A very large financial crisis looms. Those are sentiments shared by the Chief macro strategist at Contrarian Macro Advisors. According to Hunter, we are on the cusp of the biggest financial crisis fuelled by major bank failures and loss of involuntary liquidation.
Financial Crisis
According to the 47-year market veteran, and 80% stock market crash could occur, followed by a swath of bankruptcies and bank failures. In return, the Federal Reserve balance sheet could expand to as much as $20 trillion in a bid to calm the storm.
Some of the catalysts that could spur the turmoil include the central bank misstep and lack of government assistance when the economy is heating up. Hunter has also warned of the potential impact of debt buildup.
While the mammoth crash could occur in 2021, Hunter is projecting stocks racing higher as has been the case amid the pandemic, with the S&P 500 likely to reach record highs of between 4,200 and 4,500 points. He also expects the NASDAQ to touch highs of 15,000 over the next two to three months.
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Long Term Outlook
Sharing similar sentiments is billionaire investor, Jeff Gundlach, who believes stocks could crash within 18 months with the U.S dollar poised to tumble in the long run. According to o the DoubleLine Capital CEO, we are in a true brutal bear market.
He remains bearish over the U.S dollar long term prospects given the ballooning budget deficit. The prospects of higher inflation make the U.S dollar a big bet against, for the years ahead. Amid the expected sell-off, Gundlach remains bullish about certain real estate investments and resource investments as long term plays.
Former Goldman CEO Lloyd Blankfein on his part, sees bubble elements in the markets owing to free money. According to Blankfein, record low interest rate has created free money for big institutional investors. The free money, according to Blankfein, is essentially creating bubble elements resulting in risks being mispriced in the market.
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