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Food prices are about to skyrocket even more; Prepare for a 'famine,' followed by housing crash, then equities wipeout - Michael Gayed
(Kitco News) - Food prices are about to go up by a considerable degree, to the point where a "famine" is going to hit parts of the world, according to Michael Gayed, portfolio manager of Toroso Investments.
"I don't think most people have any clue how bad grocery prices could end up getting. Keep in mind when we're talking about wheat, soybeans, and various crops, you're talking about supply from the last growing season, which was last year. We actually don't know what the real supply is going to look like, even though prices have already skyrocketed on the old supply," Gayed told David Lin, anchor for Kitco News. "Let's say Russia-Ukraine ends up worsening, let's say you have nationalization of resources and you end up have more countries like we've been seeing saying they're going to ban exports of wheat and other key food commodities, and then let's say you have a bad weather scenario, you could have a massive, massive supply shock."
In such a scenario, food prices would skyrocket and people would be forced to "tighten their belt," he said.
People in the emerging markets will likely suffer the most, Gayed added.
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Meanwhile, the housing market is about to slow down, and when that happens, a major stock market correction could follow, he said.
"Most major crashes and bear markets are preceded by weakness in housing, full stop," he said. "Usually, housing is the big precursor to a major volatility tail event in equities. And yet, you've already had a big decline and housing has not preceded that big decline in risk assets. As yields have spiked here, I suspect you're going to start to see a pretty meaningful slowdown in demand for housing, and we know there's still significant supply issues," he said.
On what could happen to stocks after a housing crash, Gayed said "We're in a really, really dangerous environment."
For more information on how to hedge your portfolio during a volatile time for the stock markets, watch the video above.
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