I’m Coming Home

- Hayes is not increasing his fund’s exposure to crypto in this part of the cycle

- Restrictions on capital movements and central bank money printing are risks

- The Maelstrom fund is going more into cash, as Hayes sees headwinds

While everyone has their eyes on the US and what president-elect Donald Trump does in his first 100 days in office, Arthur Hayes, Chief Investment Officer of Maelstrom, warned of the financial repression happening in Europe and the US, and what that means for crypto investors and savers.

During his keynote address, Hayes was bearish on the state of the markets in the coming cycle, putting his outlook into direct opposition with the prevailing wave of optimism in crypto markets.

“I am not very constructive on many markets right now,” Hayes said in his keynote address. “As a fund, we are going more into cash. We are not increasing crypto risk going into this part of the cycle.”

Hayes pointed to restrictions that limit the flow of capital, for example from Europe to the US, and predilection of many central banks to print money to get out of an economic slump. As such, he is focused on how banks are upping their balance sheets versus central banks and where that money is flowing.

In his view, the European Central Bank “hides” bonds on banks’ balance sheets, who are forced to buy the avalanche of debt that finances the central bank. He also predicted the end of the Euro and Basel III (sets minimums for bank capital requirements), which in his mind means infinite leverage.

“This is the next phase of financial repression,” he said.

He believes that Trump has his work cut out for him, particularly since the debt ceiling fiasco, when the president-elect couldn’t get that passed to be able to borrow money to “make America great again”.

“[The Republicans] are going to have to be a little bit more drastic,” he said. “There are no cosmetic [fixes] available to them to really get the markets going, because they have so many structural problems, [as does] the global economy.”

Continental Europe is also facing serious issues, such as two to three times higher electricity prices than China or the US, and yet a continuing belief in what Hayes called the “renewable energy hoax”, or the idea that decarbonization will shift to low cost and clean energy.