Fred Hickey Warns “It’s Only Question Of When The Tech Time Bomb Goes Off”

Monday, August 7, 2017
By Paul Martin

by Christoph Gisiger via Finanz Und Wirtshcaft,
Aug 7, 2017

Fred Hickey, editor of the influential investment newsletter «The High-Tech Strategist», warns of trouble ahead for the stock market and spots bright opportunities in the gold sector.

Wall Street is in a champagne mood. Last week, thanks to a rally in Apple, the Dow Jones surpassed 22,000 for the first time ever. Nevertheless, Fred Hickey doesn’t share the bubbly vein. The renowned contrarian cautions investors of an unpleasant surprise because central banks like the Federal Reserve are pulling back from their super easy monetary policy.

“We could experience a severe market decline or even a crash”, says the outspoken editor of the widely read investment newsletter “The High-Tech Strategist”. A proven expert on the tech sector, Mr. Hickey makes out similarities to the excesses during the dotcom bubble and warns that dizzy valuations in large cap tech stocks and the boom in the ETF space are stirring up an explosive cocktail.

He finds shelter in gold and gold mining stocks, which he thinks will have a bright future.

Mr. Hickey, the Dow Jones is hitting one record after another. What’s going to happen next?

We are in a giant bubble. It’s already the third bubble in the last two decades. First we had the tech bubble in the late nineties, then we had the housing bubble that lead to the global financial crisis of 2007/08 and now we’re in bubble number three. All of them are of the same cause: central banks. Since the beginning of this bubble, we have seen a total of $12 trillion of money printing and in the first five months of this year central banks were printing at record rate of $3 trillion per year, up from around $2 trillion a year. So even though the Federal Reserve stopped printing, the other central banks continued. That’s the reason why we have all this insanity in the financial markets.

Now, the Fed aims to make another big step in normalizing monetary policy and start shrinking its bloated balance sheet. How is this going to work out?

The central bankers claim that they will be able to pull back and normalize interest rates without causing any difficulties. It will be like watching paint dry, Fed chief Janet Yellen says. However, the big problem is that it was their money printing that started this bull market off. It was the Fed’s money printing in 2008 that kicked off what resulted in almost a quadrupling of the US stock market. So how do you think you are going to get ever out of that? How can central banks pull back and it’s not going to have an impact when it’s their money printing that is responsible for this rally in the stock market? It’s a pipe dream. But they are going to try. They have to make an attempt to normalize monetary policy and that will likely lead to some sort of severe market dislocations. So as we head into the famous September and October period, we will likely get some kind of problem.

The Rest…HERE

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