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(Kitco News) The U.S. and other G7 countries could be in a recession come fall, with the global equity markets at risk of plummeting 30% in the second half of the year, according to Simon Hunt, founder of Simon Hunt Strategic Services.
There are a series of events looming that are very likely to usher in this recession, Hunt told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News.
"By the autumn, most G7 countries will be in recession, the [Ukraine] war will have intensified, and central banks will have completely turned policy upside down either by the autumn or in the fourth quarter," Hunt said.
And in response, most global equity markets will fall 30-35%, he added.
Markets are currently assuming a benign outcome for the war in Ukraine, but that is not going to be the case. Military intensification is coming, Hunt said. "When the markets start seeing that, they'll take a different view," he noted.
To find out how the intensification of the Ukraine war will play a role and why Hunt believes Russia will escalate its military involvement, watch the video above.
The second wave of inflation
The markets will be hit by the second wave of inflation next year, which will be more damaging than the first, Hunt pointed out. In this scenario, the dollar will fall off sharply, and all inflation hedges will get bought.
"There's a real risk that we will see 10-year Treasuries yielding well over 10%. What's that going to do to a very highly leveraged global system? Three percent was bad enough. Ten percent plus could lead us into … a very deep recession," Hunt said. "The risk of it being a depression is very high. And I don't think we get into trend growth until the early 2030s."
To find out more about why the risk of a deep recession in the U.S. is so high, watch the video above.
Prepare for the worst
Hunt advises investors to "prepare for the worst," projecting a significant upside for gold.
"[There is] an opportunity to prepare for very difficult years ahead … probably the next five years," he said. "That's my advice to everybody – prepare for the worst, just as China has contingency plans for the worst."
There is a long lag between monetary policy tightening and its impact on the economy, Hunt explained. The markets will eventually feel the full effects of the Federal Reserve's hiking cycle that saw rates jump 500 basis points in a little more than a year.
Watch the video above to get Hunt’s view on the U.S. response to the de-dollarization trend by the BRICS countries - Brazil, Russia, India, China, and South Africa - ahead of the August summit.
