“
“I think we have a second tranche and that is very reminiscent of what happened in the 1930s, where people appreciate the depth of this recession and the disruption and how long it will take to recover.”
“
That’s A. Gary Shilling, a longtime economist and president of A. Gary Shilling & Co., again featuring a grim version of what follows in a recent CNBC interview.
“Stocks are [behaving] very similar to that rebound in 1929, where there is an absolute belief that the virus will be under control and that massive monetary and fiscal stimuli will revitalize the economy, “he said, adding that the market could drop as much as 40% over the next year .
So where should investors park their cash in this climate?
“I think we are going to see downward pressure on prices and that works to the benefit of TMUBMUSD10Y Treasury bonds,
which have been my favorites since 1981, “he said.
Watch the interview:
Shilling presented his prediction in more detail earlier this year, explaining in a Bloomberg News op-ed that while many economists are looking for a V-shaped rebound, or a rapid one, to achieve a strong recovery in the second half of the year. , he is still much more skeptical.
“This pandemic is likely to be the most disturbing financial and social event since World War II with equally lasting consequences,” Shilling wrote, citing unemployment figures at the time. “Many will no doubt limit spending in the coming years to rebuild savings, especially since the crisis caught them at a time of high debt and short financial reserves.”
There is no sign of a big drop in Monday’s trading session as the Dow DJIA,
Nasdaq COMP,
and S&P SPX,
they all made louder strong movements.
.
