In a wide‑ranging conversation on Share Talk, Zak Mir sat down with Clem Chambes, CEO of aNewFN.com, to pick apart market narratives, technology trends and the practical fallout for investors. Clem brings his trademark scepticism, dry humour and strategic thinking to a discussion.
Markets are being tugged by a subtle but essential squeeze in cash supply. Central bank operations, government cash hoarding and shadow lending markets are all interacting to make liquidity a key driver of prices. At the same time, structural forces in equity markets, the evolution of crypto and the long-term demand for commodities are creating distinct opportunities and risks for investors.
Why liquidity is the story right now
There is a genuine cash flow pinch in the system. What people notice first are prices changing, but behind that is a tightening of available cash. A few mechanisms to understand:
- Reverse repo used to absorb excess cash in the banking system by letting banks park cash at the central bank in return for interest. That bucket has been chewed through and in places gone negative.
- Standing repo facility was reintroduced as a safety valve so banks can borrow short term cash from the central bank when markets get tight. It was brought back after bank stress events and is being used again because banks need cash.
- Central bank balance sheet reduction by selling bonds draws cash out of circulation, reducing the pool of liquidity available to the market.
- Treasury cash hoarding during government shutdowns or fiscal uncertainty further removes cash from the market until normal spending resumes.
Put together, these actions create a nuggety, stop start flow of cash into markets. When the US government reopens and fiscal flows resume there is likely to be a noticeable splurge of liquidity which would likely lift asset prices. Until then the Fed is using repo facilities to keep the wheels on, but it is a delicate balancing act.
The regulator paradox
People complain about central bank and regulator intervention, yet the alternative is systemic collapse. A regulator exists to prevent a smoking crater scenario like 1929 or a full systemic meltdown. That means there will be monetary and fiscal intervention when contagion threatens the system.
However, intervention can push risk into other parts of the system. The more visible forms of risk get managed or backstopped, and the dirty linen tends to migrate to less regulated corners such as private credit. That is where contagion can lurk unseen.
Private credit is the hidden risk
What was once called factoring, invoice discounting or forfeiting has been rebranded as private credit. It is massive, far from the glare of regulators and growing. When problems within private credit arise they can be abrupt and painful because regulators cannot easily step in or monitor exposures.
Expect periodic blow ups in areas that sit outside traditional oversight. Those are the places where a crisis can start even when public markets appear steady.
Hedge funds, market neutral strategies and fragility
Hedge funds have long used hedging techniques to isolate returns, typically going long superstar names while shorting the rest of the market. At scale this creates a market neutral sleeve that looks stable until it becomes huge and brittle.
Risk is concentration and leverage. The more extreme the hedge, the more sensitive the structure is to shocks. It works until it does not. This is a recurring pattern across cycles: once a strategy gets enormous it becomes fragile and then snaps.
Bitcoin, crypto and the shift to TradFi
Bitcoin’s original attraction was anarchic, permissionless trading outside the traditional financial plumbing. That era is changing. Crypto is increasingly institutionalised, traded through ETFs, futures and options and integrally connected to the fiat system. That means:
- Bitcoin is behaving more like another asset class rather than an anti establishment, peer to peer currency.
- Custody and exchange practices introduce fractional reserve dynamics. If you hold coins on an exchange you rely on the exchange having the actual keys and the ability to deliver them in a stress event.
- Not your keys, not your Bitcoin remains a vital maxim. Centralisation of custody reintroduces counterparty risk and the possibility of bank run type failures such as FTX.
So yes, a crypto winter is possible and perhaps overdue. That does not mean the end for blockchain technology. The important distinction is between cryptocurrencies and the underlying blockchain. When speculative cycles end the real innovation often emerges from practical blockchain applications with proper business models. That next wave could be just as transformative but less headline grabbing than the last.
Investment ideas and sectors I like
Given the structural trends above, here are the areas I am most interested in right now:
- Copper and base metals Copper is indispensable for electrification, grid infrastructure and electrical transmission. There is simply not enough new copper supply coming online to meet future demand and that imbalance should drive strong returns over the next few years. Consider pure play miners and large, well capitalised names.
- Platinum and palladium Both have industrial uses and potential upside as supply tightness and specialised demand reassert themselves.
- Silver and gold Silver has industrial plus monetary characteristics, while gold still has upside as a monetary hedge in unsettled times.
- Defence stocks With geopolitical competition on the rise and timelines such as 2027 being discussed publicly, defence firms, and especially US defence companies, are attractive. Governments preparing for increased defence readiness typically mean sustained procurement and strong revenue visibility.
- Cheap, dividend paying stocks Low price to earnings, high yield and strong free cash flow companies in established indices such as the FTSE 350 look compelling. If you prefer to avoid small cap noise, stick to the larger, cash generative names.
Examples mentioned include a well located Polish copper operation and household names in the UK market that trade cheaply and carry yields. These kinds of stocks are likely to be picked up by investors seeking yield and value.
Short term watch list
- Monitor US liquidity and repo usage. A rise in standing repo use signals systemic cash stress and can be an early warning for risk assets.
- Watch private credit news and announcements. Distress there will show up before regulators can act.
- Track flows out of the dollar. A sustained dollar decline could drive global equity flows into non US markets and lift UK, European and emerging market stocks.
- Look for commodity supply signals, especially in copper and platinum group metals.
- Follow defence procurement budgets and contract awards, particularly in the United States.
Final thoughts
We live in a world where monetary policy, fiscal timing and structural market strategies all determine short and medium term price action. That makes liquidity and balance sheet dynamics essential parts of any market view. At the same time, long term themes such as electrification, geopolitics and blockchain driven business models are creating durable investment opportunities.
Stay cautious about counterparty risk, keep an eye on where risk is moving in the system and favour assets with strong fundamentals, yields or clear exposure to megatrends. And if you hold digital assets, remember the old maxim.
Disclaimer & Declaration of Interest:
The information, investment views, and recommendations in this Zaks Traders Cafe interview are provided for general information purposes only. Nothing in this interview should be construed as a promotion or solicitation to buy or sell any financial product relating to any companies under discussion or referred to or to engage in or refrain from doing so or engage in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the commentator but no responsibility is accepted for actions based on such opinions or comments. The commentators may or may not hold investments in the companies under discussion.
