Euro Pacific Capital CEO Peter Schiff warns that further interest rate hikes by the Federal Reserve will spark the next stock market crash.
“[The Federal Reserve] should raise rates, but the market is going to collapse as a result,” he recently told the Fox Business Network.
Schiff said investors should expect a long drawn-out bear market with the cost of living rising to dramatic levels, Fox Business quoted him as predicting.
“This bear market is not going to end quickly,” he said.
Schiff said the debt collected by companies during the stock market boom and a hike in interest rates will cause corporate earnings to potentially collapse at a rapid pace.
“There is a lot of optimism about earnings and unfortunately that’s already priced into these stocks,” he said.
As the Federal Reserve grapples with finely balancing the economy while winding down its ultra-loose stimulus policies, investors are fretting about how and when the U.S. expansion will end, Bloomberg reported.
A recent study by JPMorgan Chase & Co. indicated the U.S. economy has a greater than 50-50 chance of tipping into a recession in the next two years.
However, other experts aren't as pessimistic.
Oaktree Capital Group LLC’s Howard Marks recently said that now is the time to adopt a cautious investment strategy as the market cycle ages, though there aren’t signs of an impending U.S. recession.
The world’s largest economy is still doing “very well,” Marks, chairman and co-founder of one of the world’s largest alternative and distressed investment firms, told Bloomberg TV in Sydney.
Despite a lack of bargains in many markets, strategies should focus on remaining invested and position defensively, without piling into cash, he said.
White House economic adviser Larry Kudlow said Wednesday that "there's no recession in sight" for the American economy and that President Donald Trump "is on the right track" with his economic agenda.
"There's no recession in sight," Kudlow, who also served in the Reagan administration, told CNBC's Jim Cramer at the cable network's Delivering Alpha conference in New York.
"The American economy is in very good shape," said Kudlow, who was blunt in that he doesn't sense any economic trouble on the horizion. "I don't see it," said Kudlow, who worked as Reagan’s budget deputy between 1981 and 1985.
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