Marc Faber Issues A Stunning Warning That A Gigantic 50 Percent Stock Market Crash Could Be Coming

Danger Button - Public DomainAre we about to witness one of the largest stock market crashes in U.S. history?  Swiss investor Marc Faber is the publisher of the “Gloom, Boom & Doom Report”, and he has been a regular guest on CNBC for years.  And even though U.S. stocks have been setting new record high after new record high in recent weeks, he is warning that a massive stock market crash is in our very near future.  According to Faber, we could “easily” see the S&P 500 plunge all the way down to 1,100.  As I sit here writing this article, the S&P 500 is sitting at 2,181.74, so that would be a drop of cataclysmic proportions.  The following is an excerpt from a CNBC article that discussed the remarks that Faber made on their network on Monday…

The notoriously bearish Marc Faber is doubling down on his dire market view.

The editor and publisher of the Gloom, Boom & Doom Report said Monday on CNBC’s “Trading Nation” that stocks are likely to endure a gut-wrenching drop that would rival the greatest crashes in stock market history.

I think we can easily give back five years of capital gains, which would take the market down to around 1,100,” Faber said, referring to a level 50 percent below Monday’s closing on the S&P 500.

Of course Faber is far from alone in believing that the market is heading for hard times.  Just recently, I wrote about how legendary investor Jeffrey Gundlach is warning that “stocks should be down massively” and that he believes this is the time to “sell everything“.

And on Tuesday, Donald Trump told Fox News that the stock market is “a big bubble”

“If rates go up, you’re going to see something that’s not pretty,” the billionaire businessman told Fox News during a Tuesday morning phone interview. “It’s all a big bubble.”

Worries that the Fed has created a market bubble have shadowed the second-longest bull market in history as the central bank has kept its key rate near zero and expanded its balance sheet by $3.8 trillion in order to pump liquidity into the financial system.

Trump actually has a vested interest in seeing the stock market go down, because that would help his chances in November.

In a previous article on The Most Important News, I explained that the stock market has indicated who would win the presidential election 86 percent of the time since 1928.  During the final three months before election day, if the stock market goes up the incumbent party almost always wins.  But if the stock market goes down, the incumbent party almost always loses.  The only times this correlation has not held up since 1928 were in 1956, 1968 and 1980.

For the moment, the stock market is defying the laws of economics, and that is a very good thing for Hillary Clinton.  But if this bubble suddenly bursts and the market starts catching up with economic reality, that is going to turn out to be very favorable for Donald Trump.

And without a doubt, the fundamental economic numbers just continue to get worse.  Earlier today, we learned that productivity in the U.S. has now been falling for three quarters in a row

Productivity, a sore spot for the U.S. economy over the past few years, has now declined in three straight quarters, according to data released Tuesday.

Productivity in the second quarter unexpectedly fell 0.5%, well below expectations, the Labor Department said. Economists surveyed by MarketWatch had forecast a 0.3% gain in productivity in the quarter.

Productivity is down 0.4% from a year earlier, the first year-over-year decline since the second quarter of 2013.

On Tuesday we also learned that real estate sales in Las Vegas were down about 10 percent in July compared to the same period a year ago, and things are not looking so good in San Francisco either.  Just check out what has been going on at Twitter

Twitter is shaking up San Francisco. It’s the city’s 10th largest employer, and second largest tech employer, after Salesforce. But it hasn’t yet figured out, despite a decade of trying, how to make money. Last October, it announced that it would lay off 8% of its workforce. A couple of weeks ago, it reported a second-quarter net loss of $107 million along with disappointing user metrics and lousy projections. Its shares have lost 74% since their miracle-IPO-hype peak at the end of December 2014.

And now Twitter is dumping nearly one third of its total office space on the San Francisco sublease market.

Las Vegas and San Francisco are both prone to huge “booms” and “busts”.  So the fact that it appears that both cities are starting to move into the “bust” end of the cycle is a very ominous sign.

Conditions are changing, and now is the time to position yourself for the exceedingly challenging times that are coming.  As I end this article today, I want to share with you something written by Jim Quinn.  He recently went out to visit his son Kevin in Colorado for a couple of weeks, and the following is how he ended his article about that trip…

After spending a week in this stunning paradise, it’s tougher than you know to go back to my two and half hour daily round trip commute into the slums of West Philly. John Muir’s words were right 100 years ago and they are right today. I am losing precious days and my days are spent trying to make money. I’ve got responsibilities. I’ve got bills to pay. I’ve got kids to get through college. We’ve got aging parents to help. I work because I have to.

I’m not learning anything in this trivial world of distractions and iGadgets. I don’t fit into this materialistic society. I don’t do small talk. I have no patience for fools. I prefer solitude. If I can survive this despicable rat race for seven more years, I’ll be joining Kevin in Colorado and living the life I’d like to live. The sun is setting and time is slipping away. Those mountains are calling me home.

I can definitely identify with what Jim is going through, because I once experienced similar emotions.

To Jim and everyone else that hopes that someday in the future they will be able to live the lives that they would like to be living right now, I would say this…

Don’t put it off.

Seize the day and find a way to make your dreams a reality.

Things are rapidly changing in this country, and if you keep putting off the life you want to be living for too long it may end up slipping away for good.

Dent, Faber, Celente, Maloney, Rogers – What Do They Say Is Coming In 2014?

