Strategist: Market Sell Off Could Get Worse As It Echos ’87 Crash

by | Oct 16, 2018 | Headline News | 6 comments

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    Simon Derrick, an economic chief strategist, warned that the ongoing sell-offs in equity markets are drawing slight parallels with the crash of the late 1980s.  Derrick alleges that this sell-off could get worse as it continues to echo the 1987 crash.

    Derrick, who is the chief currency strategist at BNY Mellon, raised concerns Monday around recent market moves, according to a report by CNBC. “Without wishing to be too alarmist, there have been a few parallels to what was happening 30 years ago in terms of what’s been happening to the dollar, what’s been happening to oil prices, what’s been happening to Treasury yields,” he told CNBC‘s Squawk Box Europe. “It’s all very September/October 1987 from that perspective.”

    Last week, major markets fell deep into the red on fears of an escalating trade war between the United States and China, as well as higher interest rates. Higher Treasury yields, which are effectively the cost of borrowing money in the U.S., also unnerved investors.

    Although Derrick said the events wouldn’t be exactly the same as the “Black Friday” crash in 1987, he said a “confluence of different circumstances” could lead to a serious risk-off event, leading the market to get significantly worse this week. “Could it get significantly worse (this week)? Yes,” he said.

    Raymond James’ Jeffrey Saut told CNBC on Monday he also believed earnings reports could spark a market turnaround. “Earning season’s coming up, I think that’s going to be the catalyst for the equity markets to trade back up to all-time highs,” he said.

    But the impact of the trade war hasn’t even been fully felt yet either, as inflation will come about after a rise in prices on goods and services because of the tariffs imposed. “Too few investors focus on the impact of cyclical businesses for [earnings per share] growth, in our opinion, and thus significant misconceptions abound,” Levkovich said. “We still worry that portfolio managers are anticipating too much from Corporate America and thus missing lofty expectations might be the catalyst for a pullback,” said Citigroup strategist Tobias Levkovich.


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      1. Every week or so there are more market crashes or even an economic crashes forecasts. It has become a staple. Because of established major market and economic cycles, one may draw two conclusions; fact #1- there will eventually be an economic crisis, fact #2 – but likely no one knows exactly when.
        The big one has been forecast since at least 2000. Untold thousands of articles (many lengthy and convincing with a lot of data) have been written. Thousands of Internet prophets have predicted it, many stated it was imminent. Still many more who claimed to have “inside information”. All wrong. You would think after a while these “prophets” would lose credibility.
        However, their predictions are not totally without merit. We have a unbelievable gigantic unpayable national federal debt, many if not most states and local governments are also hopelessly drowning in debt. Despite gov’t propaganda, Social Security, Medicaid and Medicare are depleted, drawing on fumes. Most pension plans in the US are insolvent or close to being insolvent, student loan debt is really not repayable, and there are trillions in corporate debt and car loan debt. Each of these items are trillions and trillions in debt. And, there are at least 100 trillion in future liabilities. All the while there is hyper-extreme wealth concentration; more than half the people in our country have either low paying jobs, or no money at all. The well is dry.
        To stave off the inevitable there MUST either be QE indefinitely (which will only add mountains of new debt), or wild inflation (possibly deflation), or a combination of the two. Since interest rates are climbing the cost of financing massive debt will only became untenable. Two things are for sure though, the working man will be the last to know when the SHTF is really getting ready to happen, and we will pay the greatest in human cost and suffering. Best to just think, plan, accumulate, and prep. It will happen when it happens.

      2. It will happen when it happens is right.

        Back in 2004 or so everyone was happy with the economy. Many people thought real estate and other markets would continue to boom. Economists who were giving warnings that things could go bad were ignored.

        Then out of nowhere right before the 2008 election Lehman Bros, Goldman and other financial giants started failing. McCain stopped his campaign and rushed back to Washington. This caught everyone by surprise.

        There is a long list of events, national and international, that could trigger a market collapse at anytime so prep, prep, prep.

      3. I would like to see the market plateau and simply have small dips, small rises more less keeping level with a long-range trend of slightly going up. Wild oscillations are nothing more than gamblers gambling. Placing bets on trends that they themselves cause. The average everyday working slob hasn’t the luxury of either the funds or time to ‘invest’ as the players do.

      4. I disagree with this statement;
        “But the impact of the trade war hasn’t even been fully felt yet either, as inflation will come about after a rise in prices on goods and services because of the tariffs imposed.”
        Smoot-Hawley tariffs( 1930) resulted in the great depression.

        I have many times on the site wished for a depression, as I think I’m immune from one. We as a society do need to correct this non-stop inflation engineered by the FED, equity, PM “markets”, and the governments.
        In today’s world things are supposed to get cheaper as we get better at producing them. Agreed resources are finite, but we only examine/use a small part of our world and what is available to us.

      5. Up 500 points today.

      6. the US was built upon tariffs

        “Protection of our own labor against the cheaper, ill-paid, half-fed, and pauper labor of Europe, is … a duty which the country owes to its own citizens.”
        Daniel Webster

        “The wealth … independence, and security of a Country, appear to be materially connected with the prosperity of manufactures. Every nation … ought to endeavor to possess within itself all the essentials of national supply. These compromise the means of subsistence, habitation, clothing, and defence.”
        Alexander Hamilton

        “Free trade results in our giving our money … our manufactures and our markets to other nations. … It will bring widespread discontent. It will revolutionize our values.”
        William McKinley

        “Open competition between high-paid American labor and poorly paid European labor will either drive out of existence American industry or lower American wages.”
        William McKinley

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