The man who called last year’s sell-off says these are the “four horses of the growth-pocalypse.” @MarkYusko explains pic.twitter.com/yMf70FEFVV
— CNBC’s Fast Money (@CNBCFastMoney) May 22, 2019
Even though he isn’t calling for a recession that is of the magnitude of 2008, Yusko is pointing to another “credit crisis” in 2020. He wouldn’t be surprised to see stock market declines of between 12%-14% by year-end 2019. Considering that the broader stock market remains up by a double-digit percentage, this would be a precipitous drop in value for investors’ portfolios. Yusko is bracing for what he calls a “Growth-Pocalypse,” which he admits is hyperbolic, adding:
“When I say Growth-Pocalypse, I mean one handle for the second quarter, maybe lower for the third quarter, and recession sometime late this year/early next year…shallow recession like 2001.”
Back then, it wasn’t that the economy didn’t expand at all. But there were two-quarters of retraction (not consecutive), which created the recessionary environment.
What the Fed? Dovishness Precedes Recession
The latest Federal Reserve minutes revealed that monetary policymakers are in a dovish, not hawkish, mindset. In fact, they are more likely to issue an interest rate cut rather than a hike any time soon, which must at least be making President Trump happy. But an interest rate cut is a sign of economic weakness, not strength, insists Yusko. As a result, the Fed’s stance is nothing to be bullish about. In 2001, stocks remained in a bear market for nearly two years after the “light” recession.
Hedge fund vet @MarkYusko says bitcoin is a better bet than stocks. pic.twitter.com/mbnwGJUmNi
— CNBC’s Fast Money (@CNBCFastMoney) May 22, 2019
If Yusko is so bearish on stocks, where do investors go for returns? He is a shameless bitcoin bull, saying that the leading cryptocurrency is a “great diversifying asset” and has “very low correlation” to stocks. He would bet on bitcoin over the S&P 500 over the next year and even the coming decade.