Nobody is more eloquent talking about the debt problems than Kyle Bass.
Here is a presentation entitled: Myron Scholes Global Markets Forum: The Coming Crisis in Japan – Kyle Bass
Charles Nenner was interviewed by both CNBC and Bloomberg and he proclaimed that the Dow would hit 5000 by 2017-2018.
Nenner has been out of the market since the S&P hit 1505. He does not see much upside remaining although he thinks it is too early to start shorting the market.
I’ve followed Nenner’s cycle work and he only seems to have headline grabbing soundbites when he is on the air. In his research, I’ve never seen him mention Dow 5000. As a matter of fact, even most of his long term charts do not project weakness.
The question is what would cause the Dow to drop to 5000?
War would be the obvious answer. As the equity market is giddy everyone is ignoring continuing tensions in North Korea, China, Iran and Mali.
The second possibility is that inflation starts to rocket higher. If inflation hit 4% and long bonds hit 6% one could see dividend stocks like Coca Cola get smashed. After all, a 3% dividend in a world of 6% bonds would not be attractive.
The final scenario is a deflationary bust
Nenner sees a good low for gold in April but also suggests that some early birds can invest right now.