Money & Markets: This Is the King of All Fake Markets That Is Set to Crash 80%

June 15, 2020

Article by Dan Denning in Money & Markets

After falling 35% in less than 30 days in February and March, the S&P 500 rallied over 35%. It’s now down about 1% for the year.

Where next? How about an 80% crash from here on the S&P 500? Maybe you think the Federal Reserve won’t let that happen. But I wouldn’t be so sure.

Below, I’ll explain why this is the most dangerous market I’ve seen in my professional career. Then, I’ll show you the best way to protect your wealth.

To start, consider this…

Wall Street Perversity

The initial down moves from the 1929 and 2000 crashes were matched by almost identical up moves. It was only after those huge dead cat bounces that the real bear market took hold.

The Dow fell 88% after its fake-out recovery in the 1930s. The Nasdaq fell 78%. If I’m right, and this time isn’t different, you’re looking at the S&P 500 back under 700. It’s above 3,100 as we go to press.

20.2 million Americans lost their jobs between March and April. If you want to know how perverse Wall Street is, stocks rallied when the report came out. Why? Because economists expected 22 million job losses. The number was better than they expected!

Has it occurred to analysts and institutional investors that people without incomes can’t spend money they don’t have? Sure, they can spend the $1,200 checks the government sent (assuming they don’t save the money or pay down debt with it instead). But after that?

What’s worse, the chart above shows that all the jobs added to the economy since the Great Recession of 2009 disappeared earlier this year. They were in retail, hospitality or the service sector. Many of them will never come back.

In fact, a paper out of the University of Chicago’s economics institute estimates 42% of ...

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