 32 of Season 2 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Sven Henrich, founder of Northman Trader.

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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:

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  • 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

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Aislinn Keely is a reporter on The Block's policy team holding down the legal beat. She covers court decisions, bankruptcies, regulatory actions and other key moments in the legal sphere, putting them in context for the wider crypto industry. Before The Block, she lent her voice to the NPR affiliate WFUV and helmed Fordham University's student newspaper. Send tips or thoughts on all things policy and legal to [email protected] or follow her on Twitter for updates @AislinnKeely.