A Crash is Coming… But First, We Need to See Dow 40,000
We all know a big crash is coming – the question is when.
Rates are rising, stocks are falling (having their worst day in 8 months), and the economic data is starting to turn.
***Dow futures are now down 1000 points during after-hours trading.
Deficits are exploding at the exact same time auto loan applications are falling, mortgage apps are in decline, and in some areas, we are seeing home price reductions.
U.S. consumer debt is now at a record $4 trillion, rising $20.1 billion in August alone.
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That’s borrowed prosperity, and at some point, you have to pay it back.
The yield on the 10-year Treasury just hit a 7-year high!
ZeroHedge.com just posted that BlackRock’s broad bond market ETF (AGG) suffered a nearly $2 billion outflow in a single day!
This is unprecedented…
This all points to a major recession in the works, which is why I think the Dow is headed to new all-time highs, well beyond 30,000. Maybe even 40,000, to be honest with you.
Here’s why I think we will see new highs and at least 2 more years of solid gains in the stock market.
Where was the blow-off top if this was the top? Bull markets don’t just end, they die from euphoria, none of which we have seen in this market.
Think about Bitcoin last year. How many people did you know who were talking about it and buying it all of a sudden?
I remember going to a blockchain conference in January, and I met all sorts of people who were quitting their jobs to go full-time crypto trader. It was just like in the year 2000, when you’d hear about electricians and plumbers quitting their jobs to become full-time day traders.
In the 1980s, when gold hit $850 an ounce after having started the previous decade at $35, there are stories about people lined up outside of precious metal shops to buy the yellow metal, along with silver.
Or how about the housing market? We all remember in 2006 when people were literally camping outside of KB Homes’ sales offices in order to be first in line to buy a new home.
Today’s stock market is up from a lot of hot air, borrowing, government spending, artificially low rates… there are a ton of reasons we can list for why it doesn’t deserve to be trading this high, but we can not point to investor demand unless we are talking about the lack thereof.
In my opinion, if you’re buying large-cap stocks or an index fund that tracks the S&P 500, days like today are when you go out of your way to buy, not sell.
Globally, the U.S. stock market is the one investors are fleeing into, along with the U.S. dollar. As bad as the structural fundamentals for the U.S. are, the rest of the world is in even worse shape.
So for now, let the good times roll.
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