Market strategist Jeremy Grantham, co-founder of asset management firm GMO, has warned of the bursting of a "super-bubble". He explains that the US Federal Reserve (Fed) has “created an ideal environment for a series of interconnected super-bubbles, which, once burst, have dire consequences.” and tragic”.
Jeremy Grantham's Warning
Jeremy Grantham shared his view of the US economy with economist David Rosenberg in a Rosenberg Research webcast, posted on March 16. Grantham is the company's co-founder and chief investment strategist. GMO Asset Management. He has over 40 years of investment experience and has served on the investment boards of several nonprofit organizations.
The strategist criticized the Federal Reserve for repeatedly creating asset bubbles. He noted that he was not surprised by the recent collapse of major banks. He compared the current economic situation to 2000, noting that at the time, “the economy was going through a mild recession” without any real estate problems or debt relief.
“The stock market in 2000 alone was bad enough. This time, not only the stock market, but also the housing market and the bond market as well.”
“The trouble this time is very serious because it is an 'everything bubble'. We've hyped the growth of an important but dangerous housing market. We have also inflated the bond market to historically unprecedented levels with the lowest interest rates on record.”
“Looking at the big picture, we have a little bit of this super bubble. Every one of them entails a recession. Whenever something goes wrong, like in 1929, there is always a stagnation. If you mess around with the financial system, you're going to run into the horrors of the Great Financial Crisis."
“I don't think the Bearish can end until next year,” the investment strategist continued, adding that “fundamentals can stagnate for quite some time.” It should be remembered that “after April, we will probably start to see pressure on profit margins, GDP growth and the labor market”.
“I hope everyone knows that the Fed has never done anything right since Paul Volcker. They merely created the ideal environment for a series of chained super-bubbles that, once burst, have dire consequences.”
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