Market strategist Jeremy Grantham, co-founder of asset management firm GMO, has warned of “super bubbles” bursting. He explained that the Federal Reserve has “created an environment conducive to a series of chained super bubbles that burst with painful and shockingly consequential effects.”
Warnings from Jeremy Grantham
Investment strategist Jeremy Grantham shared his US economic outlook with economist David Rosenberg during a Rosenberg Research webcast, published March 16. Grantham is co-founder and chief investment strategist at asset management firm GMO. He has been an investment strategist for more than 40 years and has served on the investment councils of various nonprofit organizations.
Grantham criticized the Federal Reserve for repeatedly causing asset bubbles. He noted that he was not surprised by the recent collapses of major banks. He compared the current economic situation to that of 2000, and emphasized that back then, “the economy was in a mild recession” with no real estate or debt reduction problems.
“It’s bad enough to do the stock market in 2000. This time, we’ve done a dead ringer for the stock market, plus sauce, we’ve done the real estate market and the bond market,” the strategist opined, elaborating:
The problem with this bubble is that it is a bubble of everything. We have inflated the important and dangerous real estate market at record prices. We bubbled the bond market to levels never seen in the history of the man with the lowest rates ever recorded.
“The big picture is that we have a small handful of these super bubbles. Each of them is followed by a recession. If you get something wrong, like 1929, depression follows. If you mess with the financial system, you have the terrible events of the Great Financial Crash,” Grantham said.
“I don’t think the bear market will end until well into next year,” the investment strategist continued, adding that “fundamentals could go on for quite some time.” Noting that “after April, we will probably start to see pressure on profit margins, GDP growth and the labor market,” he concluded:
I hope it’s common knowledge by now that the Federal Reserve has never done anything right since Paul Volcker. They have simply created an environment conducive to a series of chained super bubbles that burst with painful and outrageously consequential effects.
Do you agree with Jeremy Grantham? Let us know in the comments section.
image credits: Shutterstock, Pixabay, Wiki Commons, lev radin
Disclaimer: This article is for informational purposes only. It is not a direct offer or a solicitation of an offer to buy or sell, or a recommendation or endorsement of any product, service or company. bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
