A number of Wall Street veterans like Bear Traps Report author, Larry McDonald, think that markets might see some “disastrous and unimaginable” impacts in the near future. Another seasoned analyst, Larry Williams, believes the S&P 500 will shudder after July 28. Despite the pending doom edging toward traditional stock and equities markets, bullish crypto researchers believe the digital currency bitcoin will see the opposite trend going forward.
Wall Street Vets Predict Disastrous Market Outlook
It’s safe to say that a lot of people are concerned about the global economy and the financial systems leveraged in the country they reside in. This is due to the fact that governments worldwide responded to the Covid-19 outbreak by shutting down a large portion of the economy.
Despite the economic downturn, central banks like the U.S. Federal Reserve has been on a money creation spree. This has bolstered traditional stock and equities markets, but veteran economists think that this current run can only last so long.
At press time, the three top U.S. composite indexes; Nasdaq, Dow Jones, and NYSE, are all down on Friday, alongside big tech stocks too like Apple. People think that stock markets are still not reflective of reality just yet, and a number of analysts believe a hard economic recession is looming in the backdrop. Wall Street veteran Larry McDonald recently explained that government intervention exacerbates the economy and he called monetary interventions a “cobra effect.”
“Basic economic assumptions, or structures, will turn out to be much more fluid than policymakers can anticipate. Therefore the results will be disastrous and unimaginable,” McDonald stressed.
The “cobra effect” McDonald is talking about refers to a time in India when there were too many venomous cobras in the streets. So back then, the Indian government paid people per cobra if they turned the snakes in to local officials. However, Indian policymakers finally figured out that citizens started breeding cobras for extra income.
“We believe we are at the early stage of the biggest cobra effect in the history of economics,” the author of the Bear Traps Report wrote on July 21. “As the massive monetary and massive fiscal stimuli (over $15T globally) conjoin to save the economy from a deflationary depression, they will cause instead a hyperinflationary economic collapse.”
McDonald is not the only Wall Street veteran who believes financial markets are headed for disaster. Renowned trading expert Larry Williams has actually predicted an exact date. Williams recently told CNBC’s Jim Cramer that the S&P 500 will top in July but at the end of the month, specifically on July 28, the S&P 500 is in for some volatility.
Cramer explained the recent analysis Williams provided and said he thinks the well known…