(Kitco News) - The economic damage wrought by COVID-19 disruptions could take a year to "wash through," so that markets won't return to bullish conditions until 2024, said Clem Chambers, CEO of Online Blockchain.
Chambers, a prolific financial writer and investor with decades of experience, said that if politicians "mess it up," the recovery process could take as long as five years.
"The economic damage of everything being locked down, for such a long period of time, is going to take quite a long time to wash through," he said. "When I see light at the end of the tunnel, which is hopefully not a train, then I will go bullish, and it will be about a year before it actually happens."
Speaking with David Lin, Anchor and Producer at Kitco News, Chambers said that he is worried about politicians imposing economically harmful policies in the interim.
"The policies that are getting in the way of things have been there for quite a long time, and are continuing to grow," he claimed. "It's this ever-increasing bureaucracy and paperwork, and the optimization of the customer by systems which are working against everybody. There is so much sludge."
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No Fed pivot
Despite recent rallies in stocks and cryptocurrencies, the Federal Reserve's quantitative tightening will continue and cause a retreat into "bearish" territory, said Chambers.
The S&P 500 is up 6.7 percent since January 1st. Cryptocurrencies have also gained over the same time period, with Bitcoin up 32 percent and Ether up 31 percent.
"Everyone in the private sector is saying they [The Fed] are going to do it [pivot]," said Chambers. "The Fed is saying no."
Observing that the Fed's credibility is on the line, Chambers stated, "I believe the Fed… they've said that [they will tighten], and they've been very clear. They would be a laughingstock, and it would be devastating to their reputation, if they went back on what they keep saying."
Chambers suggested that overconfident market sentiment and recent fiscal stimulus were behind the recent rally.
"The money flow from the Treasury's $400 billion… that money is parked somewhere," he said. "That money is an injection of liquidity into the marketplace… When this new liquidity stops coming in, you're going to see a reversal."
To find out how Chambers is positioning himself in anticipation of "bearish" markets, watch the video above.
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