The stock market should prepare for more pain, says legendary investor Jeremy Grantham. “Most of the decline in these great bear markets only happens after the first interest rate cut. So you tell me when the first interest rate cut is, and I will tell you when the second half of the pain is going to start,” said Grantham, warning that stocks could crash as much as 50%. Grantham isn’t alone in his outlook, as top economist Nouriel Roubini has predicted a credit crunch that will make a recession much more likely. “The worst is ahead of us because the Fed and other central banks are facing a dilemma. They have to reach price stability. They have to maintain economic growth and avoid a recession… Interest rates have to rise further… That’s going to cause a hard landing of the economy,” said Roubini. As banks face a dark road ahead, expert economist James Rickards warns that the global de-dollarization movement is “accelerating in ways no one could have anticipated just over a year ago.”
Business Insider/Jennifer Sor
The stock market’s bubble bust will only be halfway over when the Fed starts cutting rates – and there will be much more pain ahead, legendary investor Jeremy Grantham says
The bust of the stock market bubble will only be halfway over when the Federal Reserve starts cutting interest rates, according to GMO founder Jeremy Grantham. He expects that to happen in late 2024.
The legendary investor — who’s made his name predicting market crashes across multiple decades — predicts even more gloom ahead in the market. Previously, Grantham said stocks were in the “final phase” before crashing, and asset prices that ballooned in recent years could soon pop as the economy risks facing a steep recession.
Though some investors are looking for signs of the next bull market, that’s the wrong way to think about stocks in the current environment, Grantham said. “Great Bubbles” in the stock market are different from typical bull and bear markets, meaning it’s likely there’s another round of pain ahead.
Continue reading, here.
Fox Business/Eric Revell
Dr. Doom Roubini: Banking crisis could cement hard landing
The economist known as “Dr. Doom” is warning that the recent banking crisis could undermine the Fed’s efforts to engineer a soft landing without a recession as it tries to tamp down inflation.
Nouriel Roubini, the CEO of Roubini Macro Associates and an economics professor at New York University, appeared Monday on FOX Business’ “The Claman Countdown” and told host Liz Claman that the U.S. banking system — particularly regional banks — will struggle in the near term. Claman asked if First Republic Bank’s recent announcement that it would suspend its quarterly dividend on preferred stock indicates U.S. banks and global financials have a long, dark road ahead.
“It tells me that not just for First Republic, but also for many other regional banks, their business model is severely challenged right now,” Roubini responded. “They have a narrow deposit base, they have a large amount of uninsured deposits, and now people are realizing that they can earn, say 4 or 5% on money market T-bills that are insured by the government when they get close to zero on their deposits. So that’s the source of their fundamental problem, and therefore the banking problems are going to continue for the regional banks.”
You can read the full article, here.
The Daily Reckoning/James Rickards
Goodbye, King Dollar
I’ve written for years about different nations’ persistent efforts to dethrone the U.S. dollar as the leading global reserve currency and the main medium of exchange.
At the same time, I’ve said that such processes don’t happen overnight; instead, they happen slowly and incrementally over decades.
While that’s true, the process is accelerating in ways no one could have anticipated just over a year ago.
You can read the full article, here.