Blue-Chip Risks 

  • U.S. Secular Bear Market will not end until 2030 or 2036
  • U.S. at High Risk to enter 3rd Great Depression
  • U.S. Debt and Deficit to Grow Faster than GDP through 2034
  • China’s 1st Great Depression Underway, not yet discounted by global markets
  • After shocks from China’s Great Depression
  • AI’s Hallucinations & Deep Fakes, not yet discounted by global markets

“About Secular Bears and why best to Exit Blue Chips” – Feb 17 2024 (9 min)

Secular Bear Market Underway Since 01/04/22, Will Not End Until 2030 at Earliest or 2036 at Latest

(Predictions below based on historical data in table below) 

  • Duration of 9 to 14 years
  • 61% to 85% decline from Peak to Trough
  • S&P 500 to not close above its all-time high for any year end until 2037 at the earliest and 2046 at the latest. 

U.S. at High Risk to enter 3rd Great Depression

  • Secular bear to produce 32% stock market decline key ingredient for economic depression
  • Collapses of values for Commercial Real Estate
  • Collapses for Regional & small banks due to Commercial Real Estate Loan Defaults
  • Consumer Price Deflation
  • Collapses for consumer spending & capital spending

“Coming U.S. Great Depression to Mimic 1st Great Depression (1920-1921)” – December 30 2023 (8 min)

U.S. Debt & Deficit to Grow Faster than GDP through 2034

U.S. debt to GDP ratio has steadily increased since 2000 and is forecasted to reach 172% by 2054

“Debt is likely already harming the economy. Most economic literature suggests a debt‐​to‐​GDP ratio above 78 percent slows economic growth. As debt rises, it creates burdensome consequences, crowding out private investment, reducing incomes, and increasing interest rates. Without a course correction, the United States risks either a depressed economy below its full potential with recurring bouts of inflation that eat away at Americans’ savings and incomes or a sudden and severe fiscal crisis where bondholders lose confidence in the Treasury’s ability or willingness to service debt. One likely path: a depressed economy and excess inflation will eventually trigger said crisis, with that outcome becoming increasingly likely over the next 15–20 years.

Trillion​Dollar Deficits Are Here to Stay

For fiscal year (FY) 2023, the budget deficit (how much spending exceeds revenues) was $1.7 trillion. That’s an increase of $320 billion, or 23 percent, over the FY 2022 deficit. If the CBO excludes “savings” from the Supreme Court’s strike down of President Biden’s proposed student loan forgiveness scheme, the FY 2023 deficit is $2 trillion. As a percentage of GDP, FY 2023’s deficit was 6.2 percent. That’s the largest deficit‐​to‐​GDP ratio observed in US history outside of major wars or severe recessions.

Over the next decade, excessive spending is the primary cause of elevated deficits. The CBO projects outlays growing from $6.5 trillion in 2024 to $10 trillion in 2034, a 54 percent increase. Meanwhile, revenues increase from $4.9 trillion in 2024 to $7.5 trillion in 2034, a 51 percent increase. The gap between spending and revenue becomes more apparent when comparing projections to historical averages (1974–2023). As shown in Figure 2, projected outlays are significantly higher than the 50‐​year historical average.”

Foreign buyers of U.S. Treasury securities have steadily declined since 2015, interest paid by U.S. Government will remain relatively higher

China’s 1st Great Depression Now Underway, not yet Discounted

  • Depression’s duration to rival 1929-1938 U.S. Great Depression
  • Upheaval for Global Economy & Markets not Discounted as/of 03/01/24

“China has Entered 1st Great Depression, Catalyst for Epic 2024 Global Market Crash!” – February 03 2024 (37:26 min)

After shocks from China’s Great Depression

  • U.S. 2021 secular bear market extended to 2035

“China’s 1st Great Depression to extend life of 2022 Secular Bear to 2035” – February 17 2024 (7 min)

  • Collapse for World’s Automobile Manufacturing Industry

— North America (U.S. Canada & Mexico)

— Asia (Japan, India & South Korea)

— Europe

See China’s Global EV Domination Is Just Beginning”, 03/07/24

  • The probability for China to enter into a war has increased. China is in a depression which will rival the 1929-1938 U.S. Great Depression for duration.

China’s 2021 “Common Prosperity” reformation was the cause for why its economy and morale of its citizens has and will continue to decline.  Because it is governed by communism China can-not revert back to its “Open Door” 1978 to 2021 reformation.  The Open-Door policy powered China’s economy to the world’s second largest.

War is a remedy to reinvigorate an economy and the citizens of a country.  GDP for the U.S. economy increased at an average of 19% per annum from 1941-1945 after U.S. entered WWII.  From 1937 to 1941 U.S. GDP averaged a 9.9% annual growth rate.  From 1929 to the 1937 Great Depression low for the U.S. economy, GDP declined by 11.1%.  See “The Great Depression and U.S. Foreign Policy” Office of the Historian, Foreign Service Institute United States Department of State

AI’s Hallucinations & Deep Fakes, Not Yet Discounted by U.S. & Global Markets

The stock markets for all of the world’s major countries, with the only exception being China, were at or near all-time highs on 02/29/2024.  The rationale for the highs was the advent of AI (Artificial Intelligence) in 2022.  AI is widely considered to be the panacea or killer app that will result in a surge of productivity for which the world has never witnessed.

In December 2023, SCW Director of Research Michael Markowski discovered AI’s dark side.  Microsoft’s AI app, Chat GPT had been exposed for generating hallucinative content.  Because of the problem all AI generated content will have to be checked by more than one human before it can be commercially published or utilized.   Therefore, the degree for AI’s increase in productivity has become questionable.  Further, AI’s hallucinations have not been discounted by the global stock market.

The AI hallucination problem created the need for an auxiliary industry to validate and verify AI output as soon as possible.   Read Michael Markowski’s January 9, 2024 “AI’s Achilles Heel Exposed – AI Validation Industry Must Emerge ASAP” report.  View video clip about AI’s Hallucination Problem from “Markowski on the Markets (MTOM)” 12/30/23 session:

In February 2024, a second problem for generative AI surfaced.   Google pulled Gemini, its AI app offering which competes with Microsoft’s Chat GPT, from the market.   Gemini had been generating offensive images which depicted minorities.   View video below:

The AI problems for Microsoft and Alphabet are negatively impacting professional investor sentiment.  Video below provides rationale for AI powering S&P’s gain for 2023 and will instead power losses for 2024.  Also covers SCW listed company which is well positioned to become the leader for AI Validation Industry which is projected to grow to $158 billion by 2032. 

AI’s Disinformation Problem