John Greim | LightRocket | Getty Images
"I have this belief that
we're flowing toward the path of 1928-29 when Hoover was president," said
Mark Yusko, CEO of Morgan Creek Capital.
Yusko points to evidence of
declining growth as well as that fall is a weak time traditionally for the U.S.
economy as people return from vacation.
Although the economy has been
steady this year, at least one analyst has dire predictions, comparing the
current period to the buildup to the Great Depression and warning that this
fall is when things will come to a head.
Mark Yusko, CEO of Morgan
Creek Capital, has been predicting bad news for the economy since January and
he is sticking by that, saying Monday on CNBC's "Power Lunch" that he
believes too much stimulus and quantitative
easing has resulted in a "huge" bubble in U.S. stocks.
"I have this belief that
we're flowing toward the path of 1928-29 when Hoover was president," Yusko
said. "Now Trump is
president. Both were presidents with no experience who come in with a Congress
that is all Republican, lots of big promises, lots of things that don't happen
and the fall is when people realize, 'Wait, it hasn't played out the way we
thought.'"
He points to evidence of
declining growth as well as that fall is a weak time traditionally for the U.S.
economy as people return from vacation.
"[By the fall], we'll
have a lot more evidence of declining growth. Growth has been slipping,"
he said.
However, it was not all gloom
and doom as Yusko said the emerging markets were still strong places to invest.
"Growth is where you want
to invest," he said. "All the growth is in the emerging markets, the
developing world. It's really tough if you look around the developed
world." he said profits in the United
States are the same as they were in 2012.
Yusko said at the beginning of
the year "every single analyst" said emerging markets were going to
underperform the U.S. "That hasn't been the case," he said.
Indeed, in 2017 the iShares MSCI Emerging Markets ETF
(EEM) has been up more than 18 percent while the S&P 500 index has risen more
than 8 percent.
S&P 500 (blue) vs iShares
MSCI Emerging Markets ETF (green) in 2017
Source: FactSet
He also sees trends that are
going to push interest rates down, making growth harder to find and emerging
markets more attractive.
Those trends are the killer
D's, according to Yusko: bad demographics in the U.S., Europe and Japan and too much debt and deflation.
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