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Stocks could fall as much as 50% when a severe recession begins, warns Milton Berg.
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The veteran technical analyst pointed to investor complacency and further bank woes as risk factors.
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Berg expects the S&P 500 to fall below that level in October and reach epidemic lows.
A former technical analyst has warned that the S&P 500 could fall as much as 50% as the US economy enters a deep recession.
“There is something very, very wrong with this market,” Milton Berg said. latest episode The “Guide to the Future” podcast. Berg, who runs his own consulting firm and previously worked as a commodity analyst and trader, fund manager and adviser to notable investors such as George Soros and Stanley Druckenmiller, laid out several reasons why he is so worried about the stock market’s outlook. .
For one, it has Wall Street. He grew very careless. He talked about the threat of recession.
“The reality is that the economy has been weak and could be weakened,” he said. “We are more likely to have a recession now than at any time in the last two years.”
Most investors have moved from The collapse of Silicon Valley Bank This spring. Berg warned that other banks, pension funds, endowments and similar institutions have experienced significant declines in the value of their fixed-income portfolios as interest rates have risen over the past 18 months or so.
“SVB is the canary in the coal mine, the tip of the iceberg,” he said.
Berg pointed to a breakdown of technical indicators showing a lack of momentum, more consistent with a bear market rally than a bull market. Moreover, he warned An unusual failure in the supply of money It could be “killer for stocks” at the beginning of this year.
“The market has very, very weak legs to stand on,” he said. “The amount of money that’s supposed to drive all markets higher… that’s what you see at the top of the market where only a handful of stocks go up.”
The chartist likened the stock market to a “drunk trying to walk a tightrope” and said, “Any slight change in the wind can knock you over.”
Berg estimates that it could send the S&P 500 down more than 20% to October’s lows — and could plunge 45% or more to a breakout below 2,500 points. .
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