Are we about to witness one of the largest stock market crashes
in U.S. history? Swiss investor Marc Faber is the publisher of the
“Gloom, Boom & Doom Report”, and he has been a regular guest on CNBC for
years. And even though U.S. stocks have been setting new record high
after new record high in recent weeks, he is warning that a massive stock
market crash is in our very near future. According to Faber, we could
“easily” see the S&P 500 plunge all the way down to 1,100. As I sit
here writing this article, the S&P 500 is sitting at 2,181.74, so that
would be a drop of cataclysmic proportions. The following is an
excerpt from a CNBC article that
discussed the remarks that Faber made on their network on Monday…
The notoriously bearish Marc Faber is doubling down on his dire
market view.
The editor
and publisher of the Gloom, Boom & Doom Report said Monday on CNBC’s “Trading Nation” that stocks are likely to endure a gut-wrenching drop that would rival
the greatest crashes in stock market history.
“I think we can easily give back five years of capital gains, which
would take the market down to around 1,100,” Faber said, referring
to a level 50 percent below Monday’s closing on theS&P 500.
Of course, Faber is far from alone in believing that the market
is heading for hard times. Just recently, I wrote about how legendary
investor Jeffrey Gundlach is warning that “stocks
should be down massively” and that he believes this is the time to “sell everything“.
And on Tuesday, Donald Trump told Fox News that the stock market
is “a big bubble”…
“If rates go up, you’re going to see something that’s not
pretty,” the billionaire businessman told Fox News during a Tuesday morning
phone interview. “It’s all a big bubble.”
Worries that the Fed has created a market bubble have shadowed
the second-longest bull market in history as the central bank has kept its key
rate near zero and expanded its balance sheet by $3.8 trillion in order to pump
liquidity into the financial system.
Trump actually has a vested interest in seeing the stock market
go down because that would help his chances in November.
In a previous article on The Most
Important News, I explained that the stock market has indicated who
would win the presidential election 86 percent of the time since 1928.
During the final three months before election day, if the stock market goes up
the incumbent party almost always wins. But if the stock market goes
down, the incumbent party almost always loses. The only times this
correlation has not held up since 1928 were in 1956, 1968 and 1980.
For the moment, the stock market is defying the laws of
economics, and that is a very good thing for Hillary Clinton. But if this
bubble suddenly bursts and the market starts catching up with economic reality,
that is going to turn out to be very favorable for Donald Trump.
And without a doubt, the fundamental economic numbers just
continue to get worse. Earlier today, we learned that productivity in the
U.S. has now been falling for
three-quarters in a row…
Productivity, a sore spot for the U.S. economy over the past few
years, has now declined in three straight quarters, according to data released
Tuesday.
Productivity
in the second quarter unexpectedly fell 0.5%, well below expectations, the Labor
Department said. Economists surveyed by MarketWatch had
forecast a 0.3% gain in productivity in the quarter.
Productivity is down 0.4% from a year earlier, the first
year-over-year decline since the second quarter of 2013.
On Tuesday we also learned that real estate sales in Las Vegas
were down about 10 percent in
July compared to the same period a year ago, and things are not looking so good
in San Francisco either. Just check out what has been going on on Twitter…
Twitter is shaking up San Francisco. It’s the city’s 10th
largest employer, and second largest tech employer, after Salesforce. But it
hasn’t yet figured out, despite a decade of trying, how to make money. Last
October, it announced that it would lay off 8% of its workforce. A couple of
weeks ago, it reported a second-quarter net loss of $107 million along with
disappointing user metrics and lousy projections. Its shares have lost 74%
since their miracle-IPO-hype peak at the end of December 2014.
And now
Twitter is dumping nearly one third of its total
office space on the San Francisco sublease market.
Las Vegas and San Francisco are both prone to huge “booms” and
“busts”. So the fact that it appears that both cities are starting to
move into the “bust” end of the cycle is a very ominous sign.
Conditions are changing, and now is the time to position
yourself for the exceedingly challenging times that are coming. As I end
this article today, I want to share with you something written by Jim
Quinn. He recently went out to visit his son Kevin in Colorado for a
couple of weeks, and the following is how he ended his
article about that trip…
After spending a week in this stunning paradise, it’s tougher
than you know to go back to my two and half hour daily round trip commute into
the slums of West Philly. John Muir’s words were right 100 years ago and they
are right today. I am losing precious days and my days are spent trying to make
money. I’ve got responsibilities. I’ve got bills to pay. I’ve got kids to get
through college. We’ve got aging parents to help. I work because I have to.
I’m not learning anything in this trivial world of distractions
and iGadgets. I don’t fit into this materialistic society. I don’t do small
talk. I have no patience for fools. I prefer solitude. If I can survive this
despicable rat race for seven more years, I’ll be joining Kevin in Colorado and
living the life I’d like to live. The sun is setting and time is slipping away.
Those mountains are calling me home.
I can definitely identify with what Jim is going through,
because I once experienced similar emotions.
To Jim and everyone else that hopes that someday in the future
they will be able to live the lives that they would like to be living right
now, I would say this…
Don’t put it off.
Seize the day and find a way to make your dreams a reality.
Things are rapidly changing in this country, and if you keep
putting off the life you want to be living for too long it may end up slipping
away for good.
