#341 - Peak Prosperity: 3 Risks Threatening To Crash Stocks (Market Update 6.26.20)
Updated: Jul 2, 2020
Peak Prosperity 368K subscribers
Since the appearance of the bearish island reversal we noted two weeks ago, stocks have struggled and so far failed to regain the highs reached earlier in June.
And another bearish island reversal happened on Tuesday.
The resistance displayed by these reversals and the resulting choppiness of trading are exactly the sort of indicators we would expect to see as harbingers of an approaching downturn in the market.
At a minimum, it certainly appears that the meteoric surge in stock prices since the March bottom ended in early June. Stocks have struggled since and just closed down another 2% today alone.
So with the market suddenly struggling here, what's more likely: a roll-over or a resumption of the rally?
We invited Charles Hugh Smith, proprietor of OfTwoMinds.com as this week's expert guest on the program, and he reveals three key threats to the market that he thinks are dangerously underappreciated at the moment.
One, sentiment remains euphoric, yet covid-19 cases are resurging across the US. The market is currently treating the coronavirus likes it's ancient history. If cases and deaths continue to build momentum from here and force a roll-back of lifted restrictions, stocks will be forced to price in the additional damage to the economy.
Two, the Federal Reserve is coming under increasing public criticism for how its policies and intervention are painfully exacerbating social inequity. The Fed may not be able to continue denying and deflecting, and may re-direct more of its future efforts to Main Street vs Wall Street, removing the key (only?) pillar supporting today's asinine stock prices.
Three, entities like the Fed who make up the Deep State, which has warred with President Trump over the past four years, may have incentive to let the market crash this summer. Trump has very visibly tied his administration's performance to that of the stock market; if the Deep State desires to deny him a second term, this is the most lethal weapon they can fire at him.
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