The most hated stock market rally still has room left to become truly despised, according to Martin Armstrong.
Armstrong is an economic forecaster, former hedge fund manager, monetary and foreign exchange currency expert and a deep student of history. He has advised central banks, powerful political leaders, and has testified before Congressional committees on economic cycles and monetary and currency issues.
At present, he’s extremely concerned about the gross distortions central bank policies have had on the global economy. Excess liquidity has caused asset prices to become recklessly inflated while enabling otherwise-doomed companies to persist by feeding off of the cheap and plentiful capital.
But while Armstrong predicts this “one giant mess” “is not going to end nicely”, he warns that things may get a lot more deformed, especially in the US, before the break point is reached.
With so much of the rest of the world beginning to succumb to the arriving global recession, capital is fleeing towards the relative safety and positive returns offered by America’s financial markets. As a result, Armstrong sees the US stock market continuing to power higher from here, with the Dow Jones Industrial Average potentially tagging 35,000 by 2021:
It’s on a greater global scale now. The US economy is doing OK, for now, but the rest of the world is imploding.
If you look at the capital flows, everything’s been moving into the United States.
If you just look at France and Germany’s stock markets, where were the peaks? Back in 2000. They still have not exceeded their 2000 Dotcom bubble highs. The markets are telling you something.
It’s more than people really understand. The capital flows have been moving into the United States from Europe dramatically and also from China. I mean, that was the whole issue behind bitcoin. More than 80 percent of the volume was all coming out of China because the Chinese figured out “OK, fine, there are currency restraints,. So if I can’t get my cash out of the country, I’ll buy bitcoin and then I’ll sell it in on another terminal outside of China, probably in the US, and I get my money. That’s what’s been going on.
The whole thing is just one giant mess. And this is not going to end nicely. The stock markets are moving up because it’s the only place to put money. I mean, yes, you can buy gold, but that’s for the retail person. I mean, when you’re talking about the sizable money of pension funds and institutional buyers, the stock market’s the only place to go.
So that’s why the market has been constantly knocking on heaven’s doors. I don’t see the Dow going anywhere but up. I mean, we’re probably looking at least 35,000 or so by 2021. If not higher.
Click the play button below to listen to Chris’ interview with Martin Armstrong (59m:43s).
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