Connect with us
Financial Press
key-words:-the-stock-market-is-poised-for-a-40%-drop,-warns-economist-who-says-the-current-climate-feels-a-lot-like-1929
key-words:-the-stock-market-is-poised-for-a-40%-drop,-warns-economist-who-says-the-current-climate-feels-a-lot-like-1929

Breaking

Key Words: The stock market is poised for a 40% drop, warns economist who says the current climate feels a lot like 1929

Key Words

Are we headed for another Great Depression?


Everett Collection


‘I think we’ve got a second leg down and that’s very much reminiscent of what happened in the 1930s where people appreciate the depth of this recession and the disruption and how long it’s going to take to recover.’

That’s A. Gary Shilling, longtime economist and president of A. Gary Shilling & Co., again delivering a gloomy take on what’s next in a recent CNBC interview.

“Stocks are [behaving] very much like that rebound in 1929 where there is absolute conviction that the virus will be under control and that massive monetary and fiscal stimuli will reinvigorate the economy,” he said, adding that the market could drop as much as 40% over the next year.

So where should investors park their cash in this climate?

“I think we’re going to see downward pressure on prices and that works to the advantage of Treasury bonds
TMUBMUSD10Y,
0.665%
,
which have been my favorite since 1981,” he said.

Watch the interview:

Shilling laid out his prediction in more detail earlier this year, explaining in a Bloomberg News op-ed that while many economists are looking for a V-shaped, or quick, rebound to deliver a sharp recovery in the second half of the year, he remains much more skeptical.

“This pandemic is likely to be the most disruptive financial and social event since World War II with equally long-lasting consequences,” Shilling wrote, citing the stark unemployment numbers at the time. “Many will no doubt restrain spending in future years to rebuild savings, especially since the crisis caught them at a time of high debts and short financial reserves.”

No sign of a big drop in Monday’s trading session, as the Dow
DJIA,
+1.78%
,
Nasdaq
COMP,
+2.21%

and S&P
SPX,
+1.58%

all made strong moves higher.

Written By

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Articles

Breaking

Capitol Report Published: Aug. 13, 2020 at 5:30 p.m. ET House Speaker says she told Mnuchin to come back when he’s raised offer to...

Breaking

Last Updated: Aug. 13, 2020 at 5:09 p.m. ET First Published: Aug. 13, 2020 at 3:39 p.m. ET San Francisco Superior Court judge denies...

Breaking

NewsWatch Published: Aug. 13, 2020 at 5:00 p.m. ET MARKETWATCH FRONT PAGE It’s been 100 trading days since the S&P 500 logged its pandemic...

Breaking

Published: Aug. 13, 2020 at 4:58 p.m. ET To become a reality, any digital equivalent of cash would need lengthy policy process, and no...