Smead Capital: Stocks Risk 30% Drop If Fed Rate Cuts Spark 1970s-Style Inflation Spike
• Stocks could drop 30% over next few years due to Fed rate cuts causing inflation spike, says Smead Capital portfolio manager • Sees parallels to 1970s when premature Fed rate cuts sparked high inflation and stock market crash • Most at risk are "Magnificent 7" stocks that have dominated recent gains, similar to "Nifty Fifty" in 1970s • Sees 50-50 chance inflation spikes and stocks drop 30% next 2 years, 25% chance poor returns without inflation spike • Investors increasingly worried about potential 1987-style crash, with tech stocks looking overvalued