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Experts expert bear market is in the making
Many businessmen and investment professionals’ have recently voiced their concerns regarding American equities. The S&P 500 American equities benchmark has been in a bullish run since 2009 (1o years), and this worries knowledgeable analysts since it shows signs of complacency in the market. Future market direction may disappoint investors who believe the bull market will continue for good.
David Stockman believes a decline of 40 percent is ahead
David Stockman, a businessman who served as the Director of the Office of Management and Budget during the Regan administration, believes that the current market levels do not reflect fair valuations and that the recent market recovery from December 2018 lows is due to speculation by retail traders and algorithmic trading.
Mr. Stockman believes that a fair level would be 40 percent lower than where the prices are now and expects the S&P 500 to drop at least to 1600 points, which are the levels seen back in 2013. “We’ve got headwinds coming from all over the world, and you can see it in the export data, in the European economy, in the big troubles going on in China…… you can see it in our own data, which has been really weak,” said Stockman.
This is not Mr. Stockman’s first warning. He had warned previously more than once about an imminent market decline which never happened. He sees the current budget deficit in the US as problematic, and that it coincides with the top of the business cycle and worrying demographic factors. For him, the risks are too high that even resolving the trade spat between the US and China would not alter his pessimistic prediction.
The White House defends Trump’s policies
On its part, the White House defended Trump’s policies by pointing out that unemployment rates are at low levels, that jobs are being brought back home during Trump’s administration, and the aim of economic policies under Trump’s administration is to reduce the budget deficit.
