Guest Post: Diminishing QE Returns And The Coming 40% Correction
by Chris Martenson
Chris Martenson is issuing an official warning of a major stock market correction within the next few months. He’s only done this once before (in 2008). He’s seeing a convergence of both technical and fundamental data that are flashing oversized risks to the downside for asset prices, despite the Federal Reserve’s money printing mania (which is showing signs of hitting diminishing returns). He expects the fall in equity prices to happen within the May-September window. This downdraft will be characterized by lots of volatility, formed by market routs and Fed-inspired rescues, alternating until some form of bottom is reached. Along the way there will likely be a flight for “safety” into the dollar and Treasury paper, but only during the first stage of this crisis. Once a bottom is reached – he expects anywhere from 40% to 60% lower than the current ~1500 level on the S&P 500 – the process will begin to be dominated by rising government borrowing which will cause interest rates to begin to rise. When that happens, expect capital to flee the paper market for hard assets. In particular, that’s when the upwards price revolution in the gold and silver markets will kick into high gear.