Dowd points to collapsing new home permits since 2022 and falling tenant rents as early signs of a housing crash.<\/p>\n
He also warns that government spending cuts and a slowdown in illegal immigration will sap economic growth, with stock markets facing a potential 50% drop based on historical patterns.<\/p>\n
\u201cThe idea here is you have a recession that we think manifests itself pretty soon, and the stock markets bottom sometime in the first quarter of 2026.<\/p>\n
Then you have a recovery, that\u2019s the ideal situation\u2026 We\u2019re not claiming anything\u2019s going to go systemic. We\u2019re not doom and gloom. It\u2019s just we think it\u2019s an old-fashioned deep recession and hopefully it\u2019s quick. Typically speaking in recessions like in the dot-com recession and the great financial crisis, stocks went down 50% before they recovered, so we\u2019re nowhere near down 50% yet and we think that\u2019s coming.\u201d<\/p>\n
The Dow Jones Industrial Average dropped from its all-time high of 45,073 in December of 2024 to a low of 38,314 last month, registering a 15% decline.<\/p>\n
Dowd traces the crisis to a global debt problem, temporarily masked by COVID-era money printing and spending, with commercial real estate and rising auto loan delinquencies signaling a broader credit crunch.<\/p>\n
In the long run, he expects deflationary pressures to force the Federal Reserve to slash rates and print money.<\/p>\n
For protection, Dowd advocates holding cash, pointing to Berkshire Hathaway\u2019s massive position in T-bills\/bonds, as well as physical gold, while cautioning against Bitcoin\u2019s volatility and historic correlation with risk assets.<\/p>\n
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