Goldman Sachs Ex-Executive Foresees Impending Financial Crisis: Brace for a Major Correction.
Former Goldman Sachs Executive Predicts Imminent Financial Crisis: A Significant Correction Is Incoming
In a recent interview with Real Vision Crypto, former Goldman Sachs Group Inc. hedge fund executive Raoul Pal shared his insights on the current macro backdrop and the potential for a crisis. According to Pal, the increasing proximity of a banking crisis within regional banks suggests that a parabolic movement could take place in the near future.
Pal believes that the Federal Reserve will have no choice but to introduce bailout packages to address the crisis. Concerns have been raised about escalating interest rates and an inverted yield curve, which are unfavorable to the banks.
Comparing the current market setup to the 2015-2016 cycle, Pal highlights the unusual nature of 2019, characterized by a significant correction followed by a parabolic rise in the market.
“You can use the Regional Banking ETF to see where we are in that, but if that starts breaking $35, $30, then it’s game on for more cowbell to come because the Fed will have to bail these people out. And then we’ve got the commercial real estate problems behind it. So that’s the backdrop of why the cowbell will come,” he said.
Pal suggests that the crisis will provide an opportunity for the Federal Reserve to abandon its strict monetary policy and offer the necessary liquidity to address the substantial national debt.
“Maybe that’s why the Fed is tightening rates even further is to create a crisis so they can cut rates and monetize the debt.
“Because if they don’t, they have to print more money because the interest rates are higher to pay for the debt payments, which becomes a total catastrophe. The key point is liquidity up,” he added.
With the potential for a crisis looming, it will be interesting to see how the Federal Reserve responds and what impact it will have on the financial landscape.
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