Analyst Says We are Near to Time of Great Depression due to Declining Growth

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Well, the economy has been steady this year, but one of the analyst terrible predictions comparing the current period to the buildup to the Great Depression and warning that this fall is when things will come to a head.

That analyst id Mark Yusko, CEO of Morgan Creek Capital, he predicts the bad news for the economy since January and he is sticking by that. On Monday on CNBC’s “Power Lunch” he said that he believes too much stimulus and quantitative easing has resulted in a “huge” bubble in U.S. stocks.

He said: “I have this belief that we’re flowing toward the path of 1928-29 when Hoover was president. Now Trump is president. Both were president with no experience who come in with a Congress that is all Republican, lots of big promises, lots of things that don’t happen and the fall is when people realize, “Wait it, hasn’t played out the way we thought.”

He points out to an indication of falling growth as well as that fall is a weak time traditionally for the U.S. economy as people return from vacation.

He said: “[By the fall], we’ll have a lot more evidence of declining growth. Growth has been slipping.” However, it was not all gloom and doom as Yusko said the developing markets were still strong places to visit.

He said that the profits in the United States are the same as they were in the year 2012 “Growth is where you want to invest. All the growth is in the emerging markets, the developing world. It’s really tough if you look at the developed world.”

He said at the start of the year “every single analyst” said emerging markets were going to underperform the U.S. “That hasn’t been the case.”  Yusko said.

In the year 2017, the iShares MSCI Emerging Markets ETF (EEM) has been up more than 18 percent while the S&P 500 index has risen more than 8 percent.

He also sees leanings that are going to push interest rates down, making growth tougher to find and developing markets more attractive.

And according to Yusko, these trends are killer D’S, bad demographics in the U.S., Europe, and Japan and too much debt and deflation.

 

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