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in today's video I want to share the perspectives of two important figures in the world of economics: Nuriel Rubini, a man who predicted the last major financial crisis, and Jeremy Grantham, the great investor currently discussing the economy and asset prices. So I invite you to subscribe to our channel and activate the notification bell because the goal here is to help you invest better.
Before we begin, I want to mention that these two articles, which I'll leave in the video description, are from the Markets Business website. You can check them out; the site is in English, but many browsers already translate it to Portuguese, and I'm here in Word so you can understand the main points they're observing.
Let's start here so you understand: the economist, Doctor Doom, is actually known as Doctor Apocalypse because he predicted the 2008 subprime crisis, when many people thought it was a joke and started to value it. His words, and the one he's talking about, warn that an epic market crash is likely. Notice the detail in his words: he's not saying a small drop in the stock market, which is already happening, but he's talking about an epic drop.
And he also emphasized here that his concern is with this combination of high inflation, which we are already seeing worldwide, unemployment, which may start to rise, and the risk of recklessness. This combination, which I'm going to bring to you before continuing, I want to tell you that these two articles came out in the first week of September 2022, so they are very recent.
This first one, from ERA Migrante, came out on September 1st, and Daniel Rubini's came out on September 2nd. So you can see that they are quite up-to-date. Continuing, then, let's see what he said, and I want you to pay close attention hereโhe's not a foolโhe warned that the United States economy is facing a huge market crisis and stagflation.
I've been warning here on our channel about the concern of rising interest rates leading economies to stagflation, which is the absence of economic growth and higher inflation. And in this summary of the article, he... He already mentioned that the dual action could get out of control, asking not to increase interest rates.
Another efficient option, what he's saying is that Fred will have to increase interest rates if he really wants to combat inflation, but there's a catch, and that's where the concern comes in. Pay close attention: increasing rates could slow growth, increase unemployment, and cause headaches for borrowers.
Remember that last week we brought here in the market perspective the words of Gerarm Power, Fred's president, in which he also spoke of headaches for people? See, Rubinho also has the same view. But let's understand a little better. His nickname, as I've already told you, is Doctor Apocalypse because he talked and talked and nobody believed him.
Then the great crisis of 2008 arrived, and that's when they took notice. And what he has been saying is that the American central bank may have to double interest rates, that is, take them to 55 percent. To give you an idea of โโthis, today the market is pricing in an increase in American interest rates.
Until March 2003, these... If the increases materialize, the rate would reach four percent. Rubinho is talking about 5 percent to contain inflation and says more, but moving to that level could stifle economic growth. Now, if you raise interest rates, you will end up reducing economic growth and also causing unemployment.
That is the crucial question for the Fed: how much should it raise interest rates without cooling down the economy, without creating this process of economic recession? That is the great concern at the moment, and Rubinho continues, and they may struggle to pay their loans if interest costs increase.
Here he is demonstrating a concern for American consumers and those who are preoccupied with this increase in interest rates. Rising interest rates will make it difficult for people to obtain loans because they will increase, unemployment will appear, and the economic situation may worsen. And then he said the result is that raising rates to contain inflation could sink the economy and cause a fall in stocks, bonds, housing, credit, and other assets into bubble territory.
Let's pause here for you to understand. Rubinho is saying that we have a bubble not only in stocks but in all types of assets: housing, credit, private equity, and also in the issue of... Regarding stocks, or rather, the injection of resources that occurred in 2020 during that rapid health crisis created bubbles in all markets.
That's Rubinho's view, and I'll put it in bold for you: if this haste encourages the central bank to give up fighting inflation, that is, according to him, if it raises interest rates, this will greatly impact these assets. Price increases could also get out of control. He's saying the following: look, if the Central Bank decides to intervene in the United States, inflation, which is already high, will get completely out of control.
Take note of that. And here's the final part: I'm concerned about a stag inflation crisis because we have the worst of the 70s; it's returning to a very, very old crisis that we had in terms of supply shocks. He's saying that the problem we have here is one of supply, and raising interest rates won't solve much of this problem.
He also says that we have the worst global financial crisis. I'll repeat it for you to understand: the worst global financial crisis that Ju... and this supply shock has brought this dangerous combination. And to conclude, he said, if you 're behind the curve... Eventually, the recession will be more severe.
What he's saying about being behind the curve means that interest rates at the American central bank are well below inflation rates. This means it's following the curve, which could lead to even more severe job losses, income reductions, and wage cuts. So, the first person I'm bringing to you is Daniel Rubin, who warns of an epic market crash that is likely.
So, what I want you to remember from this first piece of information is that if Vini isn't correct, as he was in 2008, assets will fall, and have fallen significantly in price. When asset prices fall, Treasury bond rates tend to rise. That's why I've been warning you that the good opportunities in the international market haven't even appeared yet.
Be prepared. But, not to only talk about Daniel Rubin, the well-known "Doctor of Doom," I decided to also bring another perspective to you. In fact, he concludes by saying that the fall could reach more than 35 percent, and he says this when the few specialists learn about the real estate bubble back in 2008.
