{"id":39499,"date":"2018-10-21T15:48:55","date_gmt":"2018-10-21T20:48:55","guid":{"rendered":"http:\/\/olduvai.ca\/?p=39499"},"modified":"2018-10-21T15:48:55","modified_gmt":"2018-10-21T20:48:55","slug":"eric-peters-if-us-stocks-finally-crack-most-people-will-conclude-were-headed-into-another-depression","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=39499","title":{"rendered":"Eric Peters: “If US Stocks Finally Crack, Most People Will Conclude We’re Headed Into Another Depression”"},"content":{"rendered":"
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Eric Peters: “If US Stocks Finally Crack, Most People Will Conclude We’re Headed Into Another Depression”<\/span><\/a><\/h3>\n<\/div>\n
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Hypothetical<\/strong><\/p>\n

\u201cI was asked to lay out the case for the US being mid-cycle,\u201d said my favorite strategist. \u201cResidential housing is 4% of GDP now, that\u2019s consistent with past recessionary levels. So perhaps it jumps to 8%,\u201d he continued.<\/p>\n

\u201cEquipment and machinery spending is just 6% of GDP.\u201d Pretty consistent with previous recessions. \u201cSo maybe both expand, and incomes rise.\u201d Which leads to higher inflation and shrinking profit margins. \u201cThen perhaps the Fed tolerates rising prices which means that nominal growth remains strong even if real growth rates slow,\u201d he postulated.<\/p>\n

\u201cSo in that case, workers do better, and companies are worse off on a relative basis. But in that 7% nominal GDP world, inflation might mask the pain well enough to allow stocks to sail through,\u201d continued my favorite strategist.<\/p>\n

\u201cYou think about that hypothetical and it\u2019s possible,\u201d he said. \u201cBut then you listen to what the companies are saying, and you walk away with the sense that there\u2019s just no way.\u201d Homebuilding stocks are -30% from the January highs.<\/p>\n

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\u201cIf you just look across the spectrum, interest-sensitive equities are screaming late-cycle.\u201d<\/strong><\/p>\n

\u201cMaking the mid-cycle case raised my conviction that we\u2019re late-cycle,\u201d he said. \u201cAmerica\u2019s fiscal boost masked the natural cycle dynamics.\u201d The US is the outlier. In dollar terms, of the major markets, only American stocks are higher on the year.<\/p>\n

\u201cSo if US stocks catch up and crash from here, what happens next?\u201d <\/strong>he asked rhetorically. \u201cI think most people will conclude we\u2019re headed into another depression<\/strong>. But I think there will be great things to buy. Probably in the places that are already crashing and burning.\u201d<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Eric Peters: “If US Stocks Finally Crack, Most People Will Conclude We’re Headed Into Another Depression” Hypothetical \u201cI was asked to lay out the case for the US being mid-cycle,\u201d said my favorite strategist. \u201cResidential housing is 4% of GDP now, that\u2019s consistent with past recessionary levels. So perhaps it jumps to 8%,\u201d he continued. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[2310,13503,22480,15427,1138,22479],"class_list":["post-39499","post","type-post","status-publish","format-standard","hentry","category-economics","tag-depression","tag-eric-peters","tag-market-cycle","tag-one-river-asset-management","tag-stock-market","tag-us-stock"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39499","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=39499"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39499\/revisions"}],"predecessor-version":[{"id":39500,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39499\/revisions\/39500"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=39499"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=39499"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=39499"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}