• 21 hours Airlines Could Recover, But Crew Remain Elusive
  • 21 hours Meet The Man Behind The World's Most Exciting Oil Play
  • 2 days Crypto-Mining Immigration Could Be The Start Of A New Trend
  • 4 days Hawkish Fed Sends Gold Prices Crashing
  • 5 days Bezos Is Heading To Space This Sunday
  • 8 days El Salvador’s Surprise Bitcoin Move
  • 11 days Markets Unfazed As Inflation Hits 13-Year High
  • 12 days How the Token Economy is Disrupting Financial Markets
  • 14 days FBI Investigating 100 Types Of Ransomware Attacks
  • 16 days Fed Ends Corporate Credit Emergency Lending Program
  • 18 days AMC Becomes the Latest Winning Meme Stock After GameStop
  • 19 days The Real Reason Your 401k Has Been Lagging
  • 20 days China Lifts Cap On Births, Allows Three Children Per Couple
  • 22 days The Market Is Ripe For Another GameStop Saga
  • 25 days Senate Grills Big Banks Over Pandemic Opportunism
  • 26 days Cannabis Has A Major Cash Problem
  • 27 days Ransomware Netted Criminals $350M In 2020 Alone
  • 28 days Russia Is Taking On Google
  • 29 days Chinese Regulators Deal Another Big Blow To Bitcoin
  • 30 days Ohio Residents Brave Vaccine for Chance To Win $1M
Ohio Residents Brave Vaccine for Chance To Win $1M

Ohio Residents Brave Vaccine for Chance To Win $1M

Countries worldwide are in different…

COVID Fraud Amounts To Nearly $570M

COVID Fraud Amounts To Nearly $570M

Illicit products have run the…

Kidnapping Is Big Business In Nigeria

Kidnapping Is Big Business In Nigeria

More than 800 school children…

  1. Home
  2. News
  3. Breaking News

These Infamous Investors Are Predicting A Market Crash

Crash

The bears have come out of hibernation after a 9-year bull run, and they’re ornery and predicting a market crash in the near future, even as a Bank of America survey says that less than 20 percent of money managers think things are headed for a collision course.

Indeed, the bull-bear polarization is almost as strong as political polarization at this point, and getting a reading on the Dow seems to require a more potent crystal ball than anyone’s ever had.

This is what it’s looked like over the past five days.

(Click to enlarge)

And over the past month:

(Click to enlarge)

Warren Buffett would say this is all par for the course, and playing the stock market means investing in American business for the long haul—bumps in the road and all.

The Bank of America Merrill Lynch survey shows that most would agree, and there aren’t any signs to real capitulation.

Worldwide, fund managers are still pumping money into the market, with cash held by funds jumping in April to 5 percent, up from 4.6 percent, even when profit expectations and equity allocations were at an 18-month low.

For now, the survey concludes, bulls have been “silenced, not routed”. Now is the time for contrarian buys.

But there are some pretty big bears out there that disagree.

David Stockman, former Salomon Brothers investment banker and former Reagan White House budget director, says a worst-case scenario is imminent, and he is predicting an “epic monetary and fiscal [policy] collision, according to Time magazine. Related: The Leveraged Loan Bubble Could Be About To Burst

Topping his list of catastrophes are tax cuts that will put the federal budget deficit to the trillion-dollar range, and the Fed’s unwinding of its bond portfolio. The sell-off of bonds will lead to a major interest rate spike that will shock the market, while most remain in denial.

Likewise, Guggenheim Partners chairman Scott Minerd expects a disastrous collision course already next year, citing strong fiscal stimulus when the economy is at full unemployment—a situation that could force the Fed to be more aggressive in terms of interest rate hikes. While the Fed so far seems to be sticking to its plan to raise interest rates three times this year, Minerd expects a fourth hike, and four more in 2019

Hedge fund manager Paul Tudor Jones is another bear who called the 1987 market crash, and is calling it again as soon as 2019, saying “We are replaying an age-old storyline of financial bubbles that has been played many times before.” The bogeyman for Tudor Jones? Again, strong economy at full unemployment, which he likens to a dangerous euphoria. 

Ray Dalio, of Bridgewater Associates, the largest hedge fund in the world, is our next bear, calling a market crash in 2020 and calling our current period the “pre-bubble stage”. He puts the chance of recession before the next presidential election at 70 percent.

Contrarian investor John Hussman, of Hussman Investment Trust, was less forthcoming on the crystal ball predictions, and has refrained from putting any timeframe to a potential market disaster. But if and when this bubble bursts, he says, we can expect a market loss of around 60 percent as stock valuations are way too high, just like they were in the run-up to the dotcom crash.

By David Craggen for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment