A recent spate of stock drops, exacerbated by signs of a second wave of the coronavirus pandemic, is unsettling to say the least. The market selloff of last spring was brief, but brutal.
Our call of the day is from Yves Lamoureux, the president of macroeconomic research firm Lamoureux & Co., who says the second COVID-19 wave is about to usher in another stock pullback
Lamoureux, who correctly predicted a panic event of 2018, originally forecast a three-part rolling bear market up to 2022. In mid-March, he told this column that a market bottom was near, and it arrived a few days later on March 23 — the S&P 500 SPX, -2.37% has since recovered 44%. That was Part 1.
“So we have a second wave coming, we have very wealthy people taking profits [on stocks] and we see a lot of speculation in the market. I think the market is going to start to go down again,” Lamoureux told MarketWatch recently. This selloff phase will start slow and extend into 2021, he added. Another big bounce will follow that, with a final drop to come perhaps near 2023.
He said one way to get ready is by investing in special purpose acquisition companies (SPACs), or shell companies, which raise money via an initial public offering to buy or merge with another company, usually within two years of listing. He said given shares of such companies are around $10, losses aren’t too severe in a stock market drop.
“We’re playing very defensive by buying these SPACs and there’s a very big boom,” said Lamoureux, who recommends GMHI GMHI, -1.43%, or Gores Metropolus — his biggest stockholding.
Last month, automotive technology company Luminar, which works with Volvo VOLV.B, -0.71% and other top auto makers, agreed to go public through a merger with GMHI. That taps into a theme he likes — self-driving cars and trucks.
And that segues into a bigger, long-term call that he said is on few radars — deflation. He sees three drivers for this — robotic and other automated technologies that push workers out of jobs, a big drop in oil prices amid rising demand for greener energies, and a 20-year decline in real-estate prices.
“Eventually we’re out of the pandemic, but we’re facing these three big threats that are as big as the pandemic,” he said. “What do you expect once you get out of this pandemic? This is what is awaiting, and that has major consequences for investments.”
And the ultimate deflation asset is bitcoin, he said. He added that companies are also waking up to cryptocurrency importance, such as business intelligence firm MicroStrategy MSTR, -3.87%, which recently announced it will use bitcoin as a primary treasury reserve asset instead of Treasury bills or cash.
Lamoureux recommends a basket that holds the second largest cryptocurrency after bitcoin — Grayscale Ethereum Trust ETHE, -6.86%. He thinks ethereum has more catching up to do versus bitcoin and is a decent bet going into 2021.
Last word from Lamoureux. He’s worried about the big five tech stocks that hold so much sway for the S&P right now — Facebook FB, -2.24%, Amazon AMZN, -4.12%, Apple AAPL, -4.19%, Netflix NFLX, -4.18% and Google parent Alphabet GOOGL, -3.45%.
“I think the big tech names are going to be doing like the big tech names of 2000, and they’re going to go down for years to come,” he said.
“Technology goes fast; you can’t see what’s coming, but there’s too much concentration in these five stocks. That’s the risk of not seeing the future and having all this money into five stocks. I think it spells a lot of trouble, like we saw in 2000.”
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IF!? it’s like other bear markets, we are looking at about a 2 year decline. Probably 50 to &0 % down. I don’t thnk it will be like 1987 all within 1 week. Could be a complete economic reset with 90% decline and God only knows what that will bring. That with the political instability makes for an interesting 4th turning crisis. Looks like Quinn has his timing about right.
Come on!! A 90% decline? How are you any different than doomer Fuaci?
Whenever somebody says “deflation” and doesn’t say if they’re talking about the money or if they’re talking about prices……
Not to worry! Clayton, head of SEC enforcement says they will take a closer look at SPAC transactions! heh,heh
“Second bear market”
Since when? Last year, 6 months ago, 2010?
Marketwatch is a fairly shit publication. If you’re a little guy you’re going to lose your shirt no matter what. Book it Danno.
Do the people who own our banking/financial system want Trump to be re-elected or not? Will a Harris presidency be better for them? Trump has given them everything, but she has demonstrated her loyalty, so it’s probably a tough call. If they want him re-elected, they will continue to prop up the market, but if they want him gone, they are going to pull the plug. Get your popcorn ready.
They are preparing for national EBT cards to dole out our stipend to ease the pain of economic depression. You just have to behave yourself to use it.
https://www.zerohedge.com/markets/loretta-mester-hints-fed-preparing-deposit-digital-dollars-directly-each-american
yep – ubi here we come (as you said-for the ‘worthy’)…. it’ll be fun. how ya doin fb?
I’m fine but my body is once again trapped in the Healthcare Goolag Archipelago.
Got a hernia doing my exercises a while back and since notigh large was bulging it thought maybe corrective non invasive surgery would fix it. It’s a funny story for me but would be tragic to someone less fortunate.
Went to the Dr. who said I have to send you to a specialist but first I have to send you for a strength test which you are going to fail because of your heart and lung problems due to new covid regulations regarding you age. then after you fail, the specialist might be able to do non invasive surgery which I’m too much of a liability for.
Then the testing lab said they need $300.00 up front Co-Pay(I assume they don’t trust me to live long enough to pay them on installments or that I would hang myself to get out of paying which is reasonable considering I’m 1/4 Scottish).
By now it’s an ordeal just getting to my truck even without the breathing problems so I decide to risk going through the VA. I still have lingering memories of when they were staffed by out of work Iranian Camel Doctors and my fellow Vets would go in with stomach cramps and leave with 1 kidney and a colostomy bag. The pain overrode the fear but you can’t just go to the VA and get looked at these days. I’ll finally see a Dr. on the 30th who will send me to a specialist 500 miles away who will send me home to wait 30 days to fly me another 500 miles in the other direction for surgery. The VA has never worried about Vets dying from surgery so theres a chance they will skip the strength test.
If I can get it fixed and still have a pecker and one each of testicles, kidneys, and lungs I’ll do it. Assuming of course we will even have airplanes flying and electricity by then.
Flea,
If it helps my personal experiences the last few years with the VA are encouraging. Granted I don’t have the more serious issues you have, and are facing, but I have been expertly sewed up by them after a disagreement with a chain saw, and they found and took out 7 polyps out of my sewer system. Plus, I have found (at least in the hospital I go to in Durham NC) a noticeable improvement in attitude towards Vets.
I’ll give Trump props on that, it started in 2017.
I still don’t know whether to shake hands with some of the doctors or burb them…but that seems to happen everywhere I go this 7th decade?
Now, they still overprescribe me drugs and shots I refuse to take…having lowered my own blood pressure, and successfully treated other medical issues I have solved on my own.
Like you I take Liposomal C, and a host of vitamins and God given cures and treatments.
Best of luck, keep us informed buddy!
Sell stocks………..buy Gld & Sil.
rollin’ bear going to market
The only way the “stawk” markets work is having ultra rich holders selling overpriced stock, to unsuspecting rubes. Then the take profit and leave suckers holding the bag.
If you have bought any of these FAANG stocks within the last few years, you are the unsuspecting rube.
more than likely, if you have a 401k or buy and ETF with a tech component, it is probably overwieghted in the faangs, as it has been easy money for the past few years.
And, there is no such thing as green energy, you can’t make solar panels from windmill power, and you cant make windmills from solar power, and you can’t make batteries using solar or wind power.
There is no replacing fossil fuel, and there is no such thing as climate change, which is the driving force behind “green energy”
Passive investors (mutual fun, exchange traded funds, ETF, and index funs and target date funds are going to get annihilated. Owning straight stocks allows immediate liquidity (not once a day at 5pm) and full transparency. With that said smart people are already out and will buy back in after the other shoe drops between now and January 21st. Because after election riots there will be legal battles of discharging many ballots that were mailed in. Then more riots after trump is found to be the winner in mid January. And after he resume Jan 21st. Then after the passing of violence and rioting they will start sabotaging infrastructure, trains etc. And dems will hold up legislation trying to cripple the economy, again. Anything to hurt trump even if that means nuking america. Some people are so delusional they just must be ended for a high trust society to function without them constantly trying to fuck it all up, constantly. If we do not end them under trump, they will slither away and come back and sneak in when they get the majority and sweep both houses and the Potus positions in the future then we are screwed. At least trump brought them out of the shadows and woke up a lot of patriots. Even if trump was “installed”.
Unfortunately I do see digital currency is the future. The feds want and need it to tax every transaction and to trace every purchase. If a dem gets in it will happen very fast.
Many do not understand there are a specific limit of supply of bitcoin. Just like gold. Many people lose their passwords and that is gone forever. Taken out of the marketplace. Just like silver/gold is used commercially and gone forever. We old timers understand gold and prob need to understand bitcoin etc. There are a lot of similarities especially when you can see the future of your govt wanting it for nefarious reasons.
However, the old timers get it. You cant use bitcoin if their ain’t no power, electricity, or dumbassed phones. But that clerk will happily take that coin for that bag of groceries. I am now looking into hedging some with digital currency and get out when it goes up 10000% because the stupid low iq young morons will bid it up to that just like tesla and nikola. Make bank on their short term stupidity…..is all I am saying. $10,000 can go to $1,000,000 especially in a deflationary or hyper-inflarionary situation.