Raoul Pal, who founded the macroeconomic research firm Global Macro Investor and the financial media company Real Vision after working at Goldman Sachs, said he thinks that liquidity will enter global markets and we will see very sharp rallies.
“Dollars from Japan will enter the markets”
Talking about short-term scenarios with analyst Julien Bittel on Real Vision’s Youtube channel, Pal said that he expects the US Treasury to reduce the money in its current accounts, the Fed to stop its tightening policy and liquidity to enter the markets due to tax and fiscal spending incentives:
“We also think that globally, the Japanese might intervene in their currency selling dollars which adds dollars into the global system. We also think that most countries will be adding liquidity as well. We think China needs to increase its liquidity.”
“Banana zone may come”
Drawing attention to the Basel IV rules, known as the new banking regulations developed by the Basel Committee on Banking Supervision, which oversees global banking regulations, Pal said that the new rules will cause banks to hold more liquidity in their hands:
“We also think Basel IV is coming next year which means the banks are buying more bonds, so we think there are a lot of sources of liquidity.Another one is commercial real estate. Eventually, if it remains ugly enough, the Fed could create a special-purpose vehicle to put all these loans in. We’ve seen that historically in the past, particularly in the savings and loan crisis in the early 90s. That’s another method of liquidity. So there’s lots and lots of different avenues, and ones that we haven’t even covered.” he said.
Earlier this year, he also pointed to the banana zone;
“Look, the backend quarter of an election year is true banana zone for all assets. It always is.”
“Don’t ruin this chance”
Pal also stated that he expects the cryptocurrency markets, which are currently worth $2.5 trillion, to grow to $100 trillion in 8-10 years and said, “This is a great chance for everyone. Don’t ruin it,” he said.