Stocks Have Peaked; Watch the Bond Market for the Next Crisis (Video)

Greg Hunter interviewed Gregory Mannarino about the debt-based economic model of the modern financial system. Mannarino just called a top in the US stock market, days before the Dow Jones dropped into negative territory for 2015. Mannarino also believes the precious metals have touched bottom.

When cash is leaving the bond market, the yields will spike. That will put pressure on equities. All of that cash does not go to money heaven. It will look for a place to go. It’s going to go into commodities, in my opinion, because they are real. We’re going to see wealth move into those types of assets.”

Highlights from the interview:

“I happen to believe in Dow theory… It boils down to this. If manufacturers are making money, they’re going to increase production. If they increase production, we’re going to have to ship these things. So you would expect that the Transports would have to be rising along with the equity market or the stock market. We’re not seeing that at all. There’s an absolute disconnect; there’s a divergence… The Dow Transports have begun a clear leg down here, and unless something dramatic happens to bring the Transports back up, this bull market is open. Yes, we have seen all the gains disappear for 2015…

“I’m not saying the stock market is going straight down from here. It never does that. It never goes in a linear fashion any way. It’s always a random walk down…

“Unless the Dow Transports resume an upwards sustained trajectory, we are at the end of this Federal Reserve-induced, capital-misallocation, distorted stock market…

“The issue with Greece… these riots in the United States… the strife around the world, the wars breaking out in China… All of this is the collapse in motion as we are moving forward. It is the perfect storm. All the pawns are in place. It’s just a matter of time before all of this comes down rapidly. You still have the financial pundits and the mainstream talking about good economic news…

“I believe they will continue to kick this can down the road. But look at what is happening in the market. Right at this moment, the interest rates are rising. And rapidly… I think the main issue with Greece is they are afraid of a contagion scenario. They don’t know how this will play out. We’ve never been here before. You can have financial pundits and mainstream outlets talking… about how scenarios in the past have done this. We’ve never seen one like now, where we have zero-interest rate policies for so long, massive distortions in the market, a debt bubble which is the greatest threat to human kind… We’ve never been here, so there’s nothing to compare it to…

“The Fed is going to have to do something… The dollar will weaken here. It may continue on a downward trajectory. We’ve seen this before… We’re going to see metals rise. I said we had hit the bottom in metals recently, and it looks like that’s the case as well…

“The alternative [to central banks interfering again] is too horrible. The alternative is the debt bubble bursting, which is not just a financial problem. It is a resource issue. This is why we’re seeing wars break out…

“The financial system, the entire thing, being that it’s not backed by a real asset at all… is built on trust. Trust that the system will work. The banks are well aware of this, and they’re exploiting it. This is why no bankers are brought up on charges, why no one gets handcuffed, no one gets arrested. Because it would shake the very foundation of the financial system, which is built simply upon a trust mechanism…

“Absolutely [watch the bond market]. That’s where the Federal Reserve and the world central banks have chose to manipulate that part of the market. It’s the largest part of the market. It’s what everything is based on. The price of everything is based on debt. It’s a debt-based economic model, it’s not wealth based. So when you have action there, in the bond market, it’s going to bleed off to every single asset. It’s not just stocks, but currencies, but housing, and every single thing in-between…

“When cash is leaving the bond market, the yields will spike. That will put pressure on equities. All of that cash does not go to money heaven. It will look for a place to go. It’s going to go into commodities, in my opinion, because they are real. We’re going to see wealth move into those types of assets, because they’ve been so suppressed…”

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