Michael Lombardi in his latest publication talks about an economic downfall that will possible take place in 3rd or 4th quarter of 2013. He named this prediction as Critical Warning Number Six which according to him will be more severe and devastating than the one in 2007-08. Since its publication, the prediction has created much buzz and controversy among investors and stock owners which is how it gained popularity among the masses. Lombardi says that his prediction is in fact based on current market and economic trends that seems temperate at the moment but will turn ugly and extreme in the future.
He points out that the current bullish market is one of the biggest indications that the US economy will fall in the deadly pit of recession in the forthcoming days. The United States Economy has been recovering from the destructive effects of recession that happened 5 years back in 2007. Current look at the market and economic figures reveal that the economy has recovered enough and the market is indeed earning large profits with major stock and investment sectors becoming more and more powerful. Investors who are currently involved in investment pursuits are earning decent returns and businesses that were under losses are gaining progressive momentum. According to Lombardi such kind of economic growth is a marker of an upcoming recession since historical records propose the fact that whenever economy reaches its pinnacle of growth a recessional event occurs and bring things back to normal. Due to this cyclic trend economy is always growing and this cyclic chain of growth and downfall will continue to happen in the future as well.
More over Lombardi indicates that the current global economic scenario is not so pleasant either. Presently Europe is still under the effects of a sovereign-debt crisis and a deeper look in the European economy reveals that Southern Europe will be remain under recession for the present year 2013 primarily because of high unemployment rates and hard hitting austerity programs. In addition, recent development indicates the starting of a global currency war by major economies like Japan, Brazil, Switzerland, Venezuela, etc. as all these nations are getting engaged in manipulating their exchange rate and bringing down their currency values in an attempt to import inflation and boost money flow in their own local economies. As per Lombardi there is no particular winner or loser in a currency war but such developments will surely affect the business of US entrepreneurs who are engaged in foreign trade and invested a good amount of capital in economies overseas.
Thus the current foreign and local issues indeed appear to be chaotic and under such negative circumstances market can indeed collapse in the upcoming days. Therefore Lombardi recommends investors to buckle up at present when things are still pleasant and start preparing for this upcoming downturn. The main purpose of Lombardi’s critical warning number six is not to create panic and havoc among investors but to enlighten them about the approaching danger so that they can make the best move now in order to evade the dangers that lies ahead.