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Larry McDonald, author of the "Bear Traps Report," recently appeared on Fox Business News to discuss his prediction of a possible stock market crash in the next 60 days. He cited his "21 Lehman systemic risk indicators" that point to a high probability of a market crash. McDonald claims that the withdrawal of capital from middle-class families due to rising interest rates is causing concern, as every 1% increase in rates takes nearly $50 billion out of middle-class pockets.

According to McDonald, the wealthy are currently benefiting from higher interest rates and excess savings, while the middle class is being "hammered" by rising inflation and higher interest rates. He claims that consumer pressure is "vielhind" and that middle-class families are getting hit hard. Auto loans are approaching 14%, and nearly 40% of auto loans are $1,000 a month.

In addition, McDonald noted that the two-year treasury is now above 5%, and mortgage rates are rising, with the 30-year fixed rate up to 6.79%. He believes that the last time mortgage rates shot up this way, we saw real estate demand destruction, with people walking away from their mortgages. Furthermore, a Fannie Mae survey found that Americans are pessimistic about their personal financial outlook, with 30% saying they expect their finances to improve over the next year, the lowest rating since 2010.

McDonald believes that the market may go down 10%, 20%, or even 30% in the next 60 days, with massive cracks appearing under the surface of the economy. He also noted that twos and tens are 100 basis points inverted, and regional banks are underperforming the S&P by 6-8% over the last nine months to a year.

When asked about potential recession, McDonald did not believe one was imminent. He stated that the two Es, earnings and employment, were strong, with employment at an all-time high and earnings better than feared. However, McDonald warned that the trigger for a stock market crash could be S&P earnings deteriorating in the next few months due to poor job data.

In conclusion, McDonald recommended investing in gold miners, emerging market equities, and global equities ex-US, which he believes will outperform the US market over the next two years. While McDonald's prediction may sound dire, it's essential to remember that the market is unpredictable, and caution is always advisable when investing.

Larry Mcondalds Bear Traps Report

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Larry McDonald's Bear Traps Report is a financial newsletter that provides insight and analysis on global economic trends and investment strategies. The report is authored by Larry McDonald, a seasoned market strategist with over two decades of experience in the financial industry.

The report's primary focus is on identifying potential market risks and opportunities that are often overlooked by traditional financial media outlets. By analyzing macroeconomic trends, geopolitical events, and investor sentiment, McDonald offers a unique perspective on the global financial landscape.

One of the main themes of the Bear Traps Report is the role of central banks in shaping the global economy. McDonald argues that central banks have played an outsized role in driving asset prices higher through their monetary policies, which have created a "bubble" in the financial markets. He believes that this bubble could burst at any moment, leading to a significant market correction.

McDonald also pays close attention to global economic trends, particularly in emerging markets. He believes that these markets offer significant growth potential for savvy investors, but that they also pose unique risks due to their volatility and geopolitical instability.

In addition to his analysis of global economic trends, McDonald also provides actionable investment recommendations for his readers. These recommendations range from specific stocks to watch to broader asset allocation strategies.

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