So, here's the final suggestion. He suggested that investors protect their portfolios with alternative assets. Look at inflation-indexed and short- term bonds, gold, commodities, real estate, infrastructure, and even Bitcoin. I disagree with some parts here, but I want to know your opinion on whether we are really in a bubble.
Write it down, and if you really believe we are in a bubble, what asset will suffer the least, or how are you protecting yourself? I want to understand more and more about this. Take advantage and give that super like to help the channel a lot. And to help, I also created the "Club of Less," and I've been bringing you historical data and information to help you prepare for this crisis.
If you want to know more about the "Club of Less," the video is up here, and there are very cheap monthly plans, and for the more expensive plans, I make all the spreadsheets available here on the channel. Access the video to understand better. And now let's talk about another author, Jeremy Grantham, an immigrant.
He is a famous investor in the financial market and manages billions in investment portfolios, and the title of the article is: Gene Immigrant warns that the super bubble in stocks is entering its final stages. And soon it's set for an epic ending. If you don't know, the stock market, especially in the United States, is already falling quite a bit, falling more than 20 percent.
If you're talking about the stock market, nothing like the tech stock market, which is almost 30%, and the S&P 500 is almost 20%. So, let's repeat 2022, a year of fixed income, and let's see a summary here. First of what he said, he warned that the stock market is entering its final phase and that the market will be marked by an epic ending.
What is this epic ending? To help you understand better, especially if you're in variable income, in this final stretch, it's like we have a bullish rally, that's right, an apparent recovery in variable income, and many people believe that this fall that is happening now is a buying opportunity. If you buy more, the market tends to rise a little and then collapse completely.
He's going to talk a little more about what he's going to say now. He says he dismissed the recent recovery of stocks with the classic bear market rally, and he also said it was a false dawn. He previously said that stocks could fall around... Fifty percent, look at this interesting point from the anime.
Grand is talking about fifty percent, isn't that right? Rubinho is already talking about 35% from now on. Gerar Miranda spoke of fifty percent previously. If the stocks fell around 20, you see, they are projecting very close numbers. Now let's understand better: he who founded the company can believe that Inter predicted the fall of 2008.
So there are two investors there who managed to foresee this situation, and he said that he asked for the S&P 500 to fall almost fifty percent compared to January, but so far the S&P 500, as I told you, has fallen twenty percent, not fifty percent. And that's why he says the crash isn't over yet. He says here that investors are betting that Fred will give up on raising interest rates as the economy slows down.
He 's saying here that some investors are betting that Fred will continue raising interest rates, and when he sees that the economy is slowing down, he will stop. That's what some are thinking, but he doesn't believe that, and he adds, saying... This recent increase in stocks was the classic Russian market rally, meaning we're already in a downtrend.
That's just a small tail, a hallmark of major past market crashes. If you've never experienced a bear market beforeโ because in 2020 it was very fastโwhat I want to tell you is this: when this kind of market comes, it makes people quite excited. So, if you didn't experience this type of action back in 2008, be prepared and keep your mind sharp.
Often, it was the third stage before the fourth and final stage when markets collapse. So, this bear market stage is divided into four, and it's saying that the worst is yet to come. Furthermore, if history repeats itself, it will be another tragedy. Because investors, especially individuals in variable income investments, continue to believe that this market crash, particularly in the US, is a buying opportunity.
They buy even more, put more stocks at home, and when the crash turns, it will be a tragedy waiting to happen. That's what it's saying here. And then it talks about the current super bubble presenting a dangerous mix of three factorsโwrite that down so you understand all three main classes. Regarding assets, oops, it's not a silly thing either, something very similar.
If you go back to the video, you 'll see that he also talked about housing, stocks, and bonds. So it's a super bubble, really. They were critically and historically overvalued at the end of last year. So, keep checking and connecting the similarities. Now we're seeing an increase in inflation and a rate shock, like in the early 1970s.
Oh, similar, Rubini also talked about this concern, this similarity to 1970 that we had then, followed by the problems with commodities and energy. And so, let's conclude here, my love, that's what I'm trying to say. And where I'm trying to get to, I've been saying here on the channel, and the intention will always be to alert you, to bring you knowledge so that you can invest better.
I've also brought in articles and opinions from investors, whether national or international, from time to time, so that you are aware of this movement. When we are at the end of the cycle, which is the end of the cycle of variable income, it's normal to have these upward sales, and you already know when there's an upward rally, an increase in the stock market's valuation, rates fall, but it doesn't change and it starts to renew again.
The invitation is for you to join the club of less. The fragility of the world economy is only increasing; there are no indicators pointing to improvement, or indicators are stable or falling, and the arrival of a new crisis is inevitable. The question is no longer if it will arrive, but when it will arrive, and if you will be prepared.
My friends, I always wish that you are in God's presence, that you enjoy your time with your families, and prepare your minds and your wallets for when that moment arrives. A hug, and until the next video.
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