Permabear Harry Dent Warns of 'Big Fat Ugly Bubble'

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Harry Dent: U.S. facing demographic crisis

'Demographic Cliff' author Harry Dent discusses his outlook for the markets and economy.

The results of the presidential election surprised many, including Wall Street, which had been pricing in a Hillary Clinton victory.

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However, with Donald Trump’s underdog win, markets took off and haven’t looked back since, seeing some of their best gains in the election month.

Economist Harry Dent, who predicted in early October on FOX Business Network’s Varney & Co. that the market would decline “in the next three months,” rejoined the program to react to the current state of the economy and Wall Street.

“I’m eating crow,” Dent admitted. “I still see a downturn because the economic reality is almost zero growth ahead.”

He added that he still hasn’t changed his underlying analysis though, citing “basic fundamentals,” and used Japan’s economic situation as an example to back his logic.

“They’ve been stimulating like crazy for two decades and grown zero,” said Dent, whose expertise lies in the study of demographic trends. “You can’t grow with an aging society. You can’t grow your way out of a bubble. Even Donald Trump says we’re in a big fat bubble. Bubbles burst and have consequences.”

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The economist also noted U.S. demographics are slowing—indicating an aging population— although the situation is not as bad as Japan’s.

Despite his earlier belief that markets would be lower around this time, Dent now believes stocks will “go up” for the next “few months.”

“I think that our indicators say short-term this Trump rally, as delusional as it is, is real,” he said. “It does look like they’re going to go up. We’ve also been warning bond rates are going straight up. The trick this year—as stocks go up, cash out at least to some degree. Take your profits. Don’t look a gift horse in the mouth.”

He added: “Buy long-term, high-quality bonds because you may be able to get a 30-year Treasury bond for almost 4% yield. And I think those yields are going to go back down when people realize we’re not going to get to this 3%-4% delusional growth. It’s not demographically possible.”

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