AT THIS POINT A LOT OF PEOPLE

ARE LOOKING FOR ECONOMISTS WHO

SAW THE LAST DOWNTURN HAPPEN

BEFORE IT HAPPENED.

ONE OF THOSE PEOPLE IS HARRY

DENT, THE GREAT ECONOMIST WHO

JOINS US BY PHONE.

HARRY, YOU SAID IT WAS GOING TO

HAPPEN AND IF IT IS REALLY

TIPPING TO HAPPEN?

>> WE'VE BEEN TELLING PEOPLE, WE

REALLY TURNED BULLISH, WHEN

TRUMP GOT ELECTED WE KNEW GRAVY

TRAIN WAS COMING.

THERE IS NOTHING BETTER THAN TAX

CUTS AND REPATRIATION.

DAVID: AND DEREGULATION.

>> LOOK, THIS IS THE FINAL

BLOWOFF RALLY.

QUESTION HOW LONG IT WILL LAST.

WARNING PEOPLE, HIGH CHANCE

WE'LL PEAK LATE THIS YEAR.

THIS IS THE FIRST SIGN OF THAT

POTENTIALLY.

KEEP TO A 10 TO 15% CORRECTION

WE COULD HAVE RUN-UP NEXT YEAR.

THE ODDS ARE SHIFTING QUICKLY

THIS COULD BE HIT BECAUSE WE HIT

EXTREMES REAL ESTATE BUBBLES

HIGH EVERY THAN AVERAGE STOCKS.

BUBBLES ARE OFF THE CHARTS.

THIS COULD BE THE BEGINNING.

THIS IS THE TRICK.

WHEN BUBBLES BURST, WE

RESEARCHED EVERY MAJOR STOCK

BUBBLE IN THE LAST CENTURY, THE

FIRST WHACK IS 40% ON AVERAGE IN

TWO TO THREE MONTHS.

DAVID: 40%?

>> THE PROBLEM IT IS BETTER TO

HEDGE.

OPTIONS ARE CHEAP.

BETTER TO HEDGE THE PORTFOLIO

THAN NECESSARILY GET OUT.

BRETTER TO HEDGE AND GET OUT

EARLY BECAUSE ONCE IT HAPPENS IT

WILL HAPPEN SO QUICK BEFORE

PEOPLE KNOW IT.

DAVID: I DON'T KNOW IF YOU HEAR

ME, YOU'RE SUGGESTING IMMEDIATE

DOWNTURN IN THE MARKET I DON'T

THINK WE'VE SEEN IN DECADES.

WHAT DO YOU THINK IS THE CAUSE

OF THAT?

IS IT THE FACT THAT WE'VE HAD

THESE SEAR RE INTEREST RATES,

ARTIFICIAL INTEREST RATES FOR A

DECADE ALL AROUND THE WORLD AND

FINALLY THE CHICKENS ARE COMING

HOME TO ROOST OR WHAT IS IT?

>> ABSOLUTELY.

THIS IS THE FIRST AND ONLY

PURELY ARTIFICIAL, LONG TERM

RALLY.

NOW IT IS LONGEST RALLY IN

HISTORY WITHOUT A 20%

CORRECTION.

OUR DEMOGRAPHIC FACTORS PEAKED

IN LATE SEVEN AS WE PREDICTED

WOULD HAPPEN DECADE BEFORE THAT

AND ECONOMY GOT WEAK, REAL

ESTATE BUBBLE GOT WORSE AND WE

PREDICTED THAT MONTHS BEFORE IT

WENT DOWN IN 2006, WHEN

BEN BERNANKE IS NO PROBLEM, IT

IS CONTAINABLE, SUBPRIME CRISIS

THING.

FUNDAMENTALS, INCLUDING WE HAVE

A GEOPOLITICAL CYCLE DOWN SINCE

2001, 9/11, DOESN'T START TO

TURN UP UNTIL YEAR-AND-A-HALF.

ALL THE CYCLES ARE DOWN YET THE

ECONOMY HAS GONE UP, WHY?

$16 TRILLION OF MONEY.

TRILLIONS IN TAX CUTS.

TWO TRILLION REPATRIATED IN

UNITED STATES.

WE'RE ONLY MARKET IN THE WORLD

MAKING NEW HIGHS BECAUSE OF

TRUMP TAX CUTS.

EUROPE AND THEM HAVE NOT MADE

NEW HIGHS.

THAT IS ANOTHER DIE VERN ANSWER.

EMERGING COUNTRIES ARE DOWN 22%.

