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It’s Raining Brokers!

August 28th, 2014 - 7:20 am

LEDGE

Not yet, but maybe soon according to two experts on CNBC yesterday:

A jolt to international confidence in central banks will lead to a 30 to 60 percent market decline, David Tice, president of Tice Capital and founder of the Prudent Bear Fund, told CNBC’s “Power Lunch.” When this happens, he said, markets will face a “period of extreme turmoil.”

This crash will be precipitated, he said, by a disillusionment with the Federal Reserve’s “confidence game,” which will then see inflation rise, and the Fed scramble to raise rates. At that point, Tice added, “the Fed starts to lose control.”

Another market watcher also called for an impending fall.

The Fed’s low interest rates could bring a “scary” 50-60 percent market correction, said technical analyst Abigail Doolittle.

We’ve had a nice run for five years, building “prosperity” on the smoke and mirrors of reinflated equities and housing, while keeping consumer spending jacked up with record welfare spending. But the correction always comes — even in a healthy economy built on a solid foundation. The difference is that when a healthy economy endures a contraction, it still has that solid foundation.

All we have are Janet Yellen’s printing press and Washington’s largess.

UPDATE: This might be obvious, but it needs to be said anyway. If you’ve been trading on margins, you’ve got to cut that out.

All Comments   (5)
All Comments   (5)
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As I've mentioned before, there are some economists in the EU starting to use the 'D' word (Depression).
Think they may be on to something?
4 weeks ago
4 weeks ago Link To Comment
A bear market fund manager talking about corrections. I'd call that "Talking Your Book"

As it happens, his prognosis probably isn't the correct one. Total money in everyone's bank account (commonly called "The money supply") has been growing between 5% and 8% per year since the crisis (despite QE). During the inflationary time of the 1970s, it was growing 15% per year.

The more likely scenario, is that the Fed will continue to tighten (decreased QE followed by small increases in interest rates) until the market buckles, and then start easing again. A big jump in inflation won't happen. The bear trader will get his correction, but it won't be driven by an inflation scare.

Conservatives going after Bernanke/Yellen doesn't make a lot of sense. By far the greatest issue in the economy is Obama's regulatory state. Its what is holding us back. Asking the Fed for 1990s monetary policy will only induce a deflationary depression - which I guess a conservative would like if it gets blamed on Obama, but the Fed isn't going to do that.
4 weeks ago
4 weeks ago Link To Comment
As long as the correction happens while Obama is in office, so the Democratic Operatives with Bylines have to at least work a little bit to explain why it's all the Tea Party's fault.
4 weeks ago
4 weeks ago Link To Comment
They'll blame it on Bush, the Tea Party, the Koch Brothers, Ted Cruz and Rick Perry. And Sharyl Attkisson.
4 weeks ago
4 weeks ago Link To Comment
Doesn't really matter, given the bales of cash businesses are going to unleash the moment the dork is out of office.
4 weeks ago
4 weeks ago Link To Comment
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