Michael Darda: Conditions Have Deteriorated Significantly

By on August 18, 2011

Michael Darda, chief economist and market strategist at MKM Partners, was on Bloomberg T.V. last week and said the economy was at a turning point. He pointed out the Bloomberg U. S. Financial Conditions Index had plunged in recent weeks.

Darda sees real GDP growth declining to 1.5%; not enough to bring the unemployment rate down. He would use rallies to lighten up on cyclical sectors and would add to utilities and consumer staples on large declines.

Darda put current concerns into perspective last month when he was quoted in Barrons, “If the entire [European] periphery were to default, it would be like the Mexico crisis in 1994, the Russian crisis in 1998 and the Argentina crisis in 2001-02 all occurring together, five times over.”

Darda reckons the current risk in the market is 100 S&P 500 points lower than where we are currently [around 1,170 when this aired].

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