Tags: John | Hussman | Markets | Poised | Plunge

Hussman: Markets Poised for Plunge

By    |   Monday, 15 Nov 2010 12:50 PM

Money-manager extraordinaire John Hussman, says financial markets, which had soared for months until last week, are set for a major correction.

“Last week, the return-risk profiles that we estimate for stocks, bonds and even gold declined abruptly,” he writes in a commentary obtained by the Business Insider.

“We don't know how long this shift will persist, but at present, investment risk appears to have spiked considerably, and our estimates of prospective market returns have deteriorated.”

The plunge in U.S. municipal bonds, Irish bonds, Greek bonds and Spanish bonds wiped out a year’s gains in just three days, he notes.

“Our bond-market measures shifted to an unfavorable status for yield pressures, putting the stock market in an overvalued, overbought, overbullish, rising-yields conformation despite QE2, which as anticipated, has been met with fairly eager offers from bondholders,” Hussman writes.

Even gold is at risk, though less so, he says. “In precious metals, conditions are mixed, so the negative overall conditions in that market at present are somewhat more subtle and may be short-lived.”

As for bonds, Hussman isn’t the only bear. “We’ve had stronger economic data and a pushback on QE2 with the idea that the Fed may not buy the $600 billion,” Charles Comiskey, head of Treasury trading at Bank of Nova Scotia, tells Bloomberg.

“People who were uncomfortably long sold out of their positions.”

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Money-manager extraordinaire John Hussman, says financial markets, which had soared for months until last week, are set for a major correction. Last week, the return-risk profiles that we estimate for stocks, bonds and even gold declined abruptly, he writes in a...
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2010-50-15
Monday, 15 Nov 2010 12:50 PM
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