Market Guru David Brady Warns S&P 500 Will Plunge 30%, With Bigger Plunge Coming After Election

• David Brady warns that the S&P 500 is expected to fall 30%, then round up and then suffer a historic plunge.

• He predicts the Fed will support the market before the election.

• The analyst said that economic and geopolitical forces would cause the market to collapse after the election was over.

One market analyst warns that the stock market will plummet 30%, bounce back before the Massachusetts General Election, and then fall to its lowest level in 14 years.

The S&P 500 is set to plummet from over 5,000 to an 18-month low of 3,500, David Brady said on the latest episode of the "Thoughtful Money" podcast.

Brady is a fund manager, former foreign exchange trader, and author of "The FIPEST Report" which analyzes metals and equities. He believes that stocks are grossly overvalued and that the downside risk to investors is much greater than the potential upside risk, and that a sell-off looks to be on the cards.

However, he predicts the Fed will reverse the coming decline by cutting interest rates and expanding its balance sheet, especially as the Biden administration wants a strong stock market and economy before the November election.

He cautioned, however, that the rebound would not be sustained in the face of mounting domestic and international economic pressures.

"My view," Brady said, "is that it's going to go down 20-30% in the short term, but then the Fed will respond, as it always does, and the market will go up." The stock market will be hit hard after the election.

"I expect the stock market to go down because the economy and the rest of the world is changing," he said of his expectation of a post-election drop in the stock market.

Bredi's list of worries includes inflation climbing to 3.5% in the past two months, which means the Fed could keep interest rates higher for longer. He also pointed to rising bankruptcies, auto repossessions due to defaults on auto loans, credit card delinquencies, and declining housing prices.

To me, these are signs that the economy is struggling," he said, adding that a number of external wars and the pressure on the banking sector were also contributing to the bleak economic outlook.

"I believe the market is going downhill as well, and I'm watching for certain signals that will tell me it's time to get out of Dodge," Brady said. Those signals include the S&P falling below 5,000 or a reversal in the yield curve, he noted.

"All of these factors will ultimately drag down what is perhaps the most highly valued stock market since the Great Depression.

As for Brady's post-election forecast, he thinks the S&P could fall to about 1,000, wiping out more than 14 years of gains and returning to 2010 levels.

"I think there will be at least 80% corrections this time," he said.

Brady isn't the only one predicting doom and gloom. The Big Short's Dr. Michael Burry, GMO Founder Jeremy Grantham, and renowned forecaster Gary Simlin have all issued dire warnings about the future of the market and the economy.

To the extent that this is true, it is worth emphasizing that the United States economy and stock market have largely prevailed over their opponents. Earlier this year, the stock market hit record highs, while inflation has cooled sharply, unemployment is near record lows, and the economy is growing strongly.

Read the original article on Business Insider