Euro Pacific Capital CEO Peter Schiff is sounding the alarm that further interest rate hikes will trigger the next stock market crash.
“[The Federal Reserve] should raise rates, but the market is going to collapse as a result,” he told FOX Business’ Liz Claman Opens a New Window. on Monday.
Schiff said investors should expect a long drawn-out bear market with the cost of living rising to dramatic levels.
“This bear market is not going to end quickly,” he said.
The latest China-U.S. tariff threats have spooked the markets Opens a New Window. , driving the Dow Jones Industrial Average Opens a New Window. to a more than 900-point swing from session highs to lows today. The index clawed back some of its loses in the final hour of trading, closing 245 points lower, or nearly 1 percent, at 24,443. The S&P 500 fell to 2,641, about 0.65 percent, and the Nasdaq Composite was down 1.6 percent at 7,050.29.
The CBOE Volatility Index, Wall Street’s “fear gauge,” has jumped an estimated 87 percent since the close of the market on Sept. 28, 2018.
Steven Quirk, executive vice president of TD Ameritrade’s trader group, says October’s volatility in no way signals a means to an end.
“[Investors] are not optimistically saying this is going to bounce right back, but they are also not saying this is the end of the world,” he said on “Countdown to the Closing Bell Opens a New Window. .”
Corporate earnings for S&P 500 companies are estimated to grow 25 percent for the third quarter.
Schiff said the debt collected by companies during the stock market boom and a hike in interest rates will cause corporate earnings to potentially collapse at a rapid pace.
“There is a lot of optimism about earnings and unfortunately that’s already priced into these stocks,” he said.