Gary Schilling explained reasonably why the market should soon decrease. And if the US market falls, most of the markets will fall (including Russian).

Investment magnate Schilling is a famous manager, an expert with a huge experience in the stock market, owns a consulting firm.

More recently, he performed on the thematic webinar. On him, he stated that the shares are now too expensive and led an example of the CAPE indicator (tool for estimating the average cost of companies from the S & P 500 index).

In his opinion, to come to the average historical significance of this coefficient, it is necessary that the market fell by 55%. At the same time, he reminded that the market usually jumps over this average value (naturally, down).

The statement is powerful, similar to the populist, so often do Armagedonchiki. Therefore, I will give here the logic of Gary Shillling, and you will become clear why such a strong fall may be possible.

First of all, he indicates the inversion of US bond yield curves:

Look at this schedule. It characterizes the spread between the yields of 2-year and 10-year US governmentobalities. Gray column is the last pandemic recession.

It can be seen that the values ​​have entered the recession zone. In addition, Schilling notes that the inversion situation of the US bond yields is complicated by the parallel growth of the US Federal Feds - this is also a sure sign of the economy movement towards the recession.

Also, it was important to reasoning shillings that the growth of wages in America now does not have time for inflation - this means that Americans will spend less, which is directly towards the recession of the economy.

Schilling even said that we are already witnessing a recession taking into account the behavior of consumers and the clear vector of monetary policy changes.

And about the stock market, he added that Faang shares are especially revalued (Facebook, Apple, Amazon, Netflix, Google). Gary Schilling is confident that these shares will decline in price as the interest rates of the Fed increase.

Schilling recommended selling stocks, and now holds a 30% position in the cache, and on shares in their portfolio focuses on protective sectors and dividend assets.

The logic of reasoning at Gary Shilling is quite reasoned. Now the US economy really begins to slow down. Consumer demand against the background of high inflation begins to show signs of stagnation. And all this is happening against the background of the growth of the US Federal Feds.

So, the signs of the impending recession are quite viewed, and this in turn can entail a substantial sale in the stock market.

The Fed USA has an impressive set of tools designed to prevent the sharp collapse of the stock market and the collapse of the financial system.

And yet, this toolkit has limitations. But the most important, Fed and the ECB did not have learned how to manage the emotions of the crowd at the moments of panic sales. And they, of course, do not want these unmanaged processes. So, quite real and the version of the gradual blistering of the bubble.

Considering all the above, I will do very logical things. After all, I do not know when the markets will fall and do not know if they will fall. I just continue to buy foreign and Russian stocks.

And, of course, I am very pleased if a fair recession comes. It will allow you to buy assets cheaper.

Today, thanks for your attention!

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