The Trump administration is “a freak show” building up to a hawkish march to war that will crash the stock market, veteran trends predictor Gerald Celente forecasts in an interview with ThinkAdvisor.
Famed as a perpetually gloomy Gus in predicting the markets and economy, Celente, 71, describes himself as a “fearless teller of the truth.” Indeed, over the decades, he has forecast more than a few monumental events.
To wit, the founder of the 38-year-old Trends Research Institute predicted Donald Trump’s presidential victory nearly six months before the election, the 2008-2009 financial crisis, the dot-com fiasco and 1987’s Black Monday market crash, among other shocks.
He bases predictions on his Globalnomic Methodology, which identifies trends in economics, business, technology, politics and more. They are published the quarterly Trends Journal, soon to be expanded.
For 2018, the top trend is “Market Shock and Mass Murder,” Celente argues; specifically, “a war that will be the most deadly yet of the 21st century” and precipitating another dreadful market meltdown.
Proclaiming the Trump rally over, he sees trends that point to a bear market en route. When will it occur? “No one can predict the future,” he declares.
Detractors call the pundit’s forecasts general and based largely on hunches.
Consultant to industry and government, Celente has been a keynote speaker for American Express, Bank of America and the Food Marketing Institute, among other organizations.
Bronx, New York-born, he began his career running political campaigns in New York’s Westchester County and became the executive assistant to the secretary of the New York State Senate. He now calls himself “a political atheist.”
ThinkAdvisor recently interviewed the trend detector, speaking by phone from his Kingston, New York, office. Amidst forecasts, he opined on Donald Trump, Larry Kudlow, Gary Cohn, Robert Mueller’s Russia probe and “Big Brother” (not the TV show). Here are highlights:
“There’s lunacy unfolding in the White House,” you told me last August. What do you say now?
It’s a freak show! Trump has brought in this woman to run the CIA [Gina Haspel] who was head of the secret torture program. Wonderful! Isn’t that a great moral statement of who we are!
What’s your biggest concern overall?
I’m most worried about war, particularly because of what’s going on with the Trump administration. He’s putting in a secretary of state [CIA director Mike Pompeo] who champions regime change, whether in Syria or Iran. We’re very worried about the heating up of rhetoric on Iran and the problems going on with Israel’s [Prime Minister Benjamin] Netanyahu. When all else fails, they take you to war. We’re mostly concerned that there could be an eruption in the Middle East.
What would another war do to the U.S. securities markets?
It will crash the markets. They’re overvalued and overleveraged. If there’s an outbreak of war in the Middle East, kiss the markets goodbye. You saw what happened in February with just a tiny little shock about the rise of interest rates. A real shock will knock the markets out.
Do you think that Conor Lamb’s winning the special House election in Pennsylvania is the start of a trend toward Democrats winning the congressional midterm elections?
Look who they elected — a military guy [former Marine major]. That’s the trend! Do you know how many military people and CIA people are running in the Democratic Party this year? Dozens!
That means more war. Which war did you like better? The Syrian War or the Libyan War? Maybe you liked the Iran War. Maybe the Afghan War is your favorite.
But haven’t wars been good for the U.S. economy?
No. Wars are destructive. That saying has been repeated since the end of the Great Depression. But wars have only dragged the country down. It’s squandering dough, and they always use that stupid excuse to get away with it.
What’s a significant example?
All the money dumped into the Vietnam War was the beginning of the end for the American economy. The U.S. trade deficit was building. Didn’t the Iraq War enrich us all? No! The Afghan War, the longest war in American history, where we spent more money rebuilding than during the Marshall Plan, adjusted for inflation, has made us poorer.
What do you think of Trump’s pick of CNBC’s Larry Kudlow as economic advisor replacing Gary Cohn?
Kudlow is perfect for Trump because this is The Presidential Reality Show, and he picked a reality-show guy. Kudlow is a TV guy. He’s perfect.
What do you expect Kudlow to do for America?
His agenda is Wall Street, not Main Street. So “by their deeds you shall know them.”
What’s your assessment of Cohn as economic advisor?
They call him a centrist. Sure, the president of Goldman Sachs is a centrist! He helped craft the tax-cut plan: the 1% get over 80% of the benefits. That was the wonderful Gary Cohn. What a guy!
Last August you predicted a 10% market correction in the fall. We had one in February. Do you forecast more corrections this year?
We definitely see the market going back into correction territory. And the markets’ being so overvalued and overleveraged can bring them into bear market territory, down 20% to 25%. But nobody can predict the future because there are too many wild cards. There’s no wilder card than the Trump card. This guy is capable of doing anything!
You’ve written that the Trump rally has peaked. Why do you say that?
The major reason is that the market can’t take an increase in interest rates. What kept it going up was bringing the money back at very low tax rates and the tax breaks. What’s putting the damper on the market going higher is the [expectation] of [the Fed’s] aggressively raising interest rates. Look how investors freaked out [in February] when the markets started tanking because of fear of rising interest rates.
Do you think the system is bollixed up?
The whole thing has been nothing but one big Ponzi scheme since they made up this stuff called Too Big to Fail, quantitative easing, and zero and negative interest rates. It’s been very good for the markets, and now they’re concerned that they can’t keep it going at the same level because they can’t keep getting all that money for free anymore.
What’s the backdrop now for the anticipated interest rate increases?
You’re seeing new mortgage applications, home sales and auto sales all in decline. Put on top of that the $13 trillion-plus in consumer debt and the debt that the U.S. and the world is taking on. How do they pay all that when interest rates go up? They can’t pay it now. And oil prices will likely spike as a result of a [potential] war. All that will bring the economy down on a lot of different levels.
What sparked the Trump rally after his election?