When the market is going to make that turn because when it does, we believe that it’s going to go into a complete freefall like we saw in oil back in 2008 that could push the Dow as low as 5,000 or lower by the end of the year,” he said.
Hefty said a “handful of very serious catalysts” are going to push the markets down such as a “disappointing” second quarter GDP and rising foreclosure rates.
“And when we look at China—China’s just another version of Dubai, but in a greater scale,” he warned. “Not only are they going to face a real estate crash, but they’ll face inflation so they’ll have to slow their economy down in the midst of a real estate crash.”
“And the freefall is due to the fact that our financial system has $17 trillion of leverage and it only takes a handful of hedge funds to get a margin call before we start to see this freefall take place,” added Hefty.
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