S&P 500 May Fall More Than 40% By Fall: Chris Martenson
Even though the S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) are hovering at all-time highs, Chris Martenson, author of PeakProsperity.com and the “Crash Course” Series, is forecasting a major market correction.
Martenson predicts the S&P could fall 40% to 60% to the 600-800 level by this fall. His last major market call was in March 2008, before the financial crisis.
Related: U.S. Stock Market Is 'Overvalued, Overbought and Overbullish': John Hussman
The Daily Ticker’s Lauren Lyster sat down with Martenson at the 2013 Wine Country Conference in support of Les Turner ALS Foundation to get his market and economic predictions.
"I see recessionary signs all over the landscape. In particular, Europe is already in recession [and] Japan is already in recession," he says. "We are looking at global economic slowdown."
As for corporate earnings, a stronger U.S. dollar could bring down profits this year, Martenson believes. Corporate profits currently account for 11% of GDP, which is way outside the norm of 6% of U.S. growth. He's also bearish on the U.S. economy and sees weakness in sectors that have shown improvement like the housing market.
Related: The Real Reason the U.S. Economy Won’t Take Off
Will the Federal Reserve's $85 billion monthly stimulus program continue to inflate asset prices?
"Fundamentally there always has to be some connection between where markets actually are and their price," Martenson says. He believes the Fed's monetary policy has reached a point of diminishing returns and could result in "a pretty significant" market pullback.
Right now he's telling investors to sell in May and go away -- the same advice he gives every year.
"This is not the time to be greedy," Martenson notes.
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