CHINA IS DOWN 26% AND THIS IS

SAYING THERE IS SOMETHING WRONG

IN THE WORLD.

DAVID: HARRY, I'M SORRY, I DON'T

IF YOU CAN HEAR, WE'RE TALKING

OVER EACH OTHER.

>> IF IT DOES WE'LL SEE THE

MARKET DOWN 20% BY MID-JANUARY.

DAVID: WE'RE HAVING TROUBLE

HEARING EACH OTHER, TROUBLE

TALKING TO EACH OTHER.

TWO THINGS I SAY TO YOU, GIVE

YOU TWO POINTS IN AND GIVE YOU

FINAL WORD, THE FACT EMERGING

MARKETS ARE GOING DOWN PRIMARILY

GETTING TERRIBLE ADVICE FROM THE

IMF, RAISING TAXES, DEVALUE

CURRENCIES DO ALL THE RIGHT

THINGS, BUT SECONDLY DO YOU

COMPLETELY DISCOUNT THE POWER OF

TAX CUTS WHICH DID REVIVE

TREMENDOUSLY NOT ONLY CORPORATE

PROFITS BUT CORPORATE INVESTS

AMONG OTHER THINGS, PAYROLLS,

HIRING PEOPLE AND TRAINING

PEOPLE?

ALSO THE AMAZING AMOUNT OF

DEREGULATION GOING ON AND FACT

YOU HAVE AS PRESIDENT A

BUSINESSMAN AS OPPOSED TO AN

ACADEMIC WHO DOESN'T MUCH LIKE

BUSINESS?

>> NO, AGAIN WE TURNED BULLISH

WITH OUR SUBSCRIBERS, THE DAY

AFTER THE ELECTION WHEN TRUMP

GOT ELECTED WE KNEW IT WOULD BE

PRO-BUSINESS.

WE KNEW THAT WOULD BE ANOTHER

SHORT TERM STIMULUS ON TOP OF

NINE YEARS OF FREE MONEY AND

QUANTITATIVE EASING BUT AGAIN,

WE'RE IN AN ECONOMY WHERE WE'RE

RUNNING OUT OF WORKERS TO HIRE.

THE WORKFORCE IS PROJECTED TO

NOT GROW AT ALL IN THE NEXT

DECADE.

PRODUCTIVITY HAS GONE FROM 3%

PLUS DOWN TO HALF A PERCENT

BECAUSE THE AGING OF THE

WORKFORCE AND BABY BOOMERS.

FUNDAMENTAL TRENDS ARE GOING IN

THE OTHER DIRECTION.

STIMULUS, SHORT TERM, ALWAYS

WORKS BUT WE DON'T THINK THIS

WORKS PAST THE NEXT YEAR.

MY QUESTION IS, IS THIS TOP?

OR DO WE SEE A TOP LATE 2019.

I SEE THE BIGGEST CRASH OF OUR

LIFETIME COMING NEXT FEW YEARS.

THIS HAS GOT MORE TO SHOW.

THIS IS NOT ENOUGH YET.

THE PROBLEM IS, AGAIN, THE FIRST

CRASH AFTER A BUBBLE LIKE THIS

IS 40% IN FIRST TWO TO THREE

MONTHS.

IF YOU HANG IN THERE TO SEE IF

IT IS GOING TO GO DOWN YOU GET

WHACKED REALLY HARD REAL QUICK.

THAT IS THE PROBLEM.

DAVID: OTHER THAN THAT YOU THINK

EVERYTHING IS ROSIE.

>> I MEAN, WE LOOK, WE'VE BEEN

BULLISH MOST OF MY CAREER.

WE SAW THE BABY BOOM COMING, SAW

INTERNET COMING BUT EVERY BOOM

GOES TO EXTREMES.

THIS HAS BEEN A BUBBLE.

AND THEN YOU HAVE TO CORRECT.

WE HAVE TOO MUCH DEBT.

FINANCIAL ASSETS ARE OVERVALUED.

POOR MILLENIAL GENERATION WILL

NEVER BE ABLE TO AFFORD TO BUY A

HOUSE AND MAKE MONEY OFF IT.

NEVER BE ABLE TO --

MELISSA: YOU LOST ME AT POOR

MILLENIALS.

>> A BIG CORRECTION OVER NEXT

YEAR IS VERY GOOD.

DAVID: WE HAVE TO CUT HIM OFF.

I DON'T THINK HE CAN HEAR US.

HARRY DENT, YOU'VE BEEN RIGHT

BEFORE.

IT IS IMPORTANT FOR EVERYBODY TO

LISTEN TO EVERYTHING YOU HAVE TO

SAY.