Investing Legend Turns Apocalyptic, Expects Stocks to Crater 50% in Largest Wealth Destruction in US History

The comments below are an edited and abridged synopsis of an article by Tyler Durden

Durden discusses stock market legend Jeremy Grantham’s views on the markets. Several years ago, Grantham turned from stock bull to permabear, and while his market notes turned alarmist, it wasn’t until 2021 that his warnings of an imminent crash became shrill… and spectacularly wrong.

Investing Legend Turns Apocalyptic, Expects Stocks to Crater 50% in Largest Wealth Destruction in US History - BullionBuzz - Nick's Top Six
Businessman ready to go on a day when a gas mask could be just as sadly familiar and indispensable as any other household object.

But with stocks waning on fears of Fed support fading, Grantham has revisited the theme that we are living in a super bubble, and like the crash of 1929, the dot-com bust of 2000 and the financial crisis of 2008, Grantham almost certain the bursting of this bubble has begun, sending indexes back to statistical norms and possibly further.

How much lower? Grantham sees the S&P falling by nearly 50% to 2,500 from its all-time high of 4,800 a few weeks ago. The Nasdaq, which recently closed down 10% from its all-time high, may take an even bigger hit.

Durden disagrees. Yes, there will be a crash that will have deflationary shockwaves globally, but it will only prompt an even bigger rescue by the same Fed that doesn’t have an alternative. In the next crash the Fed, whose only contribution has been to make the rich richer and create an epic wealth effect bubble, will buy stocks and ETFs, before it eventually loses all credibility. By then, stocks will be higher, disconnected from reality and trading on the quadrillions in liquidity central banks inject to preserve the western way of life.

The Fed, which has no choice but to blow an even bigger bubble after the coming market crash, will do just that.

How much of a crash can the Fed weather before it capitulates? Another 10-20% lower, which will obliterate Biden’s ratings, surging inflation notwithstanding, and the market will finally discover what it is looking for.

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