Mark Spitznagel says financial markets are heading for a “huge crash.”
The bearish hedge fund manager told Intelligencer that he believes the U.S. is in the midst of the biggest credit bubble in history.
He warned that a bursting of the bubble could “burn down the entire forest”.
One of Wall Street’s most pessimistic hedge fund managers is sounding the alarm about a coming market crash as the U.S. is in the midst of “the largest credit bubble in human history.”
Mark Spitznagel, chief information officer of Universa Investment, previously warned that the company’s adviser is “Black Swan” author Nassim Taleb. The market crash was even worse than 1929Spitznagel said in the report that a collapse is getting closer due to the huge bubble in the U.S. credit market. interview Monday with Intelligencer.
“We’re in the midst of the largest credit bubble in human history,” Spitznagel said. “It’s all caused by artificially low interest rates and artificial liquidity in the economy, which have really been on the rise since the financial crisis.” It happened to a large extent.”
“Credit bubbles are over. They will burst. There is no way to prevent them from bursting. The debt needs to be repaid or there will be default. Of course, today’s debt burden has reached unpayable levels,” he warned.
Other market experts warn Credit for upcoming events As interest rates rise it takes a toll on the economy. Bank of America says debt accumulated over the past decade when interest rates were ultra-low is about to run into trouble. About $1 trillion in private debt could default As borrowing costs rise.
Defaults and delinquencies on high-risk corporate debt already risingCharles Schwab said total corporate defaults and bankruptcies could surge by the end of the year and could peak in the first quarter of 2024.
At the same time, the public debt situation was in trouble, U.S. debt totals $33 trillion For the first time this year. Under a long-term higher interest rate regime, The total cost of U.S. debt balances could hit a new record by 2025Goldman Sachs estimates.
Spitznagel said the good news is the economy is growing, but even so it’s a “pyrrhic victory.”
“You gain victory now to suffer pain later. That’s exactly what monetary interventionism does: it gives you something now that you have to pay a lot of interest on later. Of course, that’s also the nature of federal debt – it’s our debt.” Sun Tzu’s question. “
All of this spells trouble for markets as a whole, which could feel pain as credit bubbles burst across the economy.
“That would destroy the entire forecast,” Spitznagel said of the credit bubble bursting. “So I’m certainly not saying I don’t think there won’t be a crash. I think there will be a huge crash.”
This crisis may not be far away, with Spitznagel predicting that a similar event could cause interest rates to fall to “very, very low” levels “in the next year or two.”
Spitznagel added that while he believes markets will be volatile, investors should not hesitate to invest for the long term and not invest in stocks. He believes the S&P 500 has outperformed every hedge fund in the market over a 20-year time span. And added that if he could only execute one trade over the next twenty years, this would be the only investment he would buy.
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