Earth From SpaceSome of the most respected prognosticators in the financial world are warning that what is coming in 2014 and beyond is going to shake America to the core.  Many of the quotes that you are about to read are from individuals that actually predicted the subprime mortgage meltdown and the financial crisis of 2008 ahead of time.  So they have a track record of being right.  Does that guarantee that they will be right about what is coming in 2014?  Of course not.  In fact, as you will see below, not all of them agree about exactly what is coming next.  But without a doubt, all of their forecasts are quite ominous.  The following are quotes from Harry Dent, Marc Faber, Gerald Celente, Mike Maloney, Jim Rogers and nine other respected economic experts about what they believe is coming in 2014 and beyond…

Harry Dent, author of The Great Depression Ahead: “Our best long-term and intermediate cycles suggest another slowdown and stock crash accelerating between very early 2014 and early 2015, and possibly lasting well into 2015 or even 2016. The worst economic trends due to demographics will hit between 2014 and 2019. The U.S. economy is likely to suffer a minor or major crash by early 2015 and another between late 2017 and late 2019 or early 2020 at the latest.”

Marc Faber, editor and publisher of the Gloom, Boom & Doom Report: “You have to say that we are again in a massive financial bubble in bonds, in equities, in [other] asset prices that have gone up dramatically.”

Gerald Celente: “Any self-respecting adult that hears McConnell, Reid, Boehner, Ryan, one after another, and buys this baloney… they deserve what they get.

And as for the international scene… the whole thing is collapsing.

That’s our forecast.

We are saying that by the second quarter of 2014, we expect the bottom to fall out… or something to divert our attention as it falls out.”

Mike Maloney, host of Hidden Secrets of Money: “I think the crash of 2008 was just a speed bump on the way to the main event… the consequences are gonna be horrific… the rest of the decade will bring us the greatest financial calamity in history.”

Jim Rogers: “You saw what happened in 2008-2009, which was worse than the previous economic setback because the debt was so much higher. Well now the debt is staggeringly much higher, and so the next economic problem, whenever it happens and whatever causes it, is going to be worse than in the past, because we have these unbelievable levels of debt, and unbelievable levels of money printing all over the world. Be worried and get prepared. Now it [a collapse] may not happen until 2016 or something, I have no idea when it’s going to happen, but when it comes, be careful.”

Lindsey Williams: “There is going to be a global currency reset.”

CLSA’s Russell Napier: “We are on the eve of a deflationary shock which will likely reduce equity valuations from very high to very low levels.”

Oaktree Capital’s Howard Marks: “Certainly risk tolerance has been increasing of late; high returns on risky assets have encouraged more of the same; and the markets are becoming more heated. The bottom line varies from sector to sector, but I have no doubt that markets are riskier than at any other time since the depths of the crisis in late 2008 (for credit) or early 2009 (for equities), and they are becoming more so.

Financial editor Jeff Berwick: “If they allow interest rates to rise, it will effectively make the U.S. government bankrupt and insolvent, and it would make the U.S. government collapse. . . . They are preparing for a major societal collapse.  It is obvious and it will happen, and it will be very scary and very dangerous.”

Michael Pento, founder of Pento Portfolio Strategies: “Disappointingly, it is much more probable that the government has brought us out of the Great Recession, only to set us up for the Greater Depression, which lies just on the other side of interest rate normalization.”

Boston University Economics Professor Laurence Kotlikoff: “Eventually somebody recognizes this and starts dumping the bonds, and interest rates go up, and inflation takes off, and were off to the races.”

Mexican Billionaire Hugo Salinas Price: “I think we are going to see a series of bankruptcies.  I think the rise in interest rates is the fatal sign which is going to ignite a derivatives crisis.   This is going to bring down the derivatives system (and the financial system).

There are (over) one quadrillion dollars of derivatives and most of them are related to interest rates.  The spiking of interest rates in the United States may set that off.  What is going to happen in the world is eventually we are going to come to a moment where there is going to be massive bankruptcies around the globe.”

Robert Shiller, one of the winners of the 2013 Nobel prize for economics: “I’m not sounding the alarm yet.  But in many countries the stock price levels are high, and in many real estate markets prices have risen sharply…that could end badly.”

David Stockman, former Director of the Office of Management and Budget under President Ronald Reagan: “We have a massive bubble everywhere, from Japan, to China, Europe, to the UK.  As a result of this, I think world financial markets are extremely dangerous, unstable, and subject to serious trouble and dislocation in the future.”

And certainly there are already signs that the U.S. economy is slowing down as we head into the final weeks of 2013.  For example, on Thursday we learned that the number of initial claims for unemployment benefits increased by 68,000 last week to a disturbingly high total of 368,000.  That was the largest increase that we have seen in more than a year.

In addition, as I wrote about the other day, rail traffic is way down right now.  In fact, for the week ending November 30th, U.S. rail traffic was down 16.3 percent from the same week one year earlier.  That is a very important indicator that economic activity is getting slower.

And we continue to get more evidence that the middle class is being steadily eroded and that poverty in America is rapidly growing.  For example, a survey that was just released found that requests for food assistance and the level of homelessness have both risen significantly in major U.S. cities over the past year…

A survey of 25 American cities, including many of the nation’s largest, showed yearly increases in food aid and homelessness.

The cities, located throughout 18 states, saw requests for emergency food aid rise by an average of seven percent compared with the previous period a year earlier, according to the US Conference of Mayors study, published Wednesday.

All but four cities reported an increase in demand for assistance between the period of September 2012 through August 2013.

Unfortunately, if the economic experts quoted above are correct, this is just the beginning of our problems.

The next wave of the economic collapse is rapidly approaching, and things are going to get much worse than this.

So what do you think?

Which of the individuals quoted above do you think are right on the money and which ones do you think are way off base?

Please feel free to share what you think by posting a comment below…

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