Gary Schilling.Bloomberg TV
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An experienced financial prognosticator has projected a potential 30% drop in the stock market.
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Gary Shilling anticipated an upcoming recession, if not already in progress.
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He expressed confidence in Treasury bonds, the US dollar, as well as stocks and commodities.
A seasoned market analyst has indicated that stocks are poised for a one-third decrease, urging preparedness for an approaching economic decline.
A. “My forecast is that the stock – and I came up with this prediction early last year – will decrease by about 30% to 40%,” declared Gary Shilling, the chairman of Gary Shilling & Company. In an interview aired this week on “The Julia La Roche Show.”
“From here, you’ll see another decline of approximately 30%, resulting in an overall drop of 40%, peak to trough,” he stated.
Shilling’s forecast implies that the S&P 500, which reached a record high of nearly 4,800 points in January last year, could plummet to around 2,900 points, its lowest level since May 2020. The key stock index decreased by 18% last year including dividends, but has surged by 17% this year.
The established economist, renowned for accurately identifying numerous significant market trends over the past 50 years, anticipates a stock decline coinciding with the stumbling U.S. economy.
“If we’re not already in a recession, we’re likely to enter one soon,” Shilling remarked, pointing to the inverted yield curve, weaknesses in crucial economic indicators, and the Fed’s commitment to controlling inflation.
After serving as the first chief economist of Merrill Lynch, Shilling established his own economic consulting and investment advisory firm in 1978. He mentioned that while the overall economy only slightly weakened during the recession, corporate profits typically decreased by 20% to 30%, and stocks are expected to undergo a similar decline.
He predicted that inflation would persist at low levels in the upcoming years as the long-term globalization trend drives prices down. He suggested that the Federal Reserve would reduce interest rates next year only when the economy significantly falters and it becomes evident that inflation is no longer a concern.
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The market predictor – who foresaw and profited from the housing boom collapse in the mid-2000s – disclosed that he was placing bets on Treasury bonds and the US dollar. Conversely, he was betting against stocks through exchange-traded funds and shorting copper as a bet against commodities.
Schilling also revealed that the “biggest bubble” presently on his radar was commercial real estate – specifically office buildings, hotels, and shopping malls – and indicated that he believes it is commencing a downturn.
Read the original article on Business Insider
Source: finance.yahoo.com
